NS&I Premium Bonds and Savings: A Beginner’s Guide for UK Investors

 

National Savings and Investments (NS&I) is a government-backed savings bank in the UK, known for products like Premium Bonds that add a bit of fun to saving. If you’re a new or beginner investor in the UK, this friendly guide will walk you through what NS&I is, the products it offers (Premium Bonds, Income Bonds, Direct Saver, Investment Account, Green Savings Bonds, etc.), how Premium Bonds work (odds, prizes, returns), pros and cons of NS&I versus other options, real customer experiences, and answers to common FAQs. Let’s dive in!

What Is NS&I? (A Safe Place to Save)

 

NS&I (National Savings and Investments) is a government-owned savings institution, essentially the UK’s state-owned savings bank . It was founded way back in 1861 (originally as the Post Office Savings Bank) to give ordinary people a safe place to save while raising funds for the government . Over 160 years later, NS&I is still going strong – today it’s an executive agency of the Chancellor of the Exchequer, operating independently of day-to-day politics but backed by HM Treasury .

All money saved with NS&I is 100% guaranteed by the government, no matter the amount . This is a key selling point – unlike regular banks which have FSCS protection only up to £85,000, NS&I has the full faith of the UK governmentbehind it. In practical terms, that means your savings are as safe as they can get (short of the government itself collapsing) . This ironclad security is one reason NS&I has over 24 million customers today , making it a trusted household name for generations of savers.

NS&I’s purpose is twofold: to offer a safe home for savers’ money, and to provide cost-effective funding for government spending . When you save with NS&I, you’re effectively lending to the government to help finance public projects, and in return the government pays you interest (or prizes) on many NS&I products . NS&I often adjusts its interest rates based on government fundraising needs – sometimes raising rates to attract more savers when needed .

In summary, NS&I is unique: it’s government-run, 100% secure, and focuses solely on savings (it doesn’t offer loans or typical banking services – just savings and investment products ). This makes it quite different from your high street bank!

NS&I Savings Products at a Glance

 

NS&I offers a range of savings and investment products – some available continuously, others coming and going. Here are the main NS&I products you should know about (especially the most popular ones):

• Premium Bonds: NS&I’s flagship product and a national favorite. Instead of earning regular interest, each £1 bond enters a monthly prize draw for tax-free prizes up to £1 million. You can invest £25 to £50,000, and you’re guaranteed your money back whenever you cash out (no capital risk) . Premium Bonds have made millionairesand are held by over 24 million people, but whether you win anything is down to luck.

• Income Bonds: An easy-access savings account that pays a monthly interest income directly to your bank account. Currently, Income Bonds pay 3.30% AER (variable) . You can deposit from £500 up to £1 million. Unlike Premium Bonds, you get a guaranteed interest payout each month (so it’s reliable for income) , and you can withdraw your money at any time without penalty. It’s great if you want to earn regular interest you can spend, without touching your principal.

• Direct Saver: A straightforward easy-access savings account you manage online. It currently pays 3.30% gross/AER (variable) interest, credited annually . You can start with just £1 (up to £2 million). You don’t get monthly income (interest is paid yearly into the account), but you have the flexibility to deposit or withdraw whenever you like . Think of it like an online savings account with a decent rate, backed by the government.

• Investment Account: A bit of an old-school offering – this is a postal-only savings account (you do everything via post or offline). It currently pays a low 1.00% AER (variable) . Minimum £20 to open (up to £1m). It’s not advertised on NS&I’s website much (since the rate is quite uncompetitive) , and you have to fill out forms to transact. Frankly, this account is a legacy product – safe, but with such a low rate it’s mostly for those who prefer paper-based saving or already have one from years past.

• Green Savings Bonds: A fixed-term, fixed-rate bond where your money is used to fund green projects for the government (think renewable energy, clean transportation, etc.). The current issue is a 3-year bond at 2.95% gross/AER . You can invest between £100 and £100,000. The interest is paid at maturity (after 3 years), and you can’t access your money in the meantime without penalty. It’s a way to lock in a rate and support environmental initiatives, though the rate (2.95%) is a bit lower than other comparable fixes in the market as of now.

• ️ (Plus, NS&I also offers tax-free ISAs): They have a Direct ISA (cash ISA) at 3.50% tax-free AER and a Junior ISA for under-18s at 4.00% tax-free . These work like normal cash ISAs (annual contribution limits apply). While not highlighted in the question, it’s good to know NS&I provides ISA options too (often not the top rates, but extremely safe and some people like to keep all savings under the NS&I umbrella).

• Guaranteed Growth and Income Bonds (aka “British Savings Bonds”): These are fixed-term deposits (1, 2, 3, or 5 years) that NS&I offers in limited issues. For example, the current 1-year Growth Bond pays 4.05% and the 1-year Income Bond pays 3.98% (4.05% AER) . These bonds come and go depending on government targets, but they’re essentially like fixed-rate savings accounts – you lock your money in and get a guaranteed rate. They can be attractive when available (rates have sometimes been competitive with bank CDs). Just note you can’t withdraw until the term ends (or you’ll face a penalty).

