Two lucky savers who put their money into premium bonds have won a million pounds each, after the latest NS&I prize draw was announced.
And as well as the headline-grabbing jackpots, another six winners scooped an impressive £100,000 – setting a new high for the number of six-figure prizes given out.
How does the National Savings & Investments decide how many of each category to award?
Which? looks at the winners of the July premium bonds draw and how the NS&I allocates high-value prizes.
July 2019 premium bonds jackpot winners
The biggest winners from this month hailed from East Sussex and County Durham, taking home a million pounds apiece.
The jackpot winner from East Sussex has been a bondholder from the very start, buying a single £1 bond when they were first released in November 1956. Six years ago, he topped up his savings with a further £25,000 investment – including the lucky winning bond (number 209CR931692).
The County Durham winner, meanwhile, had only bought the lucky bond (290BG876230) in December 2016.
- Find out more: everything you need to know about premium bonds
High-value prize winners for July 2019
While you may dream of winning a million, getting a £100,000 windfall could still be life-changing.
Every month, NS&I gives out more than 3.33m prizes ranging from six-figures to a more modest £25.
You can see the full list of July’s high-value prize winners below.
Number of high-value prizes rising
The number of jackpots has remained at two since August 2014. However, the number of other high-value prizes has crept up over time.
This month marks the highest number of £100,000 prizes given out, with six winners awarded. By contrast, there were just three £100,000 winners in July 2017.
The same trend continues with smaller prizes. Two years ago, there were five prizes of £50,000, 10 prizes of £25,000 and 26 prizes of £10,000 – in every case, less than half of what’s given out today.
That said, the number of prizes occasionally dips in some categories. Last month, there were 12 £50,000 prizes, compared to just 10 this month. This comes down to the way NS&I allocate money to the high-value categories.
You can see how the number of prizes has varied over time.
For the smallest prizes, the upswing is less stark, though the numbers are much larger. There were 2.2m £25 prizes given out in July 2017, compared to 3.33m today.
- Find out more: what is National Savings & Investments?
Why is the number of prizes rising?
There are three main factors that determine how many prizes are given out each month: the prize fund rate, the size of the pool and the NS&I’s own rules.
Prize fund rate
The prize fund rate determines how much you are likely to win over the course of a year. Essentially, it represents the return a person of average luck might expect on their bond holdings.
The current prize fund rate is 1.4%.
Each month, the NS&I will set the number of prizes to ensure this average return is possible. So, when the prize fund rate goes up, so does the total number of prizes.
For example, in December 2017, the NS&I passed on the Bank of England rate increase of 0.25% to its savers and the number of total prizes jumped by 556,060. The increase was especially noticeable among the £50,000 band, which doubled from five prizes to 10.
Total pool size
Even in months when the prize fund rate stays the same, the number of prizes often increases.
This is because the total number of bonds is also growing, as more bonds are sold each month. In July 2017, there were 69bn bonds held by savers – today, that number has reached 81bn.
When the pool grows, the NS&I needs to up the prizes it gives out to ensure the prize fund rate remains the same.
Rules for allocating prizes
Once the NS&I has identified the total value of prizes it wants to award, it needs to split these between the prize categories.
The NS&I then applies a formula to the prize categories to split out the pool, namely:
- 5% is allocated to the higher-value band. The £2m jackpots are deducted, then the remaining sums are split equally between the other categories.
- 5% is allocated to the medium-value band, with one £1,000 prize for every three £500 prizes.
- 90% is allocated to the lower-value band. There’s always an equal number of £100 and £50 prizes. The total number of prizes of all values (including £25 prizes) is equal to the number of eligible £1 bond units divided by the odds.
In this way, the number of prizes fluctuates each month. Just keep in mind that the odds of winning a large prize are still tiny, even if you hold a large number of bonds – and there’s no guarantee you’ll win anything at all.
If you’d prefer a guaranteed rate of return, you can read our guide on how to find the best savings account.