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I made a post about savings accounts with a lottery element to them a while back.
Most of these are actually still active, including the The Family Building Society Windfall Bond which wasn’t available when that original post was made, but is now open to new accounts.
Nationwide, who featured twice out of the 5 accounts I mentioned in that post, have come up with another account to get savers more engaged and add something a little different to the regular savings account.
Introducing Nationwide’s Mutual Reward Bond.
Quick disclaimer so I don’t waste your time. If you were not already a Nationwide member before 29th September, this account will not be open to you.
This account offers a fixed interest rate of 0.5% over an 18-month period. Any money put into this account cannot be taken out during this time without an interest penalty – more on that later.
How Does It Work?
You can put anywhere between £1 – £10,000 in order to open the account. But once you’ve put that initial amount in, you cannot put in anymore. Make sure you know exactly how much you’re happy to lock away for 18-months before doing so.
Every £100 you put in gives you 1 entry into the prize draw which will take place on 2nd February next year.
The prize for each winner will be £10,000. And the number of winners depends on how many full £10,000 prizes can be made up from the overall prize fund of all account balances combined. You can only win one prize.
You’ll also receive 0.5% interest on the money within the account. This will be paid to you on the anniversary of you opening it, as well as at the end of the 18-month term.
Can You Withdraw Your Money?
You can only withdraw any money put in by completely closing the account.
If you do this, you’ll have to pay an early access charge of 180 days interest. If your account hasn’t accumulated 180 days worth of interest at the time of closing, then the remainder of that charge will be taken from the money in your account (YOUR MONEY).
This is important to understand, especially if you’re locking away a significant sum as you could get back less than what you put in.
Who Is This Account For?
Existing Nationwide members.
Anyone in a position where they can lock money away for 18-months, are happy to do so for a 0.5% interest rate (fixed) and who wish to enter a free lottery styled competition.
Maybe people who have maxed out their LISA already and are looking for somewhere to maximise the excess they may have saved while waiting for the £4K a year limit to reset. If you’re in this position, please think about this as it could depend person to person.
Who Is This Account NOT For?
Students who need to prioritise easy access savings that don’t hit you with a penalty while you’re studying.
Anyone under 16 as this account is available for 16+ only.
People looking for a better return on their emergency funds. Your emergency fund is just that: FOR EMERGENCIES. You do not need to be making mega bucks interest from this safety net, as it’s there for that very reason for when a financial emergency arises.
Lottery Styled Savings – The Future Of Savings Accounts?
These sorts of savings accounts have proven particularly popular recently.
NS&I – the government backed savings company – have had to reduce the chances of winning for Premium Bond holders as they saw a sharp increase in deposits as regular savings interest rates dropped to new lows.
Being government backed, NS&I are in a precarious position where they must manage the interest of both the tax payer and their savers; they can’t be seen to be favouring one over the other.
But with little other option around at the moment, could we start to see these lottery styled savings accounts crop up more frequently?
There are certainly pros and cons. While it’s probably considered more ‘fun’ than a traditional savings account, and brings with it starry eyed hope of winning the big jackpot prizes, these chances are small to nil.
Foregoing a guaranteed interest rate for the low chance of winning anything could be a sign of yet another way savers are continually being fleeced while banks reduce their willingness to reward their loyal customers under the pretence of prizes that will be out of reach for the majority.
At least Nationwide are trying something though while offering a small interest rate on the side. This is more than most are doing at the moment.
We’ll see – I expect to see many more accounts like these crop up in the future.