Premium Bonds enter your savings into monthly prize draws instead of providing interest, with the chance to win a £1 million jackpot. There is also many other monthly prizes ranging from £25 to £100,000. For every £1 invested, a unique bond number is issued which is then entered into the monthly prize draw. The more you invest, the more unique numbers you receive, and the more chances you have to win!
Members of the public over the age of 16 can invest in Premium Bonds, while bonds can also be bought on behalf of children under 16 by a legal guardian or grandparent. However, there is a minimum investment of £50, so long as you invest via standing order.
The winning bond numbers are selected every month by ERNIE (Electronic Random Number Indicator Equipment). ERNIE doesn’t actually store any numbers itself, it just generates random numbers. These random numbers are then matched against valid bond numbers, and winners are then selected.
Best of all, any prizes won through premium bonds are free from capital gains tax as well as income tax. So any prize pot that you win, can be enjoyed all to yourself!