Savings Account or Premium Bonds?

One needs a considerable number of premium bonds- £40k + for you to win small amounts regularly.

I would find the highest interest-paying account but one which is flexible because interest rates will rise this year. When you think it is at its highest, find the best fixed rate and pop the money in there for a few years.

I’ve got both cash ISAs and premium bonds.
If you are going to keep the cash ISA then you should transfer it to another cash provider with a better rate. You can easily get 0.8% easy access and higher if it’s fixed term or restricted access. The advantages of keeping a cash ISA rather than just a normal savings account with perhaps a higher rate is that the government could always get rid of the £1000 tax free saving interest allowance in the future. Also it would give you the flexibility to transfer the cash ISA into an investment ISA if you wanted to go down that route.
I like premium bonds and win one or more lots of the £25 prize most months, and there is the thrill of the tiny chance of winning the million pound prize each month. To have a realistic chance of winning the £25 each or most months you do need quite a large amount of premium bonds. Personally I think the thrill of seeing whether you’ve won the big prize each month alone makes them worth it. Some people describe premium bonds as effectively gambling the inters you would have got if it was in a regular savings account or cash isa. Another way of looking at it is being like a lottery but you keep the initial stake.

I have the maximum number of premium bonds. As interest rates are insultingly low, any prize even a £25 one, gives you a greater return…

There was a thread about PBs a while back and people said they were winning regular amounts, but most of them didn't say how much they had invested. I was only going to put £19k so not as much as you said. People with £20k said they were winning £25 most months which would be good enough.

The advantages of keeping a cash ISA rather than just a normal savings account with perhaps a higher rate is that the government could always get rid of the £1000 tax free saving interest allowance in the future.
That's true, but the Premium Bonds won't ever have a tax problem either.

The current chance of each one pound unit winning is last time I looked 34,000 to 1. So if you had £34000 of premium bonds statistically you would be likely to win one prize each month. The vast majority of the prizes are the £25 prize. so statistically with average luck you could expect to win £300 a year in prizes.

I agree with you Chestnut. I would say max out the premium bonds first. Then go for cash ISAs.

Me too - max holding of Premium Bonds and I earn more than in any ISA - and it is simple - I know where it is and I do not have to faff around getting new ones.

The smaller building societies often offer some of the better cash isa rates.

I dislike that your savings account starts off with high interest rate which drops after a year, then you have to open a different account to get the good interest rate. I have just done that with a Nationwide savings account. I get rather stressed transferring money online and I don't like all the faffing around with large sums of money.

I have a comparatively small amount of premium bonds but have calculated that they earned 0.5% interest this year. But I do have a lucky streak for things like that.

Hey, Ernie doesn't account for people with lucky streaks! He's random 🤹‍♀️

I win something most months from my premium bonds. I am close to having the full amount because anything I win goes back into the pot. The most I have ever won is £500. It is usually a single or a few £25s. I also like the thrill of it- somebody has to win the million so why not me?

I’ve had £30,000 in PB’s since January when I retired. I have made £125 pounds so far which I am more than happy with. It goes into my Christmas present pot. I like the fact that should I need to cash them in I can do so easily with no penalties. My husband puts his winnings back in the PB’s.

I did win £5000 once on the Premium Bonds. Happy Day.

I've only got £1,125 in premium bonds bought for the first time just over a year ago. That's £1000 of savings and £125 in prizes definitely better than any savings account I've come across.

That’s super AGAA4 - no one I know has won more than £75

crazyH

That’s super AGAA4 - no one I know has won more than £75

I was quite stunned. I don't usually win anything.

I also win £25 most months sometimes x2 if you can afford to buy at least 30k I'd go with the bonds

I have the maximum Premium Bonds and this month I won 3x £25. The most I have won is £500. Our ISA’s have awful rates of interest at the moment.

Wow, I think I may go with the Premium Bonds! Otherwise it's 1.25% interest from the savings account. It's a chance but maybe I'll win something.

If you have an up to date phone, I recommend the phone only app for Chase Bank, FSC regulated, currently offering a savings account with 1.5%. I keep up to date with the latest easy access accounts on MSE.

Check out Moneysaving Expert. Lots of good advice on there.

www.moneysavingexpert.com/savings/best-cash-isa/ Pick the ISA that offers 'transfers in' that has the best rate/term for you. Personally at the moment I would not go for fixed rate, as rates are likely to rise. I'd only put money into PB if there was no downside - and here you'd be losing the ISA sheltering.