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; prize-linked savings 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. Here’s exactly how traditional savings and prize-linked savings 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, but instead of paying you all of its yield as interest, it puts that value toward a prize draw. You keep every dollar you save, your balance earns you free draw tickets, and the more you save the more tickets you hold. That’s the only mechanic that matters for this comparison. 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

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

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.

Prize-linked savings 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 prize-linked savings 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.

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 you want the guaranteed return, and the few dollars of difference aren’t worth trading.
• You have a small balance and a tiny rate never motivated you. Prize-linked savings is built for exactly this. The interest was never going to move you, so reshaping it into a real 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.

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.