Premium Bonds vs Savings Calculator: Which Pays More?
Compare Premium Bonds with a savings app after tax: your typical prize return, the tax on interest, and the rate an app must beat to win. Free UK tool.
Premium Bonds advertise a prize fund rate, but that is an average dragged up by the rare big win. Most holders get less, and with small sums many win nothing at all in a year. Savings apps pay a known rate, but that interest can be taxed. This calculator puts both on the same footing: the return a holder with typical luck receives against what the app pays you after tax. For basic-rate savers the app usually wins; for higher-rate savers with a full ISA, tax often flips it.
Premium Bonds or a savings app: which pays you more?
Prize rate, odds and tax year
Premium Bond prizes are tax-free. The "typical luck" figure is the median: half of holders get more, half get less. It is interpolated from our 200,000-year simulation of the NS&I September 2026 prize table and scaled in proportion if you change the prize fund rate, so treat it as an estimate. The chance of winning nothing uses your odds directly. Tax uses the standard £12,570 personal allowance (tapered above £100,000, and the extra tax includes any allowance the interest takes away), the £5,000 starting rate for savings, and a Personal Savings Allowance of £1,000, £500 or £0 by band. It does not cover Scottish band rules, dividends, the marriage allowance or other reliefs. Check current figures with NS&I and GOV.UK.
How the comparison works
On the savings side, the app pays your amount times its AER over a year. The calculator then works out how much extra tax that interest adds, after your personal allowance, the starting rate for savings and the Personal Savings Allowance have done their job. Interest you already earn elsewhere is counted first, because it uses up the same allowance.
On the Premium Bonds side, the prize fund rate is what NS&I pays out across all Bonds, not what any one holder gets. Because most prizes are £25, £50 or £100 and a tiny number are huge, the median holder earns less than the headline. Below roughly £1,200 at 21,000 to 1 odds, you expect fewer than 0.7 prizes a year, so the median return is nothing. Our Premium Bonds vs savings account breakdown shows the simulation results and three worked cases.
The "rate an app must beat" figure is the before-tax AER at which the app, after tax, would match the typical Premium Bond return on your sum. If you still have ISA allowance this tax year, a Cash ISA is tax-free too, and our Cash ISA vs savings calculator runs that comparison. To see the tax on all your savings interest in one place, use the savings interest tax calculator.