 

That’s the product lineup in a nutshell. Premium Bonds are by far the most popular NS&I product (with over £125 billion invested in them by savers) , but the other accounts serve different needs – from steady income (Income Bonds) to easy online saving (Direct Saver) to fixed-term commitments (Green or Guaranteed Bonds). The common thread is 100% security and the NS&I trust factor.

How Do Premium Bonds Work?

https://www.nsandi.com/products/premium-bonds

Premium Bonds deserve a deep dive, as they’re unique and often the first thing people think of when NS&I is mentioned. Here’s the lowdown:

Instead of paying interest, Premium Bonds give you the chance to win tax-free prizes. When you buy Premium Bonds, you purchase £1 units (each bond = £1). You need to buy a minimum of £25 worth to start , and you can hold up to £50,000 per person. Each £1 bond is like a lottery ticket entered into a monthly prize draw (the draws are typically at the start of each month).

Prizes range from £25 up to £1 million – and importantly, you never lose your initial money. If you don’t win any prizes, your bonds are still there and you can cash them in at face value (so your capital is 100% safe, but you might earn zero return in a bad year) . This safety net is why Premium Bonds are often seen as a no-risk flutter – you won’t lose money (except to inflation), but your “interest” is left to chance.

Every month, two jackpot winners of £1 million are picked, along with millions of smaller prizes . Currently, the smallest prize is £25 (and there are also prize tiers like £50, £100, £500, £1,000, £5,000, £10,000, £25,000, £50,000, £100,000, and the big £1,000,000) – all tax-free. So even winning a £25 prize is equivalent to £25 net of tax (which for a basic rate taxpayer is like £31 gross interest). Prizes are paid out or can be automatically reinvested into buying more bonds (if you have room under the £50k limit).

Odds and Prize Rate: What are your chances of winning? As of now, each £1 bond has a 1 in 22,000 chance per month of winning something . Those odds may change slightly over time (NS&I adjusts them when it adjusts the prize fund rate). The “annual prize fund rate” is currently about 3.80% (dropping to 3.60% from August 2025) – this is often referred to as the “nearest thing to an interest rate” for Premium Bonds. It basically means that on average, across all bond holders, the prizes paid out roughly equal what a 3.8% interest rate would be. However – and this is crucial – you are not guaranteed to get that rate of return. In fact, most people will get less than that average , and a lucky few will get more (maybe much more, if they hit a big prize).

Why would most get less than the 3.8%? Because prizes are distributed unevenly (lots of people win nothing or only £25 here and there, while a few win large amounts). MoneySavingExpert explains it well: if 20 people each put in £100, the “mean” average might be £3.80 payout each (3.8%), but because you can’t actually win £3.80 (smallest prize is £25), what happens is one person might win £25 (which is a 25% return on their £100) and the other 19 win zero . So the median (typical) return is actually £0 in that small sample. On a larger scale, with more bonds:

• If you hold a small amount (say £100 or £1,000), it’s very possible you earn 0 prizes in a year (0%) – in fact, someone with £1,000 in Premium Bonds still has a better-than-50% chance of winning nothing in a year .

• With bigger holdings, your odds improve. With £10,000 in bonds, the median “luck” would be about £325 a year in prizes (3.25%), slightly below the prize rate .

• With £25,000 in bonds (half the max), median expected winnings are around £800 a year, ~3.2% rate .

• Only at the full £50,000 holding does the median approach roughly £1,650 a year (~3.3%) , still a bit below the current prize fund rate.

 

In short, the more you invest (up to the £50k limit), the closer your returns should get to the average, simply because of the law of large numbers smoothing out luck. Small investors often get nothing or just occasional £25 wins. Larger investors usually see some wins each month, though they too are not guaranteed to hit the average exactly.

Now, how do Premium Bond returns compare to ordinary savings interest? At the time of writing, NS&I’s prize fund rate of ~3.7–3.8% is slightly behind the top easy-access savings accounts or short-term fixes available (many top savings accounts pay around 4–5% interest) . That means on average, Premium Bonds might yield a bit less interest than a normal savings account with the best rate . However, the Premium Bonds prizes are tax-free, which is a big plus if you’re a higher-rate taxpayer or have a lot of savings interest. (Remember, most people have a Personal Savings Allowance allowing £1,000 of bank interest tax-free if you’re basic-rate, or £500 if higher-rate . So if your savings interest is below those thresholds, the tax-free aspect of Premium Bonds doesn’t really give you an extra benefit . But if you would otherwise pay tax on interest, Premium Bonds can be more attractive.)

