Developing saving habits through prize-linked savings accounts

Yet over 10 million working aged people in the UK do not save regularly – with 2 million people not having any savings at all. Without this savings buffer, people could be left vulnerable to unexpected costs and unmanageable debt, particularly with the current cost of living pressures. 

To help people save more of their money, banks, building societies and credit unions have launched accounts in recent years known as prize-linked savings accounts. These accounts represent an innovative approach that enters savers into a periodic cash prize-draw if they save regularly. They can be a powerful toolOpens in a new window to get more people to save.

This project explored how prize-linked savings can be better communicated to potential savers. For this, we conducted an evidence review and experiment with Nationwide Building Society that gave us a closer look at how people that might typically save less interact with prize-linked savings accounts.

1. Prize-linked savings accounts can encourage saving behaviour. To maximise sign-ups, the size and frequency of the prize should be communicated clearly in promotional material.
2. Deposits should be framed in daily terms to increase interest and confidence in savingand encourage people to sign up to a savings account.
3. Consider smaller prizes, won by savers more frequently to increase interest in the account and to maintain saving behaviour over time

“Over 10 million working aged people in the UK do not save regularly. Without this savings buffer, people could be left vulnerable to unexpected costs and unmanageable debt.”

We hope these findings will be useful for banks, building societies and credit unions who are looking for innovative ways to increase savings behaviour.

This pilot was a collaboration between Nationwide and the Financial Capability Lab, a programme funded and overseen by the Money and Pensions Service and implemented by the Behavioural Insights Team. The lab is a multi-year programme to develop and test innovative ideas to improve financial wellbeing and demonstrate paths to scale.