Are premium bonds safe during the credit crunch?

Question

I don't know much about the credit crunch but I hear peoples savings may be affected, if someone were to put their money into premium bonds would it be somewhere safe to keep it.

Answer 1

I assume you mean the UK. British premium bonds are issued and backed by the british government. If the doctors and police are getting paid you get paid. Safe as it gets. If you care about such things, the british government has a AAA credit rating, the best around.

Answer 2

They may be safer than discount bonds since they sell at a premium.

However, they may only sell at a premium because they were issued when interest rates were higher, so the income is more than you would get for a newly-issued bond.



The safest bonds are US Government bonds. You can buy them on the stock exchange in ETFs like TIP and SHV. I've loaded up on SHV to avoid having my money in cash which is only insured up to $100,000 in a brokerage account. The interest is low, but the share price does not fluctuate much, but today it went up and my SHV had a $250 value increase for the day so far.

Answer 3

Absolutely

Answer 4

Depends on what you mean by "premium bonds." AAA bonds are unlikely to default but you can still suffer market loss due to changing interest rates, etc.

Answer 5

yes because they are underwritten by the government.