Should you buy Premium Bonds or use a savings account? Enter your details to compare expected returns after tax.
Min £25, max £50,000
Current easy-access rates are around 4.25%
A savings account gives a better return at this holding amount. Your interest stays within (or close to) your Personal Savings Allowance.
Bad luck (25th percentile)
£300.00
Expected (average luck)
£400.00
Good luck (75th percentile)
£500.00
Unlike savings accounts, Premium Bonds returns vary. You could earn more or less than the expected amount. The range above shows approximate 25th–75th percentile outcomes.
For a basic rate taxpayer at a 4.25% savings rate, Premium Bonds beat savings accounts above approximately £33,333.
Below this amount, your savings interest stays within your Personal Savings Allowance and you earn the full gross rate tax-free, making the savings account better. Above this amount, the tax advantage of Premium Bonds starts to outweigh the higher savings rate.
Premium Bonds are tax-free. As your savings grow and you breach your Personal Savings Allowance, Premium Bonds become increasingly attractive. Higher and additional rate taxpayers benefit most, as their PSA is smaller (or zero).
This calculator uses expected (average) returns. Actual Premium Bonds prizes are random and your returns will vary. The prize fund rate of 4% was last updated March 2025. Not financial advice.
Premium Bonds are a savings product from NS&I (National Savings and Investments), backed by HM Treasury. Instead of paying interest, your bonds are entered into a monthly prize draw. Prizes range from £25 to £1,000,000.
Premium Bonds are most attractive in three situations:
For smaller balances where your interest stays within your PSA, a savings account paying a higher gross rate will usually be better. The calculator above shows you exactly where the crossover lies for your tax band.
The current prize fund rate is 4.0% (as of March 2025). This is the average annual return across all holders, distributed as prizes in the monthly draw. NS&I reviews the rate periodically and may adjust it in response to Bank of England base rate changes.
Yes. All Premium Bonds prizes are completely tax-free. They do not count towards your Personal Savings Allowance and do not need to be declared on your tax return.
The minimum purchase is £25 and the maximum holding is £50,000 per person. Each £1 is one bond entered into the monthly draw.
You can buy online at nsandi.com, by phone, or by post. You need to be 16 or over and resident in the UK. Parents and grandparents can buy them for children under 16.
Yes. You can cash in some or all of your bonds at any time with no penalty. The money is usually returned within a few working days. There is no lock-in period or early withdrawal penalty.
Track all your savings and check your PSA usage with StoozeMax
StoozeMax monitors your earnings from switches, stoozing, and regular savers. It tracks your PSA usage and helps you decide when Premium Bonds make sense — all in one place, automatically.
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