As a result of the increase to the maximum investment limit, customers with Premium Bonds from National Savings & Investments (NS&I) will be able to invest an additional £10,000.
The increase follows the announcement made by Chancellor George Osborne in his Budget last year that NS&I would help support savers by increasing the Premium Bonds investment limit.
The increase comes a year after the Premium Bonds limit was increased from £30,000 to £40,000. A second £1 million monthly prize winner was also introduced from August 2014.
The Premium Bonds maximum investment is increased from £40,000 to £50,000 from Monday 1st June 2015.Click to tweet
According to figures released by NS&I as they publicise the maximum Premium Bonds investment limit being increased, the total amount invested in Premium Bonds has increased from £19.7 billion in 2003 (when the previous £20,000 limit was increased to £30,000) to over £53 billion today. This is an increase of 169%.
The total investment value has increased by £6bn since last June and NS&I expect the total amount will increase again following changes on 1st June this year.
Premium Bonds are a popular choice for savers for various reasons. In fact, nearly half of the UK population owns Premium Bonds.
The opportunity to win tax-free prizes is a big attraction, especially with two £1m jackpot opportunities each month and with such low interest rates from cash savings.
Each month, ERNIE (the Electronic Random Number Indicator Equipment) chooses winners for over 2 million prizes ranging from £25 to £100,000 in value.
Premium Bond holders don’t receive any interest on their savings. Instead an effective interest rate (currently 1.35%) is used to calculate the tax-free prize fund.
For each £1 number held, those with Premium Bonds have odds of 26,000 to 1 of winning a monthly prize of any value.
Your chances of winning the £1m jackpot are significantly slimmer; just 26.7bn to 1, in fact.
This means your jackpot chances are better with the National Lottery, with a 1 in 14 million chance of scoring the big prize each week. However, with the National Lottery you lose your stake; your Premium Bond stake is rolled over to the next draw and you can withdraw it at any time.
Despite pretty atrocious odds of winning a prize of any real value, one big advantage of Premium Bonds is their capital security. Because the money is backed by HM Treasury, can you sleep reasonably well at night knowing your cash is safe.
Do you have Premium Bonds? What has your experience been with prizes? Were they worth it?