Another thing to consider is inflation – Premium Bonds pay no guaranteed interest, so if you’re unlucky and win little, your money’s purchasing power will erode over time . Even if you do win some prizes, if the prize rate is below inflation, the real value of your savings falls. For example, a common criticism is that in periods of low prize rates (e.g. 2020 when the rate was 1%), Premium Bonds holders effectively lost money in real terms unless they hit unusual luck.

On the positive side, Premium Bonds are flexible: you can cash out any time without penalty, and you’ll get back exactly what you put in. Many people treat them like an instant-access savings account that could randomly drop some extra money in your lap. There is also a sentimental/entertainment value – each month’s draw is a little thrill to see if you won. This “fun factor” is real; it’s often cited by savers who might otherwise find saving boring.

ERNIE (Electronic Random Number Indicator Equipment) is the famous random-number generator that picks the winners. It’s essentially a hardware random number generator. Over the years there have been different ERNIE machines (the current is ERNIE 5, a quantum random number generator). Originally, ERNIE was a physical machine the size of a cupboard, using thermionic valves and random noise to spit out winning numbers in 1957. Fun fact: ERNIE 1 (the first Premium Bonds computer) took almost three days to complete a monthly draw and was in service from 1957 until 1973 !

ERNIE 1, the original Premium Bonds number-picking machine, on display at the Science Museum in London. It was introduced with the first Premium Bond draws in 1957 – back then it could take days to crank out all the winning numbers! Technology (and prize totals) have come a long way since then.

Bottom line on Premium Bonds: They’re 100% safe and can be fun. If you’re lucky, you might beat normal savings accounts (or even hit life-changing prizes). If you’re unlucky, you could end up with an effective return of near 0% in a given year (though over many years, most people with substantial holdings tend to gravitate toward a modest average return). Many people use Premium Bonds as a tax-free emergency fund or alternative to an easy-access account, knowing it won’t earn as much interest on average as the top savings, but valuing the security and lottery-like excitement. It really depends on your personality and financial situation whether they’re “worth it” – we’ll explore more in Pros/Cons and FAQs.

Premium Bonds 10-Year Projection (Example)

 

Just to visualize how Premium Bonds might perform, here’s a simple projection: imagine you put £25,000 into Premium Bonds and reinvested any winnings (i.e. used prizes to buy more bonds, up to the limit) for 10 years. If we assume an average effective return of ~2% per year (which is in line with historical averages over the long term, considering prize rates were much lower in the 2010s than today), your balance might grow something like this:

Illustrative projection of £25,000 in Premium Bonds over 10 years assuming ~2% average annual prize returns. In this scenario, the initial £25k could grow to around £30.5k after a decade (if all winnings are reinvested). Actual results will vary widely – you might do better or worse, since returns depend on random prizes. In fact, with unlucky draws you might see much lower growth (or none at all), while very lucky winners could see a big jump if they hit a large prize.

Note: The above chart is just an average-case illustration. As discussed, many people will experience a lower rate (especially with smaller investments), and a few will experience higher. Premium Bonds are not a predictable “X% interest” product – think of it as a range of possible outcomes with a certain average. For comparison, if you put £25k in a normal savings account at 3-4% interest and reinvested interest, you’d have a pretty deterministic outcome (around £33-37k after 10 years at 3-4%). With Premium Bonds, you could end up anywhere from £25k (no wins) to well over £33k (if you snag some big prizes), but most likely somewhere in the upper £20k to low £30k range.

NS&I Income Bonds (Monthly Income) and Other Products

 

While Premium Bonds steal the spotlight, NS&I’s other products are important for many savers – especially those who want guaranteed interest. Let’s look at NS&I Income Bonds, Direct Saver, Investment Account, and Green Bonds in a bit more detail, and how they compare.

NS&I Income Bonds – Steady Monthly Interest

 

Income Bonds are ideal if you’re looking for regular interest payouts without risk to your capital. With an Income Bond, you deposit e.g. £25,000 (minimum to open is £500) and currently earn 3.30% AER interest, paid monthly into your bank account . That means each month you’d get a credit of your interest (for £25k at 3.3%, that’s about £68.75 per month). You can spend that money or use it as income, while your £25,000 stays put earning more interest the next month. You can withdraw any or all of your money whenever you like (no notice, no penalties), as long as you maintain the £500 minimum balance .

Income Bonds are a low-risk way to generate passive income – especially popular with retirees or anyone who wants interest paid out regularly. The key difference from Premium Bonds is you will definitely get interest each month (at the stated rate), so there’s no uncertainty . The trade-off is you won’t win big prizes or anything; you “just” get the interest.

As of now, 3.3% is a respectable rate but note that the very best savings accounts (not NS&I) might offer slightly higher for easy-access. NS&I’s Income Bond rate can change (it’s variable), but NS&I often tries to keep it roughly in line with market averages. The interest is taxable (it’s normal savings interest), but remember your Personal Savings Allowance may cover it if your total interest isn’t huge.

