# Premium Bonds vs easy-access savings — which is the better UK home for cash?

> Compare · Last reviewed 26 May 2026

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## Quick answer

Premium Bonds pay no interest — instead you're entered in a monthly prize draw, with a prize-fund rate that's a guide to typical return but isn't guaranteed. An easy-access savings account pays a fixed or variable rate of interest you can rely on.

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Both are very safe homes for cash. Premium Bonds are backed 100% by HM Treasury; easy-access savings up to £85,000 per banking licence are covered by FSCS. The right choice depends on whether you value tax-free certainty (savings, if within your Personal Savings Allowance) or the small chance of a much bigger prize.

## Premium Bonds vs Easy-access savings

| Criterion | Premium Bonds | Easy-access savings |
| --- | --- | --- |
| Return | Variable — based on prize draw (rate is a typical, not guaranteed, return) | Variable or fixed interest rate |
| Tax | All winnings tax-free | Tax-free up to your Personal Savings Allowance, otherwise taxable |
| Government protection | 100% backed by HM Treasury | £85,000 per banking licence under FSCS |
| Maximum holding | £50,000 per person | No central limit, but FSCS cover caps at £85,000 per licence |
| Access | Withdraw anytime, takes a few working days | Withdraw anytime (same day with most accounts) |
| Best for | Tax-free chance of a big prize | Predictable, daily-interest growth |

## When Premium Bonds suits

- You've maxed your ISA and Personal Savings Allowance and want tax-free returns
- You like the small chance of a big win
- You want HM Treasury backing for sums above the FSCS limit

## When Easy-access savings suits

- You want a reliable, predictable return
- Your interest will stay within your Personal Savings Allowance
- You want same-day access without waiting for prize-draw timing

## Frequently asked questions

### What is the Premium Bonds prize-fund rate?

The rate NS&I uses to calculate the size of the monthly prize pot relative to the total amount invested. It is a guide to the typical return — most people with average luck earn close to it, some earn nothing, a tiny minority win much more.

### Are NS&I Premium Bonds covered by FSCS?

They don't need to be — NS&I is owned by HM Treasury, so 100% of money held with NS&I (including Premium Bonds) is backed by the UK government.

### Can I buy Premium Bonds for a child?

Yes. Anyone aged 16 or over can buy them for a child under 16. The child's parent or guardian becomes the registered nominee until the child turns 16.

## Sources

- [NS&I — Premium Bonds](https://www.nsandi.com/products/premium-bonds)
- [FSCS — Bank and savings cover](https://www.fscs.org.uk/what-we-cover/banks-building-societies/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.