Premium Bond winners: Saver scoops 1,900% return on lockdown investment

Lockdown luck! One saver scoops a 1,900% return after winning Premium Bond jackpot with cash he stuck in last June

  • The man from London turned a £50,000 holding into £1m 
  • This beats the FTSE 100 – which has returned 4.56% over the same period 
  • There were another £1.34bn of Bonds bought last December even as NS&I saw £2.69bn of savers’ cash exit in total – could Bonds be due another cut?

One saver turned a lockdown Premium Bond investment into a 1,900 per cent return in just eight months as billions of pounds continues to pour in even after they were cut late last year.

The man from London won one of two February £1million jackpots after buying the winning Bond last June, just as the coronavirus lockdown was beginning to be eased.

The purchase formed part of a £50,000 total holding, while the other winner, from North Yorkshire, also held the maximum £50,000 allowance, but had purchased the winning number in the same month in 2017.

Celebration time: One lockdown saver turned £50,000 in Premium Bonds into £1m in just 8 months

Turning £50,000 into £1million, which three out of the last four jackpot winners have done, represents a 1,900 per cent return for the lucky lockdown saver. 

It massively outpaces the 4.56 per cent rise in the FTSE 100 over the same period, but it is not quite as impressive as the return on GameStop shares has been.

The share price of the American retailer, which has soared on the back of a buying spree from casual day traders in a saga which has gripped Wall Street watchers, has soared from $4.13 last June to $325 last Friday, a 7,769 per cent increase. Investing £50,000 into those shares would have turned it into nearly £3.9million. 

But the chances of striking it lucky in the tax-free draw is likely why billions has continued to pour into Premium Bonds even after they were cut along with the rest of National Savings & Investments’ products last year.

The cuts meant the average ‘prize fund rate’ on Bonds fell from 1.4 per cent to 1 per cent in December, with the amount of money paid out to prize winners falling by £31million compared to November and the number of prizes by 1.1million.

There were fewer prizes of all types except for the £1million jackpot.

However. falling savings rates elsewhere has meant savers are still plumping for the tax-free Bonds in the hope of winning a prize. 

There were 1.34billion more £1 Bonds in the February draw than there were in January, which itself had seen 1.833billion more Bonds than the previous month.

Because Premium Bonds become eligible for the draw the after they have been held for a full month, it suggests savers invested £1.34billion into Premium Bonds in the last month of 2020.

Premium Bonds Winners

Prize Area Value of bond
£1,000,000 West Scotland £49,900
£1,000,000 Barnet £5,000
£100,000 South Scotland £20,000
£100,000 West Sussex £50,000
£100,000 Essex £25
£100,000 Avon £500
£50,000 South Scotland £1,000
£50,000 Buckinghamshire £30,000

More January 2021 winners

View list of January 2021 winners

This was despite £2.69billion being withdrawn from NS&I in total, according to the latest figures from the Bank of England. 

Nearly £9.5billion was withdrawn from the Treasury-backed bank, which also came under fire for a customer service meltdown, in the last three months of last year after cuts to its savings rates were announced in September.

The cuts were designed to force out savers as NS&I’s position at the top of the best buy tables last year meant it had overshot its £35billion fundraising target in just six months after receiving more deposits than the three previous years combined.

After the billions in withdrawals NS&I had raised £28.8billion of its target by the end of last year, meaning it requires around £6.2billion more between January and March to hit the target.

Premium Bond payouts rise as billions continues to be poured in 
Month  Number of Bonds in the draw  Number of prizes paid out  Value of prizes paid out 
November 2020
(Last draw pre-cuts)
97,467,982,557 3,978,286  £113.7m 
December 2020
(First draw post-cuts)
98,952,302,605  2,868,182  £82.46m 
February 2021  102,126,660,758  2,960,195  £85.1m 
Source: NS&I 

The continued interest in Premium Bonds at a time when savings rates elsewhere are at all-time lows is why some experts have told This is Money Britain’s best-loved savings product could see more cuts this year. 

The more than £3.1billion more held in Bonds by the February draw meant the amount of money paid out in total to prize winners this month rose to £85.1million, up from £82.5million.

However, this is still far lower than the £113.7million paid out in November, the last month before the cuts came into effect.

Savers can see if they have won by checking This is Money’s tables, NS&I’s website or app, or by asking their Amazon Alexa if they have one. 

Those who receive their prizes by post will also continue to receive them this way until the spring after NS&I delayed plans to axe Premium Bond payments through the post.