Low interest rates on savings could spark ‘more prize draws’ but savers urged ‘check T&Cs’

Martin Lewis offers advice on savings and interest rates

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From easy access to fixed term accounts, when it comes to saving, there’s a wealth of options. Some savings providers offer prize draw schemes, with some initiatives launched to help encourage people to get into saving.

This includes NS&I’s Premium Bonds, which offers savers the chance to win a prize rather than earn interest.

Halifax also offers a prize draw, with £550,000 of prizes up for grabs in the free draw each month.

Payouts range from £100 up to £100,000, as well as £1,000 payouts.

Recently, Express.co.uk spoke to Rachel Springall, Finance Expert at Moneyfacts.co.uk, about the savings market.

“Consumers comparing cash savings accounts may feel disheartened by the low rates currently on offer, so it would not be too unsurprising to see savers turn to a prize draw to test their luck,” Ms Springall said.

“However, there is no guarantee of winning a prize and there are alternatives to consider, such as NS&I’s premium bonds or prize draws with Nationwide, Halifax, but ultimately NS&I is a Government-backed brand and could be a trusted safe haven to invest their cash.

“The potential to win a cash prize can draw in those consumers who also want to keep their money safe with a prominent brand protected under the Financial Services Compensation Scheme.”

The finance expert went on to issue a warning for those who are interested in prize draws.

“Prize draw customers may well be offered other products from a provider but it’s wise for consumers to compare offers against the whole of market before they commit,” she said.

“Due to low interest rate environment we could see more prize draws enter the market but it’s important that customers compare deals carefully and check the T&Cs.”

The finance expert also spoke about the savings options which may be open exclusively for people who are on a low income.

“Saving little and often is the key to building a nest egg, but this may not be as simple as it seems for those who have little to no disposable income,” Ms Springall explained.

“There is help available with Government schemes, such as the Help to Save scheme designed to encourage working people on Tax Credits to save.

“HMRC revealed towards the end of last year that more consumers were using the scheme and deposits had risen too.

“The scheme’s 50p per £1 initiative means that it will pay a maximum bonus of £1,200 over four years.”

Help to Save is backed by the Government, meaning all the savings in the scheme are secure.

A person can open a Help to Save account if they’re any of the following:

  • Receiving Working Tax Credit
  • Entitled to Working Tax Credit and receiving Child Tax Credit
  • Claiming Universal Credit and they (with their partner if it’s a joint claim) earned £617.73 or more from paid work in their last monthly assessment period.

Additionally, the person needs to be living in the UK.

Some people who live overseas can apply for an account. This is if they’re either a:

  • Crown servant or their spouse or civil partner
  • Member of the British armed forces or their spouse or civil partner.

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