Halifax launches a premium bond-style prize draw for savers

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Halifax has announced a new £500,000 prize fund for its savers. Anyone with more than £5,000 saved with Halifax can enter the competition, which will see £500,000 shared out among the winners each month.

"The Halifax Savers Prize Draw is designed to shake up the savings market and reignite a savings culture," says Simon Kenyon, director of savings at Halifax. "We know that our customers work hard to achieve their savings goals so this is a great way of rewarding that commitment. Savers can be sure they can continue to earn interest on their funds in addition to the opportunity to win a cash prize in the monthly draw."

The prizes each month are made up of three top payouts of £100,000, 100 £1,000 prizes and 1,000 £100 prizes. All the winnings will be tax-free.

So what's the catch?

It's a nice idea and certainly brings a touch of excitement to the savings market, but anyone considering switching their savings to Halifax should remember that the bank offers some of the worst interest rates on the market. Its variable rate cash ISA pays a measly 0.1% and its Instant Saver pays just 0.1%.

This week's best savings rates

"This is a clever way to win customer loyalty but it's nothing but a gimmick," says Jason Riddle, director of campaign group Save our Savers. Those with a large savings pot prepared to miss out on the best interest rates in favour of the possibility of a large prize may want to take a look at the Halifax offer, but everyone else should be seeking out the best possible interest rate.

"Whilst any initiatives by providers that could help savers earn extra money should be applauded, it remains clear that most savers are earning very low rates at present," says Kevin Mountford, head of banking at MoneySupermarket.com. "Savers need to make sure they are regularly checking their rates and switch account if their money isn't working hard enough for them."

AA offers the best instant access ISA with a rate of 3.05%. If you've already used up your ISA allowance then Skipton Building Society's Fixed-Rate E-Bond, which pays 3.45% for the first year, is worth a look.

Anyone looking to start building a savings pot should consider First Direct's regular saver, which pays 8% for the first year as long as you pay in between £25 and £300 a month.

If you do want to apply for the Halifax Savers Prize Draw you can register after 3 October at www.halifax.co.uk/saversprizedraw or call 0844 571 50 76. The first draw will take place in December.

Your Comments

Actually I bank with Halifax already and their rates are almost at the top. I also have a current account twith them which pays me £5 /month, as does my halifax credit card. My ISA rate is around 3% - not great but better than most. I think its an excellent idea and have signed up for it as I already have the relavent accounts. Also it is possible to register now, not 3rd Octover.

I'd rather have a better interest rate to move some money, not a gimmick.

I bank with Bank of Scotland (same thing as Halifax). I have instant savings at 2.8% and an ISA Saver Direct at 3.0%, so i think you are being a bit unfair saying that they offer some of the worst interest rates. Maybe but also some of the best. Very misleading story!

I have repeatedly attempted to register on line for the savers prize draw but cannot obtain the correct halifax register applification page.

Halifax is a UK bank and yet Northern Ireland, part of the UK, is excluded from receiving prizes. Halifax state that this is owing to the Gambling Act 2005 but, although no legal eagle, I believe that the Halifax are incorrect and that they are discriminating against loyal customers. Their prize draw is similar to Premium Bonds and yet these are open to ALL UK residents, as is the National Lottery.
Customers, consumer organisations and the media should tackle the Halifax on this discriminatory issue.

I recently applied for myself and my partner Jacqueline Chapman to register for the Prize Draw. When will I know if I have been accepted for the draw?

I have an ISA with Halifax, it pays 3.2% if you have a currant and pay in at least £1000 each month. I also get £5, each month for this.It's called a qualifing account.

Is this true that if i register to the prize draw that i will loose the 3.5% interest rate that my isa is on