PREMIUM BONDS CALCULATOR
Premium Bonds vs Savings
Compare the expected Premium Bonds prize return with guaranteed savings interest — and see your real chances of winning.
Your comparison
YOUR RESULT
Savings currently comes out ahead
A standard savings account would return more over this period, while Premium Bonds exchange guaranteed interest for the chance of winning a larger prize.
What does the result mean?
Premium Bonds
Premium Bonds do not pay normal interest. Instead, every eligible £1 bond is entered into a monthly prize draw.
Savings account
A savings account pays a stated interest rate. The return is more predictable, but there is no chance of a large Premium Bonds prize.
The “cost of the gamble”
When savings pays more, the difference shows approximately how much guaranteed interest you are giving up for the chance to win.
FREQUENTLY ASKED QUESTIONS
Premium Bonds vs savings FAQs
Are Premium Bonds guaranteed to pay the prize-fund rate?
No. The prize-fund rate is an average across all eligible Premium Bonds. An individual holder may win more than the average, less than the average or nothing at all.
Can I lose the money held in Premium Bonds?
Your original Premium Bonds holding does not rise or fall with investment markets. The main financial risk is that inflation reduces what the money can buy over time.
Are Premium Bonds prizes tax-free?
Premium Bonds prizes are paid tax-free. Interest earned from an ordinary savings account may be taxable depending on your total savings income and any available tax allowances.
Why can savings beat Premium Bonds?
Savings interest is normally guaranteed for as long as the advertised rate applies. Premium Bonds replace guaranteed interest with entries into a monthly prize draw.
Does holding more Premium Bonds improve my chances?
Yes. Each eligible £1 bond has a separate entry in the monthly draw, so holding more bonds increases the chance of winning at least one prize. It does not guarantee a win.
Why might my actual return be lower than the calculator?
The expected return is a mathematical average. Premium Bonds prizes are random, and smaller holdings may experience long periods without a win.
Does the savings calculation include compound interest?
Yes. The calculator estimates interest being added to the balance and earning further interest over longer periods.
Should I choose Premium Bonds or a savings account?
Savings may suit people who want a predictable return. Premium Bonds may appeal to people who value tax-free prizes and the chance of a larger win, while accepting that their personal return is uncertain.
Important
This calculator provides estimates only. The Premium Bonds prize-fund rate is an overall average across the full prize draw and is not a guaranteed personal return. Actual prizes are random and may be higher, lower or zero.
Savings calculations assume the displayed annual rate remains unchanged and interest is compounded. This tool does not include tax, fees, introductory bonuses or changes in interest rates.
This is an independent calculator and is not affiliated with or endorsed by NS&I. It is not financial advice.