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Premium bond winners in July 2022 - would you be better off with a savings account?

Find out how much interest you could earn if you moved your cash

Two lucky premium bond holders have become millionaires after winning the two jackpot prizes in NS&I's July’s draw. 

The £1m winners are from Inner London and Surrey. Meanwhile, 10 other winners were picked for the next-best prize of £100,000. 

This is the second draw since National Savings and Investments boosted the prize rate to 1.4% up from 1%, with more than 1.4m extra tax-free prizes. 

But with savings accounts now offering better rates, is it time to move your money?

Here, Which? reveals the winning bond numbers, and weighs up the pros and cons of whether you should stick with NS&I.

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July 2022 premium bond winners

The first winning bond (210ST236184) was purchased by a lucky winner living in Inner London as part of a total holding of £30,300. The winning bond was purchased in August 2013.  

The second winner from Surrey purchased their bond (471RR305957) in September last year, and has a total holding of £22,350.

How many winners were drawn in July?

There were 4,839,889 premium bond prizes in the July draw up - up by 16,822 the month before. 

These prizes were worth a total of £138m. Of these 4,828,455 were worth £100 or less.

Value of prizeNumber of prizes

Source: NS&I

What's the appeal of NS&I?

NS&I was established in 1861 by the government as a secure place for people to hold savings and as a source for public borrowing. 

Having ‘been around for forever’, as NS&I’s retail director Jill Waters puts it, can give customers confidence. 

She told Which?: ‘It doesn’t matter what happens, even if you’ve lost track of what you bought, or had something bought for you as a baby, it will still be there - we won’t ever lose that money. It will be there for you to come back to.’ 

NS&I doesn’t just offer premium bonds, its wide product range includes its Direct Saver, Direct Isa, Junior Isa and Income Bonds (all instant access accounts), and three-year fixed rate Green Bonds. 

Where NS&I stands out is that your money is 100% backed by the Treasury. With other banks and building societies you'll need to check that you're covered by the Financial Services Compensation Scheme (FSCS). If you are, it only covers up to £85,000 per person, per institution (some of which share protection). 

With NS&I, you’re fully protected up to the maximum deposit limit on the account – for the Direct Saver, that’s up to £2m.

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How do the rates compare?

Here’s roughly what you would earn for a lump sum of £12,900 - the average amount held by 4,000 savers we surveyed in September. We've calculated interest for a year, but you'd have to hold the fixed-term products for three years.

Savings productNS&I rateTop rate on the marketInterest NS&I vs top rate
Instant-access savings account0.50% AERAl Rayan Bank  - 1.45% EPR*£65 vs £188
Instant-access Isa0.35% AERCynergy Bank - 1.31% AER£45 vs £170
Junior cash Isa1.50% AERCoventry Building Society - 2.60% AER£195 vs £339
Three-year fixed-term bond 1.30% AER (Green Savings Bond. Issue 2)PCF Bank - 3.10% AER£169 vs £406

Correct as of 29/06/22; rates are subject to change. *The account from AI Rayan Bank is a Sharia-compliant product, and offers an expected profit rate (EPR) rather than an annual equivalent rate (AER).

Are the rates likely to increase?

It’s unlikely you’ll see NS&I at the top of the savings tables (apart from when it offered some top rates in 2020), as it likes to position itself in the third quarter of savings products. 

It says it must strike a balance between the needs of savers by ensuring the rate is fair; the taxpayers by raising cost-effective finance for the Treasury; and the wider market by making sure rates are fair, competitive and do not distort the market. 

Jill said: ‘The easiest thing in the world for any organisation is to whack out a high rate for savers, but we’re all paying for that.’ 

But there are some scenarios in which NS&I might hike rates. Each financial year the government assigns NS&I a target amount of money to raise from savings. 

This financial year it’s been set at £6bn, with a leeway of plus or minus £3bn. 

It had the same target in 2021-22 and raised a total of £4bn. It increased rates rates in November on its income bonds to meet the target, and on its variable-rate products in December and February, after the Bank of England base rate increased.

Should you ditch your premium bonds?

You can access money held in premium bonds whenever you like with no restrictions, but many savers keep their cash invested long term: a typical bond is held for 15 to 18 years before being cashed in. 

This means it may be more useful to compare them to fixed-term savings accounts, rather than instant-access accounts. 

Let’s say you’re prepared to lock away £5,256 – that’s the average premium bond holding in May 2022 – for five years. 

The top rate on a five-year fixed bond is 3.25% EPR offered by Bank of London and the Middle East, which means that you would earn around £926 interest by the end of the term.  

If you kept that amount in premium bonds for the same period, you could expect to win around £380-worth of prizes based on the 1.4% prize fund rate - but this isn't guaranteed. You could win nothing. You could also be a millionaire (although you almost certainly won’t be). 

The reality for all savers is that no account can protect your money from the effect of inflation, which measured 9.1% in May

This means that once you have enough emergency savings (enough to cover at least three months' essential outgoings), you could be better off investing the remainder.

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Next steps for premium bond holders

Whether or not you hold on to your premium bonds, make sure that you don’t have any unclaimed prizes – there are currently two million unclaimed with a total value of £77m. 

As well as using the Prize Checker on NS&I’s website, you can download a tracing form for bonds you’ve lost details of. 

NS&I can still pay prizes by cheque (after a backlash in 2020 when it tried to phase them out), but it’s simplest to get prizes paid directly into your bank account.