One lucky Premium Bonds holder is starting the New Year as a millionaire after scooping the top prize with just a £4,625 holding.
The lucky winner, from South Yorkshire, was the first of the two winning bond numbers to be drawn having purchased the winning bond in July last year.
It is the 50th smallest holding to ever win, putting it in the top 10 per cent of smallest holdings to scoop the £1 million prize.
The second millionaire, from Wiltshire, won with the maximum holding of £50,000 having purchased their winning bond in June 2020.
>> See the full list of Premium Bonds winners
Happy New Year: A jackpot winner with £4,625 in Premium Bonds won January’s jackpot £1million prize having purchased the winning bond in July 2021
This month’s draw saw provider NS&I increase the Premium Bonds prize fund rate rise from 2.2 per cent to 3 per cent, with an extra £80 million injected into the prize pot compared to December.
The changes mean that the prize fund rate has now tripled from 1 per cent to 3 per cent since May, with the odds of each £1 bond number winning a prize improving from 34,500 to 1 to 24,000 to 1.
The 3 per cent prize rate is the highest since November 2008 when it stood at 2.85 per cent.
The highest rate ever was 7.75 per cent between November 1984 and July 1987 with odds of winning at 11,000 to 1.
Jill Waters, NS&I’s retail director, said: ‘We’re seeing in the New Year right with a boost to the Premium Bonds prize fund rate to 3 per cent – the highest it’s been in 14 years.
‘This means a bigger prize pot and more higher value prizes that all Premium Bonds customers have a chance to win – a wonderful way to start 2023.
‘This month’s prize draw sees a record of nearly £300 million worth of prizes up for grabs.’
Are Premium Bonds better than easy-access savings?
Premium Bonds are the UK’s biggest savings product, with more than 21 million people saving more than £119 billion in them.
For someone looking to introduce a bit of fun into their rainy day savings, then Premium Bonds could well be the answer.
Although the majority of prizes are worth £25, the chances of securing a bigger prize have greatly improved this month. The £1million jackpot remains at two wins per month.
There are now 56 prizes of £100,000, up from 18, while the number of £50,000 prizes went up from 36 to 111.
The total of £25,000 prizes increased from 71 to 224 and the number of £10,000 prizes rose from 178 to 559.
In addition, the number of savers who win the £5,000 payout went up from 359 to 1,116.
| Value of prize | Number of prizes |
|---|---|
| £1,000,000 | 2 |
| £100,000 | 56 |
| £50,000 | 111 |
| £25,000 | 224 |
| £10,000 | 559 |
| £5,000 | 1,116 |
| £1,000 | 11,968 |
| £500 | 35,904 |
| £100 | 1,159,432 |
| £50 | 1,159,432 |
| £25 | 2,617,902 |
| Total | Total |
| £299,202,350 | 4,986,706 |
Premium Bonds can be considered akin to easy access savings accounts, as they allow savers to withdraw their money on-demand and without penalty.
However, savers must remember that it does take time to withdraw money out of Premium Bonds – although this is much quicker than it once was – meaning they aren’t truly instant access.
With the prize fund rate at 3 per cent, savers with a lump sum of between £25 and £50,000 could well see Premium Bonds as a good place to leave their cash.
Compared to our best buy easy-access savings table, the Premium Bonds rate stacks up well, but remember that prizes are not guaranteed and account holders may do better or worse than that average rate.
At present there isn’t one standard easy-access savings rate that matches it. However, there is one cash Isa deal that does.
Virgin Money is offering a 3 per cent exclusive easy-access cash Isa account to anyone with a Virgin Money current account.
However, it allows only three withdrawals per calendar year. Once the three withdrawals have been made, the rate falls to 0.75 per cent.
In terms of non-Isa accounts, Yorkshire Building Society offers a deal paying 3 per cent on balances up to £5,000, but it only allows two withdrawals each year.
Zopa Bank is the best easy-access deal without withdrawal restrictions, paying 2.86 per cent.
Another advantage of Premium Bonds is that any prizes awarded are tax-free.
Any saver using a standard savings account for their rainy day fund will only earn interest tax free up to their annual tax-free allowance.
For a basic rate taxpayer that limit is £1,000, for a higher rate tax payers it’s £500, whilst for an additional rate taxpayer, there is no tax-free allowance.
