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."

Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' embraces politics, religion, warfare, courage, love and loyalty, say creators
Sport
Sergio Romero saves Wesley Sneijder's penalty
world cup 2014But after defeating the Dutch, Lionel Messi and Argentina will walk out at the Maracana on Sunday as underdogs against Germany
Sport
Scoreboard at the end of the semi-final World Cup match between Brazil and Germany at The Mineirao Stadium in Belo Horizonte
Sport
'Saddest man in Brazil' takes defeat with good grace, handing replica trophy to German fans
PROMOTED VIDEO
News
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
Arts and Entertainment
Martin Freeman and Lauren O'Neil in Jamie Lloyd's Richard III
theatreReview: The monarch's malign magnetism and diabolic effrontery aren’t felt
News
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Extras
indybest
Arts and Entertainment
In his own words: Oscar Wilde in 1882
theatreNew play by the Oscar Wilde's grandson reveals what the Irish wit said at his trials - and what they reveal about the man
Sport
Alexis Sanchez and apparently his barber Carlos Moles in Barcelona today
football
Arts and Entertainment
Miley Cyrus has her magic LSD brain stolen in this crazy video produced with The Flaming Lips
video
Arts and Entertainment
Unless films such as Guardians of the Galaxy, pictured, can buck the trend, this summer could be the first in 13 years that not a single Hollywood blockbuster takes $300m
filmWith US films earning record-breaking amounts at the Chinese box office, Hollywood is more than happy to take its lead from its new-found Asian audience
News
The garage was up for sale in Canning Place Mews for £500,000
newsGarage for sale for £500,000
Life and Style
tech
Sport
Chris Froome pulls out of the Tour de France
tour de france
Arts and Entertainment
Leena McCall's 'Portrait of Ms Ruby May'
art.... because it features a woman’s pubic hair
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Financial Planning Manager, Qual Accountant, £380

    £300 - £380 per day: Orgtel: Financial Planning Manager, Banking , London, £30...

    Business Analyst - Financial Services, Trading Systems, Agile

    £60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fina...

    Day In a Page

    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
    Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

    Hollywood targets Asian audiences

    The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
    Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

    Grindr founder Joel Simkhai: 'I've found love on my dating app'

    Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
    Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

    Is it time to ditch autocorrect?

    Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
    10 best girls' summer dresses

    Frock chick: 10 best girls' summer dresses

    Get them ready for the holidays with these cool and pretty options 
    Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

    Westminster’s dark secret

    Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
    A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

    A History of the First World War in 100 Moments

    Dulce et decorum est: a life cut short for a poet whose work achieved immortality
    Google tells popular music website to censor album cover art in 'sexually explicit content' ban

    Naked censorship?

    The strange case of Google, the music website and the nudity take-down requests
    Howzat! 8 best cricket bats

    Howzat! 8 best cricket bats

    As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
    Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

    David Luiz falls from leader figure to symbol of national humiliation

    Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil