New savings account pays 1% interest with a monthly prize draw: is it any good?

Yorkshire Building Society’s new savings account enters savers into a monthly prize draw. Should you consider getting involved?

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Yorkshire Building Society has launched a new savings account with a twist. While at first glance it looks like any other regular savings account, it also enters account holders into a monthly prize draw.

So if you’re a saver, is the account worth opening? Let’s take a look.

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How does the Yorkshire Building Society savings account work?

Yorkshire Building Society’s Make Me a Saver account pays 1% AER variable interest. It works like a regular savings account, meaning you can add cash to the account each month. 

With the account, you can pay in up to £150 per month until 31 January 2023. This means you could have a total of £1,950 (excluding interest) if you save the maximum each month up to this ‘maturity date’, as long as you don’t make any withdrawals.

On the point of withdrawals, you can take out cash as often as you like. However, you obviously won’t earn interest on any savings you remove from the account. If you do withdraw cash, you must keep at least £1 in the account to keep it open.

It’s worth bearing in mind that the 1% interest rate is variable, which means it is subject to change. If this happens, you’ll be given advanced notice. This will give you enough time to switch accounts if the new rate is no longer competitive.

On top of its normal features, the Yorkshire Building Society account also enters account holders, who deposit between £50 and £150 per month, into a monthly prize draw. The draw has a prize of £1,500, and there are ten of these prizes up for grabs each month.

To be eligible for the draw, you must live in England, Scotland or Wales.

What are the chances of winning a prize?

Unfortunately, without details of the number of savers holding the account, it’s not possible to determine the chances of winning one of the monthly prizes.

As a result, savers should assume it is unlikely they’ll score a prize within the next year. Therefore, it’s probably best to consider this feature as a free entry into a mini-lottery. In other words, don’t expect to win!

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How does the account compare?

It’s fair to say that Yorkshire Building Society’s new offering compares relatively well with other regular savings accounts available.

Right now, Cambridge Building Society is offering the highest-paying regular savings account at 5% AER fixed for one year. However, you must have been a Cambridge member for at least three years to get this rate. This means most savers won’t be eligible.

On a similar note, RBS and NatWest both have regular savings accounts paying 3.04% AER variable. However, these can only be opened if you have an existing current account with either bank.

In light of this, the highest open-to-all regular savings accounts come from Coventry Building Society and Principality Building Society. Both of these providers offer a regular savings account that pays 1.05% AER.

With Coventry’s account, the rate is variable and you can save up to £500 per month. With the Principality account, it’s fixed for a year and you can save up to £250 per month.

While both accounts offer a higher savings rate than the Yorkshire Building Society account, it’s worth bearing in mind that you can only save small(ish) sums in regular savings accounts anyway. As a result, if you’re attracted by the opportunity of grabbing £1,500, you may be happy to sacrifice 0.05% in interest to be in with a chance of winning.

How can you boost your savings rate? If regular savings accounts aren’t for you, you can now earn a respectable 0.72% AER variable through a normal easy access savings account. To compare your options, see the Motley Fool’s list of top-rated easy access savings accounts.

Alternatively, savings rates of up to 2.1% AER are available if you’re happy to lock away your cash. For more details, see our list of top-rated fixed-rate bonds.

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