That entirely depends on how lucky you are! Whereas with a savings account you’ll definitely receive the advertised rate of interest, if you have Premium Bonds, there’s no guarantee you’ll win anything.
A spokesman for financial website Moneyfacts.co.uk said “Savers who are starting to build a savings fund may want to consider an easy access savings account. This is because, unlike premium bonds for which there is no guarantee that bondholders will win a cash prize, easy access savings accounts pay interest, which means that savers holding even a small amount of money in an easy access savings account will earn interest on their savings. Interest rates on easy access savings accounts have, however, been at record lows over the past 18 months with the average rate standing at just 0.19%.”
With savings rates currently so low, many people are happy to accept the risk they might not win anything and may prefer to put their money into Premium Bonds, especially as their initial investment is protected, and they can cash in their bonds at any time.
The Moneyfacts spokesman said: “ It should be noted that no cash savings account can match or beat the current rate of inflation, which stands at 3.1% (CPI) and experts predict will reach as high as 4%. Those who win a top Premium Bond prize will, however, gain an above inflation return on their deposits, but as already highlighted there is no guaranteed returns on Premium Bonds.”
It’s down to you to decide whether you want to put your money into Premium Bonds or whether you need guaranteed returns from your savings, however limited these may be. Remember that you don’t have to pick one or the other, you might, for example, choose to put a bit into both so that you have a chance of winning a prize, but you’ll still be earning interest on some of your savings.