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 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.