How do premium bonds work?

A reader asks, What percentage of Premium Bond prizes goes to investors paying in less than £100 a month?

Young family at home.  Mother  holding baby (8 months) while father pays the bills.  Focus on man (20s).

Doug emails: “What percentage of Premium Bond prizes goes to investors like me who are paying in less than £100 a month?”

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Paul Lewis replies: There are no figures for that, but Doug is right to be concerned that he has been building up his Premium Bond holdings for 12 years yet has never won a prize of more than £25.

I’m not surprised.

Almost all the prizes — 98% of them — are of £25.

Even with the maximum £50,000 in Bonds you could expect on average to get a £50 or £100 prize every five years or so.

But you would have to wait an average of 24 years for a £500 prize and a lifetime — 71 years — for £1,000.

With Doug’s £7,500 in Bonds he might expect a £50 or £100 prize about once every 35 years or so.

Of course, these are average figures and some people win more frequently than that.

Doug also asked who verifies the two £1 million winners each month.

Every draw is verified at random by the Government Actuary before the results are announced.

In December the £1 million prizes went to a man in Stockport with £36,000 of Bonds and another on the Isle of Wight who had £50,000.

Both had held the winning Bond for less than six years.

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For more information on premium bonds visit NS&I