From interest rates to access restrictions, there’s so much to consider when taking out a new savings account. Can I make withdrawals? Do I need to give notice on the account? Will I lose interest?

In this blog, we give you the lowdown on Premium Bonds. Keep reading to find out if it’s worth putting your money into Premium Bonds.

Ever since 1956, people have been hoping that they’ll have some luck on the premium bonds, a government-backed investment that doesn’t pay interest but enters you into a monthly draw with a top prize of one million. Premium Bonds were first introduced as a way to raise money for the country in the post-war years. They have continued to be very popular ever since, especially as gifts for other people.

What are Premium Bonds?

Premium Bonds are a form of investment run by the state-owned savings bank NS&I (National Savings and Investments). They’re available in £1 units and the minimum and maximum levels of investment are £25 and £50,000 respectively.

For each £1 unit the holder has in Premium Bonds they’re given a unique number. Each month all these are entered into a prize draw with a £1 million jackpot. The prizes are divided into three bands, higher value which ranges from £1 million down to £5000, medium value which ranges from £1000 to £500 and lower value which ranges from £100 down to £25.

It’s the holder’s responsibility to check from time to time whether they’ve won smaller prizes. The lucky winners of the £1 million jackpots will be contacted directly. Checking for wins is easy to do using the app that’s available for both Apple and Android devices.

Are Premium Bonds tax free?

Yes, all winnings from Premium Bonds are completely free of tax.

How much are Premium Bonds worth?

Because they earn no interest Premium Bonds always remain at their face value for as long as you own them. The trade off for this is that you stand a chance of being a winner in one of the monthly prize draws.

You can also cash in your Premium Bonds at any time by contacting NS&I with your details – but you’ll be missing out on the chance to join the many millions of people who’ve enjoyed a win in the past.

Can Premium Bonds be in joint names?

No. Premium Bonds can only be held in one name, but there’s nothing to stop you and a partner each having your own bonds. It’ll increase your chances of a win.

When’s the best time to buy Premium Bonds?

Unlike other investment accounts like ISAs which are best to open at the start of the tax year, there’s no good or bad time to buy Premium Bonds. But you might want to give them as a present as savings that could also provide a cash prize.

Do Premium Bonds expire?

Premium Bonds never expire but once they’ve been cashed in you can never get them back. Instead, you can simply buy some more if you ever want to have another chance of winning in the draw.

Need a bit more guidance when searching for the right savings account? Why not read the reviews left by our Smart Money People community?