How to check (and cash in) your Premium Bonds

Premium bonds offer savers the security of a government-backed bank, tax-free returns and the hope of a bumper £1m jackpot win each month. 

Instead of paying interest, premium bonds with National Savings and Investments (NS&I) offer holders the chance to win monthly cash prizes of up to £1m. 

You can own up to £50,000 worth of premium bonds; each bond costs £1 and you have to hold a minimum of 25 to qualify for the draw. 

In line with a series of rises to the Bank of England base rate, the premium bond prize rate has been climbing and is currently at 4.65pc.

Each month, winning numbers are drawn from among 22.5m holders by Ernie, NS&I’s unique numbers machine.

Since the first draw in June 1957, Ernie has awarded 637 million prizes with a total value of £26.8bn.

An attractive part of premium bonds is that the monthly prizes are tax-free. 

This is useful because if you are a basic-rate taxpayer and you save money in an ordinary (non-Isa) savings account, you must pay tax on interest of more than £1,000 in a year, or £500 if you are a higher-rate taxpayer. 

If you are an additional-rate taxpayer you get no tax-free savings allowance at all.

How are premium bond winners notified?

Winners will receive an email with the happy subject line “you’ve just won!”. This message won’t reveal the amount, however, so you’ll need to check with NS&I to know whether you can start planning to splurge on a luxury holiday or a round of drinks in the pub. 

You don’t even have to wait for the email. On the second working day of the month you can log into your online account, use the prize checker app, or an Alexa-enabled device to see whether you have won a prize worth between £25 and £100,000.

If you are one of the month’s two lucky jackpot winners you’ll have a visit in person from Agent Million – an individual hired by NS&I to find and inform winners that they have scooped the £1m prize.

The undercover agent delivers the news on the first working day of the month, about 24 hours before the general prize draw results are announced. 

Higher value prize winners of £10,000 and above will be sent a prize claim form in the post, so you can specify where and how you would like your prize paid. You can opt to reinvest your prize money in more bonds (up to the maximum of £50,000) and increase your chance of winning again, or they can be paid straight into a bank account.

How do I check old premium bonds?

While premium bonds prize winners are notified when they win a prize, sometimes people move or change their contact details without letting NS&I know. 

This can lead to unclaimed prizes if they have opted to receive their winnings by cheque.

You can see if you have by using NS&I’s online prize checker or the prize checker app – you’ll need to have your bond holder’s number. If you don’t know your holder’s number but think you own premium bonds, you can use NS&I’s tracing service.

What happens to unclaimed premium bonds? 

Premium bond winnings worth more than £80m are still waiting to be paid out. The oldest lost prize, worth £25, was won in 1957.

There are currently 2,300,820 unclaimed prizes of up to £100,000; in the South East alone there are more than £10m worth of prizes yet to be claimed.

Hundreds of thousands of these have arisen where NS&I does not know the correct details for the rightful owners – perhaps because they have moved overseas. 

Unclaimed prizes are always available to be claimed: NS&I holds onto them until the owner comes forward.

Are premium bonds worth anything? 

There is a risk that the real value of your premium bonds will decline over time because you may not win, and inflation will erode their relative worth. 

They are flexible, however: you can withdraw your money from premium bonds whenever you like without penalty. 

And there is always the hope of a big (tax-free) prize, or even Agent Million paying you a visit.

This article is kept updated with the latest information.