As 2026 gets underway, holders of Premium Bonds are being advised to conduct a thorough review of their investments. The iconic savings product from NS&I, which offers the chance to win tax-free prizes each month, currently has a prize fund rate of 3.6 percent.
The odds of any single £1 Bond winning a prize are set at 22,000 to one. While you can hold up to £50,000 in Bonds, increasing your stake improves your chances, there is no guarantee of a return. Many savers can go months or even years without landing a prize.
The Crucial Question for Every Bond Holder
Personal finance expert Aaron Peake from the free credit score service CredAbility is encouraging customers to take a pragmatic look at their holdings. He highlights that Premium Bonds are often seen as a tradition, where people buy them and enjoy the monthly draw excitement without further thought.
"There is nothing wrong with that, but it is still worth checking whether they are working hard enough for you," Mr Peake stated. "Unlike savings accounts, there is no guaranteed return. You might win a prize, or you might get nothing at all, even after holding them for years."
He proposes a straightforward self-assessment for the new year: "If you stripped away the fun of the draw, would you be happy with the outcome so far?" An answer of 'no' could signal that it's time to reconsider your approach.
Diversifying Your Savings Portfolio
Mr Peake emphasised that a review does not necessarily mean cashing in all your Bonds. For many, a blended strategy is more effective. He recommends diversifying savings across different vehicles to balance opportunity with security.
This could involve placing some funds into easy-access accounts for liquidity, while allocating other portions to fixed-rate accounts or Cash ISAs for potentially better, guaranteed returns. "Structuring your savings like this spreads risk and gives you a better balance between certainty and chance," the expert advised.
Weighing the Opportunity Cost
Another critical factor for savers is opportunity cost. Mr Peake explained that if savings rates offered by banks and building societies are highly competitive, and your Premium Bonds have yielded little, moving at least a portion of your money could be a sensible financial decision.
With the new year being a popular time for setting fresh goals, aligning your savings strategy with your broader financial plans is highly recommended. Assessing whether your Premium Bonds still fit within those plans is a crucial first step for 2026.
