The Nationwide Premium Bond, sort of

[Simpo Two]

For those grubbing around in the dustbin of savings interest rates, Nationwide BS have invented what seems to be a slight copy of PBs:

https://www.nationwide.co.uk/products/savings/mutu...

Nationwide said:

As a Building Society we're always looking for ways to give a little something back to our members. So, we've designed our Mutual Reward Bond, offering you our best available fixed interest rate, plus the chance to win £10,000 in our prize draw. For every £100 you save, you’ll get an entry into the draw. And the more our members save together, the more £10,000 prizes there'll be.

Note that the deal is fixed for 18 months, and also their brilliant last sentence, which whilst true has no benefit to the investor!

Nationwide said:

Your chance of winning is between at least 1/20,000 if you save £100 and at least 1/200 if you save £10,000 in your account.

In other words the 'prize fund' is another 0.5%. So they obviously have 1.0% to give away, but rather than make it a simple headline rate, they choose to do it as half guaranteed and half competition. I can only assume they think it will attract more punters that way.

[Arranguez]

If the extra rate is down to chance, is it tax free?