Check Premium Bond

Why keep your money locked in premium bonds for a low return?

But premium bonds offer lousy or next-to-nothing returns - and most investors would have earned more if they'd stuck with savings accounts.

As a nation, we have a staggering £42billion invested in the bonds. The main appeal is the monthly £1million jackpot, and the fact the prizes - which start at £25 - are tax-free.

But anyone hoping to win big will have a very long wait. The chance of a bond scooping the main prize is more than 40 BILLION to one.

And, while the odds of winning smaller prizes are 24,000 to one and the prize-fund rate is equivalent to an interest rate of 1.5 per cent a year, the chances of getting this average depend wholly on your luck each year.

And even if you did get that average, even if this time of low interest rates it would only give you around half the rate of some savings accounts.

It's also worth bearing in mind that, unless you are regularly winning prizes, the rising cost of living is effectively eroding the value of your investment.

Traditionally, of course, premium bonds - which were launched 54 years ago this month - have been seen as a safe haven for cash, as they are run by the Government-backed National Savings and Investments.

But, after the banking crisis of a few years ago, all UK savings accounts are now protected up to £85,000.

Andrew Hagger, of Moneynet, said: "The odds of you winning the premium bond jackpot payout are very slim, so you could have £20,000 of bonds that earn you nothing in 12 months.

"But if, for example, you'd put the £20,000 in a one-year fixedrate bond from Aldermore at 3.55 per cent, you'd have a definite return of £568 after basic-rate tax. That's the equivalent of more than 22 £25 winning cheques.

"Some people are prepared to forego interest just for the chance of picking up a tax-free prize with bonds - but there's a much bigger chance you'll get nothing."

Even though base rates were again held at 0.5 per cent this month, there are plenty of decent savings accounts to choose from. And if you go for an ISA, your returns will be tax-free too.

For example, AA Savings is paying 3.35 per cent on its cash ISA, which you can open with a minimum investment of £500.

That means if you invested £2,000 for a year, you would earn £67 tax-free, compared with the average return of around £30 on premium bonds - assuming, of course, you get lucky.

NS&I Reveal Over £30 Million of Unclaimed Premium Bond Prizes ...

A major nationwide search has been launched by National Savings and Investments (NS&I) to track down the winners of over 550,000 unclaimed Premium Bond prizes worth over £30 million in total. This is the largest amount ever left unclaimed and includes one prize worth £100,000, two worth £25,000 and ten worth £10,000.

The prizes commonly become unclaimed because people fail to pass on new addresses when they move house, they have forgotten that Bonds had been bought for them when they were a child or executors are unaware the Bonds are held when someone dies. Over a third (37%) of people who have lost touch with their savings (http://www.nsandi.com/ ) have moved home and failed to tell all their financial providers their new address. Half (50%) say they find it difficult to remember all of the accounts they have opened over the years.

The unclaimed premium bond prizes (http://www.nsandi.com/products/pb/index.jsp ) range all the way from £25 up to £100,000. NS&I gives away over one million tax-free* Premium Bond prizes each month.

Sally Swait, Premium Bond manager at NS&I said: "Following the expense of Christmas, tracing lost Premium Bonds prizes (http://www.nsandi.com/products/pb/haveYouWon.jsp ) may prove to be a welcome source of extra money for some."

She continued, "We urge anyone who believes they could have unclaimed prizes to check with us. The easiest way is to use our website and there is no time limit on claiming the prizes."

There are two ways to check for an unclaimed prize:

The Premium Bond prize checker is on the home page of the NS&I website at www.nsandi.com - customers simply need to enter their Premium Bond holder's number into the search facility.

Alternatively customers can write to

Premium Bonds

National Savings and Investments

Blackpool

FY3 9YP

There is no time limit on claiming prizes and each unclaimed prize is held until the winner can be tracked down. The oldest unclaimed prize dates back to November 1957 for the sum of £25.

Notes to editors:

*All Premium Bonds prizes are free of UK income Tax and Capital Gains tax.

About NS&I:

NS&I is one of the largest financial providers in the UK with 28 million customers and over £83 billion invested. It is best known for Premium Bonds, but also offers High Income Bonds (http://www.nsandi.com/products/ib/index.

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