As the UK enjoys a heatwave, two lucky premium bond holders have particularly sunny outlooks after winning a million pounds each in the July NS&I prize draw. More than 3m other prizes were distributed – so what should you do with your winnings?
The two bond holders who became overnight millionaires live at opposite ends of the UK, in Wales and Suffolk.
Which? looks at this month’s winners, as well as your options for using your winnings.
July 2018 premium bond winners
In this month’s premium bonds prize draw, two men took home the million-pound jackpots – one from Suffolk, on the east coast of the UK, and another from South West Wales.
The Suffolk man bought his winning bond (number 305QA758516) a year ago, in June 2017. He had invested the maximum amount of £50,000 into bonds.
The Welsh winner is the fifth from the region since the first million-pound prize was first introduced in 1994. He bought his winning bond (number 166LV246433) in March 2010.
A further five prizes worth £100,000 were handed out – with two going to residents of Hampshire and the Isle of Wight, and the others to bond holders in Staffordshire, Oxfordshire and East Sussex.
In addition, the NS&I awarded 3,082,208 prizes of lower-value, worth £88,099,800 in total – including nine worth £50,000 and 20 worth £25,000.
- Find out more: premium bonds
What happens if you win a prize?
Provided your details are up-to-date, NS&I will notify you if you’ve won a prize.
If you’ve registered for their online service, NS&I will email you if you’ve won. You’ll also be able to check on your online account.
Alternatively, you can use their prize checker app, or the tool on the NS&I website.
Should you be lucky enough to win a million pounds, NS&I will send their representative, Agent Million, to visit you in person to share the good news.
But keep in mind that the odds of becoming a premium bonds millionaire are vanishingly small, at just 1 in 34 billion.
- Find out more: should I invest with NS&I?
How do you get your winnings?
You can opt to have your winnings paid straight into your bank account, saving you time and hassle.
Alternatively, the NS&I will post you a warrant, which is similar to a cheque – but it may take more than 10 working days to reach you.
You can also choose to automatically re-invest any of your winnings back into premium bonds – but whether you should go for this option will depend on your circumstances.
Should you re-invest your winnings?
If you’d like to continue growing your premium bond holdings, you can opt to re-invest your winnings into more bonds.
This can be a useful option if you’d like to grow your investment, and don’t need to the additional funds right away. You can invest up to a maximum of £50,000 in total into premium bonds.
But is this an option you should go for?
Every bond has an equal chance of winning, so the more bonds you hold, the better your odds – and there’s a point where your chances of winning a prize within 12 months approach 100%.
The odds of any individual bond winning a prize over 12 months is 24,500 in to 1.
Currently, if you hold £100 in premium bonds, you have a 5% chance of winning at least one prize over 12 months.
But if you increase your holdings to £10,000, your odds of winning a prize jump to 99.99%.
Then again, these odds are based on the chances of winning any prize at all – which, in the majority of cases, could be as little as £25.
How do premium bonds compare?
The NS&I puts the prize rate at 1.4%, which means that someone with ‘average luck’ is likely to make around a 1.4% return on their investment. But this is an average, not an interest rate – so many people may earn less, or nothing at all.
Then again, the highest interest rate currently offered on an easy-access savings account available to all savers is from RCI Bank, which pays just 1.3% AER.
If you’re willing to lock your money away for at least two years, you could earn up to 2.17% AER from OakNorth on their fixed-rate product. And if you’re willing to stretch to five years, you could earn up to 2.68% AER from Gatehouse Bank’s fixed-term deposit.
None of these accounts offer you the chance (however tiny) of large cash windfalls – but they do offer guaranteed returns on your savings.
Editor’s note: This story has been corrected to reflect the lowest possible prize is £25.
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.