National Savings and Investments (NS&I) has released a cautionary advisory to customers who are contemplating consolidating their Premium Bonds accounts. The warning comes in response to a recent inquiry from a saver on social media, prompting NS&I to highlight the potential risk of missing out on the monthly prize draw should any changes be made to their Bonds.
The specific customer, who approached NS&I with a request to amalgamate their holdings into a single group of 50,000 consecutive numbers, received a carefully worded response from the provider. The customer was informed that should they proceed with this consolidation, they would be required to redeem their existing holdings and subsequently repurchase the Bonds as a lump sum, resulting in their exclusion from the prize draw.
Premium Bonds afford customers the opportunity to compete for prizes ranging from £25 to two jackpot prizes of £1 million in the monthly draw, rather than accruing interest as with a traditional savings account. The current prize fund rate stands at 4.4 percent, with winning odds set at 21,000 to one.
Renowned financial expert Martin Lewis has recently cautioned Premium Bonds customers that they may be able to obtain a more favourable rate of return through a savings account, particularly for those with substantial holdings. Lewis pointed out that while an individual with the maximum £50,000 in Premium Bonds could potentially receive around £2,200 in a year, the same amount deposited in a leading one-year fixed rate saver at 5.25 percent would yield £2,625 in savings, resulting in an additional £425 in returns.
However, Mr. Lewis also emphasised that Premium Bonds may be well-suited for individuals who have already utilised their tax-free allowances on their savings, particularly for those who are liable to pay taxes on their savings growth.
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