Nationwide building society is giving its members a one in 1,750 chance of winning a cash prize of up to £100,000 each month in a draw which it said demonstrated “the benefits of mutuality”.
The UK’s largest building society said from September it would give adult savers and mortgage borrowers the chance to win prizes from a £1m pot each month.
There will be 8,008 prizes on offer, most of them set at £100, but five winners will get £10,000, two will receive £25,000 and one a month will win £100,000.
This is not the first draw offered by the society – it has run others targeted only at savers. Other providers are also offering competitions, with cash prizes available to the winners, and of course, premium bonds offer an opportunity for savers to win up to £1m each month.
Anna Bowes, a co-founder of Savings Champion, which helps savers find the best deals, said providers have been looking at ways to attract some of the £238bn that flowed into accounts last year.
“The problem is that as we have become a nation of savers, interest rates have continued to fall,” she said.
“The rates on even the best savings accounts are so low that potential savers are not as driven by the rates on offer. So a competition or a prize draw is a good way to pique savers’ interest.”
In the new draw, Nationwide’s members will get one entry regardless of how many accounts they have with the society, and Louise Prior, its director of membership propositions, said this underlines “the ethos of all members being treated equally”.
In total, 14.2 million members across England, Scotland and Wales will be eligible. Rules around prize draws in Northern Ireland mean it will not be offered there, and instead, a £300,000 fund will be given to local charities.
The society said that if it had used the prize fund to increase its savers’ interest, it would have worked out as a rise of 0.01% in rates, while the top prize on offer could make a “meaningful difference” to an individual member.
“Members don’t need to do anything to take part – as long as they have at least one of our mortgages, savings accounts or current accounts, then they are automatically entered,” Prior said.
“We do understand, though, that there may be some members who do not wish to take part in our member prize draw, which is why there will be an opt-out page on our website and, by having the first prize draw in September, we are giving members plenty of time and opportunity to do so.”
The society has committed to run the draw for a year and will review it after that.
The rival institution Halifax each month offers three savers the chance to win £100,000, and has 100 prizes of £1,000 and 1,500 of £100. To qualify, savers must hold at least £5,000 in qualifying accounts. Savers need to register to enter, and savings in joint accounts are treated as being split equally.
Bowes said Nationwide’s competitions “have often come with a savings account that has also been competitive – so a prize draw is the cherry on the top”.
She added: “This new prize draw is a nice way to reward loyalty – although it shouldn’t necessarily be a reason to pick a savings account if you are not already a member. A competitive rate of interest is also important.”
Bowes said Nationwide does have accounts offering decent rates – she highlights the FlexDirect current account paying 2% for 12 months on balances of up to £1,500 – although as a current account, in order to earn that rate, you need to deposit a minimum of £1,000 each month.
Nationwide’s Start to Save regular savings account, which pays 1% AER (annual equivalent rate), is beaten only by Coventry building society’s Regular Saver, paying 1.05% AER.
She added: “Nationwide does also pay some very poor rates, so choose carefully to get the best of both worlds.”
Bowes said Halifax’s rates mean that you could be missing out on best-buy deals to stand a chance of winning a prize.
“As savers continue to suffer cripplingly low interest rates, these prize draw funds may offer a beacon of hope – however, it’s important to understand that you may well win nothing and therefore earn even less on your hard-earned cash,” she added.
