Britain’s biggest building society has launched a new savings account that puts customers into a regular prize draw as well as paying interest.
Nationwide Building Society said its new Start to Save account is particularly aimed at young people and families who may not have much of a nest egg built up currently or who are struggling to put cash away on a regular basis.
The instant access account, which is available across Britain, pays 1% interest.
It allows balance increases of up to £100 per month.
The account will also encourage people to get into the habit of saving small amounts regularly – as savers who consistently grow their balance will have the chance to win £100 through regular prize draws.
To be entered into the prize draw, savers will need to increase their balance in the account by a minimum of £50 up to the maximum of £100 in each of the three calendar months leading up to the month of the prize draw.
Savers can withdraw their cash at any time – but if they want to enter the prize draw they will need to top their account back up by the required amounts to make themselves eligible.
The first prize draw will be held on July 21.
The more people with the account collectively save, the bigger the total prize pot.
Each draw offers £100 prizes, with the prize fund for each draw being 1% of the total balance increase across all qualifying accounts in the three months leading up to the draw.
The account is part of the society’s PayDay SaveDay initiative, which encourages people to save on the day they are paid, whoever they bank with.
Nationwide pointed to figures from the Money and Pensions Service suggesting that more than 11 million people across the UK have less than £100 in savings.
Nationwide said Start to Save will not be available in Northern Ireland due to prize draw regulations there. It is looking at alternative options for Northern Ireland.
Tom Riley, Nationwide’s director of savings, said: “By launching Start to Save, we are offering an account for savers to build their nest egg while rewarding those people who are either discovering or rediscovering a savings habit with a prize draw.
“We hope this, alongside what the Money and Pensions Service is trying to achieve, contributes towards helping drive a saving culture and starts to chip away at the challenge of reducing the number of people who have less than £100 in savings.”
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “It’s fantastic to see Nationwide determined to encourage consumers to start saving.
“At the moment consumers may prefer convenience over interest when it comes to saving a nest egg, so it’s positive to see that the Start to Save account will allow access and encourages the savings habit.
“The prize draw may well be appealing as some savers may feel more inclined to save with the chance of winning a prize, similar to how Premium Bonds from NS&I are seen as an attractive choice.
“Savers will need to abide by the terms of saving regularly to be eligible for entry into the prize draws, but overall this should result in consumers saving more than perhaps they intended.”
Looking at other potential options, she highlighted a prize draw from Halifax for people saving £5,000 or more in qualifying accounts.
Ms Springall also highlighted the Government’s Help to Save scheme, which is specifically aimed at those with low incomes, which provides a 50p bonus for those eligible for every £1 they save over four years.
Sarah Porretta, strategy and insights director at the Money and Pensions Service, said: “Financial well-being underpins overall health and happiness, and a lack of savings can leave people vulnerable to unexpected bills and a spiral into problem debt.
“We’re asking the whole country to get behind our goals to help millions of people make the most of their money and pensions, and it’s exciting to see innovative new products being offered in support of these aims.
“We look forward to seeing how effective this approach is at helping people develop a savings habit.”