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Latest Premium Bond Winner Hits It Big

by Jim ONeil on June 10, 2011

in uk banks

The National Savings and Investments scheme of the UK government issues a lottery bond called a premium bond. Interest is paid by the government but goes into a prize fund rather than an individual account. Each month, a lottery randomly draws bond numbers and awards tax-free prizes to winning bondholders.

Prize amounts range from £25 to £1,000,000.

A Cardiff man won the £1,000,000 prize in June. The man purchased the winning bond in 1995 and is now the 257th millionaire through this lottery. Ironically, he won on the anniversary date of the first Premium Bond prize drawing, which was June 1, 1957.

Since 2010, it has become much more difficult to win the £1m prize, due to the interest rate dropping.

Bonds must be held for at least one full calendar month following the month of purchase before they are eligible for the lottery. Bond numbers are entered in the lottery each month and every holder has an equal chance of winning a prize.

Upon request, the government will repurchase the bond at the original price and the bond number will be removed from the lottery.

As of October 2009, the odds of a bondholder winning a prize are 24,000 to one. More than one third of the population in the UK, about 23 million people, own Premium Bonds. A minimum purchase of 100 bonds (50 bonds if paying via standing order) is required, each with a value of £1.

After this is met, bonds can be purchased by the £1.

Anyone who has extra cash and is not interested in making cheap loans to friends should consider purchasing Premium Bonds. Prize fund size is equivalent to one month of interest on all eligible bonds. Based on the odds, someone who holds the maximum £30,000 in bonds can expect to win about 15 prizes each year.

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