More than half of Premium Bond savers have not won a penny

Figures demonstrate that over 13 million individuals who hold Premium Bonds have not been awarded any prize for almost 20 years.

Premium Bonds are the most popular savings option in the UK, boasting a staggering 22 million customers who have invested a whopping £121 billion. However, numerous savers would benefit more from exploring alternative avenues for their hard-earned cash.

Information from National Savings and Investments (NS&I) indicates that a whopping 62 percent of individuals who have invested in Premium Bonds have not been fortunate enough to win any prizes since May 2004.

Premium Bonds do not provide assured interest payments; instead, every £1 bond is automatically included in a monthly lottery where winners can score anywhere from £25 to £1m, tax-free. Starting in September, the interest rates for this savings option will reach their highest point since 1999, rising to 4.65%. This increase will contribute an additional £66m to the monthly prize pool of the NS&I.

The statistics, acquired through the Freedom of Information Act, reveal that the typical individual who won a prize had a total of £38,874 saved. On the other hand, the typical balance of a saver who hasn't won anything for almost two decades is a mere £106.

The latest data from financial analysts Moneyfacts reveals that the current average one-year fixed rate is 5.30 percent as of Monday. Additionally, the highest paying accounts are providing returns of over 6 percent.

According to Anna Bowes, a financial expert from Savings Champion, Premium Bonds stand out from regular savings accounts. This is why they continue to be favored by many, particularly individuals in higher tax brackets, as any winnings obtained from them are exempt from taxes.

Although there is no certainty of winning a prize with Premium Bonds, the interest rate offered on the prize pool is now highly competitive. This might dissuade individuals who were considering withdrawing their funds for a guaranteed return from another bank or building society. The idea is to wait and see if they happen to secure one of the significant prizes on offer. It is noteworthy that there is currently a larger number of substantial prizes up for grabs.

According to Laura Suter, a broker at AJ Bell, it is probable that a numerous amount of the tiniest accounts have slipped from memory of savers who were endowed with Premium Bonds during their younger years.

She stated: "Many individuals receive Premium Bonds as gifts during their childhood or later in life, and the funds remain in their accounts for extended periods of time."

This indicates that numerous accounts containing insignificant amounts are probably disregarded by their owners – either because they find it too troublesome to locate the necessary documents to withdraw their small funds, or because they have completely forgotten about the existence of these accounts.

According to Sarah Coles from Hargreaves Lansdown, if you are keeping a lot of money for a long time and don't succeed, your investments will decrease in value due to inflation - and this is currently a notable concern.

This implies that certain individuals will choose to receive a consistent flow of interest by keeping their money in a savings account instead. In contrast, there are others who are willing to take a gamble in exchange for the opportunity to win - even though the likelihood of winning a life-altering amount of money is extremely unlikely.