New ‘win while you save’ credit union scheme launched

Credit union customers are being given the chance to “win while you save”, as a new type of account is piloted.

The PrizeSaver accounts, which give savers the chance to win up to £5,000 per month, are similar to schemes already run in the United States.

Fifteen credit unions are initially taking part and the launch coincides with International Credit Union Day.

Every month will see a top prize of £5,000 awarded to the winning saver, with a further 20 smaller prizes of £20 also awarded.

The first prize draws will take place in mid-December.

The Treasury said that the pilot, announced at last year’s Budget, is designed to help improve people’s financial resilience and raise awareness of credit unions.

The exact terms of the savings accounts will vary between credit unions – so savers should check with their chosen credit union first.

Asked how the new initiative differs from existing Premium Bonds, which are run by Treasury-backed body NS&I, the Treasury said savers in the credit union schemes can invest with as little as £1 and these schemes are specifically designed to link people up with their local credit union, which may also potentially be able to offer them other useful financial products.

Premium Bonds by contrast require a minimum investment of £25 – with a £1 million jackpot up for grabs every month.

Credit unions, which are owned and controlled by their members, can offer people cheaper alternatives to some other high street loans – and the maximum interest rate credit unions are allowed to charge generally is capped at 3% a month, while in Northern Ireland the cap is lower, at 1% a month.

Credit unions’ profits are reinvested to meet members’ needs.

The new accounts will be immediately available from 1st Alliance Credit Union, Bradford District Credit Union, Central Liverpool Credit Union, Clockwise Credit Union, East Sussex Credit Union, Merthyr Tydfil Borough Credit Union, Nottingham Credit Union, Riverside Credit Union, South Manchester Credit Union, Westcountry Savings and Loans, Commsave Credit Union, Plane Saver Credit Union and Police Credit Union.

Lewisham Plus Credit Union and London Capital Credit Union will make accounts available at a later date.

As with banks and building societies, savers’ money is protected by the Financial Services Compensation Scheme (FSCS), which steps in when financial institutions go bust.

Economic Secretary to the Treasury John Glen said: “We all know that saving for the future is important and I want to make it as easy and attractive for people as possible.

“That’s why we’ve teamed up with credit unions, on International Credit Union Day, to launch the new PrizeSaver account pilot, giving people the chance to win up to £5,000 on their hard-earned savings.

“Credit unions provide an invaluable service for people up and down the country and I’m pleased that together we can give more people the chance to win while they save.”

Fintech company incuto was appointed by the Treasury earlier this year to administer the pilot.

The account is partly inspired by the Save to Win scheme in the US.

The pilot will run until the end of March 2021 and will be rolled out more widely if it is successful.

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