To illustrate, here’s what £25,000 in an Income Bond could yield:

If you put £25,000 into NS&I Income Bonds at 3.30% and withdrew the interest annually (or as it’s paid monthly) without touching the principal, you’d receive about £825 per year in interest. Over 10 years, that’s £8,250 of total “passive income” paid out to you, while your original £25k remains intact. The green bars above show the equal annual interest, and the orange line shows the cumulative total you’d have withdrawn by each year. In practice, interest rates can change over time, but this gives a sense of scale.

One thing people like about Income Bonds is that monthly payout – it can feel like a little paycheck. You could achieve the same with other savings accounts by withdrawing interest manually, but NS&I automates it nicely. Also, for those with a lot of cash (NS&I allows up to £1 million in Income Bonds), it’s one of the few places you could safely stash, say, £200k and get interest on the whole lot without worrying about the £85k FSCS limit (since NS&I is fully guaranteed by the government).

NS&I Direct Saver – Easy-Access Online Savings

 

The Direct Saver is a simpler product: 3.30% variable interest, paid annually, on balances from £1 up to £2m . You manage it online or by phone. It’s “easy access”, meaning you can deposit or withdraw whenever. Think of it like an online savings account with a decent (though not top) rate, run by NS&I.

There’s not much quirk here – unlike Premium Bonds, a Direct Saver is straight interest. It’s taxable interest (but again, PSA applies). You can also have a joint Direct Saver with someone, which is nice if you want to save together (this is something NS&I allows on Direct Saver accounts) .

If you don’t need the monthly payouts of an Income Bond and are fine with annual interest, the Direct Saver is slightly more convenient (online managed, £1 min). Both Income Bonds and Direct Saver often have very similar rates (right now 3.30% vs 3.30% AER – virtually the same) . So it’s more about do you want monthly interest out, or to leave it in to compound? If you leave interest in a Direct Saver, it compounds over time (though at these rates, compounding for one year vs monthly isn’t a big difference).

NS&I Investment Account – Old-Fashioned and Low Interest

 

The Investment Account is basically NS&I’s legacy passbook account. It only pays 1.00% interest currently . You have to manage it by post (mailing forms to withdraw, etc.) or possibly phone. NS&I isn’t promoting it to new customers because, frankly, 1% is very low today and the account is somewhat outmoded .

Why would anyone use it? Perhaps someone who opened one decades ago and likes using it for their child or as a very basic account that any relative can contribute to (it does have a feature where, say, a grandparent can open one for a child without needing to be the parent/guardian, which is somewhat unique) . But for most, you’d skip this account given far better rates elsewhere, even within NS&I. If you already have money in an Investment Account, you might consider moving it to a Direct Saver or Income Bond to earn more, unless having the postal aspect is important to you.

NS&I Green Savings Bonds – Fixed Term for a Cause

 

The Green Savings Bonds were introduced in 2021 as a way for savers to support the UK’s green projects. The idea: you lock your money for 3 years and get a fixed interest rate (currently 2.95% AER) . The rate is locked in, but notably when first launched the rate was very low (~0.65% – it attracted criticism). NS&I has since increased it to be more in line with market rates, but as of now 2.95% for 3 years is below the top market rates for 3-year fixes. So you’d mainly choose this if you like the idea of supporting green initiatives with your savings and trust NS&I’s absolute security.

Interest on Green Bonds is paid at maturity (i.e. all at once after 3 years). You can’t access your money in between. Minimum £100, maximum £100k . They are fully guaranteed like all NS&I products. If interest rates in the broader market fall, these could look more attractive; if they rise, you’re locked in lower. So it’s a bit of a gamble on rate trends (as with any fixed-rate bond).

NS&I Guaranteed (Growth/Income) Bonds – Fixed-Rate Options

 

Though not explicitly asked in the question, for completeness: NS&I currently has “Guaranteed Growth Bonds” and “Guaranteed Income Bonds” (recently branded as British Savings Bonds in marketing) . These are basically 1-year, 2-year, 3-year, or 5-year term deposits with a guaranteed rate. For example, the 3-year Growth Bond is 4.10% (interest paid at end), and the 3-year Income Bond is 4.03% (interest paid out monthly) . These rates have been quite competitive and are among the highest NS&I has offered in years. They were introduced in 2024 to attract more funding (likely since NS&I had higher targets to raise for the government).

These Guaranteed Bonds come and go – sometimes NS&I withdraws them from sale once they’ve met their financing target. If they’re available and you’re okay locking your money in, they can be very attractive given the government backing. They also can be hefty – up to £1 million per person allowed , which is far above typical bank limits. So high net-worth individuals, or trustees, sometimes flock to NS&I bonds when the rates are good.

One note: If you need to cash these fixed-term bonds early, you usually lose some interest (penalty). Always check terms. Typically NS&I’s penalty might be like 90 days’ interest for 1-year bonds, and more for longer terms (not 100% sure of current terms, but just know it’s not freely liquid).

