These bonds don’t pay interest. However, for every £1 invested in Premium Bonds, you’ll get one entry into a monthly prize draw. The top prize is £1 million.
The popularity of these bonds proves that some UK savers like the idea of gambling on a large cash prize, rather than receiving a steady regular income.
In this guide, we’ll explore some other savings vehicles that give you a chance to win a large cash prize. We’ll also compare these products to more traditional savings accounts.
Alternatives to Premium Bonds
Here are a few direct alternatives to Premium Bonds.
Halifax Savers Prize Draw
Halifax offers a monthly prize draw to all customers who hold at least £5,000 worth of savings. These savings must be held in Halifax or Bank of Scotland savings accounts or ISAs (but not children’s savings accounts).
Each customer gets one free entry into the monthly draw.
Every month, Halifax gives away:
3 x £100,000 prizes
100 x £1,000 prizes
1,500 x £100 prizes
Halifax doesn’t reveal how many people enter its monthly draw, so it’s not possible to compare the odds of winning with Premium Bonds.
However, it’s worth remembering that you’ll earn interest on your savings as well as your place in a monthly prize draw.
Nationwide Start to Save Prize Draw
Nationwide holds a prize draw for its “Start To Save” savings account holders, with the last draw being held in February 2024.
To be eligible for the draw, your account balance must have increased by between £50 and £100 in each of the previous 3 months. The idea is that this encourages savers to keep adding to their accounts.
The prize on offer is £250. Nationwide said the odds of winning fluctuate between one in 34 and one in 67, depending on the number of entrants.
Account holders also earn interest on their savings, regardless of whether they win a prize.
Prize draws took place on 22 August 2023 and 20 February 2024.
TSB Spend & Save Prize Draw
TSB launched a new prize draw in 2021 to help its customers get into the habit of saving, and it will be running until the end of May 2022.
To be in with a chance of winning, Spend & Save and Spend & Save Plus current account holders must either set up a new Savings Pot, or change an existing one, to include the words “my dream” in its name. The Savings Pot must also have a balance of £10 or more.
Each month until the end of May, TSB will award 5 prizes of £1,000 and 50 prizes of £100 to randomly selected customers meeting that criteria, with the prize money paid directly into their Savings Pots.
Family Building Society Windfall Bonds
This prize draw is now closed to new accounts, but it continues for existing account holders. If you have already invested £10,000 in a Family Building Society Windfall Bond, you’ll be automatically entered into its monthly prize draw.
The prizes on offer are:
1 x £50,000 prize
2 x £10,000 prizes
3 x £2,500 prizes
15 x £1,000 prizes
The odds of winning a big prize are significantly better than with Premium Bonds. The odds of winning with a Family Building Society Windfall Bond are 1 in 714 each month, or 1 in 60 per year.
Family Building Society says that the odds of winning are almost 6 better than with Premium Bonds.
On top of that, you’ll earn interest on these bonds at the Bank of England base rate.
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If you open a PrizeSaver account with your local credit union, you’ll automatically be entered into a monthly draw to win up to £5,000.
Each month there is:
1 prize of £5,000
10 prizes of £50
10 prizes of £20
Every £1 you hold in your account at the end of each month gives you one entry into the following month’s prize draw. You can have a maximum of 200 entries a month (equal to £200 in savings).
You can only hold one PrizeSaver account and keep in mind that not all credit unions offer PrizerSaver accounts.
Chip Prize Savings Account
With the Prize Savings Account from Chip, account holders have the chance to win a prize of up to £10,000, instead of earning interest on their savings.
The number of entries you get is decided by your average balance over the calendar month. Your average balance is calculated by your daily balance divided by the number of days in a month. The earlier you pay money into your account, the more entries you get.
Each month there’s a chance to win one prize of £10,000 and 7,750 prizes of £10.
Other than that, the account works like any other easy access account – you can deposit funds and withdraw your cash when you want to and your savings are protected up to £85,000 under the Financial Services Compensation Scheme (FSCS).
Comparing traditional savings accounts to Premium Bonds
Not sold on the idea of a prize draw? Here’s a quick look at how other types of savings accounts compare to Premium Bonds.
Savings accounts and cash ISAs
You won’t earn any interest on Premium Bonds.
The amount of money paid out in prizes per year is determined by the Annual Prize Fund Interest Rate. This dropped to 1% in December 2020.
This is technically the amount that each bond pays out, taking into account the odds of winning. Premium Bond holders will be hoping to earn a lot more, but the majority of them will earn less.
If you prefer to earn a guaranteed amount of interest, find a good savings account or cash ISA that pays at least this amount.
Stocks and Shares ISAs
A stocks and shares ISA is a platform that allows you to invest in stocks and shares tax-free.
Stocks and shares tend to pay higher returns than cash savings in the long run. However, there is a risk that the value of your investment can go down, as well as up.
Peer-to-peer lending
Peer-to-peer lending websites allow you to lend money directly to borrowers. The lack of overheads needed for these websites to operate allows them to offer superior rates of return compared to most banks’ savings accounts.
There is a slight risk of you losing your investment, should the borrower default on their loan. However, most good peer-to-peer lending websites have protections in place to compensate savers (the lenders) in this situation.
Bottom line
If you’re looking for a different, potentially more fun way to save, opening a prize draw savings account could be the way to go. If you’re lucky enough to win the jackpot, you could win several thousand pounds, which can work out to be a lot more than the amount of interest you would earn on a standard savings account.
But on the flipside, you need to consider the chances of actually winning this sum. After all, you might not win anything at all and, with the exception of the Halifax Savers Prize Draw, your savings won’t be earning interest either.
When considering your options, weigh up whether you’re happy to take this risk, or whether you’d prefer to have a guaranteed return on your cash deposits with a traditional savings account.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio
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