What is the typical return on NS&I Premium Bonds versus 4.5% cash?

Martin Lewis notes many savers will see roughly 3.2-3.3% tax-free as a typical outcome from Premium Bonds, while easy access or short fixes pay 4.4-4.5% guaranteed before tax. If you still have PSA or ISA room, the guaranteed cash rate usually wins for predictable, near-term needs.

Who should consider Premium Bonds right now?

Higher-rate or additional-rate taxpayers who have used their ISA allowance and exceeded their PSA may benefit, since Premium Bond prizes are tax-free. They suit money you do not need on a set date. Keep emergency funds and near-term spending in guaranteed easy access savings instead of prize-based products.

How does the cash ISA allowance affect the choice?

The cash ISA allowance is £20,000 this tax year. Use it first to shelter interest from tax. Once your ISA is full, compare taxable cash at 4.4-4.5% with Premium Bonds’ variable, tax-free prizes. If your interest would be taxed, Premium Bonds can be more appealing for a portion of surplus cash.

Are Premium Bonds safe and easy to access?

Yes. NS&I Premium Bonds are backed by HM Treasury, and you can usually withdraw quickly. The trade-off is return uncertainty. You might earn less than 4.4-4.5% cash. If you need steady income or have bills soon, guaranteed easy access savings provide clearer planning and fewer surprises.

How much should I put into Premium Bonds?

Set a cap based on tax band, time horizon, and risk comfort. Many savers keep emergency funds in easy access, use short fixes for known dates, and hold only a measured slice in Premium Bonds. Review quarterly. If results lag cash by too much, reduce your Premium Bonds share.

Global Market Insights

NS&I Premium Bonds Today, December 30: Martin Lewis Favors 4.5% Cash

ByHuzaifa Zahoor December 30, 2025December 30, 2025

NS&I Premium Bonds are back in focus today, 30 December, as savers weigh them against 4.4-4.5% easy access cash. Martin Lewis says most people will earn more from guaranteed savings than from the typical 3.2-3.3% tax-free outcome on Premium Bonds. The choice turns on tax, access, and certainty. We break down who benefits, how the cash ISA allowance helps, and year-end moves to tidy your cash for 2025.