Pros and Cons of NS&I vs Other Savings Options

 

Now that we’ve covered what NS&I offers, let’s talk big picture: What are the advantages and disadvantages of NS&I products compared to other places you could put your money? Here’s a rundown:

✅ NS&I Pros:

 

• Ultimate Safety: NS&I is as safe as it gets. Your money is backed 100% by HM Treasury, with no limit . In comparison, banks and building societies are safe up to £85,000 under FSCS protection – beyond that, if a bank failed you could lose any excess. With NS&I, even if you have £500k or more, it’s all protected by the government. The only scenario where NS&I wouldn’t pay out is if the UK government itself went bankrupt – at that point, we’d have bigger problems indeed . This makes NS&I particularly attractive for wealthier savers or those who prioritize security (e.g. keeping an inheritance safe).

• Tax-Free Benefits: Premium Bonds prizes are tax-free, which is a big plus for savers who might otherwise pay tax on interest (especially higher-rate taxpayers) . Also, NS&I’s ISAs are tax-free (like all ISAs). While most NS&I interest (Direct Saver, Income Bonds, etc.) is taxable, the existence of Premium Bonds as a tax-free “extra allowance” of sorts is valuable: prizes don’t count towards your Personal Savings Allowance , so in effect, you could earn more tax-free than you could with bank interest if you max out your PSA – Premium Bonds are an additional tax-free shelter for interest, assuming you win something.

• Easy Access & No Penalties: NS&I’s easy-access products (Direct Saver, Income Bonds, Premium Bonds) allow you to withdraw anytime without fees. Even fixed-term products like Green or Guaranteed Bonds, while they lock you in, at least guarantee the rate (and NS&I did allow early exit from Green Bonds in the first issues when people complained about low rates, though that was an exception). There’s a lot of flexibility overall, especially with Premium Bonds – you can pull money out quickly (usually takes around 3 working days to get money after you cash in online) .

• Unique “Prize” Element (Premium Bonds): Let’s face it, the chance of winning a million or other big prizes is a psychological and real benefit. It’s fun! Many people say they like Premium Bonds because each month they get to dream a little. As one customer put it: “I save regularly by standing order to buy Premium Bonds. On average my winnings equal the going rate with other investments and there’s always the chance of a big prize, all tax free.” For those who hate seeing low predictable interest trickle in, Premium Bonds provides interest in a more exciting way.

• Good for Gifting and Kids: Premium Bonds can be bought as gifts for children, and kids under 16 can hold bonds (with a parent/guardian managing). It’s a popular gift from grandparents. NS&I’s Investment Account also lets family open accounts for a child more freely than some banks. So NS&I is often used for children’s savings(alongside Junior ISAs) – Premium Bonds especially, since kids won’t worry about the interest rate and will love the idea of winning prizes.

• Trusted & Established: NS&I has been around forever, so there’s a trust factor. Some folks feel more comfortable with the “government bank” than with newer online banks, etc. Also, NS&I has no shareholders; its “profits” (when it pays less interest than it could have) essentially benefit taxpayers. So some see it as “putting money to work for the country” while saving.

• Large Balances Welcome: If you have a very large sum (say you sold a house, or you’re managing an estate), NS&I is one of the few places you can park millions and still have it all guaranteed. Private banks might do that too but usually at lower interest unless you spread it around. NS&I allows up to £2m in Direct Saver, £1m in Income Bonds, £1m in each of the Guaranteed Bonds, etc. Some savvy savers with huge sums actually spread a few million across various NS&I products to keep every penny 100% secure.

 

⚠️ NS&I Cons:

 

• Often Not the Highest Rates: NS&I’s interest rates, while improved lately, are often lower than the very top commercial rates. For example, top easy-access accounts from banks might pay, say, 4-5%, whereas NS&I Direct Saver is 3.3%. Top 1-year fixed bonds from banks might be 5%, whereas NS&I’s 1-year is ~4% (hypothetical example). NS&I balances the needs of savers and taxpayers , so it doesn’t always chase the top of the market. They sometimes deliberately price slightly lower than best-in-market to avoid unfair competition with banks (since they have gov guarantee advantage). Bottom line: if maximizing interest is your absolute goal and you’re comfortable with normal bank protections, you can usually find better rates outside NS&I for pure interest earnings .

• Premium Bonds Returns Are Unpredictable: While safe, Premium Bonds don’t guarantee any return. If you’re unlucky, your “interest” could be effectively zero, which means you lose out to inflation . Over time, with average luck, you might make a bit under the prize fund rate (as discussed, median returns are a tad lower) . For many, that’s fine given the positives, but if you absolutely need a certain amount of interest, Premium Bonds are not suitable. Also the odds of hitting the really big prizes are extremely small (you have a 1 in almost 59 billion chance per bond to win the £1m in any given draw; even with max bonds, that’s still around 1 in 1.3 million chance for you per month to bag a million). So the “dream” is fun but one shouldn’t count on it. In essence, the opportunity cost is that money in Premium Bonds could have earned a sure return elsewhere – so if you never or rarely win, you come out behind where you could have been.

