Premium Bonds savers told 'your money will work harder' with these two accounts

Premium Bonds savers may be able to get better savings growth by making an account switch. Bond holders go into a monthly draw rather than getting an interest rate applied to their savings. Each £1 Bond has an equal chance of winning a prize, but the odds are very slim of winning anything.

You can hold up to £50,000 in Premium Bonds meaning you can have up to 50,000 entries into the monthly draw, but with the odds of winning at 22,000 to one, you are still unlikely to win a prize. And even if you do, most of the prizes are for low amounts such as £25, so if you have a relatively high holdings amount, you may have got a better return with a conventional savings account.

Tom Francis, head of Personal Finance at Octopus Money, said: "Premium Bonds don’t pay interest, so unless you win, your money simply sits there, gradually losing value to inflation. The thrill of a potential £1 million jackpot is exciting, but the odds are slim: in February, just 164 people won £50,000 and around 1,600 won £5,000 - out of more than 24 million bondholders."

There are two £1million jackpot prizes in each draw and other big cash prizes for amounts such as £100,000 and £50,000. Given the slim chances of winning, Mr Francis spoke about who Premium Bonds would suit as a savings option.

He said: "Premium Bonds tend to make more sense as a saving vehicle for people who’ve already used up other tax-efficient savings options like their personal savings allowance, ISAs and pensions."

The expert spoke about two other accounts that are worth looking at. Mr Francis said: "For most savers, your money will usually work harder in a competitive savings account or ISA."

There are many easy access savings accounts offering rates of 4 percent or above at present. You can also get rates of above 4 percent with many easy access and fixed rate ISAs.

One benefit of Premium Bonds is all your prizes are tax free. However, this is also true of ISAs, as any savings or investment growth within an ISA wrapper is tax free. You can deposit up to £20,000 a year into ISA accounts.