Premium Bonds are issued by National Savings and Investments (NS&I) and provide an alternative way of investing funds. Interest is not paid on Premium Bonds – instead your bonds are entered into a prize draw each month. All prizes are tax free.
You can invest a minimum of £100 and a maximum of £50,000. Bonds can be cashed in at any time without penalty.
Parents, grandparents and even great grandparents can buy Premium Bonds, although the bond must be held on the child's behalf by parents or guardians until the child reaches the age of 16. Any prizes won before this time will be paid to the parent or guardian and only the parent or guardian can cash in bonds before the child reaches 16.
There is a £1 million jackpot each month and many other monthly prizes of amounts ranging from £25 to £100,000.
You can apply online by visiting the NS&I website, or you can apply by telephone on 08085 007 007.