What are premium bonds?

Premium Bonds were introduced in 1957, when the government tried to encourage ordinary wage earners to save by running a 'risk-free' lottery.

Now 23 million people in the UK own at least one premium bond.

CHANGED ODDS* February 1993: 11,000-1 September 1996: 19,911-1 May 1997: 23,066-1 March 1999: 19,000-1 June-December 1999: 24,000-1 May 2000: 20,000-1 December 2001 - January 2002: 23,066-1 Mar 2002 - Feb 2003: 28,500-1 *Odds for winning any amount. Source: National Savings & Investments.

Investors buy bonds worth �1 from the Post Office or by post from National Savings & Investments (NS&I). The minimum stake is �100, and the (recently-raised) maximum is �30,000.

Over the past few years sales have rocketed, as people look for a safe home for their investments in the face of turbulent stock markets and low interest rates.

The main attraction of National Savings is that they are a relatively safe investment and backed by the Treasury.

Anyone aged 16 years or over can buy Premium Bonds for themselves. Premium Bonds can be bought for children under 16 by their parents, grandparents, great grandparents or guardians.

How much can I win?

Every month Ernie (Electronic Random Number Indicator Equipment) - the computer which selects the winners - gives away around 600,000 prizes, including a �1 million jackpot - introduced in 1994 - and more than 550,000 other prizes ranging from �50 to �100,000.

What are the main advantages?

TOP UNCLAIMED PRIZES �25,000 Bond number 1JK 051177 Won in 1991 in London �25,000 Number 7KB745181 May 2001 - Kent �10,000 Number 03DS 884 311 April 2000 - Derbyshire �10,000 Number 11KB 156268 February 2001 - Staffordshire

The same bond can in theory win time and time again.

Premium Bonds can be cashed in at any time, with the only loss being the potential interest that could have been earned in a building society or other type of investment - and winnings are tax-free.

While you can't guarantee you can win, part of the fun of investing in Premium Bonds is waiting for that letter to land on the doormat saying you have won.

But will my chance of winning decrease as more people pile into them?

National Savings is keen to stress Ernie generates the winning Premium Bond numbers entirely at random.

But, according to official figures, the odds on winning are the worst in at least 10 years.

A premium bond owner currently has a 28,500 to one chance of winning.

Back in February 1993 a premium bond holder faced odds of just 11,000 to one.

And while millions more are being pumped into premium bonds, the government has not greatly increased the number of high-value prizes.

Instead, people have an increased chance of winning those at the bottom end, for example, �50, �100 and �500 prizes.

"We have remained relatively stable at the top end," says a National Savings spokesman.

And the slightly bad news is that odds are likely to worsen before they get better - premium bond prize rates tend to mirror movements in the Bank of England base rate - and this was cut recently.

However, if you enjoyed average luck National Savings says you could expect to earn about 2.25% of your investment a year - not bad when most people have their money languishing in current accounts with rates as low as 0.1%.

How do I know if I have won?

Even if the odds are getting tougher, many people are still failing to claim their prizes.

National Savings is still looking after 374,000 unclaimed prizes worth a total of �22.3m.

The good news is there is no time limit on claiming prizes if the bond holder is alive.

But, unlike other NS&I savings plans, most Premium Bond prizes have to be claimed within 12 months of the holder's death.

If you think you may have won, you can request a claim form either by phone, on 0845 9645000, or at its website www.nsandi.com .

Alternatively you can check if you have won by writing to Premium Bonds, NS&I, Blackpool FY3 9YP.

National Savings has already united 3,700 savers with �4.2m.