Tax free bonds issued by National Savings & Investments which are backed by the UK Treasury. Investors are given a unique Bond number for every £1 invested. These are entered into a monthly prize draw with the winning numbers paying cash prizes of up to £1 million. Premium bonds have a minimum investment of £100 or £50 through a standing order and a maximum limit of £30,000. However, as premium bonds do not pay interest, the value of the money invested is eroded over time by inflation.
This definition is for general information purposes only