We examine how to purchase Premium Bonds for children, and whether they are the gift that keeps on giving
Premium Bonds might be the ideal gift if you're looking to give someone a unique present. In addition to the possibility of winning a £1 million jackpot, your loved one could win multiple cash prizes each month.
But what are the guidelines and how can Premium Bonds be given as gifts?
Although you are not permitted to purchase Premium Bonds on behalf of other adults, you are permitted to do so on behalf of children under the age of sixteen, including your own children as well as those of friends or relatives. Aside from being a great way to begin saving, Premium Bonds are also entertaining due to their monthly prize draw.
The minimum investment amount for each Premium Bond is 25, but each bond has a value of 1. Savers are the ideal present for a variety of budgets because they can hold up to 50,000 in Premium Bonds overall.
A 25 gift might be the ideal amount to purchase for a close friend's kid. Alternatively, you could purchase hundreds or even thousands of pounds worth of Premium Bonds to give to your own children, possibly lowering your inheritance tax liability.
How do premium bonds operate?
Premium bonds don't function the same way as a typical bond or savings account. As an alternative, bondholders can enter a monthly prize draw to win prizes ranging from £25 to £1 million.
NSandI, the state-owned savings institution, is in charge of managing Premium Bonds. This indicates that they have the government's support, which makes them totally safe.
Although interest is not guaranteed on Premium Bonds, NS&I does establish a prize fund rate that aids in determining how many prizes to distribute each month. As interest rates have decreased, this has been declining in recent months after reaching a peak of 4 points 65 percent.
The prize fund rate will drop to 3.8 percent starting in April. However, there are still a lot of prizes available. In the March draw, the number and value of prizes awarded are displayed in the table below.
The chances of winning the Premium Bonds draw are subject to change. For every bond you own, they are currently 22,000 to 1.
It goes without saying that your chances of winning a prize increase with the number of bonds you possess. However, one fortunate bondholder used just 17 Premium Bonds to win the £1 million jackpot in July 2004.
How to purchase premium bonds.
Premium Bonds can be purchased via postal mail, the NS&I website, or over the phone.
You can apply over the phone by giving NS&I a call at 08085 007 007. To apply by mail, print an application, fill it out, and send it back to NS&I with a check. The application form and additional guidelines are available on the NS&I website.
There are a few things to keep in mind if you are applying on behalf of someone else's child. Make sure the parent or guardian is willing to manage the child's investment and consents to you sharing their information, according to NS&I.
Additionally, NS&I will have to verify each applicant's identity. In order to obtain proof of identity documents, they may be contacting the parent or guardian.
NS&I even gives you a free gift card with a message on it if you want to customize the present. You have the option of receiving this electronically or through the mail.
How do kids' Premium Bonds work?
Regardless of who purchased them, the parent or guardian listed on the child's application is responsible for their bonds until they turn 16. In 2024, more than 84,000 accounts for under-16s were opened with Premium Bonds.
In addition to being tax-free, Premium Bond rewards offer flexibility in their management. They may be paid into a designated bank account on the child's behalf, transferred into an NS&I Direct Saver or Junior ISA account, or automatically reinvested to purchase additional bonds.
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