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I have a number of premium bonds. Are these a better investment than cash ISAs?

14 January 2022

Question by Martin

I have a number of premium bonds, around £20k and usually have about £100+ a year in prizes. Are these a better investment than cash ISAs?

Answered by Boring Money

Hi Martin, thank you for your question.

The NS&I website states that the annual prize rate is equivalent to 1.00%, however, this is not guaranteed, nor a consistent rate of return. As such, if you can obtain a cash ISA with a higher rate than 1%, or close to 1%, but guaranteed, this could be a better option if available. Both Premium Bonds and Cash ISAs provide tax-free returns.

I would also like to add that neither a cash ISA nor Premium Bonds would generally be the best place for your money if you are concerned about inflation over the longer term.

Hope this helps?

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