What are your thoughts on Premium Bonds

[BatleyTownswomensGuild]

Basically that really.

Want to start regularly squirrelling small amounts of cash away to build up my savings. Was thinking about an ISA, but a friend suggested Premium Bonds last night and now I'm curious.

What are your opinions/experiences? Good? Bad? Please tell....

I have won around £1500 in two years with about £20k in premium bonds. But that's very good going. And I only put money in there after maxing out my ISA.
Martin Lewis does a good prediction calculator on this. If you've a decent amount in then it's better than getting next to nothing in a current account, but I suspect an ISA is probably still your best bet first.

They’re ok for a bit of fun, but the money that is provided as prizes isn’t great, when compared to an account with decent interest.

If you want save long term and maximise your returns I’d look at a stocks and shares ISA, your investment may go down (or up) in the short term, but they will go up in the long term. If you’re under 40 look at a LISA (lifetime ISA), the government will top up your savings with a bonus, as long as you don’t withdraw any until you’re 60, or use the cash for a house deposit as a first time buyer.

I use Nutmeg to invest, the fees are low and there is a great app which makes it really easy to see how your funds are performing.

If you've got a few thousand or less, chances are that you'll win nothing or close to nothing. The closer you are to the £50k maximum, the more likely you'll achieve the average payout rate of around 1.4%.

If you don't want to touch the money for a year, look at regular savings accounts, you can get 2.5% interest with Santander.

If you want to be able to withdraw regularly, you can get about 1.5% instant access.

Have a look at the MSE article for a full explanation. I've been in and out of premium bonds for years, and was well behind with interest until last month when I won £75, so this year, I'm slightly ahead - something like 1.7% assuming that I win nothing in December. But you have to compare with the interest you would be guaranteed in standard instant access account. I have about £13k of PBs and need to win £25 nearly every month just to match the interest I receive by leaving the money in my Santander 123 current account.

Thanks all. This has been really helpful, based on these replies, I think I'll go down the isa route.