Is Halifax's new £100,000 draw worth the punt?
Now it's not just Premium Bond savers who can win a life-changing sum – but not everyone is thrilled with the bank's new wheeze. Julian Knight reports
Sunday 25 September 2011
Everyone likes getting something for nothing, or at least so Halifax is hoping.
That is why the bank, which had to be rescued first by Lloyds and then by the taxpayer, has launched a new savings deal which has similarities to National Savings' evergreen and ever-popular Premium Bond.
New and existing savers at Halifax who have more than £5,000 on deposit are, from 1 December, going to be entered into a monthly prize draw to win amounts up to and including £100,000.
The draw will be available to UK residents over the age of 18, excluding Northern Ireland, which has different gambling laws.
Customers must actively opt into the prize draw – either online, by phone or in their branch. If savers don't choose to enter the draw, they will not have a chance of winning a potentially life-changing amount.
The Halifax scheme is the first of its type in the UK, but, for several years, banks in the US, Australia and New Zealand have run similar incentives to save.
"In these countries, we have seen that it has worked and given a real lift to the savings culture," said Simon Kenyon, the director of savings at Halifax. "This isn't a gimmick. We are committing to be out there for the next 12 months, and, crucially, anyone signing up will continue to receive their interest, as per usual."
With NS&I's Premium Bonds, savers forego the interest in the hope of scooping a monthly cash prize, which can be as high as £1m. Those with the maximum bond holding of £30,000 can expect to win relatively frequently, presuming average luck. But these are normally only small prizes. On average, Premium Bond savers receive less in prize money than they would get in interest if their money was held in a best-buy account.
However, Halifax is not exactly offering something for nothing. Andrew Hagger, of price-comparison service Moneynet, said: "I'd say to the Halifax that, instead of offering this prize draw, why don't you just use the money to give savers a higher rate of interest?"
In response, Mr Kenyon said that the money involved would make little difference to rates when spread out over potentially hundreds of thousands of account holders. "We always aim, and I think succeed, in offering good rates of return, but the idea of this scheme is to do something totally different, which genuinely makes saving a little bit more fun."
Mr Hagger's own calculations put the potential cost in terms of lost interest to savers at around 0.1 per cent a year. "It's very much up to individual customers whether or not they think that it's a good idea for the Halifax to be doing this. However, as it equates to maybe £5 in lost interest for someone with the minimum holding of £5,000 on deposit they may feel that actually that's a price well worth paying in order to have a chance of winning £100,000, and other smaller prizes down to £100," he said.
"What's more, the chances will be better under this scheme than, say, Premium Bonds, because only those that register can enter, rather than everyone being automatically enrolled into the prize draw."
The prize-draw initiative is all part of what Lloyds Banking Group chief executive Antonio Horta-Osorio has described as Halifax trying to achieve "challenger brand" status. Basically, that's distinguishing Halifax from Lloyds and setting out to offer something different and innovative in the marketplace. "Halifax challenger brand proposition was first seen when it became the first bank to say that it would pay interest on Individual Savings Account transfers from day one. This prize draw needs to be seen in this context," Mr Hagger said.
But regardless of what Halifax is trying to achieve, some experts have real concerns over the prize-draw idea.
Michelle Slade, of the financial information service Moneyfacts, said: "Innovation in the savings market is always welcome and it will be interesting to see if they attract new customers – who may, perhaps, have thought about National Savings – with this. But customers need to be aware that whereas Halifax savings rates are quite good, they can usually be beaten elsewhere. If you don't win a prize then you will more than likely be losing out on interest by not putting your money with a market leader.
"Take an account with £1,000 in it; if Halifax is paying 1 per cent below the best-buy account, then that equates to £100 a year in interest. That's quite a lot of money to potentially give up."
But Ms Slade concludes that: "If savers are happy with the rate being offered by Halifax on their savings then the chance of winning in the draw will be an added incentive to keep at least £5,000 in the account."
A trawl through Halifax's savings rates reveals that in only one product area – four-year fixed-rate ISAs, which isn't a very competitive sector – is it a best buy. In all other areas Halifax comes up at least a little short. In the case of one-year fixed-rate bonds and one-year fixed-rate ISAs, Halifax is over a percentage point off the pace.
What's more, as Ms Slade points out, as the Halifax is the biggest savings-account provider in the UK, there are likely to be an awful lot of people signing up to the prize draw. "As a result, the chances of savers winning a prize, particularly the top prize, are very slim."
Dirty tricks in a divorce can cause some nasty surprises
10 tips for taking out a personal loan
Women born in 1950s facing severe financial hardship over pensions could have fates changed by Ros Altmann - should she choose to help
Is it really that bad in the bond market?
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 2 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
- 3 Gay teenager 'forced to have sex with his own mother' to 'cure' his homosexuality, campaigners in India say
- 5 We have six months to save the world, says leading economist
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
Day In a Page
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool