Premium Bonds prizes are 66 years old – but how much would they be worth now if they rose with inflation?

Premium Bonds from National Savings & Investments (NS&I) remain the nation’s best-loved savings product.

Offering savers the chance to win prizes of up to £1million pounds every month, the deals  have attracted 21million customers.

The lottery-style draw clearly appeals to Britons – but anyone buying Premium Bonds knows they have to be lucky to get any kind of return on their money, let alone one that can match inflation.

Inflation now stands at 6.8 per cent, having gradually eased from a high of 11.1 per cent in October 2022.

Blast from the past: This version of NS&I’s computer ERNIE, the Electronic Random Number Indicator Equipment, picked Premium Bonds winners from February 1973 until August 1988

Using This is Money’s historic inflation calculator, the value of the £1milion jackpot prize, first launched in April 1994, would be £2.4million today if increases were tied to inflation.

So what would the other prizes be worth now if adjusted for inflation since they were launched?

The Premium Bonds ‘interest rate’ is 4.65 per cent as of August 2023, but it’s not paid in the same way as most savings accounts.

Instead, each bond is entered into a prize draw each month, with ERNIE (the Electronic Random Number Indicator Equipment) selecting the winners. It means you could win up to £1million, but on the flip side, your savings may not earn anything at all.

The first ever NS&I Premium Bonds draw, started by Postmaster General Ernest Marples, took place on 1 June 1957. The rate of inflation that year was 3.7 per cent.

The biggest prize up for grabs at the time was £1,000 with the others prizes on offer worth £500, £100, £50 and £25.

The prizes launched in 1957 would have seen the greatest jump today if they rose in line with inflation – a whopping 2,874.95%.

The £1,000 prize would be £29,749.47 if inflation was factored in, while the £500 prize would be £14,874.73 today.

The current £100 prize would have risen to £2,974.95 while £50 would be worth £1,487.47 and the smallest prize of all – £25 – would be worth £743.74 today.

The £5,000 Premium Bonds prize was introduced in August 1960 and this would be £138,431.60 today, another large jump of 2,668.63%.

By February 1966, NS&I introduced a £25,000 prize and this would be £575,462.80 today if tied to inflation. The £10,000 prize was added to the draw in 1980 and would be worth £60,273.16 today.

The biggest prizes after the £1million jackpot – the £100,000 and £50,000 prizes – were launched in 1976 and 1971 respectively.

The £100,000 prize would be worth almost ten times as much, or £998,619.20 while the £50,000 would become £920,404.90 – again, if tied to inflation.

This week, This is Money editor Lee Boyce asked whether it is time for NS&I to ramp up the number of £1million prizes.

But NS&I says it have no plans to do this.

Jill Waters, NS&I retail director, says: ‘We welcome any feedback, but currently have no plans to change the number of millionaires or introduce a bigger prize.

‘The current prize draw structure ensures we can offer a range of prizes. It also strikes a balance between the chance to win life changing sums of money and helping people receive a regular return on their hard-earned savings.’

Just how likely are you to win a £1million prize?

August’s prize draw saw the odds of winning improve from 24,000 to 1 to 22,000 to 1, meaning that each £1 Bond now has its best chance of winning a prize in almost 15 years.

NS&I added an extra £30million more in prize fund money, but there are still only two £1million prizes paid out each month – so the odds don’t look great when it comes to winning the jackpot.

In a given year, someone with the maximum £50,000 holding has a 1 in 100,460 chance of winning the £1million jackpot at least once.

This lengthens to one in 502,280 for someone with £10,000 in Premium Bonds.

The odds of a person with £1,000 in Premium Bonds winning the £1million prize within a year is more than one in 5million.

To put that in perspective, you have a better chance of being eaten by a shark or hit by lightning in your lifetime than you do of winning the top Premium Bonds prize in a year.

This post first appeared on Dailymail.co.uk