• Inflation Risk for Fixed Rates: If you lock into NS&I’s fixed-rate bonds (Green or Guaranteed) and inflation spikes, your money could lose real value. This is true of any fixed-rate product, but note NS&I no longer offers inflation-linked certificates to new money (they used to, and some lucky people still hold old index-linked certificates at NS&I – those were great, but off-sale now). So NS&I can’t protect you from inflation except with those legacy products.

• Website and Service Quirks: NS&I’s online system has improved, but some customers have complained about the website and login process. There are reports of people getting locked out due to tricky security questions or the site timing out . Also, NS&I is not on open banking, and sometimes bank transfers from NS&I take a couple of days (they often use BACS, not Faster Payments, for withdrawals which can be slower). According to some Trustpilot reviews, while many find it easy to move money, others hit snags like “being locked out of their accounts after answering security questions correctly, and having to wait several days for a new password” . So user experience might not be as slick as a modern app-based bank.

• No Branches (mostly): You can’t walk into an NS&I branch (they don’t really have branches; they partner with Post Office for some transactions historically, but generally it’s all remote). That said, many banks are also branchless these days, so this may not be a big issue.

• No FSCS – Not that it matters: Some people might worry that NS&I isn’t covered by FSCS. But that’s because it doesn’t need to be – the government backs it directly. However, a very cautious person might think “what if the rules change?” etc. In reality, that’s not a concern; NS&I’s guarantee is pretty ironclad and has never been reneged on.

• Stocks & Investments Could Outperform: This is not a critique of NS&I per se (since NS&I is about safe saving, not investing in markets), but it’s worth noting: over the long run, investing in stocks, funds, or other higher-risk assets could yield higher returns than NS&I savings. NS&I doesn’t offer any stock market-linked products anymore (except some old ones like Children’s Bonds which are gone, and Premium Bonds which are not really “investments” in the growth sense). So if you’re aiming to grow money significantly and can tolerate risk, NS&I products might feel “slow”. For example, over 10+ years, a diversified stock portfolio might average >5% returns (not guaranteed, with lots of volatility), which could beat the ~1-4% you might get from NS&I. Of course, that comes with risk of loss, whereas NS&I won’t lose nominal value. So it’s trade-off of safety vs growth.

• Product Availability: NS&I can withdraw products from sale or change rates at any time. Sometimes people get frustrated if, say, the Guaranteed Bonds sell out or the rate is cut. NS&I’s mission involves balancing government funding costs, so if they have met their goal for the year, they might not need more money and thus might lower rates or pull offerings. You have to keep an eye on NS&I news; for instance, interest rate changes (like the Premium Bonds rate being cut from 4% to 3.8% to 3.6% within 2024-2025) can affect whether it’s as attractive compared to banks.

 

In summary, NS&I is best for safety-conscious savers, those who value the tax-free or unique features, and those who don’t mind possibly earning a bit less interest in exchange for peace of mind (or a bit of excitement, in the case of Premium Bonds). It’s not the go-to if you simply want the highest interest rate or big investment growth – other providers or investments serve that purpose but with different risks.

Customer Reviews and Experiences with NS&I

 

What do real customers say about NS&I and its products? The feedback is mixed-positive overall, with certain themes emerging:

On the positive side, many customers appreciate the ease and simplicity of saving with NS&I and the security it offers. For example, users on Trustpilot have commented on the convenience: “I like the ability to move funds to and from my NS&I products simply and quickly. The security measures in place (automated phone calls, one-time passcodes, memorable data questions) make me feel that my funds are well-protected.” . A lot of savers set up regular deposits (standing orders) to buy Premium Bonds each month and find that straightforward. One user wrote: “I have set up some direct debits to make regular investments. If I can do that then anyone can.” (implying the process is user-friendly) .

The enjoyment factor of Premium Bonds comes through strongly. Reviews frequently mention that Premium Bonds are a “great & fun way to save money” because of the excitement of the prize draw . As one saver put it: “NS&I Premium Bonds savings is a great & fun way to save money as you have the opportunity to win… and the chance of winning the £1M, so win-win most of the time” . People love that withdrawals are quick and that prizes (even small ones) get automatically paid to their bank or reinvested. There’s an intangible benefit to many in knowing “I never lose my savings, and I might gain – it makes saving feel less like a sacrifice”.

Customers also like that NS&I interest and prize rates have improved recently: “On average my winnings equal the going rate with other investments and there’s always the chance of a big prize, all tax free. Withdrawal is as easy as…” (the review cut off, but we can assume it says it’s as easy as pie) . So, basically, satisfied Premium Bond holders often report that their returns ended up comparable to a decent savings account, with the added excitement of maybe getting more.

