Last updated: 11 April 2026

Over 24 million people in the UK hold Premium Bonds, making them the nation's most popular savings product. Yet most holders have never compared Chip Prize Saver vs Premium Bonds side by side, and the numbers might surprise you. Around 62% of Premium Bonds holders have never won a single prize, according to data from AJ Bell. The prize fund rate has just dropped to 3.30%, and the odds of winning with each £1 bond have lengthened to 23,000 to 1.

Meanwhile, Chip's Prize Savings Account has been quietly building an alternative: a prize draw savings account that claims 3.5 times better odds than Premium Bonds, with quarterly big prizes reaching £250,000. We are not saying Premium Bonds are bad. They are backed by the Treasury and pay tax-free prizes, which is a genuine advantage. But if you have not compared them to anything in years, this is worth ten minutes of your time.

This article is for informational purposes only and does not constitute financial advice. It is not a recommendation to open, close, or switch any savings or investment product. Always do your own research or consult a qualified financial adviser before making financial decisions. CoolCuration is not authorised by the Financial Conduct Authority. Tax treatment depends on individual circumstances and may change. All product details were verified at the time of writing but may have changed since publication. Always check the provider's website for current terms.

What are Premium Bonds?

Premium Bonds are a savings product offered by National Savings and Investments (NS&I), which is backed by HM Treasury. Instead of earning interest on your money, each £1 you put in buys a bond that enters a monthly prize draw. Prizes range from £25 to £1 million, and two people win the £1 million jackpot every month.

Winners are chosen by ERNIE (Electronic Random Number Indicator Equipment), which generates random numbers each month. All Premium Bonds prizes are free of UK Income Tax and Capital Gains Tax, according to NS&I. You can buy bonds from £25 up to a maximum holding of £50,000 per person, and anyone aged 16 or over can buy them. New bonds must be held for one full calendar month before they are eligible for the draw.

Here is the crucial bit that catches people out: the prize fund rate is not an interest rate. As of April 2026, the prize fund rate is 3.30%, cut from 3.60% according to NS&I's official announcement. This rate is used to calculate the total prize pool. It represents what someone with perfectly average luck might receive. In reality, most individual holders receive significantly less than this, and many receive nothing at all. As MoneySavingExpert puts it, you are likely to get quite a lot less than the headline prize rate, and there is a negligible chance of winning a million.

What is Chip Prize Saver?

The Chip Prize Savings Account is a savings product offered through the Chip app. Like Premium Bonds, it is a non-interest-bearing account. Instead of earning interest, your balance earns entries into a monthly prize draw. For every £10 of your average monthly balance, you receive one entry.

Chip Financial Ltd is authorised and regulated by the Financial Conduct Authority (FCA reference number 911255). The savings account itself is provided by ClearBank, a UK-authorised bank (FCA reference number 754568). Eligible deposits are protected by the Financial Services Compensation Scheme (FSCS) up to £120,000, subject to the scheme's conditions. This protection covers all your ClearBank deposits across Chip products combined, so if you hold a Chip Cash ISA, Easy Access Saver, Instant Access Account and Prize Savings Account, the total FSCS cover across all of those is £120,000.

You need a minimum average balance of £10 to enter the draw, and you can deposit up to £85,000. Withdrawals are near-instant and there are no fees for holding the account or entering the prize draw. According to Chip's website, prizes are tax-free, though Chip also notes that winners are responsible for any individual tax liabilities and recommends seeking independent tax advice if you have questions about your tax status.

Prize amounts vary from month to month. For April 2026, Chip's draw offers one grand prize of £10,000, plus 7 prizes of £500, 73 prizes of £100, 180 prizes of £20, 360 prizes of £10, and 14,400 prizes of £5. Every quarter, Chip runs a larger draw. In March 2026, the grand prize was £250,000, alongside 100 prizes of £1,000, 5,000 prizes of £10, and 20,000 prizes of £5.

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Chip Prize Saver vs Premium Bonds: the key differences

Feature Premium Bonds Chip Prize Saver
Provider NS&I (HM Treasury) Chip / ClearBank
Guaranteed interest None None
Prize draw frequency Monthly Monthly (quarterly big draw)
Top prize £1,000,000 (x2 per month) £10,000 (monthly) / £250,000 (quarterly)
Smallest prize £25 £5
Tax on winnings Tax-free Tax-free (per Chip's T&Cs)
Protection 100% HM Treasury backed FSCS up to £120,000 (via ClearBank)
Minimum deposit £25 £10 (for draw entry)
Maximum deposit £50,000 £85,000
Withdrawal speed 3-5 working days Near-instant
Odds per entry 23,000 to 1 per £1 bond Not published (Chip claims 3.5x better than PBs)
Entry calculation 1 entry per £1 held 1 entry per £10 average balance

Both products work on the same basic principle: you save money, earn no interest, and instead enter a prize draw. Neither pays guaranteed returns. So the comparison comes down to how the draws differ, how your money is protected, and which structure suits your circumstances.

