Save money and win a cash prize while you’re doing it
STEPHEN Turner could not believe his luck when he won £100 in a Nationwide Building Society prize draw last month. ‘It’s the second time in a row I’ve won,’ says the mortgage servicing professional from East Lancashire. ‘I’m saving up for a new boiler so my winnings will help a lot.’
Stephen, 45, is one of a growing tribe of savers who are winning cash sums in monthly prize draws with their savings provider.
Such prize draws were once the domain of National Savings and Investments, which distributes Premium Bond prizes to millions every month. But Halifax, Nationwide Building Society, the Post Office and Family Building Society have also piled in and hand out between them cash prizes to tens of thousands of savers every month on top of savings interest.
Nationwide’s draw has been so popular since launch last year that it has announced it will add two extra prize draws. The Post Office, too, launched a prize draw last month due to run until the end of April.
Behavioural scientist Joe Gladstone believes prize draws can be a positive force if they encourage people to save who would not otherwise. But he warns they also have a cynical side.
‘The interest rates that providers are offering at the moment are so low that they are basically zero with a small rounding error,’ he says. ‘So making their savings products sound attractive is really hard work. Prize draws can make saving sexy in a way it really isn’t at the moment.’
He adds that many savings providers do not want to compete with their rivals on rates because it would cost more in interest payments. Offering a prize draw is an alternative way to stand out that is cheaper and easier to market.
Stephen Turner agrees that one of the main reasons he was attracted to the Nationwide Start to Save account was the chance to win a prize. ‘Savings rates are so low at the moment that even if they were doubled, I’d still only earn a few pence in interest, so I may as well have a bit of fun,’ he says.
Rachel Springall, savings expert at financial products scrutineer Moneyfacts, believes that while these prize-related accounts are obviously great for winners, most savers are still better off with an account paying a higher interest rate. ‘Consumers comparing flexible cash savings accounts may feel disheartened by the low rates currently on offer, so it is not surprising to see that people turn to a prize draw to test their luck for a windfall,’ she says. ‘Of course there’s no guarantee of winning a prize and, in real terms, cash could erode due to inflation, so their money could work harder in an alternative account.’
Andrew Hagger, savings expert at financial website MoneyComms, believes that anything which gets people saving is a good thing. ‘It is i mportant for people t o save regularly and build a cash safety net – it stops them having to rely on expensive credit,’ he says.
But Gladstone cautions that savers should not pile a large sum into a low-interest savings account in the hope of winning a prize.
Investing it, instead, in a low-cost, diversified portfolio is far more likely to lead to long-term wealth.
He explains: ‘It’s easy to imagine a scene of a family who wins a prize draw or lottery and have their lives transformed.
‘ But we should also imagine a family gaining financial wealth due to years of investing and compounding returns. The truth is that such an approach is considerably more likely to be successful.’
How unfair to read in last week’s issue about Emily In Paris star Lily Collins, who has sadly been targeted by cruel online trolls in the wake of her nomination for a Golden Globe and the absence of one for Michaela Coel and I May Destroy You. These trolls need to get a life. Both women are great actresses and we should all just try to live together without race hate and trolling.
David Courtney, Weston-super-Mare
I think it’s probably true that Lily Collins has not been nominated for the right reasons (although it’s probably nepotism rather than racism), but trolls shouldn’t target her directly as she didn’t nominate herself.
H. Ferguson, Canberra, Australia
So any time a white actor is up for an award against a black actor, there is going to be a backlash? What rubbish – ever heard of ‘may the best man win’?
L. Knight, Surrey
The fact that the universally panned Emily In Paris got nominated at all shows that it is easier to get ahead by producing unintellectual, unchallenging TV.
Name and address supplied
As the article points out, the two shows aren’t in the same category, so even if Lily Collins hadn’t been nominated, her place could not possibly have been taken by Michaela Coel.
Exeter