Premium Savings Bonds

In the United States people can purchase savings bonds which are issued by the government, and have a face value, gain interest, and have a maturity date. These bonds are guaranteed a certain value, and are purchased in set denominations. In the United Kingdom, the government offers a different way to save, and invest money, unlike the savings bond issued in the US. They are called Premium Bonds.

In the UK, there are many ways to save money. Just like in the US. There are still many people who don't trust banks, and choose to keep their money at home, hide it. This is a bad way to save money because the money gains no interest, and there is a risk of losing it to damage, fire, or theft. Other methods of saving money, and gaining interest is playing the stock market. This of course comes with a risk. Others choose to save their money in a bank, and gain a conservative amount of interest.

One of the smartest forms of saving money in the UK is purchasing Premium Bonds. These bonds are unlike US Savings Bond. Premium Bonds do not gain interest. The face value of the premium bond is the amount of the purchase. It never gains value, but can be cashed in at any time. What makes the premium bond a good investment ( besides not losing value) is the chance of winning a lot of money.

Instead of paying the purchaser interest, the interest gained goes into a public fund, and is divided into cash prizes, and awarded to lucky participants who have bought premium bonds. These dollar amounts are much greater then any interest you could possibly have accrued. The more premium bonds you buy, the better your chances are to win the cash prizes. Just like a lottery.

The other premium bond is found in Canada, and is issued by the Bank Of Canada, It is similar to a regular savings bond, but collects more interest . The primary difference is a Premium Bond can only be redeemed on the anniversary date of the bond, or within 30 days. A Savings bond can be redeemed at any time, but pays less interest then a premium bond.