Martin Lewis has explained who Premium Bonds are best suited for and who should avoid them, warning that "we tend to give them to the people they're least suited for."
The finance expert said on his podcast that despite the current prize fund rate of 4.35%, most people with typical luck will earn less than this amount. He added that standard savings accounts often offer better returns for many savers.
Who Premium Bonds suit best
Premium Bonds work best for high earners investing close to the £50,000 maximum who have already used up their Cash ISAs and savings allowances. The tax-free nature of the bonds becomes valuable for those already paying tax on other savings interest.
Children among the worst candidates
Lewis warned that Premium Bonds are particularly unsuitable for children and others investing small amounts who don't pay tax. He noted: "We often give Premium Bonds to children" despite them being among the worst candidates.
The money expert also put the million-pound prizes into perspective, revealing each £1 bond has just a one in 70 billion chance of winning the top prize. There are two £1 million prizes each month from 136 billion bonds in the draw.
Best use for Premium Bonds
Lewis concluded that Premium Bonds are best for high earners saving for major purchases like property who can invest large amounts.
