The dream of becoming a millionaire overnight is a huge attraction for the 22 million savers who hold Premium Bonds.
And with that much money on offer, a whole stack of Premium Bond myths has built up over the years.
These range from the belief that only savers with the maximum holding win the draw, to savers being convinced old bonds don’t win big prizes, and that you must live in the South East to scoop the jackpot.
But is there any truth in these theories? Using 31 years’ worth of exclusive data provided to us by NS&I, Money Mail analysed the past 378 Premium Bond prize draws and 564 millionaires created over that time, to find out if there are any secrets to success.
How much did savers typically need in Premium Bonds to land the jackpot? How long did it take jackpot winners before they bagged the big prize? Where in the country has the most luck with millionaires?
We reveal the answers to those questions below – and you can find out how many people have won near you, how much they held and how long it took using our new tool.
Holding out: Around 24 million people hold Premium Bonds with the hope of winning a £1m prize in the monthly prize draw
HOW MUCH DO £1M WINNERS HOLD
Each month, National Savings and Investments offers two winners the chance to win a tax-free £1million in the Premium Bonds prize draw.
The £1million jackpot has been in place since 1994 but until September 2004 there was only one monthly millionaire crowned.
Our figures go back to 1994, so the first decade covers draws that had just one £1million prize.
The average holding of a £1million winner since 1994 is £24,779. This compares to the average Premium Bond holding of £5,613, so as you would expect holding more bonds does increase your chance of winning the million-pound prize.
But it illustrates the myth that only those with the maximum holding scoop the top prize is wrong. The average Premium Bonds’ millionaire’s holding sits squarely at half the current day maximum amount.
This maximum holding has been lower in the past. Before June 2015, it was £40,000 – a limit that dated back to June 2014. In 1994, when the £1million prize was introduced, the maximum holding was £20,000. It rose to £30,000 in May 2003. The minimum purchase amount for Premium Bonds has been £25 since February 2019. Before this, the minimum investment was £100 where it had been since 1993.
Some 178 of the 564 £1million prize winners since 1994 held the maximum in Premium Bonds, representing 31 per cent.
The odds of winning a prize are 22,000 for each £1 held, so the larger your holding the higher your chance of success.
The odds of winning a £1million jackpot prize with a £50,000 holding is 1 in 1.3million. While the odds of winning a £100,000 prize with a £50,000 holding are 1 in 35,026 and you have 1 in 17,629 of winning a £50,000 prize with a £50,000 holding.
Andrew Hagger, founder of financial information site MoneyComms says: ‘This shows that holding the maximum £50,000 holding will help you win smaller prizes but the chances of winning one of the two £1million prizes each month are still very slim.’
CAN SMALL HOLDINGS WIN BIG?
Smaller holdings can still win big prizes. In fact, a total of 13 Premium Bonds savers won the £1million prize with holdings of less than £1,000.
In March this year, a Premium Bonds saver based in Cleveland, in Yorkshire, won a £1million prize with a holding of just £100, the second smallest holding to ever win the jackpot.
The smallest holding ever to land £1million was £17 in July 2004 by a saver based in Newham, east London.
Anna Bowes, of financial advisers The Private Office says: ‘This data is encouraging. it shows although, of course, if you hold more Premium Bonds you are more likely to win prizes – including £1million – it’s not always the case. That’s why people hang onto them.’
This may be particularly attractive to higher rate taxpayers who may find their interest taxed if they put the money in a savings account instead.
Any Premium Bond winnings in the draw are tax-free and don’t count towards your Personal Savings Allowance, which lets basic rate taxpayers earn £1,000 interest tax-free. Higher rate taxpayers can only earn £500 of interest before tax, while additional rate taxpayers have no savings allowance.
HOW LONG DOES IT TAKE TO WIN A £1M PRIZE?
Many savers might expect that winning a Premium Bonds windfall requires decades of patience, but it took jackpot winners an average of just five years to land £1million, we can reveal.
And there are 12 Premium Bonds millionaires who won a jackpot prize on their bond’s first ever eligible draw.
A bond only becomes eligible to be entered into a draw after the holder has owned it for a full month.
NS&I says that in many cases this means a bond will not eligible for two draws after it has been purchased. For example, if you buy Premium Bonds any time in November, they’ll be in the draw in January.
This is because, even if you bought them on 1 November, you would have only held them for a full month by 1 December. As the draw takes place on the first day of the month, you would have missed the December draw and the next one your bonds would be eligible for would be January.
Prizes are paid from the interest earned from the total amount held in Premium Bonds. Therefore, bonds need to be held for a full calendar month to earn interest to be eligible. Savers who automatically reinvest their prizes are being paid from interest already held by NS&I.
In the July 2020 draw, a Premium Bonds holder in Tyne and Wear won a £1million prize just two months after they purchased it in May 2020 with a holding of £35,000.
In contrast, by far the longest wait for a Premium Bonds holder to win their £1million fortune was 45 years.
Incidentally, this was also the winner who won the £1million prize with the smallest holding of £17. They purchased their winning bond in February 1959 and won the jackpot in July 2004.
Surrey is home to 18 per cent of all £1million prize winners since 1994
WHERE HAS THE MOST £1M WINNERS?
A hugely popular Premium Bond myth is that you need to live in southern England to win. This is not correct but there is some truth behind the suggestion this wealthy part of the country wins more.
This is largely because a higher number of customers, with more money in Premium Bonds, live in the affluent region.
Almost a fifth of all Premium Bonds millionaires lived in the South East of England, our analysis of NS&I data shows.
That equates to 103 Premium Bonds holders who won a £1million prize coming from the South East, representing 18 per cent of all jackpot winners since 1994. This is impressive considering the South East makes up 14 per cent of the population.
Surrey was the hotspot for £1million winners within the region, with 29 Premium Bonds holders there winning a £1million prize since 1994.
The South West is next, with 79 £1million prize winners. Most of them came from Devon, where there were 18 £1million prize winners.
The luckiest spot though, appears to be the London Borough of Camden. It has a surface area of 22 square kilometres, and a population of around 218,000, but has been home to four £1million Premium Bonds winners. That is one winner for every 5.5 square kilometres.
By comparison, Bromley, London’s largest borough has a surface area of 150 square kilometres but has had only two jackpot winners, so one winner for every 75 square kilometres.
Greater London as a whole is 1,572 square kilometres and has had 59 £1million winners, which works out as one winner for every 27 square kilometres.
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