Are Premium Bonds Worth It? After Tax, Fees and Luck, It Depends on Your Tax Band
The typical Premium Bond holder earns less than the advertised 4.35%: 3.5% on £10k, and most holders of £1,000 win nothing in a year. Against the best easy-access account, Premium Bonds come out ahead for higher-rate taxpayers whose other savings already use up their tax-free allowance, and lose for anyone who pays no tax on their interest. If you can tie money up, a one-year fix or a short gilt beats the typical holding for almost everyone.