As the year draws to a close, Britain’s savers are once again re-assessing where to park their cash — with NS&I Premium Bonds under fresh scrutiny against high-interest cash savings paying around 4.4–4.5%.
The comparison is not merely academic: with easy-access savings accounts paying strong returns in late 2025, financial experts including MoneySavingExpert founder Martin Lewis have been flagging the trade-offs for typical savers.
What Premium Bonds Offer
NS&I Premium Bonds, issued by the UK government’s savings arm, do not pay interest in the usual sense.
Instead, each £1 bond is entered into a monthly prize draw with a range of tax-free prizes from £25 up to £1 million.
The headline prize fund rate — an average figure representing total prizes as a percentage of the investment — stands at around 3.60%.
However, this figure doesn’t guarantee what individual savers receive, as winnings depend on luck in the draw.
Pros of Premium Bonds:
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Tax-free prizes and capital guaranteed by HM Treasury.
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Easy access: you can cash in bonds whenever you want.
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The dream of big jackpot wins.
Cons of Premium Bonds:
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No guaranteed return — many people get below average outcomes.
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The effective “rate” only reflects overall payouts, not what you personally will earn.
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Odds of winning remain long — around 22,000 to 1 per £1 bond number. TechStock²
Martin Lewis’s Take: Cash Savings Often Win Out
Amid the current comparison, Martin Lewis has urged savers to think twice about Premium Bonds if their goal is a reliable return on cash. With **top easy-access savings accounts offering around 4.4–4.5%, those guaranteed rates may beat what many households will actually see from Premium Bonds once luck is taken out of the equation.
Lewis has emphasised:
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Typical outcomes from Premium Bonds hover around 3.2–3.3% for many savers over the long run — below the best cash returns available.
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Guaranteed savings interest can outperform prize-based returns, especially for those not liable for high levels of tax.
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Premium Bonds may still make sense for some higher-rate taxpayers, once ISA allowances and personal savings allowances are considered, due to the tax-free nature of winnings.
This assessment matters today, December 30, because the next Premium Bonds draw — traditionally watched by many holders — is only days away, intensifying the comparison with cash savings as the year closes.
Why the Debate Matters Now
The personal finance landscape has shifted significantly:
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Easy-access savings rates have climbed, driven by competition among UK banks.
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Premium Bonds’ prize fund rate has reduced from earlier highs, meaning the expected rate across all holders is lower than some headline savings deals.
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Many savers are planning cash strategies before the start of 2026, including making use of ISA allowances and reviewing where emergency funds should sit.
Who Might Still Like Premium Bonds?
Despite Martin Lewis’s caution, Premium Bonds aren’t worthless — particularly for those who:
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Enjoy the gamble and are comfortable with uncertainty.
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Are higher-rate taxpayers looking for tax-free returns.
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Already have fully-utilised ISA allowances or want to diversify how they hold cash.
Bottom Line for Savers on Dec 30
If your priority is a predictable return on your cash, easy-access savings accounts paying around 4.5% currently offer more certainty than the average expected return from Premium Bonds — and that’s the core of Martin Lewis’s recommendation heading into the new year.
If, however, you’re saving partly for fun and the occasional tax-free prize — and you’re comfortable with randomness — Premium Bonds still have a place in many portfolios.
