Accessibility Menu

What Are Premium Bonds? Overview, Benefits & Yield

By Lyle DalyUpdated Jan 31, 2025 at 2:28 PM

Key Points

  • Premium bonds cost more than their face value due to higher interest rates or the issuer's improved credit rating.
  • Investors must analyze if the extra interest from the premiums outweighs the added cost.
  • Selling premium bonds may be beneficial if market rates fall and you need the money.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.