The Daily Telegraph - Saturday - Money
The new prize draws rivalling Premium Bonds
Premium Bonds are the nation’s favourite way to save, with more than 22 million people entering into the prize draw every month.
But rival banks are now trying to woo savers towards their own lottery accounts.
Britain’s biggest building society Nationwide, for example, offers the chance of winning £250 in its prize draw. The prize fund for the first draw was £ 229,250, with savers given a one-in-34 chance of winning. Out of 31,713 eligible savers, 917 won in the latest draw in February.
The prize draw applies to its Start to Save regular savings account, which pays interest of up to 5pc. However, the amount savers can pay into the account is limited to between £25 and £50 a month for 24 months.
This is a competitive rate but is below the top rate of 7pc on a regular savings account, which is offered by First Direct.
The prize draw is currently in its second issue and has two prize draws left. Savers must put in at least £25 a
The next draws are due to take place in August 2023 and February 2024.
Halifax is also offering a monthly prize draw for customers with qualifying savings accounts. Savers with at least £5,000 in an eligible account will be entered to win prizes each month: three prizes worth £ 100,000, 100 worth £1,000 and 1,500 worth £100.
Halifax Everyday Saver, one of the qualifying accounts, pays just 0.7pc on balances of £1 to £ 9,999. Meanwhile, the highest easy-access rate on the market is 3.15pc, from Chip. On a deposit of £5,000, which is the minimum to qualify for the monthly prize draw, the difference in interest between 3.15pc and 0.7pc is £122.50 a year.
Halifax says all its savings accounts qualify for the draw, apart from better option for those who want to take part in the draw would be to take out a Halifax Fixed Saver account, which pays 4pc in annual interest, which is competitive compared with the top rate on the market – currently 4.31pc from Atom. The difference in interest paid by the two accounts is only £15 a year.
The prize fund rate of National Savings & Investments’ flagship savings draw is currently 3.3pc, reflecting the average prize payout. Savers have the chance of winning prizes from £25, up to a jackpot of £1m.
The odds of each £1 bond winning is 24,000 to one. The more you have in the account, the greater the chances of winning. However, as with all draws, there is no guarantee savers will win anything.
Anna Bowes, of Savings Champion, a comparison site, said such prize accounts were not suitable for those looking for guaranteed interest income.
“A prize draw is the cherry on the top. It’s not the be-all and end-all. You should not pick an account to win the prize draw because meaningful “You might lose out by picking a poor account for the chance to be in a prize draw, which you may well not win.”
The bank offering the prize draw that is most similar to Premium Bonds is the Chip Prize Savings Account, which is advertised as “a more premium” Premium Bond.
Like Premium Bonds, it does not pay interest but is easy access. There are 1,301 prizes worth £ 35,000 each month, including a grand prize of £10,000 a month. There are 50 prizes worth £100, 500 worth £25, and 750 worth £10.
Each £ 10 saved in the account amounts to one entry into the draw.
Savers need to have at least £ 100 saved in the account to qualify for the following month’s competition. The odds of winning are one in 6,056 for each £10 entry.
Savings of up to £ 85,000 per person are protected by the Financial Services Compensation Scheme, a lifeboat fund, while state- backed NS&I’s Premium Bonds are 100pc guaranteed by the Treasury.
‘You should not pick an account to win the prize draw because meaningful interest is more important’