Premium bond limit to rise to £40k
The maximum sum that can be invested in premium bonds rises to £40,000 on Sunday 1 June 2014, up from £30,000.
Because every pound invested buys a £1 bond that is entered into a monthly prize draw, if a maximum limit investor took advantage of the new limit, their odds of winning a cash prize would by increase by a third.
Cash prizes range from £25 to £1 million and from the August draw onwards the number of £1 million prizes doubles to two.
National Savings & Investments, which operates premium bonds, is also making it easier for customers to buy them and get hold of their winnings.
Existing customers can now buy more bonds by bank transfer directly to NS&I, while all customers can sign up to have their winnings paid directly into their account.
In the 2015/16 tax year, the maximum amount that can be invested in premium bonds will rise again to £50,000.
The bonds, which are guaranteed by the Treasury, have grown in popularity. In 2003 £19.7 billion was invested in them, compared to £45.7 billion today – or an increase of 131%.
Greater chance of winning
Julian Hynd at NS&I said: "Premium bonds are one of the nation's favourite ways to save. Raising the maximum amount that can be invested is good news for customers because the more they invest, the greater their chance of winning a tax-free prize. I'm sure many of the 600,000 customers who currently have the maximum holding of £30,000 will want to invest more."
To buy premium bonds, call NS&I on 0500 500 000 or apply online at nsandi.com. You can also apply in your local Post Office or by post.
Facts and figures about premium bonds
- Since the first prize draw in June 1957, more than290 million tax–free prizes have been paid out
- Prizes are picked out by ERNIE, the Blackpool-based random number generator
- In May 2014, ERNIE paid out over 1.8 million prizes, together amounting to over £51 million in value.
A form of National Savings Certificate, premium bonds are effectively gilt-edged securities: you loan your money to the government and, in return, it pays you for the privilege with a guarantee it will return your capital at a specified date. Where premium bonds differ is that the interest payments (currently 1.5%) are pooled and paid out as prize money and you can get your cash back within a fortnight, with no risk. Launched by Chancellor of the Exchequer Harold Macmillan in his 1956 Budget, every single £1 unit has the same chance of winning and in May 2011, 1,772,482 winners (from a total draw of 42,539,589,993 eligible bond numbers) shared £53,174,500. The odds of winning are 24,000 to 1 and the maximum holding is £30,000 per person but it remains the only punt in which you can perpetually recycle your stake money.