Martin Lewis exposes Premium Bonds 'urban myth' ahead of NS&I's next prize draw
Greg Smith issues warning about ax on savings interest
GB NEWS
Martin Lewis has addressed key "urban myths" about National Savings and Investments' (NS&I) signature Premium Bonds product during his recent BBC Sounds podcast.
The financial expert emphasised that Premium Bonds represent one of the safest savings products available to British consumers.
"Every penny you've got in there is backed up by the Government," Lewis explained during the broadcast.
He added: "The only way you could have a problem is if the Government went bust - then we'd all have bigger problems." The consumer champion reassured listeners that their capital is completely protected, stating: "In other words, you're always at worst going to get your money back."
During the podcast, Lewis tackled a persistent "urban myth" about Premium Bond winnings.
"I often get asked, I've had my Premium Bonds a long time but haven't won anything, will I be better off buying new bonds because they seem to win more? Complete urban myth," he stated. The financial expert explained that all bonds have an equal chance of winning in prize draws.
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Martin Lewis is breaking down the "urban myths" surrounding Premium Bonds
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He clarified why this misconception exists: "When people were buying these bonds in the 1960s and 1970s, they were buying £1, £10, £20 worth. Now people are buying £500, £1,000, £10,000 worth."
"So, there are just simply more new bonds, so more new bonds win more often," Lewis concluded.
Premium Bonds can be purchased with a minimum investment of £25, offering savers a chance to win prizes while storing their money.
Each bond is entered into a monthly prize draw with potential winnings ranging from £25 up to £1million.
The interest earned on Premium Bonds comes in the form of prizes, making returns dependent on luck rather than a fixed rate.
"Each individual bond goes into a prize draw and has a chance of winning an amount of money, from £25 up to a million pounds. And that's what dictates the interest that you get. So your interest is a gamble, but your money is totally safe," Lewis explained.
Premium Bonds represent the UK's largest savings product, with over 24 million people investing more than £122billion.
In November's Premium Bond draw, two lucky winners claimed the top prize of £1million each.
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Premium Bonds savers can check if they have won via the NS&I Premium Bonds prize checker app or website NS&IEd Monk, an associate director at Fidelity International, outlined why savers should consider Premium Bonds and cited Lewis in his reasoning.
He explained: "Because of the way Premium Bonds work, the more bonds you have the greater the chance you have of achieving - or exceeding - the prize fund rate.
"The best analysis of this is generally recognised to come from Martin Lewis, the TV money-saving expert, who advises that only those with many thousands - or even tens of thousands - of pounds in Premium Bonds will achieve a return approaching the prize fund rate, providing they have the average level of luck.
"If you have less than that to put into them then Premium Bonds are, statistically speaking, likely to pay you less than the prize fund rate."
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