Now, on the negative side, the most common complaints are about NS&I’s website and login process. Some users find the online system clunky or outdated. For instance, a number of reviews mention frustration with being repeatedly logged out, or difficulties resetting passwords. There are cases where people answer security questions correctly yet get locked out, then have to wait for a new password by post – which is obviously aggravating . Mobile users in particular have said the site can be fiddly, logging them off unexpectedly. NS&I has added more security layers in recent years (e.g. two-factor auth via phone), which improves safety but can inconvenience folks during setup.

Customer service experiences seem mixed. A few have reported delays in reaching NS&I by phone during busy periods (like when rates change and many call). Others had no issues contacting them. Since NS&I deals with massive numbers of customers, there will always be some hiccups.

Another point: Premium Bonds expectations vs reality. Some customers get disappointed if they don’t win much. For example, anecdotally on forums, you’ll find people saying “I’ve had £10k in Premium Bonds for 2 years and only ever got £25!” while others will boast “I’ve consistently gotten ~3% from my Bonds”. So individual experiences vary. It’s important for new investors to go in with eyes open: you might be that unlucky person who feels like “Premium Bonds never pay me anything!” or you might be pleasantly surprised.

However, overall sentiment tends to recognize that NS&I is trustworthy and safe, even if not glitzy. On Trustpilot, NS&I has a 4.2/5 “Great” rating with thousands of reviews . That’s pretty solid for a financial institution. The high scores often cite security, peace of mind, and the fun of Premium Bonds, while the low scores often cite website issues or a specific customer service problem.

To quote the Trustpilot summary: “Customers appreciate the ease and speed of moving money in and out of NS&I products. The security measures give confidence that funds are well-protected. Many find the Premium Bonds option enjoyable – the chance to win prizes each month is highlighted as a creative way to save. The process of buying bonds online and setting up direct debits is well-received.” On the flip side, “some have faced challenges with the website, especially on mobile (frequent logouts). Others had issues with the login process – e.g. being locked out after answering security questions correctly and waiting days for a new password. A few found the website confusing when trying to locate specific information or complete transactions.” .

In summary, beginner investors can take away that NS&I is widely trusted and liked for its safety and the unique twist of Premium Bonds, but one should also be patient with its perhaps not-so-cutting-edge tech, and be realistic about the returns. Many people happily use NS&I alongside regular banks – for example, keeping an emergency fund in Premium Bonds or an Income Bond, while also using bank accounts for higher interest on some funds, and maybe investing some money in stocks for growth. NS&I plays a specific role: ultra-safe savings with some special features. And by most accounts, it fulfills that role well, with the UK public continuing to show strong support for it (Premium Bonds especially continue to break records in amount invested).

FAQs (Frequently Asked Questions)

 

Finally, let’s address some common questions new investors often have about NS&I and Premium Bonds:

Q: Are Premium Bonds really worth it?

A: It depends on what you mean by “worth it.” If you value absolute security, tax-free potential returns, and a bit of fun, they can be worth it as part of your savings mix. You won’t lose any money you put in (apart from inflation effects), and many people find that over the long run they earn something like 2-4% per year in prizes . However, Premium Bonds are not the way to maximize guaranteed interest – on average the prize rate (currently ~3-4%) is slightly lower than the best ordinary savings accounts , and there’s a good chance your effective return will be lower than that average (especially if you hold a smaller amount) . If you’re unlucky, you might get near 0% for some time (no wins), which would underperform even a basic bank account. So, they’re “worth it” if you’re okay trading a bit of certainty for the chance of something bigger (and for the tax-free aspect). Many people with lots of savings think they’re worth it because once you’ve maxed other tax shelters and safe accounts, Premium Bonds give you an extra place to stash money securely with a possibility of outperforming. If you need guaranteed income or the highest rate possible, you’d use a different product. A balanced view: Premium Bonds are worth considering for medium to long-term savings you don’t strictly need interest from, where you’d enjoy a flutter and accept possibly lower returns. If that sounds like you, then yes, Premium Bonds could be a worthwhile choice. If not, you might be better off in a high-yield savings account or ISA.

Q: Can you lose money with NS&I?

A: In nominal terms, no – you will never lose a penny of your original deposit with NS&I because of the government guarantee . NS&I won’t go bust and won’t “bail-in” your cash. Even Premium Bonds, where returns aren’t guaranteed, ensure you can cash out every bond for £1 each as you bought them . However, there are a couple of caveats:

1. Inflation can erode the real value of your money. If your NS&I product (say Premium Bonds or a low-interest Investment Account) yields 0-1% and inflation is 5%, then after a year you can still withdraw all your money, but it would buy 5% less stuff than before – effectively a loss in purchasing power. So you can “lose ground” to inflation, just like with any savings if the rate is below inflation .

2. Opportunity cost: If you choose a lower interest NS&I product when you could have gotten higher interest elsewhere, you lose out on potential earnings. That’s not losing your money per se, but it’s losing potential growth.

