A risk-free way to win £100,000

Do this and you could stand to win £100,000 in cash... but what's the catch?

Let’s imagine you have £5,000 of savings or more, tucked away in the bank for a rainy day or a stormy night.

The last thing you want to do is to gamble that money away - it’s your safety net of emergency cash - but if you could do it, risk-free, and stand to win £100,000, would you be interested?

That is the new offer on the table for savers with Halifax and Bank of Scotland. The banks are giving anyone who has £5,000 of savings with either bank the chance to register for a series of monthly prize draws where you could win up to £100,000 a month.

A risk-free gamble

Since savings in these banks are protected by the Financial Services Compensation Service,* there is no way you can lose your money entering the prize draw. In other words, this is a risk-free gamble!

But is it a wise one?

What you can win

• There are three prizes of £100,000 to be won each month.
• There are 100 prizes of £1,000 to be won each month.
• There are 1,000 prizes of £100 to be won each month.

There will be at least 12 monthly prize draws, and the first draw will be held in December during the first three working days of the month.

All prizes awarded are in addition to any interest paid but bear in mind savings accounts for children, clubs, charities and businesses are not eligible.

If you win the prize money, it will be free from Capital Gains Tax and Income Tax.

So what’s the catch?

There are two: the first one is that you need to register to enter into the draw. So you’re not automatically entered, even if you already have the qualifying amount of £5,000 in a qualifying saving account. Boo!

To register, fill in the form at www.halifax.co.uk/saversprizedraw or call 0844 571 50 76. You only need to register once to be entered into every draw; however, if your account balance dips below £5,000, you won’t be eligible for the draw that month. But you’ll be automatically re-entered again the following month if your balance goes back up to £5,000 or more.

The second drawback is more serious. Halifax and Bank of Scotland savings accounts are not market-leading in any category. So whether it’s instant access you want, a fixed rate bond or an ISA, you can do better elsewhere.

The question is: how much better? And is it worth sacrificing some interest to be in the prize draw? Or is this so-called reward for savers just another gimmick to tempt you to take out a rubbish account?

Let’s take an in-depth look at the eligible savings accounts and find out! 

Savings accounts

The first thing to note is that Halifax currently offers better (or exactly the same) rates on its savings accounts as Bank of Scotland so, while Bank of Scotland accounts are eligible for the prize draw, you are better off as a Halifax savings customer.

Compare savings accounts at lovemoney.com 

As the table shows, by opting for an account eligible for the prize draw, higher rate taxpayers will typically lose around £10 to £15 of interest per £5,000 you invest. Basic rate taxpayers typically stand to lose £15 to £20 and non-taxpayers around £20 to £25.

As each customer only gets one entry into the draw, it’s certainly not worth keeping more than £5,000 in a Halifax account. You could earn more interest putting the rest of your money elsewhere, and still enter the draw.

What should you do?

One way to look at it is to ask yourself: Is it worth losing out on £1 to £2 a month in interest in order to enter the draw?

That is, after all, the equivalent of the cost of one or two National Lottery tickets a month. So how does it compare?

The prizes with the Halifax draw are far smaller, of course, but the odds are likely to be better. Unfortunately, Halifax won’t release information about how many people have £5,000 in qualifying savings accounts, but I’m guessing it has to be fewer people than the number who play the lottery. And of course, even eligible customers need to register to enter the draw. Not everyone will be organised or bothered enough to do it!

So you might think it’s worth a punt, especially if you’re an existing Halifax or Bank of Scotland customer with £5,000 sitting in an account which you’re too lazy to move for sake of a few quid.

Is it a gimmick? Well, yes, it is. But at least Halifax is offering savers something a bit different in a challenging market.

Just remember: it might be a risk-free gamble in one sense - but there’s still no guarantee you will win!

Compare savings accounts at lovemoney.com

*As long as you keep your balance at £85,000 or less.