Halifax offering £250,000 prize for opening an ISA

To encourage saving, Halifax will award three prizes of £250,000, plus more than a thousand offer cash prizes, in May's draw. All you have to do is open an ISA.

To encourage Brits to save more, Halifax is launching a bumper 'savings Super Draw' in May.

It's not often that you're given the chance to win a life-changing sum of money with no risk, so it's well worth looking into this prize draw.

£1 million up for grabs

In total, Halifax has 1,113 prizes up for grabs in May, including three top prizes of quarter of a million pounds. Here are all four prize levels:

As you can see, in addition to three £250,000 prizes, there are 10 prizes of £5,000, one hundred prizes of £1,000 and a thousand prizes of £100. In total, the prize pot for May is a whopping £1 million.

After May, the draw reverts back to paying its normal monthly prizes of one hundred prizes of £1,000 and a thousand prizes of £100, totalling £200,000. Hence, the May Super Draw is the really big one for 2013, with an extra £800,000 in prizes up for grabs.

To enter this May draw, you must be aged 18 and over, keep an aggregate balance of at least £5,000 in one or more qualifying savings accounts for the whole of April and register for the Halifax Savers Prize Draw by 30th April.

Since its launch in December 2011, the Halifax Savers Prize Draw has attracted over 1.3 million customer entries, awarding 16,569 prizes with a total value of £9.4 million. In addition, from 5th April, you can now see who has won in your area via Halifax's new Winners Near Me website.

Time to get an ISA

Halifax has launched this savings Super Draw in order to promote ISA savings.

A Cash ISA (Individual Savings Account) is a special kind of savings account which pays tax-free interest. Thus, an ISA's 'tax wrapper' prevents the tax man from grabbing between a fifth (20%) and half (50%) of your hard-earned savings interest.

Of course, there are limits on how much you can put into an ISA.

In the 2012/13 tax year (which ends on Friday, 5 April), the maximum deposit into a Cash ISA is £5,640 (£11,280 for a couple). In the 2013/14 tax year (which begins on Saturday, 6 April), these deposit limits rise to £5,760 for an individual and £11,520 for a couple.

Also, if you deposit the yearly maximum into an ISA and then withdraw some of this cash, you cannot put it back in the same ISA. Instead, you'll have to wait until the start of the next tax year before depositing it into next year's tax haven.

Join 20 million ISA savers today

Cash ISAs are available to all UK residents who are aged 16 and over, which totals nearly 50 million people. Nevertheless, and despite their obvious attractions, only around 20 million Brits have used an ISA to shelter cash or investments free from tax.

While this prize draw is an enticing reason to open an ISA with Halifax, it shouldn't be the deciding factor - you need to work out which account will offer you the best return on your cash, irrespective of the chances of winning £250,000 in a prize draw.

Halifax currently offers a number of different Cash ISAs. let's start with the ones paying a variable rate of interest:

Unfortunately neither the Variable nor Online ISAs are much good. If you want easy access to your cash you can get a rate of 2.50% from Cheshire Building Society if you have a minimum of £1,000 to save, or 2.25% from Harpenden Building Society for smaller balances. And if you can afford to give up some access to your cash with a notice account, you can earn 2.80% from the Coventry Building Society 6-Day Notice ISA.

It's a better story with the fixed rate ISAs though. These do involved locking your cash up for the specified term, though.

A better rate on your Junior ISA!

There's another reason to consider an ISA at Halifax - it means you could get a better rate on your Junior ISA!

Junior ISAs were introduced as the successors to Child Trust Funds and are designed to help parents save for their children's futures.

And Halifax has a phenomenal offer on its Junior ISAs. Ordinarily they pay a rate of 3%. Not bad, but nothing too amazing. However if the parent holds an ISA with Halifax too, that rate flies up to 6%, easily the best around.

More on ISAs and saving:

Top Cash ISAs for transfers

The best Cash ISAs

The top fixed-rate savings bonds

The best instant access savings accounts

The best Junior ISAs