Limit rises to £50,000 on Premium Bonds

From today (1 June) you can buy £50,000 worth of Premium Bonds, up from £40,000. The increase was first announced in last autumn's Budget, although at the time no date for the rise was given.

Another change coming into force today will enable parents to buy bonds for children aged under 16 online (on the NS&I website) and over the phone (by ringing NS&I). Until now, parents could only buy bonds for children by post (to NS&I) or at a Post Office.

If you're aged 16+ and buying bonds for yourself, you can continue to do this online, by phone, by post or at some Post Office branches.

However, bonds have to be owned for a full calendar month before being entered into the draw, which offers prizes from £25 up to £1 million. So buy bonds from today, and they'll first be entered into the August prize draw.

Currently over 21.2 million individuals hold £53.4 billion in Premium Bonds. Since the first draw in June 1957, 318.3 million prizes have been won totalling £15.8 billion in prize money. See our Premium Bonds guide for more help on how they work.

Are premium bonds worth it?

Before buying, it's worth considering whether premium bonds are really right for you. Our Premium Bond Calculator shows your odds of scooping a prize in each monthly draw. We're working on updating this now to allow for the new £50,000 limit, so sign up to our weekly email if you haven't already, as we'll announce there when the calculator has been updated.

But the key point to remember is that while Premium Bond 'winnings' are tax-free, the scheme is like any lottery: you're not guaranteed to get a return on the money you invest, something you can get, at least for a certain length of time, with both savings accounts and bank accounts.

The current 1.35% Premium Bond 'interest rate' can also be beaten. The highest paying easy-access cash ISA, which is also from NS&I, pays 1.5% tax-free.

You can also earn up to 5% pre-tax, (4% after basic rate tax) in a best-buy bank account, although you won't earn interest on anywhere near as much as the £50,000 Premium Bond limit.

Santander's 123 lets you save the most with 3% interest pre-tax (2.4% after basic rate tax) on £3,000-£20,000. See our Top Savings guide for more information on the best buys.

'More bonds in the draw means you're less likely to win big'

Helen Saxon, senior money writer at MoneySavingExpert.com, says: "With savings rates so low, Premium Bonds are an increasingly attractive option, so it's likely that the new £50,000 limit will see people pouring more of their savings into NS&I.

"But remember, the 1.35% Premium Bond 'interest rate' only describes the average payout; many win much less than this.

"And while more bonds means there are more prizes at almost all levels, there's no announcement of a third £1 million prize. Before today (1 June 2015), the odds of you winning £1 million were 1 in 27 BILLION – with more bonds in the draw, it'll become even more unlikely."

Got Premium Bonds? Check you've reclaimed prizes

NS&I says that currently across the UK, there are over 1.1 million unclaimed Premium Bonds prizes worth more than £49 million. There's no time limit to claim prizes, so find out how to reclaim lost prizes in our Premium Bonds guide.