A new type of ‘prize draw’ savings account aimed at getting young people and families to put small amounts of money aside each month is being launched by Nationwide Building Society.
The ‘Start to Save’ account, launching on Tuesday 18 February, is aimed at encouraging Britain to save, especially people who have the means to save even a small amount, but for whatever reason aren’t doing so. It forms part of the Society’s PayDay SaveDay initiative, which seeks to encourage people to save on the day they are paid – no matter how much or who with.
At a time when more than 11 million people across the UK have less than £100 in savings1, the account and approach also support the Money and Pensions Service’s (MaPS) recently launched UK strategy2 for Financial Wellbeing, one goal of which is to get two million more people to save regularly.
Start to Save – the account:
Start to Save is an online, instant access, regular savings account that pays 1.00% AER/gross p.a. (variable). Available to all savers across England, Scotland and Wales, the account can be opened via Nationwide’s website and by using the Internet Bank or mobile App with a minimum of 1p. It allows a balance increase of £100 per month.
The Prize Draw:
To further motivate people to save regularly, the account offers savers the chance to win £100 through regular prize draws. This is designed to reward savers for growing their balance each month, with the idea being to encourage steady growth of balances.
To be eligible3 to enter the Start to Save prize draw, savers will need to increase their balance in the account by a minimum of £50 (up to a maximum of £100) in each of the three calendar months leading up to the month of the prize draw. There will be four prize draws beginning on 21 July 2020, then on 21 October 2020, 22 January 2021 and 23 April 2021.
Each draw will offer prizes of £100, with the total prize fund4 for each draw being 1 per cent of the total balance increase across all qualifying Start to Save accounts in the three months leading up to the draw. As a result, the chances of winning are dependent on saving behaviour, so the more that people save, the bigger the prize fund and the more prizes on offer.
Savers can withdraw funds at any time. However, if any money is taken out during a calendar month, some or all of it may need to be paid back into the account to be entered into the prize draw5.
Start to Save will not be available in Northern Ireland due to the way prize draws are regulated there. Nationwide is currently looking at alternative options to encourage the savings habit in Northern Ireland.
Tom Riley, Nationwide’s Director of Savings, said: “Millions of people are struggling financially and as a building society we are looking at how we can help them become financially stable. When we launched PayDay SaveDay, our aim was to get Britain saving, regardless of who with, so it’s great the Money and Pensions Service’s recently launched financial wellbeing strategy aims to get two million more people saving regularly.
“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. Our experience tells us that rates are not the primary reason why young people and families aren’t saving. That is why Start to Save is aimed at those struggling to build a savings buffer of any sort. And even without a prize draw win, £50 per month saved over the two-year period would certainly be a good financial buffer to fall back on.
“We believe our Start to Save account complements other initiatives, such as Help to Save and PrizeSaver, the government’s savings scheme for credit unions, because, together, they reach out to a wide variety of people, all of whom are not saving for various reasons. 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.”
1 Source: Money and Pensions Service
2 https://moneyandpensionsservice.org.uk/uk-strategy-for-financial-wellbeing
Example (based on the 21 July 2020 prize draw):
3 If the starting balance at the end of March is £150, then at the end of April the account balance would need to be at least £200, and by the end of May at least £250 and by the end of June at least £300.
4 Using the example above, if 50,000 people all increased their Start to Save account balance by £150 (£50 per month) between April and June, the total prize fund for the July draw would be £75,000 – equating to 750 chances to win a £100 prize. If those same 50,000 people all increased their Start to Save account balance by £300 (£100 per month) the total prize fund would be £150,000, with 1,500 chances to win a £100 prize.
5 For example, if the account balance is £100 at the start of the month and £50 is then withdrawn, at least £100 will need to be saved into the account to ensure the balance reaches at least £150 at the end of the month.
- The account will revert to the Society’s Instant Access Saver 24 months after account opening with all deposit restrictions removed.
- Winners will be notified personally and will have their £100 prize paid directly into their Start to Save account. The interest and any winnings paid into the account will not count towards the monthly balance increase target to be eligible for entry into the prize draw, nor will they contribute to the amount in the prize fund.
- The prize winnings are not taxable. The £100 prize is paid into the account and becomes part of the balance and that accrues the 1% interest.
