Premium Bonds - worth a flutter?

You still have to pay interest to the credit card company, if it's one of those deals we've been discussing, where the 0% interest rate on the balance transfer is conditional upon you making ca. £50pm of purchases on the card, on which interest will then be charged.

I gather the premium bond prizes are set to pay out at a rate which on average correpsonds to a certain interest rate, which they publish. I think it's around 3%, which is not very exciting. It's competitive with typical savings accounts only to higher rate tax payers.

I have suggesting, for several years, PSBs to my 40% tax bracket clients as an alternative to low paying deposit a/cs. It used to be that the max holding (then) of 20,000 would give you nearly an evens chance of winning a prize each month - although mainly at the 50 level. But the government's tinkering with the "interest rate" etc have increased the odds.

But one of my clients did win 25,000, so who knows......................

I think that after the government's latest "tinkering" the odds are now pretty much exactly 30,000 to 1 of winning a prize so if you hold the maximum (which was increased earlier this year up from 20,000 to 30,000) then you should win an average of 1 prize per month, but that prize will almost always be 50.

I've held the maximum for about the last 5 years and on average my winnings each year have been about 75% of the published returns. My worst year was

50% and my best just under 100%. I guess I'm just unlucky! So far all the prizes I have won have been 50 except for one 100 prize and one 500 prize. (To avoid confusion, when I say my best year was 100%, I don't mean that I made 100% return on my investment, I mean that if the government was paying out 5% in prizes then my return was the expected 5% of capital (pbonds held) for that year.)

- Julian.

The message from "Trust No One" contains these words:

It could be worth a go. This months one million pound winner was a 2000 bond bought in July this year!

I was more impressed by the 100,000 won by a 10 bond (out of a total of

60) from July 1958. That's a good return !!!

"a0000000000" wrote

Not mind-blowing, though - less than 22.6% per annum over 45.25 years...... [assuming no other prizes from this particular bond]

Its only 10% of the fund for >=£500 prizes.

I'm pretty sure it used to be higher than that, but maybe people were complaining that they weren't winning often enough.

Could be.

They've meddled a lot with the prize profile and the odds.