TAKE YOUR CHANCES Three state banks raise funds with savings certificates linked to lottery schemes.
Three state banks are raising funds with savings certificates linked to lottery schemes, write Oranan Paweewun and Wichit Chantanusornsiri
The odds of winning the first prize in state lotteries is minuscule at 1 in 1 million, with mathematicians and consumer finance experts calling playing the lottery “throwing money down the drain”. Playing the lottery should not be considered investment, as those who do so are likely to spend more money on tickets than they will ever win. However, specialised financial institutions have come up with savings certificates to appeal to folks who want a chance to win a top prize.
Savings certificates are now available at the Government Savings Bank (GSB), the Bank for Agriculture and Agricultural Cooperatives (BAAC) and GH Bank, with varying features and returns.
GH Bank recently launched its first savings certificate, Wimarnmek, to the public. It is priced at 1 million baht per ticket.
The prize is a flat amount of 200,000 baht, with 27 prizes per month. Throughout three years, there are a total of 927 prizes.
Chatchai Sirilai, GH Bank’s president, said this savings certificate offers every holder an equal chance to win a prize, unlike the other two banks’ certificates that require a certain amount of investment to win the lowest prize every draw.
“Our savings certificate is mainly for depositors who like a game of chance, as our product’s interest rate is close to those of three-year fixed-deposit accounts for the same amount,” he said.
The state-run mortgage lender plans to put out a new series of savings certificates worth 10 million baht per ticket to raise 30 billion baht in funds by the end of this year.
Moreover, savings lotteries priced at 50,000-100,000 baht per ticket and 500 baht each are in the bank’s pipeline. Features of the 10-million-baht and 50,000- to 100,000baht savings certificates are similar to the Wimarnmek product, but those of the 500baht ticket will be akin to GSB’s and BAAC’s saving certificates.
BAAC is offering Kaset Mung Kung 4 savings certificate at 100 baht per ticket, while GSB is selling a Special Premium savings certificate and Digital Salak on MyMo at prices of 50 baht and 20 baht each, respectively.
BEST RETURN?
Based on a 1-million-baht investment, BAAC’s Kaset Mung Kung 4 provides the highest return among prize-linked savings products when depositors hold it for three years until maturity.
Holders of Kaset Mung Kung 4 savings certificates earn at least 1.438% per year, when accounting for 7,500 baht in interest, 3,240 baht from four-digit prizes, and 32,400 from three-digit prizes over the three years.
To guarantee investors will win the lowest prize every draw, investment of at least 100,000 baht in the BAAC’s savings certificate is required, while a minimum investment of 500,000 baht and 200,000 baht are needed for GSB’s Special Premium and Digital Salak on MyMo, respectively.
The second-best return is GH Bank’s Wimarnmek, which offers at least 1.4% per year in return from interest. However, the return will increase to 8.07% per year if holders win a prize one time, 14.7% if they win twice, 21.4% for three wins, 28.1% for four and 34.7% for five wins.
Unlike BAAC’s and GSB’s savings certificates, GH Bank has set prizes at a flat amount of 200,000 baht, with 27 prizes per month and 927 total prizes over three years.
Mr Chatchai said the probability to win a prize with GH Bank’s savings certificate is low at 0.1%, and each savings certificate has an equal chance to win a prize.
GSB’s Special Premium savings certificate yields a minimum return of 1.12% per year from holding 20,000 tickets. Holders will earn 12,000 baht in interest plus 21,600 baht from winning a four-digit prize for every draw throughout three years.
For GSB’s Digital Salak on MyMo, its holders will receive at least 0.85% per year in return from 2,500 baht in interest and 6,000 baht from winning four-digit prizes for every draw for 12 months.
Savings certificates issued by the three banks are tax-exempt for interest earned and prizes.
In terms of top prize value, holders of the Kaset Mung Kung 4 savings certificate have a chance to win a grand prize of 15 million baht each six times — in November this year, May and November next year, May and November 2021, and May 2022. They are also eligible to win the first prize worth 1 million baht for the remaining 30 draws.
The GSB Special Premium savings certificate’s first prize amounts to 10 million baht each, with three prizes per draw, while the one-year Digital Salak on MyMo’s prize is 2 million baht per draw.
EARLY WITHDRAWAL
Given that money deposited in savings certificates is locked in for a certain time period, premature redemption must be considered when determining total return.
The Wimarnmek savings certificate is considered to be the most attractive among the four prize-linked products on this aspect because it charges only 1% of the 1-millionbaht ticket price, or 10,000 baht, if certificate holders make an early withdrawal after holding it for less than three months.
Wimarnmek holders are subject to no charge if they make a premature withdrawal after keeping money in the certificate for three months to less than one year. Those who redeem after parking money in the savings certificate for one year but less than three years are entitled to a 1% interest rate per year.
GSB’s Special Premium savings certificate charges one baht per ticket if holders withdraw money less than three months after depositing it in the product. Based on 1 million baht in deposits in the bank’s Special Premium certificate, the principal balance will fall to 980,000 baht if that happens.
The bank’s savings certificate holders are not subject to any charge if they hold it for three months to less than one year, while they still receive 0.25% per year if they withdraw money after depositing it for one year but less than three years.
For Digital Salak on MyMo with one-year maturity, holders are charged 50 satang per ticket or a 25,000-baht deduction if they pull out money after depositing it for less than three months, assuming a 1-millionbaht deposit.
There is no charge for premature withdrawal from three months to less than six months, but holders do not receive any interest. For early withdrawal after holders deposited their money in Digital Salak on MyMo for six months to less than one year, they earn 0.1% per year in interest.
BAAC charges two baht per ticket for early withdrawal of Kaset Mung Kung 4 savings certificates for holders of less than three months. Certificate holders who withdraw before the full three years are not entitled to any interest.