How to Invest in Premium Bonds

Launched in 1956 by Prime Minister Harold Macmillan to curb inflation and encourage public saving, NS&I (National Savings and Investments) Premium Bonds represent a fun, risk-free investment. Instead of interest payments, you can win tax-free prizes at a monthly draw. Each monthly prize fund equals the monthly interest on each Bond unit entered in the draw.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Internet connection
• Phone
• Debit card
• Personal confirmation documents
• Address confirmation documents

1. Purchase Premium Bonds. Apply to the NS&I by post, by telephone or online at their website. You can also get an application form by visiting your local Post Office or online from the Post Office website.

2. Buy Premium Bonds in the required minimum quantity of £100 or in multiples of £10 (up to the maximum holding limit of £30,000). The value of each premium bond is £1.

3. Pay by debit card if applying online or over the telephone. Pay by check if sending your application by post.

4. Complete and sign the confirmation form that the NS&I will send you on receiving your application. Provide documents verifying your identity and address. Send them the signed form and verification documents within 21 days.

5. Receive your Premium Bond certificates by post after the NS&I office has completed your registration. They will allocate you a Premium Bond-holder number. The certificate will have your bond numbers and your name.

6. Use your Bond-holder’s number to check your status in the monthly draw on the NS&I website. You become eligible for the monthly draw one month after the date of your registration.

7. Receive a check by post if you win in the lower value prize bands of £50 and £100, the medium value prize bands of £500 and £1000 and the higher value prize bands of £5000 and £10,000. If you win a £1 million jackpot, a NS&I representative will visit you with the good news. There is no time limit for claiming your prize. The NS&I will hold it for you until you claim it.

8. Cash out your winnings or reinvest them in Premium Bonds. For regular investing, you can set up a monthly standing order to invest a fixed amount until you reach the maximum permitted holding of £30,000. The minimum monthly investment for this scheme is £50. Get an application form from Post Office or NS&I, fill it and send it to your bank or building society. They will make the monthly standing order payments from your account.

Tips & Warnings

• Premium Bond winnings are free from U.K. Income Tax and Capital Gains Tax.
• You can cash out all or part of your Bonds at any time by filling a repayment form and sending it with the Bond certificates to the NS&I office. You will receive the money within 8 working days. You can choose to have it transferred directly into your back account or receive a check.
• Interested overseas investors should check if their local regulations permit them to buy U.K. Premium Bonds. They can send the application form and a check in pound sterling to the NS&I Blackpool Office.
• You cannot buy Premium Bonds for anyone except yourself online or over the phone.
• You cannot hold Premium Bonds jointly with anyone or transfer them to anyone.
• You cannot buy Premium Bonds if you are under 16. Your parents or guardians can buy them on your behalf. They will have the Bonds issued to them and will receive any money you win.
• The value of your money can go down through inflation.
• Don’t go for Premium Bonds if you want a regular income from your savings.
• You cannot use a credit card to buy Premium Bonds.

Resources

• National Savings and Investments