Are Premium Bonds worth it? New research shows amount of time savers are left waiting to win a prize

Premium Bonds holders typically wait three and a half years before winning their first prize, challenging widespread expectations of quick returns, new research from Octopus Money reveals.

The wealth manager's freedom of information request uncovered this lengthy wait time, despite almost a third of bondholders expecting to win within six months of purchase.

With over 24 million people holding more than £130 billion in Premium Bonds, they remain one of Britain's most popular savings products. However, the reality of returns often falls short of savers' dreams.

Each £1 bond carries 22,000-to-one odds of winning any prize, with the current prize fund rate standing at 3.8 per cent for those with average luck.

The June 2025 Premium Bonds draw has just been announced, with two £1 million prizes claimed. A winner from Stockport secured the top prize with bond number 103FE583469, having purchased their winning £5,000 bond in November 2005 whilst holding £50,000 overall.

NS&I data reveals the distribution heavily favours those with substantial holdings. Over the past five years, 96 per cent of jackpot winners held more than £10,000, whilst 75 per cent had over £25,000 invested.

Beyond the two millionaire prizes, approximately 80 people won £100,000 and 163 claimed £50,000 this month.

Research by Dodl found nearly two-thirds of all Premium Bonds holders have never won anything, with over £4.25 billion sitting in accounts showing no activity for a decade.

According to Octopus Money's analysis, 88 per cent of Premium Bonds prize winners took home less than £2,000, whilst just 0.32 per cent received over £10,000.

Ruth Handcock, CEO of Octopus Money, warned that "Premium bonds are unlikely to outpace inflation, so your money may seem 'safe' but it's quietly shrinking in value over time."

The erosion of savings value presents a significant concern for the millions holding bonds long-term. With inflation steadily reducing purchasing power, those waiting years for modest prizes may find their real returns deeply negative.

This reality contrasts sharply with the product's popularity, as Premium Bonds remain Britain's biggest savings vehicle with over £122 billion invested according to Money Saving Expert.

Several alternatives offer more predictable returns than Premium Bonds' lottery-style system.

Cash ISAs currently provide guaranteed interest, with Plum offering 4.85 per cent through a variable rate plus newbie bonus, whilst Leeds Building Society pays 4.1 per cent with unlimited penalty-free withdrawals.

For standard savings, Atom Bank leads easy-access accounts at 4.75 per cent, dropping to 2.5 per cent in withdrawal months. Hampshire Trust Bank offers 4.45 per cent for one-year fixed rates and 4.44 per cent for two years.

Some institutions have created hybrid products combining guaranteed returns with prize draws. Halifax's Savers Prize Draw offers monthly chances at £100,000 alongside regular interest, requiring £5,000 minimum holdings.

Coventry Building Society's Sunny Day Saver pays 6.25 per cent interest plus monthly prize draws for those saving at least £10.

Handcock emphasised that whilst Premium Bonds may work well for some, "others are missing out on strategies that could grow their wealth and deliver stronger returns over time."

Stocks and shares ISAs present another option, though with higher risk. Trading 212 offers zero-fee investing, whilst Interactive Investor charges £4.99 monthly plus £3.99 per trade.

The disconnect between expectations and reality remains stark. Octopus Money's survey of 2,000 UK adults found almost a third anticipate winning within six months, despite the 3.5-year average wait.

For those checking monthly results, NS&I updates its prize checker tool via app, website and Amazon Alexa the day after each month's first working day. With June's winners now announced, millions will once again check their numbers against the odds.