Premium Bonds Calculator

Premium Bonds do not pay interest at all — instead, every £1 bond enters a monthly prize draw, with the overall prize fund rate acting as a statistical average of what a typical holder might expect to win over a year. This calculator estimates your expected monthly and period prizes based on your holding and the current prize fund rate, so you can see roughly what this actually means in pounds.

Why the Rate Just Went Up After Years of Cuts

From the July 2026 draw, the Premium Bonds prize fund rate rose to 3.80%, the first increase in almost three years after a run of consecutive cuts had taken it as low as 3.30% earlier in the year. The odds of any individual £1 bond winning something in a given month also improved alongside the rate, from 23,000 to 1 down to 22,000 to 1. This reversal reflects NS&I’s own savings targets for the year rather than any change in how Premium Bonds themselves work, but it is a genuinely meaningful shift for existing holders after a prolonged period of the rate moving in the other direction.

This is worth being aware of if you are comparing Premium Bonds against information from earlier in the year, or against an older article discussing the previous, lower rate — the underlying mechanics of the product have not changed, only the specific rate and odds currently in effect, which is exactly the kind of detail worth double-checking is current before relying on it for a real decision.

This Is an Average, Not a Guarantee

The prize fund rate describes the average return across all bondholders combined, not a rate any individual holder is guaranteed to receive — some holders will win considerably more than the headline rate suggests in a given year, while others, with entirely typical luck, will win less than the average, or nothing at all. This calculator’s “expected” figure is a genuine statistical expectation, useful for comparing Premium Bonds against a standard savings account in broad terms, but it is worth holding that expectation loosely rather than treating it as a promised return, since the actual monthly draw is genuinely random for every bond every month.

Seeing the Average in Real Pounds

At the current 3.80% prize fund rate, a £20,000 holding — close to the annual ISA allowance and a common comparison point — has a statistical expectation of roughly £63 a month, or around £760 a year. A smaller £5,000 holding expects roughly £16 a month, or around £190 a year. These are averages across the whole bond-holding population, not individual promises — in any given month, an individual holder could win nothing, or could win considerably more than this average figure suggests, since the underlying prizes range from £25 up to two £1 million jackpots each month.

Why Higher-Rate Taxpayers Benefit More Than Basic-Rate Ones

Every Premium Bonds prize is entirely free of Income Tax and Capital Gains Tax, which matters more for some savers than others depending on their tax position. A basic-rate taxpayer already shelters up to £1,000 of savings interest tax-free each year through their Personal Savings Allowance, meaning a comparable taxable savings account can often match or beat Premium Bonds for this group once that allowance is factored in. A higher or additional-rate taxpayer, with a smaller or non-existent Personal Savings Allowance, keeps considerably more of the equivalent return from Premium Bonds’ tax-free structure by comparison, which is exactly why Premium Bonds tend to suit higher earners with surplus cash more than basic-rate taxpayers with modest savings.

This is worth running through your own specific numbers rather than assuming either way, since the exact comparison depends on your total savings held elsewhere, your tax band, and the actual rate available on a standard taxable account at the time — the tax-free advantage is real for higher earners, but it is a genuine calculation worth doing rather than a rule that automatically favours one option regardless of the numbers involved.

What the Odds Actually Mean for a Small Holding

Odds of 22,000 to 1 per £1 bond per month sound favourable in isolation, but the practical effect depends heavily on how many bonds you actually hold — a small holding of a few hundred pounds has a genuinely modest realistic chance of winning anything meaningful in any given month, while the maximum holding of £50,000 spreads considerably more individual chances across the same monthly draw. This is worth keeping in mind specifically when comparing Premium Bonds against a standard savings account for a smaller sum, since the statistical average return only becomes a reasonably reliable approximation of your actual experience once held for a long period, or held at a genuinely substantial amount. Our Savings Interest Calculator is useful for comparing this expected figure directly against a standard taxable savings account, and our ISA Growth Calculator covers the other major tax-free savings option worth weighing up alongside Premium Bonds.

Frequently Asked Questions

Important Information

This calculator provides a statistical estimate based on the current prize fund rate and does not constitute financial advice or a guaranteed return. Actual prizes are entirely random and not guaranteed for any individual holder. See our Disclaimer for further information.