NS&I explains why Premium Bonds ‘bought most recently’ appear to win more often

Martin Lewis details how Premium Bonds odds work for savers

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Premium Bonds are overseen by National Savings and Investments (NS&I) and have a long history for savers. Issued in the UK since 1956, millions of people have held, or currently hold Premium Bonds in the hopes of winning, but also saving at the same time. Functioning as a savings account, Premium Bonds offer security for Britons in putting away their cash.

However, instead of the usual interest rate savers can expect, this goes towards funding the prizes issued monthly.

At the start of each month, NS&I announces the results of its prize draw, with the chance to win prizes anywhere from £25 to a staggering £1million.

Premium Bonds currently create two lucky millionaires each month, and eagle-eyed savers will be looking closely to see if they have won big.

But a frequently asked question when it comes to Premium Bonds relates to the odds of actually winning.

Understandably, not everyone can win, which may leave some Premium Bonds holders feeling disheartened.

A specific question on odds relates to when a person actually purchased their Premium Bonds holdings.

Some have questioned whether the winning Premium Bonds are the ones which have been purchased most recently.

Thankfully, NS&I has cleared up the confusion to provide further insight to Bond holders.

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Its website states: “Each £1 Bond number has an equal chance of winning, regardless of when or where it was bought.

“Over 95 percent of eligible Bonds have been bought since the year 2000.

“So even though Premium Bonds have been on sale for over 60 years, this is why newer Bonds seem to win more frequently.”

ERNIE, which stands for Electronic Random Number Indicator Equipment, is the machine which generates the winning Bond numbers each month.

NS&I explains that because of this system no Bonds can be left out, as the machine does not store numbers.

In fact, the savings institution also highlighted a fairly recent case of a winner with older Bonds.

In 2004, a lucky millionaire was revealed as a person with a £17 holding, after their purchase of the Bond was made all the way back in 1959.

The odds for Premium Bonds, however, have changed recently.

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This is due to the fact NS&I took steps in November 2020 to reduce its interest rates.

The decision, it said, was based on striking a balance between the “interest of savers, taxpayers and the broader financial services sector”.

Effective from December 2020, the Premium Bonds prize rate fund reduced by 40 basis points.

This means the prize rate fund dropped from 1.40 percent to 1.00 percent.

The odds of any £1 Bond number winning a prize decreased from 24,500/1 to 34,500/1.

The interest rate reduction saw NS&I align savings products against rates which were more familiar in the wider market, after the provider held out as a top payer for a significant amount of time throughout the pandemic. 

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