Is the hybrid prize draw / regular saver any good?
Nationwide is bringing back its interest-paying prize draw for customers. Find out if it’s a decent place for your savings, and what your chances are of winning a prize on top.
What is Nationwide Start to Save?
The account is part savings account and part prize draw. It first ran from February 2020 for two years, but is back from 16 June 2022.
Though it’s designed to encourage those who don’t save right now to start, anyone can use it for their savings.
The idea is that you’ll save small amounts every month, and if you keep the money in the account you’ll be in with a chance of winning a £250 prize.
The account is easy access, meaning you can take your money out at any time, though if you do this it could affect your entry into the draw.
The account will also only last for 24 months. Once this is reached it’ll be closed and your savings will be transferred into a separate savings account.
What is the interest rate?
The rate on offer is 2.5%, up from the 1% rate the last time the account was available. This puts it below the top-paying regular savings accounts, and level with Nationwide’s own Flex Regular Saver. Interest is paid annually on the anniversary of when you opened the account.
How much can you save?
The big difference with this new version of the account is there’s a lower limit on your monthly deposit – just £50. This is down from the £100 you could save before. There’s also a minimum each month of £25.
How much could you win?
The prizes with Start to Save are £250, a big increase from the £100 last time around. If you do win, the prize will be added to your account and will earn the 2.5% interest.
However, the draw now takes place every six months rather than every three, so there are fewer chances to win.
The prize fund will vary from draw to draw as it’s 2.5% of the total amount added to all the Start to Save accounts in the previous six months.
Nationwide say this means the odds are between 1 in 34 and 1 in 67. This hasn’t changed since the last version, so the odds are the same.
Prize draw eligibility
You need to save at least £25 every month in the previous six-month period to be entered into the draw. So miss one month and you won’t be in the next draw.
The draw month is the month after the last month of a six-month period, e.g. to be entered into the February one you’ll need to have saved the minimum in the previous August, September, October, November, December and January.
And if you withdraw any cash you’ll need to pay it back and another £25 before the end of the same calendar month for that month to be eligible. For example, take out £50 and you’ll need to pay in £75 before the month ends.
The draws will take place on the following dates:
- 21 February 2023
- Save in August, September, October, November, December 2022 and January 2023
- 22 August 2023
- Save in February, March, April, May, June and July 2023
- 20 February 2024
- Save in August, September, October, November, December 2023 and January 2024
Who can open a Start to Save account?
There’s no need to be an existing Nationwide member (it’s a building society so customers are known as members) to open an account, though you do need to be over 16 years old and live in England, Scotland or Wales.
However, once you have your Start to Save account you’d count as a member. This means if you then open a Nationwide current account and then switch into it you’ll earn a £125 switching bonus (non-members get just £100).
How does it compare to other savings accounts?
When you compare the 2.5% rate against other regular savers, it’s not bad. Only three offer a higher rate, and only two match it.
- First Direct 3.5% (£300 max a month)
- Natwest 3.3% (£150 max a month)
- RBS 3.3% (£150 max a month)
- Nationwide Flex Regular Saver 2.5% (£200 max a month)
- Santander Regular Saver 2.5% (£200 max a month)
These accounts also allow larger monthly deposits, so in terms of guaranteed interest you’ll earn, you’re better off with all of the above accounts. However they all require a current account with that bank – the Start to Save account doesn’t.
The 2.5% rate is also better than what you’ll get with the Virgin Money M Plus current account (2.02% on the first £1,000 saved) and Virgin Money M Saver (1.56% on up to £25,000).
However, when it comes to ethics, as a building society Nationwide scores much higher than the other banks.
Is a Start to Save account worthwhile?
Looking purely at the rate on offer, it’s not a bad option – though I’d prioritise the higher paying accounts first.
But my problem is with the maximum monthly deposit. If you save £50 each month you’ll get a grand total of £8 interest after the first year. Not exactly a life-changing amount. You’ve got to question whether it’s worth the admin of opening an account and setting up the standing order.
In fact, putting the same £50 every month into the best easy-access account will net you just £3 less at £5, and you’ll also be able to earn interest on any larger sums you have from day one.
There’s also a good chance we’ll see further Bank of England base rate increases this year, which will mean the gap from other savings accounts and this one could soon disappear.
However, there’s a chance you’ll win a prize with Start to Save, which would knock all the other savings accounts out of the park.
Compared to Premium Bonds, the odds aren’t actually that bad. But there’s still a good chance you’ll get nothing – I failed to win anything on the first iteration of the account.
Overall, I think if you already have a Nationwide account, why not put £25 to £50 away each month, at last for the first six months to you’re eligible for the first draw. Then review what other rates are available elsewhere.