Britain’s largest building society has launched another savings lottery, giving those who lock at least £100 away for 18 months a one-time shot at winning £10,000.
Launched a week after National Savings & Investments announced it would slash the number of non-£1million Premium Bond payouts from December as part of a range of cuts to its savings accounts, Nationwide’s new ‘mutual reward bond’ will let existing customers stash away up to £10,000.
Saving into the 18-month fixed-rate bond comes with a rate of 0.5 per cent – a rate that is exceeded by more than a dozen one-year fixed-rate accounts in This is Money’s independent best buy tables.
However the bond puts savers into a prize draw taking place at the start of next February.
Nationwide Building Society unveiled its third savings lottery of 2020. Savers have a shot of winning £10,000
There will be multiple £10,000 prizes up for grabs, with the total prize fund given away to savers based on 0.5 per cent of the total amount saved. Were £10million to be saved into the accounts, the prize fund would be £50,000, with five £10,000 prizes given away.
Savers will be entered into the draw once for each £100 saved, effectively giving them 100 ‘tickets’ in the draw if they save the full £10,000.
Nationwide said someone who saved this much into the account would have ‘at least’ a one in 200 chance of winning one of the headline prizes, which suggests someone who saved the minimum £100 would have a 20,000 to one shot.
How does it stack up to elsewhere?
This compares favourably with Britain’s best-loved savings lottery, NS&I’s Premium Bonds, which handed out 71 prizes of £10,000 in this month’s draw, although it was choosing from a far larger pool of savers.
With more than 94billion £1 Bonds in the September draw, the odds of any £1 Bond winning £10,000, the fifth-most valuable sum up for grabs, was 1.33billion to one.
Someone holding £100, the minimum needed to open Nationwide’s lottery, would have a 13million to one chance of winning the prize, while someone who held £10,000 would have a 133,061 shot at doubling their money.
|Value of prizes||Number of prizes in September 2020||Number of estimated prizes in May 2020 under original cuts planned in February||Number of estimated prizes in December 2020|
These odds are set to get even longer from December when NS&I makes cuts to its Premium Bonds.
It estimates there will be 43 prizes of £10,000 in the draw that month, 28 fewer than in September.
If the number of Bonds remained the same, the odds of any £1 Bond winning £10,000 would lengthen to 2.2billion to one, the odds of winning £10,000 with £100 worth of Premium Bonds to 21million to one, and the odds of doubling a £10,000 holding, 220,000 to one.
|Account||How many £10,000 prizes up for grabs?||Odds of winning with £100||Odds of winning with £10,000||Interest paid?||Withdrawal restrictions?|
|Nationwide Building Society Mutual Reward Bond||Dependent on total amount saved||‘At least’ 20,000 to 1||‘At least’ 200 to 1||0.5%||18-month fixed-rate bond|
|National Savings & Investments Premium Bonds (current odds)||71 in September 2020||13m to 1||133,061 to 1||1.4% effective prize fund rate (1% from December)||None|
|Family Building Society Windfall Bond||2||N/A (minimum holding £10,000)||7,500 to 1||Bank of England base rate (currently 0.1%)||35 days’ notice, account must be closed when money withdrawn|
However, while the odds are shorter for Nationwide’s draw, it is worth noting that the Premium Bonds draw takes place every month, savers can hold up to £50,000 worth and additions and withdrawals can be made without penalty at any time.
And even after NS&I’s cuts come into effect, the ‘effective prize fund rate’, or the amount savers can expect to earn on their Premium Bonds holding over a year, remains twice the interest rate of Nationwide’s 18-month bond.
Britain’s largest building society has previously launched two prize draws in 2020. In February it unveiled a Start to Save account paying 1 per cent interest which entered those who saved between £50 and £100 a month over a three-month period into a quarterly prize draw, with prizes of £100 up for grabs.
The first draw in July handed out 458 £100 prizes after around £4.58million was saved between April and June.
Meanwhile a one-off Isa prize draw in May handed out 10 prizes of £20,000, 10 £10,000 prizes and 40 £5,000 prizes to savers who paid in £100 or more into a Nationwide Isa in the 2020-21 tax year.
And the world of savings lotteries became even more crowded at the end of last month when Epsom-based mutual Family Building Society brought back its Windfall Bond, giving those with £10,000 or more the chance of winning between £1,000 and £50,000.
It would give away up to 15,000 tickets bought in £10,000 instalments, allowing a total of £150million to be saved, with the monthly draw including two £10,000 prizes.
Someone with £10,000 would therefore have a one in 7,500 chance of taking home that prize.