Halifax is living up to its new 'challenger bank' reputation with an innovative bid to attract new savings business from its rivals and to reignite the country's savings culture.
The bank has announced that it will launch a prize draw on 3 October in which it will give away £500,000 tax free every month, including three top cash prizes of £100,000 each.
The incentive isn't open to all Halifax customers, only those age 18 or over with a balance of £5,000 or more will qualify for the monthly Premium Bond-style draw.
The reaction to this new monthly promotion has been mixed, while it has been welcomed by some; other experts have dismissed it as little more than a marketing gimmick. I think it is a clever idea and I'm sure it will have the desired effect of bringing new savers to Halifax. After all, the interest rates offered by its savings accounts are already pretty competitive, so even if you do not win in the monthly draw, you will still be getting an above-average return on your cash.
Premium Bonds remain hugely popular and there always seem to be queues for National Lottery tickets, so you can understand why the UK's largest savings provider thinks it's on to a winner.
When I spoke to contacts at Halifax, I asked why they didn't use the prize money to increase the interest rates on its accounts. They said that even though the annual prize fund adds up to £6m per year, if this was spread across their entire savings book, it would make very little difference to pricing.
The key thing this initiative does is raise the profile of savings. For the last three years there has been only doom and gloom for UK savers. However this draw, which includes 100 monthly prizes of £1,000 and 1,000 prizes of £100, will certainly get people talking and help put savings back on the agenda.
There will be Halifax customers topping up their balances to £5,000 in order to qualify for the draw, while other customers who currently bank elsewhere and are on a similar rate may be tempted to transfer their account across – after all they won't be losing out on the interest rate front, and there is always a chance that they may be one of the lucky winners.
I admit that there are many savers out there with a nest egg of less than £5,000 who will feel excluded, and that the chances of winning a cash prize in the monthly draw is fairly remote, but overall it is a positive move and challenging enough to make other banks and building societies sit up and take notice.
Co-op shows that fee-paying accounts can offer a tidy package
during the last year there has been ongoing discussions between the banks and the FSA concerning packaged or "added value" current accounts as the regulator wants to ensure customers are getting a fair deal in return for their monthly fee.
In the past there has been much bad press surrounding dubious sales practices and poor value for money with these "premium" current accounts.
If you're not going to make use of the monthly benefits on offer with these fee-paying current accounts then it's a no brainer, switch back to a standard bank account and save yourself £120- plus per annum into the bargain. However, rather than dismiss all packaged accounts out of hand, it's worth looking closely at the deals on offer.
This week Co-operative bank has refreshed the offer on its Privilege (£9.50 a month) and Privilege plus (£13 a month) accounts. The comprehensive vehicle breakdown cover will now be provided by RAC and instead of covering one named vehicle, for joint account customers with two cars, both will now be covered.
The travel insurance element has also been improved and it now covers airport closures, so will kick in for any future volcanic ash type disruptions. The age limit for travel cover has also been increased and now caters for customers up to 75.
The third main change is with mobile phones, where up to four phones (including smartphones) are covered for family members. There is no longer a requirement to register the phone, however you will need to provide proof of purchase if you happen to make a claim. When you consider that some mobile companies charge £12.99 per month to cover a single iPhone, these accounts can represent good value.
It comes down to individual circumstances, but with the value of benefits increasing, a packaged current account can make great financial sense for some people.
Andrew Hagger is an analyst at moneynet.co.ukReuse content