Martin Lewis has issued a warning over the most popular type of savings account in the UK - Premium Bonds. The money saving guru explained that although the system seems attractive, where instead of receiving interest your bonds are entered into a monthly prize draw with chances to win big, it isn't always the most efficient way of saving money.
In a live episode of the Martin Lewis Money Show, the finance expert explained that, on average, with "typical" luck, premium bonds won't pay out much more than easy access or fixed rate savings accounts. He explained how premium bonds work, saying that the prize fund rate is 2.2%, meaning in theory for every £100 invested, they'll pay out £2.20.
But, he went on, you can't actually win £2.20 - the minimum possible win is £25, meaning "you can't get £2.20, you can get nothing, or £25 or more." This means that smaller investments won't likely generate much interest.
