What's Halifax offering?
The Halifax Savers Prize Draw launches on 3 October although the first monthly draw will not take place until December. Halifax has said the initiative will run for at least a year.
Each month there will be three prizes of £100,000, 100 £1,000 prizes and 1,000 prizes of £100 - this money is tax-free. To stand a chance of winning you must hold at least £5,000 of savings with Halifax or Bank of Scotland and be aged 18 or over. The money doesn't have to be in the same account but children's accounts don't qualify and if it is held in joint names, you need to have at least £10,000 invested.
The other key thing to note is that you won't be automatically entered into the prize draw. You need to register and this can be done by filling in a form at www.halifax.co.uk/saversprizedraw or calling 0844 571 50 76.
Simon Kenyon, director of savings at Halifax, said: "The Halifax Savers Prize Draw is designed to shake up the savings market and reignite the savings culture. Savers can be sure they're continue to earn interest on their funds in addition to the opportunity to win a cash prize in the monthly draw."
Should I open a Halifax/Bank of Scotland savings account?
Halifax has recently relaunched its savings range and although none of its accounts are the best on the market, some of them are fairly competitive so you need to weigh up whether you're happy to sacrifice a bit of interest in the hope you'll be one of the monthly winners.
Halifax savings accounts are all available under the Bank of Scotland brand too.
Easy access accounts are most popular with savers because they're the most flexible. Halifax's Online Saver pays 2.80% (the market-leading deal is Nottingham Building Society's eSaver Plus Issue 2 at 3.20%). If you decide to open this Halifax account to be eligible for the prize draw, make sure you move your money after the first year because the 2.80% rate includes an introductory bonus and the rate drops to a paltry 0.1% after 12 months.
If you have savings you can afford to lock away for a few years, you may want to consider a fixed rate bond. Halifax's two year Fixed Online Saver is paying 3.50%, this compares with the best two-year deal on the market which is from Post Office at 3.96%.
If you want a longer term fix, Halifax's five-year Fixed Saver pays 4.20%. This is 0.30% less than the market-leading fiver-year fixed rate bond which is from BM at 4.50%.
Money held in Halifax ISAs is also eligible for the prize draw. Its five-year ISA Saver Fixed is paying 4.40% - just 0.05% less than the market-leading deal from BM at 4.45%.
You can invest up to £5,340 in a cash ISA this tax year (the tax year ends on 5 April 2012) and any interest you earn is tax-free so it's a tax-break well worth taking advantage of. If you have money invested in previous tax year sitting in cash ISAs that are no longer paying a competitive rate of interest, both the Halifax and BM accounts accept transfers in, which means you can move your savings across without losing its tax-free status.
If five years is too long to tie your money up for, Halifax' three-year ISA Saver Fixed pays 3.70%. The best account over this term is the Post Office's Fixed Rate Cash ISA Issue 6 which is paying 4.00%. Its two-year ISA Saver Fixed pays 3.50%, compared with a leading rate for a two year term of 3.75%, again from Post Office.
Halifax's variable rate easy access ISA Saver Online pays 2.60%. The leading deal in this category is Northern Rock's Online eISA which has a rate of 3.05%. The rates on both of these accounts include 12 month bonuses so be prepared to move your money again after a year.
The concept of a savings prize draw isn't new as this is how NS&I's Premium Bonds work and they're massively popular even though the chances of winning the big prize (£1million) are small. I therefore expect the Halifax prize draw to also be popular. And with this competition, you'll get some return on your money regardless of whether you win one of the monthly prizes because you'll continue to earn interest on your savings. Premium Bonds don't pay any interest, so it's only if you win that you get any return on your money.
However, while we need initiatives to encourage people to save more and Halifax claims this is part of the reason to launch a prize draw, I'm not convinced this will get more people saving. The fact you need at least £5,000 in a savings account to qualify means it's only existing savers who'll be able to benefit.
That said it's great to see a savings provider come up with something new. With the Bank of England base rate having been at 0.50% since March 2008, even many existing savers don't see the point in savings at the moment. The vast majority have money languishing in accounts paying less than base rate even though the best easy access accounts are paying around 3.00% and you can earn even more if you have money you can afford to lock away for a few years. Therefore, if banks and building societies can come up with new ideas that get people interested in savings again, it's a good thing.
Let's hope others follow Halifax's lead and we see some more product launches that are a bit different from the norm.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct