Faced with a modest rate of return, savers may be tempted to “test their luck” in a prize draw, but they may miss a better deal, analysts say.
The Nationwide Building Society has announced that it will begin drawing members in England, Wales and Scotland in September.
The UK’s largest building-and-loan union competes with rivals Halifax and Premium Bonds.
But Moneyfacts analysts say savers shouldn’t forget to shop.
“It wouldn’t be too surprising to see savers go to the draw to try their luck in a low interest rate environment, but there’s no guarantee that they’ll win the award,” said Rachel Springall, a financial information service. Stated.
“Savers may also miss a competitive interest rate that chooses to put cash in an account linked to a winnings draw instead of chasing the highest interest rates available elsewhere.”
Nationwide extends the previous saver draw by announcing the launch of a lucky dip for members holding mortgage, savings, or checking products.
Lottery regulations exclude only children and Northern Ireland guests. Instead, donations will be made to a local charity in Northern Ireland.
Each member has an equal chance of winning, no matter how much they have in their account. New customers can open and enter a £ 1 Savings Account.
The prizes drawn monthly for the year range from £ 100,000 per jackpot to 8,000 winners, each £ 100. The odds of winning a prize are about 1 in 1,750.
“Members don’t have to do anything to get involved. As long as they have at least one of our mortgages, savings accounts, or checking accounts, they will be filled in automatically,” said Nationwide. Louise Prior said.
She said that if the prizes were used instead to improve the interest rates of the savers, they would only rise by 0.01%. If you probably don’t want to participate for cultural or religious reasons, you can opt out.
The national jackpot matches a similar draw jackpot run by Halifax, which is part of the Lloyds Banking Group.
However, both are dwarfed by the £ 1m jackpot (much longer odds) offered by Premium Bond, operated by the National Savings and Investments (NS & I).
NS & I is backed by the government. It saw an influx of interest in premium bonds from people who were saving money during the pandemic but could hardly find any returns elsewhere. However, during the Covid crisis, customer service has been highly criticized.
Savings rates are still at historically low levels, so Springall said other banks and building-and-loan unions may be considering offering lottery to attract customers. Building-and-loan and NatWest have recently offered something similar.
She warned that customers should carefully compare these transactions, review their terms and conditions, and be aware of mutual promotion of other products.
“Prize draw customers may be offered other products by their providers, but it’s wise to compare the deal to the entire market before consumers commit,” she said.