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1 Oct 2021

Premium bond winners in October 2021: could your prizes beat inflation?

Even top-rate savings accounts can't beat current inflation rates

Two lucky premium bond holders have become millionaires in NS&I's October prize draw.

The jackpot winners, each receiving the top £1m prize, are from South Gloucestershire and Surrey. Five other winners were picked for the next-best prize of £100,000.

Here, Which? reveals the winning bond numbers, and finds out whether your premium bond winnings could beat the current rate of inflation.

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October 2021 premium bond prize winners

This month, the two £1m jackpot prizes went to premium bond holders in South Gloucestershire and Surrey.

The winner from South Gloucestershire is a woman who bought her winning bond (433SN401366) in January 2021 as part of an overall holding of £49,994.

The Surrey winner is a man who also purchased their winning bond (436WJ503244) earlier this year, in February. This is part of a £50,000 holding.

How many winners were drawn in October?

There were 3,277,723 premium bond prizes given out in the October draw, worth a total of £94,234,500. Of these, 3,269,980 were worth £100 or less.

Value of prizeNumber of prizes

Source: NS&I

Can you beat inflation with premium bonds?

The Consumer Prices Index (CPI) measure of inflation rose to 3.2% in August -the largest monthly rise on record. No traditional savings accounts or cash Isas can beat this rate.

As a result, many savers are still turning to premium bonds in the hope of winning prizes and growing their savings.

NS&I has calculated a 'prize fund rate' of 1%, which describes how much all of the money invested in premium bonds grows over 12 months.

This takes into account those few lucky people who win the £1m jackpot, along with thousands of others who win nothing at all.

Money held in premium bonds does not earn any interest, so you have to count on winning prizes if you want to see any kind of return on your cash.

To see how much you'd really need to win to make sure your money keeps up with price rises, we've looked at four different investment amounts and used the most recent measure of CPI inflation, which was 3.2% in August 2021.

If you have £100 saved

To grow a £100 savings pot by 3.2%, it would need to increase by £3.20 over the course of a year.

If you're banking on a premium bonds prize, the smallest one available is worth £25, which would see your savings increase by a huge 25%.

However, the chances of winning any prizes with such a small amount saved are slim. According to premiumbondscalculator.com, with £100 and average luck you probably wouldn't win anything in a year - or even over five years.

But you might have above-average luck. Back in 2015, one premium bond holder won the £1m jackpot with just £400 invested, so it's certainly possible to win £25 or more from £100.

If you have £1,000 saved

To keep up with the August rate of CPI inflation, savings of £1,000 would need to grow by £32. In this case, you'd need to win two £25 prizes, or one £50 prize to have you covered.

With average luck, however, you shouldn't expect to win any prizes over the course of a year. According to the calculator, you might win £50 over five years - but you can get a bigger return with a five-year fixed-rate savings bond.

If you have £10,000 saved

You'll need quite a few prizes to secure the £320 needed to keep up with inflation for a £10,000 savings pot.

In one year with average luck, you're likely to win £75 worth of prizes, which won't quite cut it.

The top one-year fixed-rate savings account, offering 1.5% AER, would see your savings grow by roughly £151 - still not enough to keep up with inflation, but far more than what the average person would expect to earn in premium bonds prizes.

If you have £50,000 saved

The maximum amount you can have invested in premium bonds is £50,000.

Unsurprisingly, £1m jackpot winners most commonly have £50,000 invested - but the chance of this happening to you is still just 1 in 92,367.

To keep up with inflation, your £50,000 savings would need to grow by at least £1,600 - far more than the £450-worth of premium bond prizes someone with average luck would expect over the course of a year. However, you'd have a 1 in 202 chance of winning £1,500, and a 1 in 911 chance of winning £2,500 so it's certainly not impossible.

When it comes to placing your money in premium bonds, it's always worth remembering that no prizes are ever guaranteed.

While you can have a pretty good statistical chance of winning prizes, each and every bond number has an equal chance of being picked by NS&I's random number generator - so you could be someone with £50,000 invested who wins nothing for several years in a row. Equally, you could be someone with just £25 invested who hits the jackpot - there's no way to know for certain.

If you don't win any prizes, your money will not receive any kind of interest. If you do want to make sure your money grows, you'd be better off with a savings account or cash Isa.

How does inflation affect your savings?

CPI inflation tracks the prices of an imaginary basket of more than 700 popular goods and services.

Each month, the inflation rate figure describes how prices for these have collectively changed in comparison to the same month of the previous year.

This can affect the value of your savings, if the money is left in an account that doesn't pay interest at a rate that equals or exceeds the rate of inflation.

For instance, your savings pot may have been able to buy 50 of these goods and services when you first deposited the money into your savings account. But if everything increases in price over the next year while your savings aren't earning much interest, you'll no longer be able to pay for them at all.