The Martin Lewis Podcast Question Time: Time to ditch Premium Bonds? Do student loans cost more for middle earners? Credit on a low income?
Dec 1, 2025
Martin Lewis tackles hot financial topics, like whether it's time to ditch premium bonds and the hidden costs middle earners face with student loans. He breaks down how the ISA limit functions and discusses upcoming changes that could impact savers. Plus, there's a deep dive into the Online Safety Act and why it hasn't effectively reduced scam ads. Learn how savings interest is taxed and ways to manage your tax liability on earnings. With plenty of listener questions answered, there's financial wisdom for everyone.
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Where Premium Bonds Make Sense
- If you pay tax on savings, fill your cash ISA allowance first and then consider Premium Bonds for tax-free prize returns.
- Move non-ISA savings into top-paying cash ISAs or fixed accounts if you are a basic-rate taxpayer for better predictable returns.
Mean ≠ Typical Return
- The stated 3.6% Premium Bonds prize fund is a mean, not what most people receive on small holdings.
- Typical (median) winners with small amounts often get zero, while larger holdings approach the mean rate.
Tax Position Should Guide Choice
- If you're a higher-rate taxpayer with lots of savings, ISAs then Premium Bonds may be preferable because Premium Bond prizes are tax-free.
- For basic-rate taxpayers, prefer high-paying cash ISAs or fixed-term accounts for more consistent returns.