Published On: Fri, Sep 6th, 2019

What do Premium Bonds cost? How likely are you to win £1 million in prize draw? | Personal Finance | Finance

Premium Bonds are a government-backed scheme, available for those who are looking to save their money but who are not seeking guaranteed returns. While each Bond number costs £1, the minimum amount a person can invest is £25. There is an upper limit too, with this being £50,000. Any interest which may be earned via Premium Bonds is tax-free.

Rather than Premium Bonds holders being paid interest, the numbers are entered into a tax-free prize draw.

Prize levels range from £25 up to £1 million.

The “prizes” are randomly allocated, using a machine called ERNIE – which stands for Electronic Random Number Indicator Equipment.

The odds of winning for each £1 Bond number stands at 24,500 to 1, NS&I state.

Each month, NS&I pay out two lots of £1 million jackpots.

Other higher value band prizes are available, and this is worked out by dividing the balance of the prize fund share allocated to the band equally among the remaining prize values.

There are also medium value bands and lower value bands, with the lowest prize level being £25.

While the odds of winning anything at all is 1 in 24,500, the chances of winning one of the two £1 million jackpots are fairly slim.

In fact, according to Love Money, for a £1 bond, the likelihood is around 1 in 40.99 billion.

This month, the prize fund amounted to more than £96 million.

It was made up of in excess of 3.3 million prizes.

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