Money Insider: Halifax can only win from savings lottery

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.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
New Articles
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
News
i100
Finacial products from our partners
Property search
Latest stories from i100
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

    SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

    £40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

    Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

    £85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

    Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

    £40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

    SQL DBA/Developer

    £500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

    Day In a Page

    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering