Premium Bond alternatives: As rates fall, are savings prize draws a good option?

The allure of becoming a millionaire has kept Premium Bonds a staple of many savers’ portfolios. But the rates on savings accounts are taking a dive as the base rate has been cut for the first time in over four years, so, people might be looking for alternatives to Premium Bonds and regular savings products.

The good news is that there are rivals to Premium Bonds that could be more lucrative. More savings providers have launched prize draw products, with one prize draw offering the chance to win up to £100,000. If you’re interested, you will need to move quickly, as Santander, NatWest and Coventry Building Society closed their prize draws recently – but three draws remain on the market. 

So, how do they work and are they better than Premium Bond? 

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How prize draws work 

Prize draws operate in a similar way to Premium Bonds. They are easy-access savings accounts, where the money you pay in allows you entry into a prize draw. Each provider has slightly different eligibility rules, frequency and payout rates for their prize draws. 

With some, like the Halifax Prize Draw, you get interest on your savings and the prize draw payout is a perk on top. With others, just as with Premium Bonds, if you don’t win, you don’t get any return on your investment and remember, most Premium Bond holders never win. Of course, if you like the thrill of a competition and you aren’t banking on a guaranteed return on your savings, then these prize draws might be a good option for you. 

Here are the top Premium Bonds alternatives on offer right now. 

1. Halifax Savers Prize Draw – win up to £100,000 

The prize pot: Halifax Savers Prize Draw offers a chance to win up to £100,000. Qualifying savers are entered into a monthly draw, with 1,603 walking away with a cash prize. The top three winners bag £100,000 each, followed by 100 prizes of £1,000 and 1,500 prizes of £100.

How it works: You need to register for entry into the draw, which you can do through the Halifax app or mobile banking service. If you win, your prize will be paid directly into your Halifax savings account. 

A feature of the Halifax Savers Prize Draw is that any prize you win is a bonus on top of the interest you’re already earning through your savings account. Even if luck deserts you and you never win a prize, you will still get interest paid on your savings.

Eligibility: To qualify, you will need to hold £5,000 or more in qualifying accounts for a whole calendar month. All Halifax savings accounts and ISAs, plus most Bank of Scotland-branded savings accounts are included. Accounts for children are excluded. The £5,000 can be made up of money in different accounts, rather than all in a single savings account.

2.  Chip Prize Savings Account – win up to £75,000 

The prize pot: Chip is offering the second most attractive jackpot, of up to £75,000. One saver each month will win the £75,000 top prize, there’s also one £10,000 prize and 250 prizes of £10.

How it works: With Chip’s Prize Savings Account you don’t earn any interest on your deposits, instead the money you deposit counts towards entries in a monthly prize draw. Any prize you win is added to your account.

The number of entries savers get is decided by their average balance over the calendar month. The average balance is calculated by dividing the daily balance by the number of days in the month. It’s an approach that Chip says allows them: “To reward savers who deposit earlier in the month and build long-term wealth with us.”

Eligibility: All savers with the Prize Savings Account are automatically given a number of entries into the prize draw. 

3. Credit Union PrizeSaver - win up to £5,000

The prize pot: The PrizeSaver draw is managed by the Association of British Credit Unions. It is a monthly prize draw with a top prize of £5,000, 10 prizes of £50 and 10 prizes of £20.

How it works: Savers are automatically entered into a monthly draw. Every £1 held in a PrizeSaver account gets you one entry into the monthly prize draw, with up to 200 entries per month. 

Eligibility: The draw is open to people saving in PrizeSaver accounts with their local credit union. You can only have one PrizeSaver account. Note: Not all credit unions in the UK offer a PrizeSaver account. Find out which ones are participating on the PrizeSaver website.