The new price draws competing premium bonds — but beware of the catch

Premium Bonds are the most popular savings option nationwide. Every month more than 22 million take part in the raffle.

But competing banks are now trying to lure savers into their own lottery accounts.

For example, Britain’s largest building society Nationwide is offering a chance to win £250 in its raffle. The prize fund for the first draw was £229,250, with savers receiving a 1 in 34 chance of winning. Of 31,713 eligible savers, 917 won in the last drawing in February.

The raffle applies to the regular Start to Save savings account, which pays interest of up to 5 percent. However, the amount savers can deposit into the account is capped at between £25 and £50 per month for 24 months. This is a competitive interest rate, but is below the 7 percent maximum rate on a regular savings account offered by First Direct.

The sweepstakes is currently in its second edition and has two sweepstakes left. Savers must deposit at least £25 per month for six months to qualify. The next draws will take place in August 2023 and February 2024.

Halifax also offers a monthly prize draw for customers with qualifying savings accounts. Savers with at least £5,000 in an eligible account enter to win prizes each month: three prizes of £100,000, 100 of £1,000 and 1,500 of £100.

Halifax Everyday Saver, one of the qualifying accounts, pays just 0.7 per cent on balances from £1 to £9,999. Meanwhile, the highest easy-access rate on the market is 3.15 percent by chip. With a deposit of £5,000, which is the minimum to qualify for the monthly prize draw, the interest differential is between 3.15 pcs and 0.7 pcs €122.50 per year.

According to Halifax, all of its savings accounts qualify for the draw, with the exception of accounts for children. For this reason, a better option for those wishing to enter the prize draw would be to take out a Halifax Fixed Saver account, which pays 4 percent in annual interest, which compares to the top rate on the market – currently 4.31 percent. ​​competitive is from Atom. The difference in interest paid by the two accounts is only £15 per year.

The prize fund rate for National Savings & Investments’ flagship savings draw is currently 3.3 percent, reflecting the average prize payout. Savers have the chance to win prizes ranging from £25 up to a £1 million jackpot.

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 that savers will win anything.

Anna Bowes of Savings Champion, a comparison site, said such rate accounts are not suitable for those looking for guaranteed interest income. “A sweepstakes is the icing on the cake. It’s not the be-all and end-all. You shouldn’t pick an account to win the raffle as meaningful interest is more important,” she said.

“You could lose if you pick a bad account to enter a raffle that you may not win.”

The bank offering the sweepstakes most similar to Premium Bonds is the Chip Prize savings account advertised as Premium Bond “more premium”.

Like Premium Bonds, it pays no interest but is easily accessible. There are 1,301 prizes worth £35,000 each month, including a £10,000 monthly top prize. There are 50 prizes worth £100, 500 worth £25 and 750 worth £10.

Every £10 saved in the account equals one entry into the prize draw.

Savers must have a minimum of £100 in their account to qualify for the following month’s competition. The odds of winning are 1 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 NS&I’s government-backed premium bonds are 100 per cent guaranteed by the Treasury.

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