Two in three premium bond savers have never won a penny
Two thirds of savers with Premium Bonds have never won a prize, as experts warn their chances of making any money are 'minuscule'.
More than £125.9bn is held in Premium Bonds, which are administered by National Savings & Investments (NS&I) and guaranteed by the Treasury. Prizes are awarded in a monthly lottery, with two savers winning £1m every month.
But unlike interest-paying savings accounts, there are no guaranteed returns on Premium Bonds – and those with small holdings are much less likely to win.
More than 14.3 million savers have not won a prize since 1994, data shared with investment platform AJ Bell under Freedom of Information rules revealed.
Just five million of the 22.5 million holders won a prize between March 2024 and February this year, with 80pc of those who won winning more than one prize.
The average winner held £23,397, whereas the average holder had just £5,406 in the account.
It comes as the effective prize rate has dropped following interest rate cuts by the Bank of England in an effort to stimulate the economy.
From this month, the effective prize rate on the nation's favourite saving product dropped from 4pc to 3.8pc, having fallen from 4.4pc last year.
The chances of winning a prize remained the same, but the number of prizes dropped overall, with those winning £100,000 falling from 82 to 78, and those getting £50,000 decreasing from 164 to 157.
In comparison, the best savings accounts available are paying as much as 5.07pc with Trading 212, or 4.76pc with Chip. Both the average one-year fixed-rate savings account and one-year fixed-rate cash Isa are paying more than 4.12pc, according to financial analysts Moneyfacts.
After reaching a peak of 5.25pc in August 2023, the Bank Rate dropped to 5pc last summer. The rate fell again to 4.5pc in February, with three further cuts expected this year.
Charlene Young, pensions and savings expert at AJ Bell, said: 'The chance of winning any of the top prizes (from £5,000 all the way up to £1m) remains miniscule.
'There's a chance even the average holding won't win a prize, meaning savers might be better off considering other options with their cash rather than leaving it to chance in a Premium Bonds account, particularly over the long term.'
An NS&I spokesman said: 'Premium Bonds remain one of the nation's favourite savings products and are a flexible and fun way to save. They offer the excitement of potentially winning tax-free prizes every month, the safety and security of the 100pc government guarantee, and easy access to withdrawals.
'Every Premium Bond has a separate and equal chance of winning a prize each month, however the more bonds you buy, the better your chances of winning.
'Each month we pay out millions of prizes ranging from £25 to £1m. In our most recent draw, there were more than 5.9 million prizes worth over £412m.'
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