How much you REALLY need in Premium Bonds to win the £1m jackpot... and why it's less than you may think. We reveal the truth behind all the rumours

They are the nation’s favourite savings product – and almost 23 million holders live in hope of snatching a £1million jackpot in each monthly draw. But just how likely is it really that your Premium Bonds will come up trumps?

It’s long-held myth that Ernie – the machine used by Treasury-backed National Savings and Investments (NS&I) to generate the winning Bond numbers – favours savers with the maximum £50,000 in Bonds when it picks out the jackpot winners. Or that it instead prefers fresh Bonds to those held for decades.

But now Wealth & Personal Finance can finally put these rumours to rest as official figures reveal the exact amount jackpot winners typically have squirrelled away – and you may be surprised to learn it’s not £50,000.

Jackpot winners have £35,668 saved in Premium Bonds on average, almost £15,000 less than the maximum permitted holding, official NS&I figures for The Mail on Sunday show.

Savers can invest between £25 to £50,000 and, unlike regular savings accounts, you do not get a regular interest payment. Instead, each £1 Bond is entered in a prize draw every month, where tax-free prizes of £25 to £1million are on offer. Savers can cash in their original stake whenever they choose.

While you’re never guaranteed a win, an average saver could expect a return of around 3.3 per cent, rising to 3.8 per cent from July’s draw. This means that for every £100 held in Premium Bonds, around £3.30 is currently paid out in prizes.

Two lucky holders every month win a huge £1million each and there are smaller prizes from £100,000 down to £25.

Just 38 per cent or 91 of the 240 £1million winners between July 2016, and June 2026, had the maximum holding. It means that more than three in five had less than £50,000 saved in Bonds.

There have even been occasions where those with a small holding have won big.

Take the £1million jackpot prize from March last year. The lucky winner, from Cleveland in North Yorkshire, snatched the top prize with just £100 saved in Bonds.

That’s the smallest amount to win big over the past ten years. And they had held the Bonds for less than two years.

The smallest holding ever to hit the jackpot was £17 in July 2004 and that belonged to someone in Newham, east London. Just 6.4 per cent of holders save the maximum £50,000 – but they make up 38 per cent of winners.

Andrew Hagger, savings expert at MoneyComms, says: ‘Simple mathematics mean the larger your holding, the greater your chance of winning but there are no guarantees that you’ll win anything.

‘I think most Bond holders appreciate that their chance of winning one of the two monthly £1million jackpot prizes is quite remote.’

The two most recent Premium Bond millionaires from June’s draw – based in Leeds and in Cheshire West and Chester – did have large holdings of £42,426 and £33,800 respectively.

The chance of winning the jackpot with a £1 holding was one in 68.4 billion. Meanwhile, the chance of winning big with the maximum amount saved in Bonds is one in 1,369,552.

Anna Bowes, savings expert at independent financial planners Private Office, says: ‘The chance is less if you haven’t got the full amount. But somebody has got to win it – and two people every month do. This is the real appeal of Premium Bonds.’

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Winning Bonds over the past ten years were purchased an average of just under six years before they were chosen, the fresh analysis shows, proving that neither newer nor older Bonds are any more likely to be winners.

But one 2018 jackpot winner with £7,500 saved only had to wait 59 days after purchasing the winning Bond. Over the past decade, the average £100,000 winner held £39,916 in Bonds while for the £50,000 lump sum it was £39,862.

The chance of winning a massive prize and retaining your stake is a tempting prospect.

But think carefully before investing your nest egg.

Ms Bowes explains: ‘If you do depend on the interest from your savings, you cannot depend on Premium Bonds.’

Almost two in three Bond holders have never won a prize, according to a freedom of information request obtained by the investment platform AJ Bell.

However, if you pay tax on your savings interest, then the tax-free prizes on offer with Premium Bonds have an extra appeal.

Ms Bowes explains to earn the equivalent of 3.8 per cent tax free, you would need to find an account paying 4.75 per cent as a basic-rate taxpayer, 6.33 per cent for those on higher rate and 6.91 per cent for additional rate.

Have you won a large Premium Bonds prize? Email [email protected]