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Record £2.16 billion more saved in Premium Bonds in a month – but could their popularity lead to a rate cut?

The amount invested in Premium Bonds jumped by a record £2.16 billion between the February and March prize draws, according to new analysis from But their runaway popularity could mean we're more likely to see the prize rate cut in the coming months.

New data shows that the number of Premium Bonds in the March draw is 2,160,113,561 more than the number in the February draw. It's the highest increase in the number of bonds in a draw compared with the previous draw that we've seen, and Premium Bonds provider NS&I has confirmed it's the biggest month-on-month increase on record. It even beats the "just over £2 billion" worth of bonds that it says was the net increase in December 2006, when it held a special 50th anniversary draw which had five £1 million winners.

It's likely that people put more money into Premium Bonds in January as rates on standard savings continued to tumble – the top easy-access account at the start of the month offered a dire 0.55%, and by the end of the month it was 0.5%. 

We've more analysis below on why the huge take-up of Premium Bonds could herald a possible rate cut. For full info on how Premium Bonds work – and whether they're worth it – see our Premium Bonds guide. Or calculate your odds of winning with our Premium Bond Probability Calculator.

Premium Bonds currently have an annual prize rate of 1%

Premium Bonds are essentially a savings account, but instead of you being paid interest, each £1 bond's entered into a monthly prize draw where you can win tax-free prizes ranging from £25 to £1 million. Of course, the monthly prize draw element means you could win nothing too.

The nearest thing Premium Bonds have to an interest rate is their annual prize rate, currently 1%. That's a benchmark of the 'average' return you'll get for your money – though in reality, there's no guarantee you'll win anything at all.

What it really means is that for every £100 saved in Premium Bonds across the market, £1 is paid out every year in prizes. Yet the prizes include two £1 million payouts, and many prizes for £100s or £1,000s – meaning lots of people have to win far less than this prize rate. In fact, most win nothing. This statistic illustrates it well – of the 104.2 BILLION bonds in March's draw, only 3.02 MILLION won a prize (and 98%, or 2.96 million, of those prizes were just £25).

The monthly increase from February to March was far above average

The number of bonds in each draw compared with the last is powered by three different things:

  • The number of Premium Bonds bought in a month. For March's draw this is the number bought in January (you need to hold bonds for a full month before they go into a draw). 
  • Prize money that has been reinvested. For March's draw, this is money reinvested from February's draw.
  • Any money taken out of Premium Bonds is subtracted. For March's draw, this means money withdrawn in February. 

We've crunched the numbers on Premium Bond purchases back to July 2016 and found that the increase between February and March this year is not only a record but far above average, even for the last year.

Between July 2016 and March 2021, the average monthly increase in Premium Bonds investment was £766 million. And while this figure hides the fact that Premium Bond purchases have shot up since the start of the pandemic, if you look at just the period between April 2020 and March 2021, the average increase was just over £1.5 billion – still far less than this month's huge total.

Are Premium Bonds worth saving in?

A good comparison to make to assess whether Premium Bonds are worth it is to compare the returns you'd get from them if you had average luck with the returns from top savings, where interest is guaranteed. Right now, the top easy-access account – from Marcus Bank – pays 0.5% AER. On the face of it, this is a lot lower than the published Premium Bonds prize rate, though as we explain above, many won't win as much as that 1% rate.

If we use our Premium Bond Probability Calculator, it gives us the following likelihoods of beating the 0.5% savings rate if you have average luck. We assume here that you don't pay tax on savings interest (the case for 95% of people).

Amount saved in bonds Interest at 0.5% (1) % chance of Premium Bonds beating top savings over a year
£100 £0.50 4%
£1,000 £5 29%
£5,000 £25 82%
£30,000 £150 95%
£50,000 £250 98%
(1) Top easy-access savings – this assumes the interest is covered by your personal savings allowance up to your limit, and that it is withdrawn, not compounded, as this is how most people use Premium Bonds. Rates correct in Mar 2021.

As you can see, if you have average luck you're more likely to beat savings rates if you have larger amounts saved in Premium Bonds. And you'll have an even higher chance of Premium Bonds winning if you pay tax on savings interest. 

For those with less to save, of course you may beat the odds and have better than average luck, but don't bank too hard on winning big. After all, the chance of winning one of the £1 million prizes with one bond is one in 52.1 BILLION. Even if you've the maximum £50,000 in Premium Bonds, it's still one in a million for any given month.

See our Premium Bonds – are they worth it? guide for full info on how they work and whether they're right for you.

'It wouldn't be surprising to see a Premium Bond rate cut this year'

Helen Saxon, banking editor at, said: "With savings rates so low, it's no surprise people are flocking to Premium Bonds. As our analysis shows, you've a decent chance of beating easy-access savings rates if you've £5,000 or more to save, or if you pay tax on your savings interest.

"Yet last week's Budget threw up some interesting numbers – specifically around the amount of cash the Government has asked NS&I to raise on its behalf over the 2021/22 tax year. It's asked it to raise an extra £6 billion, with an acceptable range of between £3 billion and £9 billion. 

"If people continued to buy Premium Bonds over the next year at the rate they have been doing over the last, though, NS&I would see net increases of around £18 billion in money coming in through Premium Bonds alone – around three times what they've actually been asked to raise.

"Of course, there are lots of different factors to consider. NS&I's balance sheet covers much more than just Premium Bonds, and funding targets can change mid-year – which means there are lots of ifs and maybes here. But one way to stem the startling inflow of Premium Bonds cash is to drop the prize rate, so fewer people want to buy them. So it certainly wouldn't be surprising to see a Premium Bond rate cut this year."

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