Record £ 2.16 billion more premium bond savings in a month – but could their popularity lead to a rate cut?

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New data shows that the number of Premium Bonds in the March draw is 2,160,113,561 more than the February draw. This is the largest increase in the number of bonds in a draw compared to the previous draw we saw, and premium bond provider NS&I has confirmed that this is the largest increase over the previous month. It even beats the “just over £ 2 billion” bonds it says represented net gains in December 2006 when there was a 50th anniversary special drawing with five winners of £ 1 million.

It’s likely that people will be putting more money into premium bonds in January as standard savings rates continued to drop – the top account with easy access at the beginning of the month offered a terrible 0.55% and at the end of the month it offered a horrific 0.55%. .

We have an analysis below of why the massive adoption of premium bonds could herald a possible rate cut. You can find detailed information on how premium bonds work – and whether they are worthwhile – in our guide to premium bonds. Or calculate your chances of winning with our Premium Bond Probability Calculator.

Premium bonds currently have an annual price of 1%

Premium bonds are essentially a savings account, but instead of being paid interest, every £ 1 bond is entered into a monthly raffle where you can win tax-free prizes between £ 25 million and £ 1 million. Of course, the monthly sweepstakes element means you can’t win anything either.

What Premium Bonds comes closest to an interest rate is the annual price rate of currently 1%. This is a measure of the “average” rate of return you will get on your money – although in reality there is no guarantee that you will win anything at all.

What it really means is that for every £ 100 saved in premium bonds in the market, £ 1 is paid out in prizes every year. However, the prizes include two payouts of £ 1 million and lots of prizes for £ 100 or £ 1,000 – meaning many people will have to win far less than that prize. In fact, most of them gain nothing. That statistic shows it well – of the 104.2 billion bonds in the March draw, only 3.02 million won a prize (and 98% or 2.96 million of those prizes were just £ 25).

The monthly increase from February to March was well above average

The number of bonds in each draw compared to the last is determined by three different factors:

  • The number of Premium Bonds bought in a month. For the March draw, this is the number bought in January (you must hold bonds for a full month before going into a draw).
  • Prize money that has been reinvested. The March drawing is money that was reinvested from the February drawing.
  • Money withdrawn from premium bonds will be deducted. For the March draw, this means that money was withdrawn in February.

We trimmed the numbers for premium bond purchases to July 2016 and found that the increase between February and March of this year is not only a record, but also well above the average last year.

Between July 2016 and March 2021, the average monthly increase in premium bond investments was £ 766 million. And while that number hides the fact that premium bond purchases have skyrocketed since the pandemic began, if you just look at the period between April 2020 and March 2021, the average increase was just over 1.5 billion . GBP – still far less the huge sum of the month.



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