3. Early withdrawal penalties: If you have, say, a 3-year Guaranteed Bond with NS&I and you cash out early, you might get back less interest (NS&I might dock some interest as a penalty). But you generally won’t lose principal. For example, cashing a Guaranteed Growth Bond early usually means you lose X days of interest but you still get your original deposit.

   In summary, NS&I keeps your money safe, but to maintain its value you should aim to at least earn some interest. Premium Bonds won’t lose money except the invisible loss of inflation, which is worth keeping in mind. So, practically, no – you can’t see your account balance go down at NS&I, unlike investments which can fluctuate. That’s a big reassurance for risk-averse savers.

 

Q: How do I buy Premium Bonds?

A: Buying Premium Bonds is easy and you have a few methods: the quickest is online via the NS&I website. You’ll need to register an account with NS&I if you haven’t already (they’ll set up an online login for you). Once registered, you can use a debit card to purchase Premium Bonds online (minimum £25) . You can also set up a monthly standing orderto automatically buy £25 (or more) of bonds each month – a lot of people do this to build up their holdings gradually . Alternatively, you can call NS&I and they’ll take your details over the phone (again, debit card needed) . There’s also a postal option: you can fill out a form and send a cheque (forms are downloadable or you can request them). If buying for a child under 16, there’s a specific form and process – essentially a parent/guardian has to be named to look after them . But it’s straightforward. You cannot buy Premium Bonds with a credit card or cash – it must be bank transfer, debit card, or cheque from an account. Many people today use the online route; it’s secure and you’ll get a confirmation of your bond purchase. Once you’ve bought them, remember that new bonds have to be held for a full calendar month before they enter a draw . For example, if you buy in mid-July, those bonds will first be eligible for the September draw (so there’s always a short initial waiting period). Your bonds will be assigned unique numbers, and you can log in to the NS&I site or use their Prize Checker app to see if you win each month. Also, Premium Bonds are only sold by NS&I (no third parties), and there are no fees or charges to buy them.

Q: Are NS&I accounts safe?

A: Yes – NS&I is probably the safest place you can put your savings in the UK. As mentioned, it’s backed by HM Treasury, meaning the government guarantees 100% of your money . While regular banks rely on the Financial Services Compensation Scheme (which covers up to £85k per bank), NS&I bypasses that with an explicit government promise. So if safety is your concern, NS&I is as good as it gets. Even during financial crises, NS&I is rock solid (people often move money to NS&I in turbulent times). The government would literally print money to repay NS&I deposits if it ever came to that. In addition to the backing, NS&I has strong security protocols for online access (perhaps a bit too many steps, as some complain, but it does protect you) . They use things like two-factor authentication, security questions, and do identity checks when you register. Also, NS&I won’t ever call you out of the blue asking for personal info – so if you get any communication, always verify it’s genuine (phishing attempts exist, as with any bank). But as long as you keep your login and personal details safe, NS&I’s systems will keep your money safe. In summary, yes, NS&I accounts are extremely safe – both in terms of financial guarantee and operational security. The only “unsafe” aspect is that, as with any savings, if you go for products with variable rates or prizes, there’s the “safety” of returns to consider (e.g., safe from loss doesn’t mean you’re safe from interest rates going down). But your cash is not going to disappear.

Q: Premium Bonds vs Savings Accounts – which is better? (Bonus FAQ)

A: This is a classic debate! For pure guaranteed returns: a top savings account will usually win, since it’ll pay a fixed interest. For example, if a bank pays 5% on £10k, you will earn £500 that year. Premium Bonds at 3.8% prize rate might on average pay £380 on £10k, but you could easily end up with £0 or maybe £75 or £150 etc., and only a small chance of something like £500+ in prizes . So statistically, a normal savings account yields more for most people (especially on smaller balances) . However, Premium Bonds have advantages: all winnings are tax-free (a 5% bank account is effectively ~3% for a higher-rate taxpayer after tax), and Premium Bonds give you the possibility of more. They also have that premium bond “buzz” factor. Many savers adopt a hybrid strategy: keep some money in Premium Bonds for the potential and fun, and some in a high-interest savings for guaranteed growth. If you have a high appetite for security and don’t mind potentially lower returns, Premium Bonds are fine. If you need to maximize every pound of interest, you’d chase savings accounts and ISAs instead. So neither is strictly “better” universally – it’s about your goals (certainty vs chance, and tax situation). Martin Lewis of MoneySavingExpert sums it up: premium bonds are generally unlikely to beat the top savings accounts for someone with average luck and under their PSA , but for some (large balances, higher-rate taxpayers, or those who simply enjoy them) they can be a valuable tool.

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Sources: Official NS&I website and product brochures for rates and info , MoneyHelper and Rest Less guides for clear explanations , MoneySavingExpert analysis for Premium Bonds odds and returns , Trustpilot reviews for customer sentiments , The Guardian and NS&I archives for historical context . All information is up-to-date as of 2025.