What are Premium Bonds? (UK)?

Question

Could someone explain what Premium Bonds are, inc rules, ads/dis etc.

Answer 1

Assuming that you know the definition of bond (debt security), premium bonds are bonds that are sold above the principal value. e.g: A 3 years $1000 bond sold at $1,100 is a premium bond ($100 premium). There are really no ads/dis, the premium is explained by changes in interest rate(ir). if ir go up:premium bond, if ir goes down:discount bond

Answer 2

The above answers are correct and the only thing I wish to add is that the winnings amount to a return of 4% pa (tax free) and you can judge the value for money they represent from that. Rather poor value, I would say.

Answer 3

They are Bonds that you buy from the Government and really a sort of 'gamble'. Every month, bond numbers are drawn at random and various prizes (up to the value of £1 million) can be won. Your money is 'safe' but when you cash you bonds in you only get the same value as when you bought them - i.e. you don't get any interest. Martin Lewis the 'investment guru' doesn't reckon much to them - saying that my wife and I have a few (You never know, we might just win the £1m!!!)

Link to Martin Lewis's site on Premium Bonds

http://www.moneysavingexpert.com/savings...