‘Unattractive’ interest rates increase premium bond popularity

Unattractive interest rates are responsible for the increase in the popularity of premium bonds, claims an asset management company.

Mark Dampier, head of research at Hargreaves Lansdown, said the tax free returns from premium bonds have also helped make them more attractive.

“It is based partly on the fact that interest rates had gone down so far that people stared to think: ‘Why not have a bet in the premium bonds’?” he said.

He added that premium bonds are popular with self-employed people started to take advantage of the tax free benefits.

“If you are lucky enough have quite a lot of money, premium bonds are often a port of call. You don’t have to put them on an income tax return form,” added Mr Dampier

From August 1st 2005 there were two £1 million jackpots drawn each month and, at the current odds, over a million other cash prizes. The winning bond numbers are selected at random each month.

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