Premium Bonds offer bigger top prizes (two £1 million jackpots every month) and total prize pools worth hundreds of millions. However, the minimum prize is £25, and most of the prize fund goes to the huge number of small prizes that still require considerable holdings to win. Chip offers smaller top prizes in standard months (£10,000) but runs quarterly big draws with prizes up to £250,000. The smallest Chip prize is just £5.

On protection, both products keep your capital safe but through different mechanisms. NS&I is backed directly by HM Treasury, meaning there is no limit on how much is protected. Chip deposits sit with ClearBank and are covered by the FSCS up to £120,000 per person across all ClearBank accounts. For most people, both offer excellent security.

The odds: what are you actually likely to win?

This is where the comparison gets properly interesting, and where you need to be careful with the numbers.

For Premium Bonds, NS&I states that the odds of each £1 bond winning any prize are 23,000 to 1 per month, as of April 2026. So if you hold £1,000 in Premium Bonds, you have 1,000 entries each month, giving you roughly a 4.3% chance of winning at least one prize that month. Over a full year, statistically, you might expect to win approximately one or two small prizes. Most of those prizes would be £25.

If you hold £10,000, you have 10,000 entries per month. Statistically, you might expect to win several prizes over a year. According to MoneySavingExpert, someone with £10,000 in Premium Bonds should win around £275 a year based on the old 3.60% rate, though this drops with the new 3.30% rate. However, that figure reflects an average across all holders. Your actual experience could be significantly better or worse.

If you hold the maximum £50,000, you have 50,000 entries per month. You are more likely to win regularly, but even at this level, research from Quilter found that first-time winners had waited an average of 3.1 years before receiving their first prize. Additionally, 62% of all Premium Bonds holders have never won anything at all, according to AJ Bell.

For Chip, the comparison is trickier because Chip does not publish a fixed prize rate or fixed odds. According to data reported by Money Talk, Chip published historical odds of winning anything at 1 in 964 per £10 held across January to September 2025, and 1 in 623 per £10 held for September 2025 alone. These vary from draw to draw depending on the total prize pool and the number of entries. Chip claims on its website that the odds of winning are 3.5 times better than Premium Bonds, based on its September 2025 draw data.

The lack of a published, consistent prize rate for Chip is a genuine drawback. With Premium Bonds, you can at least calculate expected returns based on the prize fund rate (even if actual returns vary wildly). With Chip, the prize structure changes monthly and there is no equivalent benchmark figure.

One thing is clear with both products: if you have a small balance, your chances of winning anything meaningful are slim. The maths favours larger holdings in both cases. Be honest about whether you are saving for the thrill of a potential win or for reliable growth on your money. If it is the latter, a high-interest savings account will almost certainly serve you better.

Bonus draws and extra entries

Premium Bonds do not currently offer bonus draws or extra entry mechanisms. Every £1 bond has the same odds regardless of when it was purchased or how long you have held it. The only way to increase your chances is to hold more bonds, up to the £50,000 cap.

Chip, on the other hand, runs quarterly "big prize draws" alongside its standard monthly draws. In March 2026, for example, the quarterly draw featured a grand prize of £250,000 alongside thousands of smaller prizes. These quarterly draws significantly boost the total prize pool. The standard monthly draws (like April 2026) offer smaller but more frequent prize structures.

Additionally, Chip's app includes tools for automatic saving. You can set up recurring saves or use Chip's auto-save feature, which analyses your spending and moves small amounts into your savings automatically. While this does not directly improve your odds per entry, it can help you build a larger balance over time, which means more entries.

Which is better for you?

Neither product is objectively "better" than the other. It genuinely depends on your circumstances, and here are some scenarios to consider.

If you have a large lump sum and are a higher-rate taxpayer: Premium Bonds become more appealing. Since prizes are tax-free and backed by the Treasury, they offer a way to save outside the Personal Savings Allowance (£500 for higher-rate taxpayers). The larger your holding, the more likely you are to win prizes that approximate a meaningful return.

If you have a smaller balance and like the app experience: Chip may be more engaging. The app is well-designed, auto-saving features can help build the habit, and the quarterly big draws add an extra element of excitement. However, with a small balance, your chances of winning anything substantial are low with either product.

