The seven deadly sins of premium bonds
Of course, though, with premium bonds you don’t lose your capital. So for a fair comparison, put £2,900 in premium bonds and your jackpot odds are 1 in 14 million. Instead, put the same in a top savings account and you’d earn £5 interest after a month – enough to buy 5 lottery tickets each with a 1 in 14 million chance.
Now the good news….
Having savaged them, it’s worth saying there are always people who beat the odds, so for a small amount of money if you want the thrill of the dream, it’s not so bad.
Of course, my comparison’s against the highest rate of savings; against a normal bog-standard account, bonds can win. Then again, ditch and switch the bog standard account.
Yet as a serious form of savings, it’s only currently worth it for top-rate (50%) taxpayers who’ve used their ISA allowance and are putting a good whack in. For higher (40%) rate taxpayers, top savings accounts currently beat Premium Bond averages but the differences are small so it’s not criminal to have cash there.
Yet for basic-rate taxpayers, best to not think of it as nothing more than a flutter.
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