The jackpot winners are from Dorset and Wandsworth, while 91 other winners were picked for the next-best prize of £100,000.
While record-high rates over the last two years mean tax on savings interest is an increasing concern for people even with modest pots, premium bond holders won't owe a penny to HMRC on any prize money won.
But it's not the only way savers can beat the taxman. So as well as revealing this month's winning premium bond numbers, Which? explains the other ways to maximise your tax-free savings.
February premium bond winners
The first winning bond (137BG686951) was bought by a lucky winner living in Dorset and is part of a total holding of £28,051. The winning bond was bought in March 2008.
The second winner, from Wandsworth, bought their bond (456RD476057) in May 2021. They have a total holding of £10,40.
Find out more:How many winners were drawn in February?
There were 5,844,664 premium bond prizes paid out in the February 2024 draw. Of these, 5,765,193 were worth £100 or less.
In total, this month's prizes were worth £475,609,325.
Find out more:When do you pay tax on savings income?
The personal savings allowance (PSA) allows you to earn £1,000 of interest tax-free if you are a basic-rate taxpayer or £500 if you are a higher-rate taxpayer. Additional-rate tax-payers do not benefit from a PSA.
But record-high savings rates over the last couple of years mean even people with modest nest eggs are being pushed over the threshold for paying tax on interest.
So it's important you keep on top of making your savings tax-efficient.
Find out more:Should you consider an ISA?
While you can hold up to £50,000 tax-free in premium bonds and won't owe HMRC anything on prize money, you won't earn interest on your investment and there is a high chance of not winning a single bean.
Despite the tax perks, research from Shawbrook Bank found that 27% of savers lack a clear understanding of the benefits and rules around Isas. These people are also potentially missing out on huge returns from higher interest rates.
The average interest on a one-year fixed Isa in January 2024 was 4.72% AER and 3.25% for an instant access Isa. Although rates are dropping fast across the market, the lead-up to the end of the financial year is traditionally the time when providers boost interest on Isa products - either to attract new customers looking to max out their allowance before it resets on 6 April or encourage early savers ahead of the new tax year.
Find out more:Make the most of pension tax relief
When you save into a pension, the government gives you a bonus as a way of rewarding you for saving for your future. This comes in the form of tax relief.
When you earn tax relief on your pension, some of the money that you would have paid in tax on your earnings goes into your pension pot rather than to the government.
Tax relief is paid on your pension contributions at the highest rate of income tax you pay.
Find out more:source https://www.which.co.uk/news/article/premium-bond-winners-in-february-2024-is-it-time-to-consider-an-isa-aRoRK2y3AxIQ