Martin Lewis issues word of warning to anyone who has Premium Bonds

Martin Lewis has explained how much savings you need to make Premium Bonds "worth it". The BBC Sounds podcast host appeared on his ITV The Martin Lewis Money Show this week, where he fielded questions from Premium Bonds holders and National Savings and Investments (NS&I) customers.

For every £100 invested in Premium Bonds, the “average” return is £4.40 - but Martin explained how this doesn’t quite work in reality. He said: “You can't, because the smallest prize is £25. What would actually happen is, amongst 20 people, 19 would win nothing, and one would win £25 or £50.

"That's more likely to be the probability.” Martin said: “The first thing I [would] do is, put your money in a cash ISA, and if you filled up ISA, and you're still paying tax on savings so you're above the personal savings allowance, that's when these come into play.

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“You want to have, if you're going to do it, you want to be maxing out at the £50,000, or as near as you can, £20,000, £30,000 or £40,000, and you want to be somebody who pays tax on savings interest, because otherwise the returns aren't that good.

"So for higher earners with lots of savings who are paying tax on interest, it's a good bet. For those people just putting a small amount of money in, who don't pay tax on savings, it's a really poor bet.” Later, Mr Lewis took to Twitter, now X, with an apology.

"Apologies I said on @itvMLshow the premium bond probability calc is driven by binomial it's actually multinomial probability. Apologies to maths geeks," he said. A social media user replied to say: "I was given some Premium Bonds when I was at school. In 60 years all I have won is £25, in 1970. I can't even be bothered to cash them in, their present day buying power is worth only a fraction of what it was when I got them."

A second said: "t's good to see someone so concerned about: 1. Giving accurate information 2. Correcting any mistakes 3. Admitting to those mistakes ASAP. It's why you developed such a brand that has loyalty from millions. You deserve all your success."