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Prize-Linked Savings Account: Definition and How It Works

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For years savings accounts interest rates have been at an all-time low, which have left many savers wondering what the highest interest rate savings accounts are. A new type of savings account has emerged from the low interest rate environment, however, and that is the prize-linked savings account.

What is a Prize-Linked Savings Account?

A prize-linked savings account is a savings account that has interest in the form of sweepstakes and prizes as opposed to a fixed interest rate. These accounts are similar to a lottery, except that you do not lose your deposit should you not win the sweepstakes.

Prize-linked savings accounts started in the UK in the 1950s as Premium Bonds. Instead of paying interest, a Premium Bond gives the purchaser a chance to win tax-free prizes each month. This is attractive to many buyers who want something more exciting than a bond with simple interest payments.

Freakonomics Radio has covered how prize-linked savings accounts are being implemented in the U.S. In order to encourage people to save money, many states have allowed banks and credit unions to offer prize-linked savings accounts.

How Does a Prize-Linked Savings Account Work?

Prize-linked savings accounts are relatively simple. In order to be eligible for the prizes, customers deposit money into a specific prize-linked savings account. Once these funds are deposited, they are eligible to win the advertised prizes.

It is important to note that different accounts may have different prizes. For example, prize-linked savings account Yotta offers not only cash prizes, but also physical prizes like Tesla cars. Make sure to check with the account provider to confirm what prizes can be won.

Additionally, some accounts have different ways to enter into their sweepstakes. For Yotta, you get more chances to win by setting up recurring deposits as well as using their debit card on purchases.

Best Prize-Linked Savings Accounts

There are our favorite prize-linked savings accounts:

  • Yotta– One of our favorite prize-linked savings accounts is Yotta. This FDIC insured account is a secure and fun way to start entering into sweepstakes. With Yotta, you can enter for sweepstakes multiple times by depositing more funds, and using their debit card to spend money. Additionally, their app is extremely easy to use and understand.
  • Save to Win- If you are a member of a Credit Union, your CU might offer a prize-linked savings account through This website is an alliance of Credit Unions across the country to offer prize-linked savings accounts to their members. With Save to Win, members open up a 12-month certificate of deposit that gives them a chance to win prizes. While you cannot sign up directly on the website, you can learn more here.
  • Walmart Prize Savings- Walmart is not a bank or Credit Union, but they still offer a prize-linked savings account for their shoppers. Walmart Moneycard holders can be eligible for a monthly prize drawing by transferring money into their Moneycard account. You earn one (1) entry for every $1.00 on your Moneycard, with a maximum of 500 entries per month. You can learn more here.

Are Prize-Linked Savings Accounts Worth It?

If you are considering a new savings account, it might be worth exploring a prize-linked savings account. Instead of offering simple interest, you have the chance to earn prizes.

For those who enjoy the thrill of the lottery and betting, a prize-linked savings account offers a risk-free way to bet, since none of your deposits will be lost should you not win the sweepstakes. If you do win the sweepstakes, you may earn more than you would with a normal savings Account.

If you are looking for a stable flow of interest income, then it is not recommended to open a prize-linked savings account. Usually if you do not win the sweepstakes, you do not earn any interest on your funds in a prize-linked savings account.

Alternatives to Prize-Linked Savings Accounts

For those looking to make money from their money, there are a number of alternatives to prize-linked savings Accounts.

High Yield Savings Accounts are the most popular alternatives to prize-linked savings accounts, with the most popular being Marcus from Goldman Sachs and Ally Bank.

Money Market Accounts are another alternative to savings accounts. Like a savings account, the money you deposit earns interest. However, some money market accounts have large minimum deposits and may have withdrawal restrictions.

Certificates of Deposit (CDs) are also a popular alternative to savings accounts. When you buy a CD, it earns interest over its total lifetime. However, unlikes savings or money market accounts, you cannot withdraw your money until the fixed period of time is over. CDs offer higher than average interest rates to compensate for the lack of liquidity, so it is good for investors that know they will not need their deposited funds for some time.

In conclusion, prize-linked savings accounts are a savings account is great for savers that are looking for something more exciting than a savings account, but still not very risky.