If absolute security is your priority: NS&I is backed directly by HM Treasury, which means your full holding is protected regardless of amount (up to the £50,000 cap). Chip deposits are FSCS protected up to £120,000 via ClearBank. Both are very safe, but Treasury backing is about as solid as it gets.

If you need quick access to your cash: Chip has the edge here. Withdrawals are near-instant through the app. Premium Bonds withdrawals take 3 to 5 working days to reach your bank account.

If you want to maximise your savings above all else: Honestly, neither product may be your best option. Since both are non-interest-bearing, you earn nothing unless you win a prize. A high-interest savings account or cash ISA would give you guaranteed, predictable returns. If you are weighing up what to do with spare cash, you might also want to read our guide on whether to overpay your mortgage or invest.

This is not financial advice. Always assess your own circumstances and consider speaking to a qualified financial adviser.

Can you use both?

Absolutely. There is nothing stopping you from splitting your savings across both products. Some savers keep Premium Bonds for the tax-free jackpot chance and Treasury backing, while using Chip for the app-based saving experience and more frequent smaller prizes. If you already hold the maximum £50,000 in Premium Bonds, Chip's £85,000 cap gives you additional headroom for prize-draw savings. Just remember that money in either product is not earning interest, so weigh this against what you could earn in a standard savings or investment account.

This article is for informational purposes only and does not constitute financial advice. It is not a recommendation to open, close, or switch any savings or investment product. Always do your own research or consult a qualified financial adviser before making financial decisions. CoolCuration is not authorised by the Financial Conduct Authority. Tax treatment depends on individual circumstances and may change. All product details were verified at the time of writing but may have changed since publication. Always check the provider's website for current terms.

Frequently asked questions

Is Chip Prize Saver better than Premium Bonds?

It depends on what you value. Chip claims 3.5 times better odds of winning per entry based on its September 2025 draw, and offers near-instant withdrawals plus a higher deposit cap (£85,000 vs £50,000). However, Premium Bonds offer much larger top prizes (£1 million), guaranteed tax-free status on all winnings, and the unmatched security of HM Treasury backing. Neither pays interest, so for guaranteed returns, a standard savings account would outperform both.

Are Chip Prize Saver winnings tax-free?

According to Chip's terms and conditions, prizes are tax-free. However, Chip also states that winners are responsible for any individual tax liabilities and recommends seeking independent tax advice. Premium Bonds prizes are explicitly free of UK Income Tax and Capital Gains Tax as confirmed by NS&I.

What are the odds of winning Premium Bonds?

As of April 2026, the odds of each individual £1 bond winning any prize in a given month are 23,000 to 1, according to NS&I. This was recently changed from 22,000 to 1. To put this in context, if you hold £1,000 in Premium Bonds, you have roughly a 4.3% chance of winning at least one prize in any given month. With the maximum £50,000 holding, you have better odds, but AJ Bell research found that 62% of all holders have still never won anything.

Is Chip Prize Saver FSCS protected?

Yes. Chip's Prize Savings Account is provided by ClearBank, a UK-authorised bank regulated by the FCA and PRA (reference number 754568). Eligible deposits are protected by the FSCS up to £120,000 per person. However, this limit applies across all your ClearBank accounts through Chip combined (including any Cash ISA, Easy Access Saver, or Instant Access Account you hold with Chip). For details, visit the FSCS website.

Can you lose money with Premium Bonds?

You cannot lose your capital with Premium Bonds. Your original investment is always safe and backed by HM Treasury. However, if you do not win any prizes, your money sits static and loses purchasing power due to inflation. With the current UK inflation rate, holding savings that earn no return means the real value of your money decreases over time. This is an important consideration for both Premium Bonds and Chip Prize Saver.

How much do you need in Premium Bonds to win regularly?

Research from AJ Bell found that 53% of all prizes went to holders with the maximum £50,000, and over 90% of prizes went to those with more than £10,000. Fewer than 1% of prizes went to holders with less than £1,000. So realistically, you need a substantial holding to win with any regularity. The average account value among the 14.3 million holders who have never won is just £128.91, according to AJ Bell's FOI data from NS&I.

What is the Chip Prize Saver interest rate?

Chip's Prize Savings Account does not pay interest. It is a non-interest-bearing account, similar to Premium Bonds. Instead of interest, your balance gives you entries into a monthly prize draw. If you want guaranteed interest alongside app-based saving, Chip offers separate interest-bearing accounts (such as their Instant Access Account or Easy Access Saver) which do pay interest. These are different products from the Prize Savings Account.

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Published by Stiv in Apps, Finance, Money, Money saving, Saving, UK Made
Tags: Chip, Chip Prize Saver, FSCS, NS&I, Premium Bonds, prize draw savings, savings, savings comparison, tax-free savings, UK savings