Is prize-linked savings better than a regular savings account?

Neither is better in the abstract. A regular savings account is better for predictable growth on a known balance. Prize-linked savings is better when a low rate never motivated you to save, because it attaches a chance at a much larger prize to the saving while your principal stays safe.

Do you lose interest with prize-linked savings?

In a standalone prize-linked product, most of the interest is redirected to fund the prize draw, so direct interest is low or zero. With Lodavo it works differently. Your money stays in your own bank account and keeps earning whatever rate it already pays, and Lodavo adds free draw tickets on top.

Is a prize-linked savings account safe?

Yes. Your principal is never at risk, which is the whole point. You keep every dollar you save, and with an app like Lodavo your money never leaves your own Canadian bank, where it stays eligible for deposit insurance up to $100,000 per category.

Traditional Savings vs Prize-Linked Savings in Canada (2026)

A traditional savings account and prize-linked savings aren’t opposites. A traditional savings account pays a small, guaranteed interest rate; a standalone prize-linked account trades most of that interest for a chance at a cash prize, with your money just as safe in both. One gives you certainty, the other gives you a reason to keep saving. A prize-linked app is a third option that holds none of your money, so it adds the draw without touching your rate. Here’s exactly how the three compare in Canada, and which one fits which saver.

How does a traditional savings account work?

A traditional savings account is the deposit account most Canadians already have: a safe place to hold money that earns interest over time. Balances at a member institution are protected by the Canada Deposit Insurance Corporation (CDIC) (opens in a new tab) up to $100,000 per insured category, so your principal is never at risk. The reward is steady but small.

Rates are modest. Everyday rates at the big banks often sit well below 1 percent, while no-fee online banks run higher, roughly 1 to 2.85 percent in mid-2026, with promotional rates climbing higher for short windows.
Watch for fees and minimums. Some accounts charge a monthly fee or require a minimum balance to waive it, which eats into a small saver’s return.
Access is easy. You can move money in and out through online and mobile banking whenever you need it.

For a predictable, guaranteed return on a known balance, this is the right tool. For an app-by-app look at the best rates, see our roundup of the best savings apps in Canada.

How does prize-linked savings work?

Prize-linked savings keeps your principal just as safe, and your balance earns you free draw tickets: the more you save, the more tickets you hold. Where the two versions of it differ is who pays for the prizes.

In the classic version, a standalone account run by a bank, a credit union or a government, the provider holds your deposit and points most of the yield it would have paid you toward the draw instead. UK Premium Bonds and the US Save to Win program both work this way, and that’s the version where you genuinely trade interest for a chance at a prize.

A prize-linked app is the newer shape, and the trade doesn’t apply to it. Lodavo holds none of your money, so there’s no yield of yours to redirect. Your savings stay in your own bank account earning whatever they already earn, and the prizes are funded by partner referral fees. For the full model, where the prize money comes from, the history, and why it’s legal here, see our guide to prize-linked savings in Canada.

Traditional vs prize-linked savings: side by side

Feature	Traditional savings	Standalone prize-linked	App (Lodavo)
What you earn	A known interest rate	Tickets instead of most interest	Your interest, plus tickets
Your principal	Safe, CDIC-eligible	Safe, held by the provider	Safe, in your own account
Cost	Sometimes fees or minimums	Usually free, no minimum	Free, no minimum
The reward	Small but guaranteed	Bigger, but only if you win	Your rate, plus a chance
Who funds the prizes	No prizes	The interest you gave up	Partner referral fees
Expected value	The interest you’re paid	Roughly the same, reshaped	Your interest, plus the draw
Best for	Predictable growth	Upside on a small balance	Keeping both

The standalone trade-off: guaranteed interest vs a chance at more

In a standalone prize-linked account, the choice isn’t about safety, since your principal is protected either way. It’s a trade of expected value for motivation. Put a number on it. At roughly 2 percent, a $1,000 balance earns you about $20 of interest over a year, paid out a couple of dollars at a time. You will barely notice it, and that’s exactly the problem.

A standalone account takes that same $20 of would-be value and points it at a chance at a much bigger prize instead, while your $1,000 stays safe. You give up a small, certain amount you would hardly feel for the chance at a sum you actually would. On average, a draw can’t pay out more than the value that funds it, so a high-interest account holds a slight edge on expected return. What the prize gives you is a payoff worth caring about and a weekly reason to keep going, which for a lot of people is the difference between saving and not saving at all.

The size of your balance is what tilts the call. The bigger the balance, the more real that guaranteed interest becomes, so certainty starts to win. Ten thousand dollars at 2 percent is about $200 a year, enough that you would notice giving it up. A few hundred dollars, on the other hand, earns single-digit interest you will never feel, and that’s exactly where the chance at a prize does more for you than the rate ever could.

None of that arithmetic applies to a prize-linked app that holds none of your money. There is no $20 to redirect, because your interest keeps landing in your own account, so the draw is added rather than swapped in.

Which should you choose?

It depends on the saver, not on which model is cleverer.

You have a lump sum and want certainty. Take the high-interest savings account. On a known balance the guaranteed return is what you want, and a standalone prize-linked account isn’t worth the trade at that size.
You have a small balance and a tiny rate never motivated you. A standalone account is built for exactly this. The interest was never going to move you, so reshaping it into a chance at a prize is the better use of it.
You’re most people. Use both. Keep the bulk of your money in a high-interest account for the guaranteed growth, and let prize-linked savings make the habit actually stick. They solve different problems, so it’s not really an either/or, and with an app version there’s nothing to give up to run both.

If you’re still unsure whether a draw-based model sits right with you, we cover whether prize-linked savings is gambling in full.

How Lodavo fits in

Here’s the part that makes the choice easier: with Lodavo you don’t choose. Lodavo is Canada’s first prize-linked savings app, and it’s free. It connects read-only to the bank account you already have through Plaid (opens in a new tab), so you keep the high-interest account and the interest it pays, and Lodavo adds free weekly draw tickets on top.

That means no switching and no deposits into Lodavo. Save more, hold more tickets, with up to $10,000 to win and a guaranteed prize of at least $100 going to a user every week. So instead of trading interest for a chance at a prize, you keep both. Download Lodavo free on iOS or Android and see how many tickets your balance is already worth.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.