What are the odds of winning a £1 million prize in premium bonds with a stake of £500 or less?

More than 22 million savers hold National Savings and Investment (NS&I) premium bonds in the hope of winning a big prize in the monthly draw.

Monthly prizes range from £25 to £1 million, with winning numbers chosen by ERNIE, NS&I’s electronic random number generator.

There are two top prizes of £1 million, and in the October draw there were 88 prizes of £100,000 and 177 prizes of £50,000. These are the two biggest prizes in the draw after the top prize of £1 million.

Currently, the odds of any £1 bond winning a prize are 21,000 to 1, and the premium bond prize pool rate (or average prize payout per year) sits at 4.4 per cent. .

But the odds of winning a Premium Bond prize will rise to 22,000 to 1 in the December draw as NS&I announced it would reduce the Premium Bond prize pool rate to 4.15 per cent.

Every month, in addition to the coveted £1 million jackpot winners, we keep an eye out for the luckiest premium bond holders who manage to bag big prizes (the £50,000 and £100,000 prizes in addition to the £1 million prize) with small shares. .

Of course, the more you have, the better your chances of winning big. But contrary to common myth, you don’t need to own the maximum amount of £50,000 to win a big prize.

Even someone who only has a small savings fund and has just opened their account has chances, even if they are very small, of winning big.

Nothing embodies this better than the 2004 £1 million jackpot winner from Newham in London, who won with just £17 in premium bonds they bought in February 1959.

More recently, in the October draw, three Premium Bond holders won prizes of £50,000 and £100,000 with small entries of £500 or less.

A Gloucestershire-based premium bond holder scooped a £100,000 prize with a small stake of just £275, while two other winners, from north-east Scotland and Lincolnshire, pocketed prizes of £50,000 with stakes of £300 and £500 respectively.

This led us, and This is Money readers, to ask: What is the probability of landing a big prize on premium bonds with a small stake of £500 or less?

We decided to seek the guidance of a statistics wizard to help us understand the probabilities of this happening and how the amount someone has in premium bonds changes those probabilities.

We asked Dr Michael Dunne-Willows, statistician and ambassador of the Royal Statistical Society, to crunch the numbers.

The probability of winning a £1 million jackpot with a stake of £50 is 1 in 1.2 billion.

As the odds of winning a prize increase the more you hold premium bonds, those with £100 have 620 million to 1 odds of winning the £1 million jackpot.

These odds reduce to 250 million to 1 if you have £250 in premium bonds. If you have £500, you have a 1 in 120 million chance of winning a £1 million prize.

The chance of winning at least £100,000 in the Premium Bond prize draw with a £50 entry is 1 in 27 million.

If you have ten times the stake, at £500, the odds are 1 in 2.7 million. Those who have £100 in premium bonds have a 1 in 13 million chance of winning at least £100,000 and if they have £250 their odds are 5.5 million to 1.

When it comes to prizes of £50,000, Premium Bond savers holding £50 have a 1 in 9.5 million chance of winning at least £50,000.

If you have £100 in Premium bonuses, the odds of winning at least £50,000 are 4.7 million to 1, dropping to 1.8 million to 1 if you have £250.

Holding £500 in premium bonuses would mean you have a 1 in 940,000 chance of winning at least £50,000.

To bring these odds to life, This is Money also analyzed NS&I data from the last 54 premium bond draws, dating back to May 2020, when the pandemic premium bond boom took hold, to see how many people managed to take home one of the great prizes. with a small participation.

Of the 6,070 winners of the largest Premium Bond prizes at the time, 46 holders won prizes of £50,000 or £100,000 with holdings of £500 or less, or 0.8 per cent.

Twenty of the £100,000 prizes were won by NS&I customers with a stake of £500 or less and 26 of the £50,000 prizes were won by those with a stake of less than £500.

The most unlikely of these winners was a Norwich-based winner who took home a £50,000 prize with just a £5 stake in the December 2023 draw. They bought their winning bond in April 2004.

No £1 million jackpot winner has won their prize with a stake of £500 or less since May 2020, but 12 people with £1,000 or less have won the £1 million jackpot since 1994, when the first prize of £1 million.

James Blower, founder of the Savings Guru website, said: “There are approximately 1.2 million premium bondholders with a maximum holding of £50,000.” Therefore, around £60bn of the almost £126bn saved in Premium Bonds comes from those with the maximum holdings – just under 50 per cent.

‘Given there are 177 prizes of £50,000 each month, it is not surprising that some have been won by those with smaller stakes. Similarly, there are 883 £10,000 prizes each month, so the odds favor smaller holders having the chance to win at least some of them.

‘There were 47,682 prizes of £10,000 in that period, so it is not surprising that 20 of them were won for lower value entries.

“However, there are only two £1m prizes a month, so it is not surprising that the odds do not favor the small holders at all.”

Anna Bowes, co-founder of the Savings Champion website, said: “The very fact that some people have won with a small amount will keep many people invested.”

‘The risk of £500 earning no interest is perhaps £25 a year, at the current best purchase price. There will be people willing to risk that for the chance to win big… or even win something.’