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

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."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Digital Optimisation Executive - Marketing

    £30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

    Recruitment Genius: Financial Reporting Manager

    £70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Day In a Page

    Sepp Blatter resignation: The beginning of Fifa's long road to reform?

    Does Blatter's departure mean Fifa will automatically clean up its act?

    Don't bet on it, says Tom Peck
    Charles Kennedy: The baby of the House who grew into a Lib Dem giant

    The baby of the House who grew into a Lib Dem giant

    Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
    Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

    The harrowing testament of a five-year-old victim of Syria's endless civil war

    Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
    The future of songwriting: How streaming is changing everything we know about making music

    The future of songwriting

    How streaming is changing everything we know about making music
    William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

    Recognition at long last

    Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
    Beating obesity: The new pacemaker which helps over-eaters

    Beating obesity

    The new pacemaker which helps over-eaters
    9 best women's festival waterproofs

    Ready for rain: 9 best women's festival waterproofs

    These are the macs to keep your denim dry and your hair frizz-free(ish)
    Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

    Wiggins worried

    Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
    Liverpool close in on Milner signing

    Liverpool close in on Milner signing

    Reds baulk at Christian Benteke £32.5m release clause
    On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

    On your feet!

    Spending half the day standing 'reduces risk of heart attacks and cancer'
    With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

    The big NHS question

    Why are there so few new GPs when so many want to study medicine?
    Big knickers are back: Thongs ain't what they used to be

    Thongs ain't what they used to be

    Big knickers are back
    Thurston Moore interview

    Thurston Moore interview

    On living in London, Sonic Youth and musical memoirs
    In full bloom

    In full bloom

    Floral print womenswear
    From leading man to Elephant Man, Bradley Cooper is terrific

    From leading man to Elephant Man

    Bradley Cooper is terrific