A finance expert has shared how those using NS&I Premium Bonds could actually be losing money in the long run.
Premium Bonds have become a popular choice for those looking for a secure way to save while being in with the chance of winning a life-changing sum of money.
However, economic conditions like high inflation could reduce the real-world value of the money in your account.
Finance expert reveals how Premium Bonds users could be losing money in the long run
Raisin UK, said NS&I Premium Bonds "remain a popular choice for retirees" because they offer a "unique blend of secure savings and the excitement of a prize draw".
Kevin Mountford, co-founder ofHe said: "One of their key appeals is that your initial investment is completely safe, with no risk to your capital, unlike that of gambling.
"However, it's worth noting that while your money is protected, inflation can gradually reduce its real-world value, particularly in times of rising prices that we have seen in recent years.
"Unlike traditional savings accounts like fixed-rate and easy-access, which provide a guaranteed return in the form of interest, Premium Bonds don’t offer a fixed return—your ‘earnings’ depend entirely on luck."
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Discussing your chances of winning in the monthly prize draw, he added: “The odds of winning with Premium Bonds can be somewhat confusing. The widely cited 21,000:1 refers to the chance of winning any prize, but the likelihood of hitting a larger, life-changing amount is much slimmer.
"Additionally, these odds fluctuate monthly, influenced by the number of bondholders and total bonds in circulation.
"So, while Premium Bonds offer a no-risk way to save, savers should consider whether a more predictable option like a fixed-rate or easy-access savings account, which guarantees interest, might be more suitable for their financial goals.”
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