Premium Bonds company NS&I has clarified how its prize draw works and why people with less than £50,000 have a lower chance of winning.
NS&I carries out a monthly prize draw which gives you the chance to win up to £1M even if you only own a single £1 Premium Bond.
One upside of the scheme is that Premium Bonds are tax-free, so anyone who has already maxed out their £20,000 ISA limit for the year as well as their Personal Savings Allowance can use Premium Bonds to earn a little bit more money tax-free over and above these limits.
Of course, there are no guarantees but Martin Lewis has previously said that the average return on £50,000 of Premium Bonds is about 4 percent, which is more than you’d be allowed if you’ve already maxed out your other tax free avenues.
But under constant questioning about how the prize draw works on Twitter, NS&I has explained to customers how those with £50,000 have a better chance of winning.
Each £1 gives you another chance to win, so your chances of scooping a jackpot will always be higher the more you have – ie ££2 has better odds than £1, £500 has better odds than £499, and £501 has a better chance than £500, and so on, all the way to £50,000 which is the limit on the amount you can hold in Premium Bonds.
NS&I explained: “Thanks for getting in touch. Please note it is an essential feature of the Premium Bond scheme that winning is solely a matter of luck, and there can be no guarantee of any level of return whatever the value of the holding. The random nature of the prize draw means that there is no predictable pattern to the frequency or value of prize wins. It is possible to experience months without winning a prize, as well as months with multiple wins.
“Currently, the odds of winning are 21,000 to 1 for every £1 Bond. This ratio remains the same for a holder of £1 as it does for one with the maximum holding of £50,000.
“The only distinction between them is that the holder of £50,000 has more ‘entries’ into the monthly draw.
“Each draw also takes place a few days before the end of the month; this gives us enough time to run multiple checks on ERNIE (Electronic Random Number Indicator Equipment) and the whole process to ensure that its output is completely random.
These checks are not conducted by NS&I, but by the Government Actuary’s Department (GAD), who run independent from the operations of NS&I. We will never reveal the results of any draw until we have received a certificate of approval from GAD confirming that ERNIE has passed all their tests.”
