Prize-Linked Savings in Canada: The Complete Guide

With prize-linked savings, the money you set aside gives you tickets for recurring prize draws. The more you save, the more free tickets you earn, and a chance at real cash comes on top of the saving itself. It’s a decades-old, proven idea, and Lodavo is the first app to bring it to Canada. This guide explains what prize-linked savings is, how it works, where it came from, why it’s legal here, how it compares to a high-interest savings account, and how Lodavo fits in.

What’s prize-linked savings?

Prize-linked savings is a savings product where your savings earn you a chance at a prize and are never spent or at risk. Usually, instead of every saver collecting a small flat return, the value is pooled into prizes. A few savers win larger sums, everyone keeps their full balance, and saving finally becomes something you might actually look forward to and do more of.

It comes in two shapes, and knowing which one you’re reading about makes the rest of this guide a lot easier.

The first is a prize-linked savings account, run by a bank, a credit union, or a government. You deposit into it the way you would any other account, and the interest it would have paid you funds a prize draw instead. That’s what the UK and US programs further down are. No Canadian institution offers a savings account built that way today.

The second is a prize-linked savings app like Lodavo. It never holds your money. Your savings stay in the account you already have, still earning whatever that account pays, and the draw is funded separately. That’s the shape prize-linked savings takes in Canada right now, so it’s the one most of this guide is about.

What both have in common is the part people worry about. Compared with a regular savings account, what changes is the reward, not the safety of your money.

How does prize-linked savings work?

The mechanics are simple. You keep saving in your own account, the more you save the more free draw tickets you earn, and a regular draw awards the prizes. Nobody ever pays to enter. You’re rewarded for the action of saving itself.

The part people get stuck on is where the prize money comes from if nobody buys a ticket. It doesn’t come from other savers’ deposits, and it’s not skimmed off your balance. It comes from one of two places: the interest revenue a provider would otherwise have paid you, or a sponsor. The three models, side by side:

The most important row is the last one: your money is never spent to fund a prize. In the bank-run version the pool is built from interest that would otherwise have arrived as small individual payments, redirected so the reward is put towards prizes worth getting excited about. In the app version, you don’t even give that up, because the provider never held your money to begin with. Instead the app promotes other products and uses that revenue to fund prizes.

Where did prize-linked savings come from?

Prize-linked savings isn’t a new fintech gimmick. It’s a model with a long, well-documented track record. The clearest example is the United Kingdom, where the government has run Premium Bonds (opens in a new tab) since 1956, with the first prize draw held in 1957. In this program, instead of paying each bondholder a small, guaranteed amount of interest, the government pools all that interest to fund large prize draws where a few holders win big. It buys the bonds back at full price whenever the bondholder wants. They’re super popular there: more than 24 million people hold them, over a third of the UK population.

In North America, the breakthrough was Save to Win, the first large-scale prize-linked savings program in the United States. It launched in 2009 across eight Michigan credit unions, offering a $100,000 grand prize plus smaller draws to members who saved. According to the program’s results (opens in a new tab), nearly 12,000 accounts opened in under a year, and most participants had never held a long-term savings account before. The model later expanded to credit unions across many US states. The takeaway is consistent across both stories: when the downside is removed and a prize is added, people who weren’t saving start saving.

Is prize-linked savings legal in Canada? Is it gambling?

Prize-linked savings is legal in Canada, and it’s not a lottery, because it’s structured as a contest. It’s the same framework behind everyday Canadian prize contests like Tim Hortons’ Roll Up the Rim and McDonald’s Monopoly. Two things matter, and both trace to section 206 of the Criminal Code (opens in a new tab): no purchase is required to enter, and winners must answer a skill-testing question so the prize isn’t handed over only by pure chance. Parliament never wrote that second part into law, but it became universal anyway, and our guide to skill-testing questions explains why. Those familiar contests let you buy a coffee or a meal to play, with a free way to enter alongside it. Lodavo goes a step further, since you can never pay us anything to enter anyway. Entry is always free because prizes are funded by other companies, not by users, and you earn tickets just by saving.

The deeper reason it’s not gambling is that you never put your own money at risk. In gambling, your stake can be lost. Here, your money stays in your own account and keeps earning whatever it already earns, so the worst case is simply that you saved and didn’t win this time. We go through this distinction in full, with the relevant rules, on our guide to whether prize-linked savings is gambling.

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.

Prize-linked savings vs a high-interest savings account (HISA)

A high-interest savings account and prize-linked savings solve different problems. A HISA pays you a known, steady interest rate, which is the right tool when you want a predictable, guaranteed return on a sum of money. A bank-run prize-linked account trades a slice of that guaranteed return for the chance at a much larger prize, while keeping your money just as safe. Neither is objectively better. They fit different goals.

That table is about the bank-run kind, where you really do give something up. With an app you don’t, because the HISA keeps paying you and the draw is in addition to it.

Context matters here. As of September 2026, the Bank of Canada (opens in a new tab) overnight rate sits at 2.25 percent, and most everyday savings accounts pay well below the headline promotional rates banks advertise for limited windows. If you have a large balance and want certainty, a strong HISA is the better fit and you should take it, and you can still use an app-based prize-linked savings platform like Lodavo. If your real problem is that you struggle to save at all and the guaranteed-but-tiny interest on a small balance isn’t motivating, then that’s exactly the gap prize-linked savings fills. For a side-by-side breakdown, see how traditional savings and prize-linked savings compare, or our roundup of the best savings apps in Canada for an app-by-app look.

Why does prize-linked savings help people actually save?

Most Canadians aren’t saving much right now. According to Statistics Canada (opens in a new tab), the household saving rate was 3.5 percent in the first quarter of 2026, near its lowest level in years. Telling people to just save more rarely helps, because a few dollars of interest on a modest balance doesn’t give a real reason to start. The incentive is too small, and honestly, boring.

Prize-linked savings changes the incentive without changing the safety. You get free upside, the chance at a meaningful prize with nothing to lose, plus a recurring reason to open the app and track your savings more regularly. That combination is what the research keeps finding. Harvard Business School’s Peter Tufano, who helped design Save to Win, has measured it in real bank programs and in controlled experiments, and found the same thing each time. People who had never built savings before started saving. It works by making the boring thing a little more fun. We go through the studies one at a time in does prize-linked savings actually work, and if saving has never felt worth it to you, here’s why a prize makes saving stick.

How does Lodavo bring prize-linked savings to Canada?

Lodavo is Canada’s first prize-linked savings app, built in Montreal, and it’s free. You connect the bank account you already have through Plaid (opens in a new tab), which covers over 99 percent of deposit accounts in Canada, so you can track what you save each week and earn free tickets for it. The connection is read-only, so your savings stay at your own bank, earning whatever they already earn, and Lodavo can’t touch your money. It only fetches your balance to update your savings progress and issue tickets (you earn 1 ticket for every $25 you have saved in your account).

From there it runs on the model in this guide. The weekly draw gives a chance to win up to $10,000, with a guaranteed prize of at least $100 going to a user every week. Payouts are sent by Interac e-Transfer or bank transfer, and over a thousand dollars has already gone out to winners across Canada. You can see which financial institutions connect on our supported banks page, check how every draw is verified on our provably fair page, and view past results under winning numbers.