There has been a huge surge in the number of Premium Bond holders stashing the maximum of £50,000 in the NS&I savings product.
Now a record 1.4million savers have the maximum allowance parked in their Premium Bonds accounts – up from 600,000 in 2019.
Every £1 bond entered into the prize draw has the same odds of winning, but the more you hold the more likely you are to win a prize.
With two monthly £1million jackpots up for grabs and in the most recent draw, 76 prizes of £100,000 and 152 of £50,000, savers are lured in by the slim chance of winning big.
They are also a tax efficient way to keep cash savings as any prizes won are tax-free, although there is no guarantee of a monthly prize, meaning potentially no interest.
Feeling lucky: The number of savers holding the maximum amount has more than doubled in six years from 600,000 to 1.4million
The maximum holding has been £50,000 since June 2015. Adjusted for inflation, the £50,000 limit would be £75,000 – according to This is Money’s historic inflation calculator.
This maximum holding has been lower. Before June 2015, it was £40,000 – a limit that dated back to June 2014.
In 1994, when the £1million prize was introduced, the maximum holding was £20,000. It rose to £30,000 in May 2003.
Is it time NS&I once again raised the maximum holding from its current level?
There are signs that if the maximum holding were to increase it would be well received among savers with big sums of cash.
This is Money asked five savings experts to give their verdict on whether the maximum Premium Bonds allowance should be increased.
James Blower, founder of savings website the Savings Guru says: ‘In terms of customer interest there’s a case for a £75,000 limit.
‘It would be immensely popular and there would be significant interest from savers who already have £50,000 who would immediately move to put in £75,000
‘But there are reasons why NS&I won’t want to do it and why there would be some challenges in terms of managing it.
‘It would make bigger holders even more dominant in the prize winnings, which is not unfair as the prize draw is random, but the optics of that could put people with smaller holdings off if they always see holders with £75,000 holdings winning.
‘NS&I has a fundraising target and this move would immediately spark quite an inflow into NS&I. Premium Bonds already account for around half of NS&I’s book.
‘That makes it a little bit harder for NS&I to manage going forwards in terms of inflows into Premium Bonds.
‘Such a move would take Premium Bonds to making up two thirds of its book and it could risk overshooting its target.’
George Sweeney, money expert at personal finance comparison website Finder says: ‘Premium Bond limits could do with an update given the high levels of inflation we’ve seen since the cap was last raised to £50,000 in 2015.
But if allowances are being reviewed, Premium Bonds wouldn’t be my priority.
‘Raising the limit could help NS&I accelerate progress toward its current yearly fundraising target of £12billion, with a £4billion buffer either side, but an environment of higher interest rates means NS&I is already roughly on track to hit this after raising £2.5billion in the first quarter of 2025.
‘Increasing the Premium Bond allowance would risk blasting through that target.
‘With the Government aiming to encourage more people to invest, lifting the Premium Bond limit could also be counterintuitive to achieving that goal.
‘Premium Bonds remain popular, but many savers could very likely achieve better long-term outcomes by investing instead.
‘This could have the dual benefit of savers getting better returns while potentially injecting some growth into the economy.’
Rachel Springall, finance expert at Moneyfacts Compare says: ‘Amid the fiscal drag, many savers will be seeking out ways to make their money work harder, so it could be beneficial to increase Premium Bond limits.
‘Not only this, but if NS&I have larger funding targets overall, it can lead to better interest rates on their standard savings accounts.’
Laura Suter director of personal finance at stockbroker AJ Bell, says: ‘While the maximum Premium Bond limit isn’t pegged to inflation, it has increased in the years since they were launched.
‘In 1956 when they first hit the market you could only invest up to £500. If that was pegged to inflation today it would be almost £11,000 – so the current limit has outpaced inflation.
‘But the last time they rose was in 2015, so they could be due an upgrade.’
Who would a higher Premium Bond limit benefit?
Andrew Hagger, founder of personal finance website MoneyComms says: ‘There’s no doubt that there would be an appetite amongst wealthier savers who are looking for an additional tax free shelter for some of their spare cash savings, having already maxed out their Premium Bonds and cash Isa limits.
‘It would result in tweaking NS&I financing targets because there would be a flood of new money should the limit be increased and would see NS&I overshoot its current financing targets.’
Anna Bowes, of financial planning firm The Private Office says: ‘There would be huge demand for a higher maximum into Premium Bonds, especially for higher and additional rate taxpayers and the tax free nature of the Premium Bond prizes means they are even more valuable.
‘A higher rate taxpayer winning prizes that equal the current prize fund rate of 3.6 per cent would need to find a taxable account paying 6 per cent to match that return – for an additional rate tax payer, the taxable equivalent is 6.55.’
‘It would be a good way of raising some more income for the Government, but it goes directly against the desire the Government has expressed to get more people investing as this would be a way to hold more in cash tax-free.
‘If they were to increase allowance they could raise more money from wealthier people.
‘It would be a direct benefit to wealthier savers with more money to put away, as the average amount kept in Premium Bonds is only £5,500.
‘Increasing interest rates on other NS&I savings accounts would be more beneficial to more people.’
How would it work?
Andrew Hagger says: ‘The decision to raise the maximum Premium Bonds holding limit from its current £50,000 limit would need government sign off and approval by HM Treasury.
‘There would need to be government legislation if any limit increase was agreed as a way of raising funds and there would need to be government consultation and approval to do this.’
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