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Premium bonds winners April 2018: should I invest with NS&I?

Find out who won April's jackpot, and how the NS&I measures up

Girl sitting on the floor with a laptop raising his arms with a look of success

Premium bonds are the only savings products offering the chance to win £1m – but most savers will see more modest returns. But how do the other savings deals on offer from National Savings & Investments (NS&I) stack up against the market?

In April, two lucky bond holders from Dorset and Hampshire took home the £1m jackpots. The vast majority of NS&I premium bond holders look forward to much smaller winnings, but premium bonds are not the only products offered by the NS&I.

Which? examines how premium bonds stack up as investments, as well as looking at how competitive other NS&I accounts are.


Premium bonds winners for April 2018

Easter brought a windfall to two men on England’s south coast, as the winners of the premium bond £1m jackpots were announced.

One winner, who lives in the Hampshire and Isle of Wight region, currently has £30,725 invested in premium bonds. He received his winning bond (number 141JM676632) in August 2008 after he opted to reinvest a prize of £50.

The other winner, hailing from Dorset, has £38,320 invested in premium bonds. He acquired his winning bond (number 216YS216548) as part of a £27,800 prize in January 2014.

A total of 3,023,387 prizes were paid out in April’s prize draw, worth £86,418,475. All winning bonds are selected at random by the NS&I’s number generator ERNIE.

Are premium bonds worth the investment?

Unlike other savings products, premium bonds don’t pay interest. Instead, prizes are awarded based on a random number draw – so your returns are never guaranteed.

Nevertheless, the NS&I estimates that a person with ‘average luck’ generally makes a return of around 1.4% on their investment in premium bonds.

Of course, even if you do achieve the average return, you may take home a £5 prize one year and a £1,000 prize the next.

In February 2018, the inflation rate was 2.7% – meaning a return of 1.4% will see your money slowly erode in real terms. Unfortunately for savers, few products in the market currently offer inflation-beating returns.

It’s also worth keeping in mind that the more you invest, the more likely you are to win, as each £1 bond has an equal chance of winning.

If you invest £1,000 in premium bonds, your odds of winning a prize over a 12 month period are 49%. But f you invest £10,000 or more, your odds are close to 99.99% – though the prize may be as small as £25.

How do other NS&I products stack up?

While premium bonds tend to grab attention, the NS&I also offers a range of more traditional savings products.

With 25m customers, the NS&I remains one of Britain’s most popular providers – but how do their savings rates compare to other deals on the market?

Below, we explore what the NS&I offers and how the deals compare to the market-leading rates for comparable products. We’ve limited our search to products that are open to new customers.

Keep in mind that NS&I products are 100% backed by the Treasury – meaning all deposits are fully protected.

By contrast, most other banks are protected under the Financial Services Compensation scheme, which offers protection for up to £85,000 per person per provider (or by an EU equivalent). If you’re depositing more than £85,000, the NS&I might therefore be an attractive option.

Best easy-access savings & Isas

If you have £20,000 to deposit, but you’d like to be able to access your money, NS&I offers a range of products.

But you could earn more interest by opting for a different provider – RCI Bank, for example, pays 1.3% on deposits.

It’s worth noting that deposits with RCI are not covered by the Financial Services Compensation Scheme, but rather by the French deposit guarantee scheme, which protects sums up to £100,000.

Product (easy-access savings) AER%  Min. deposit  Max deposit  Interest earned on £20,000 over a year 
NS&I Direct Saver 0.95% £1 £2m £190
NS&I Income bonds 1% £500 £1m £200
NS&I Investment account 0.7% £20 £1m £140
Market-leader: RCI Bank UK Freedom Savings 1.3% £100 £1m £260

Source: Money Compare

If you’d prefer to the deposit into an ISA to benefit from the tax-free wrapper, the NS&I offers a cash Isa paying 1%. Alternatively, you could earn 1.25% interest at Paragon, which is the best rate currently on offer for easy-access cash Isas (excluding Help to Buy products).

Product (easy-access cash Isa)  AER%  Min. deposit  Max deposit  Interest earned on £20,000 over a year 
NS&I direct Isa 1% £1 £20k £200
Market-leader: Paragon Easy Access Cash Isa  1.25% £1 £20k £250

Source: Money Compare

Best fixed-term savings rates

If you’re prepared to lock your money away for a period of time, you can earn higher interest. The products below all pay interest annually – and while the NS&I is competitive, other deals could potentially offer higher returns.

Product (fixed-term bonds) – interest paid annually AER% Min. deposit Max deposit Interest earned on £20,000
NS&I 1 Year Guaranteed Growth Bond 1.5% £500 £1m £300
Market-leader: Al Rayan Bank fixed term deposit 1.86% £1,000 N/A £372
NS&I 3 year Guaranteed Growth Bond 1.95% £500 £1m £1,193
Market-leader: Vanquis Bank 3 Yr Fixed Rate  2.3% £1,000 £250k £1,412

Source: Money Compare

One NS&I Product, the 2 Year Investment Guaranteed Growth bond, will only be available until 10 April. Deposits into this bond are also limited to £3,000.

But the rates are close to the top of the market, just 0.1% behind market-leader Vanquis Bank.

Product (fixed-term bonds) – interest paid annually AER% Min. deposit Max deposit Interest earned on £3,000
NS&I 3 Yr Investment Guaranteed Growth 2.2% £100 £3k £202
Market-leader: Vanquis Bank 3 Yr Fixed Rate 2.3% £1,000 £250k £212

Source: Money Compare

This page was updated at 11am on 3 April to reflect new information on how one of this month’s winners purchased his winning bond.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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