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?

Answered by

Boring Money