Premium Bonds
Premium bonds are a form of savings that were originally launched by the government in 1956. They were set up to encourage people to save and to keep inflation low.
Anybody over the age of 16 can invest in premium bonds and children under 16 can own bonds if they are purchased for them as gifts. To buy premium bonds you need to invest at least £100 and can hold a maximum amount of £30,000 in the bonds.
Premium bonds don’t give interest like other forms of savings accounts. They work kind of like a lottery. Your money is completely safe with premium bonds (however won’t earn you interest) and you can get it back whenever you like but holding bonds allows you to be entered into prize draws. The more premium bonds you own, the higher your chances of winning a cash prize.
Premium bond draws are held on a monthly basis and currently offer two top prizes of £1 million and over a million other cash prizes. Any money that you win on a premium bond will be tax free in both income tax and capital gains tax terms.
The numbers drawn in the competitions here are randomly generated by a number generator machine which is commonly known as ERNIE (Electronic Random Number Indicator Equipment).