Will this new monthly draw encourage some savers to turn away from Premium bonds?

An app-based savings provider offers its customers the opportunity to win monthly prizes in the same vein as NS&I premium bonds.

The Prize Savings Account, launched by savings and investing app, Chip, is an easy-to-access account offering savers the chance to win a prize of £10,000 as well as 250 small prizes of 10 £, every month.

Savers will be entered into the monthly draw if they have at least £100 in their account at the end of each month.

The minimum account deposit is £1 and the maximum amount is £85,000, with every £10 deposited counting as one entry per month.

Lottery Style Savings: Every month, Chip randomly selects winners from all eligible entries.

This means that the more savers deposit, the more entries they have, up to a maximum of 8,500 entries per customer.

Savers can also withdraw funds arriving in seconds at any time, according to Chip – although in some cases it can take up to two hours.

Chip hopes its improved user experience and fast withdrawal speed will appeal to premium bondholders who might be fed up with recent issues when accessing their money.

Last week, we reported how hundreds of savers were unable to access their savings accounts with NS&I due to its new online login system, three weeks after the problem was first reported.

Simon Rabin, founder and managing director of Chip, presented the new product as a real alternative to NS&I’s premium bonds.

“It’s time for a more premium…Premium Bond,” Rabin said, “we saw an opportunity to create a savings account with an amazing user experience.

‘NS&I Premium Bonds is a savings account you can deposit money into (and withdraw whenever you want), where the interest paid is determined by a monthly lottery.

“However, withdrawals sometimes take up to six days, and as of December 2021, NS&I received 4,187 customer complaints that month.

“Additionally, at the end of 2021, there was a whopping £74,452,325 in unclaimed prize money. We believe that when it comes to customer experience there is plenty of room for improvement – we think our new ‘Price Savings Account’ is just what you need.’

Similar to premium bonds, Chip’s offering is an interest-free savings account provided by its partner bank, ClearBank.

Any savings held in the account are protected by the Financial Services Compensation Scheme up to £85,000 per person.

What is Chip?

Chip is an automatic saving and investing app designed to help its customers save without having to think about it.

Its application is available on iOS and Android and is used by more than 500,000 people. In total, it has over £1 billion in savings for customers.

Chip uses artificial intelligence technology linked to their bank account through an open banking system to calculate how much they can afford to save based on their spending habits.

Jackpot: Chip offers a monthly jackpot worth £10,000.

Jackpot: Chip offers a monthly jackpot worth £10,000.

He then transfers that money from his checking account to his Chip account – automatically without interfering with a person’s normal daily spending habits.

Savers can also choose to set up a recurring payment, just like a direct debit which can be done weekly, bi-weekly or monthly.

The new account also allows savers to use both the auto-save feature and recurring payments to automatically deposit into the Prize Savings Account.

Customers can increase or decrease the amount Chip sets aside by adjusting their savings level on the app, which determines how fast or slow they want to save.

Chip can apparently adapt to someone who overspends or earns irregular income and can adjust savings amounts accordingly.

It offers a host of features – it analyzes your spending habits, helps you set savings goals, and can automatically set a regular amount to save each time you get paid by your employer.

How does his discount account compare?

Chip may see disgruntled premium bondholders as his primary target. However, this will not be an easy task given the confidence people place in the 65-year-old savings product.

The NS&I draw has been running since 1956 and there are around 21 million premium bondholders holding over £118bn of eligible £1 bonds between them.

Chip is unable to offer the big cash prizes that are NS&I, which will likely remove the magic for many.

Premium bonds have been a popular product for UK savers for over 65 years.

Premium bonds have been a popular product for UK savers for over 65 years.

Although the majority of the prizes are worth £25, premium bond holders still have a remote chance of winning one of two monthly £1 million jackpots.

There are also ten prizes worth £100,000 and 19 prizes worth £50,000.

In May, NS&I raised the rate of the underlying premium bond prize fund from 1% to 1.4%, boosting the odds of its 21 million savers winning a monthly prize.

This means the odds of each £1 Premium Bond number winning a prize have increased from 34,500 to 1 to 24,500 to 1.

Chip is unable to give the odds of winning just yet as it is only the first month of the online account, although he says in the future he hopes to share this once he has collected more data.

However, it goes without saying that the more savers deposit, the more raffle entries they will have each month.

Another factor for savers to consider is that Premium Bond prices are tax exempt, while Chip prices may be taxed depending on whether or not they exceed the tax-free annual abatement of a nobody.

Ultimately, there is no guarantee of winning anything with these sweepstakes. Savers looking for guaranteed returns while maintaining access to their cash might be better off considering an easy-to-access interest-bearing savings offer.

The best easy-to-access savings account currently earns 2.1%. On a deposit of £20,000 this would mean £420 in interest over the course of a year.

What other savings draws are worth considering?

Halifax Savers Draw

Customers with a current account in Halifax can sign up through online banking or by visiting a local branch for their savings draw.

Every month, more than 1,600 saving customers participating in the Halifax raffle are randomly selected to win cash – three of the prizes worth £100,000.

However, there is a hurdle to overcome as they will need to hold £5,000 or more in savings for an entire month to qualify for the following month’s raffle.

The £5,000 can be made up of multiple pots on any Halifax savings account, including cash Isas, although children’s accounts are excluded.

Nationwide Membership Draw

National members benefit from a monthly raffle split into 8,008 prizes, with one worth £100,000, two worth £25,000, five worth £10,000 and the rest worth £100.

Unlike Halifax, Nationwide members are automatically registered, so as long as you have a mortgage, savings account or checking account with Nationwide there is nothing to do.

Nationwide currently has around 14 million eligible members for the draw.

Yorkshire Building Society Make Me A Saver Account

This regular savings account pays 1.65% interest and instant access to savings with no penalty while offering 10 prizes of £1,500 each month.

To participate in one of the raffles, customers must deposit money into the account and increase the balance by at least £50 every month.

The account also allows unlimited instant withdrawals with no loss of interest.

A total of eleven raffles will take place once a month between March 2022 and January 2023, with the account expiring on January 31, 2023.

It should be noted that the account limits savers to a maximum deposit of £150 per month, meaning a total of £1,800 can be saved over 12 months.

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