Last month NS&I adjusted the premium bond prize fund rate down to just 1 per cent. It was already pretty low, at 1.4 per cent. The cut meant the chance of winning is now even less. But does that mean they are not worth having?

There is about £99 billion held in NS&I premium bonds, by about 21 million people. Each bond costs £1 and each has an equal chance of winning. So, the more you have the more your chances. The maximum win is £1 million, with two £1 million prizes paid out a month, down to a £25 prize, paid out about 2.8 million times a month.

The chance of winning anything is 34,500 to one for each £1 invested. So, as NS&I themselves say, premium bonds are not for people who want guaranteed returns or a regular income. They are, according to NS&I, ‘a fun way to save, with the chance to win tax-free prizes each month.’

Another reason people used to save with premium bonds is, as they are backed by the Treasury, they are safe. But these days all UK-regulated savings accounts are protected up to a value of £85,000 per person, per institution. With the top amount you can save with premium bonds capped at £50,000, there is no benefit from a security point of view.

So, who are premium bonds for? Well, if you have a large sum to invest (the chances of getting a return obviously go up the more you have) then they might be for you. They are one way of investing if you want to save for longer but may need access.

Also, if you are one of the small number of people who use up their Personal Savings Allowance (PSA), premium bonds are good as wins don’t count towards your PSA. Or if you are in a position to take a bit of a gamble and feel lucky (someone has to win after all!) – then they might be for you.

Whether or not they are a good choice does depend on your wider financial situation. As we always say, if in doubt – get advice.

Please get in touch if you would like advice about where to invest your money.