What are premium bonds?
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One thing that not enough people really know about are premium bonds, even though premium bonds can be one of the best ways to get a well-needed cash zap. Keep reading for some crucial information on what premium bonds are, and why buying premium bonds can be a fantastic idea.
The premium bonds basics
Premium bonds were introduced by National Savings and Investment (or NS&I for short) back in 1956, which is why you can often see them also being referred to as NS&I premium bonds.
In essence premium bonds are very similar to investments, however instead of earning interest or other income from them, you are instead entered into a monthly draw where the prizes can run from £25 all the way through to a whooping £1 million.
The minimum investment for NS&I premium bonds is £25, and the maximum £50,000. Premium bond buyers will receive a unique NS&I premium bond number for each £1 invested, and this will go into the monthly premium bond draw. In many ways premium bonds are like a lottery, however the odds of winning are fair larger, and they are a much more respected form of investment.
A history of premium bonds
NS&I introduced premium bonds more than half a century ago in 1956, and since then there have been millions of NS&I premium bonds bought up across the country. Premium bonds were first introduced in order to try and control inflation during the post-WWII period, and were also used to encourage community saving.
In 1973 ERNIE 2 was introduced, a sophisticated computer program that could generate far more random numbers, and therefore process even more premium bond draws. Another landmark was in 1994, when NS&I started offering £1 million premium bond prizes.
How to buy premium bonds
Premium bonds can be an easy way to boost your income, as you might have seen from our article on the topic here [easy ways to boost your income]. Whilst it is never a certainty that you will win anything, it is certainly a better way to spend your money than entering something like the national lottery.
Premium bonds can be bought from NS&I online, by phone, bank transfer or even through the post – it is a remarkably streamlined and simple process. The only thing you have to make sure of is that you are over the legal age of 16, however adults can buy children younger than 16 premium bonds as a present, although they won’t get access until they hit 16.