PrizePool review: a closer look into this money-saving platform
Rating as of based on a review of services June 2, 2022.
PrizePool not only offers a high APY, but also adds an element of fun to saving, automatically entering you into raffels for cash prizes each week.
- Prize-linked saving
- High APY
- No-cost saving
Turbulent economic times teach savers the value of having money stored away for a rainy day. However, with the average U.S. bank account offering extremely poor interest rates at present, it’s hard to see a good way to make your money go further.
Risky and expensive choices like buying lottery tickets gain popularity in difficult times for this reason. It’s always nice to dream of that jackpot, but any form of gambling typically makes fools of many and winners of a tiny few. When your budget is already tight, entering the lottery is a great way to make it tighter in exchange for the illusion of hope.
What if there was a savings account that offered higher interest rates than mainstream competitors, but also entered you in a free-to-play lottery for the chance of that one-off big win?
In this review, we’ll talk about what makes PrizePool different from its competitors, how the company makes money, and whether this is a trustworthy and beneficial place for you to deposit money.
Let’s get started with our comprehensive PrizePool review.
What is PrizePool?
PrizePool is a money-saving platform launched in partnership with Evolve Bank & Trust. It’s aimed at people who are looking to make their money grow faster then it would in a conventional savings account.
The platform was founded in 2019 by Frankie Chien and Joe Woo. The founders remain at the head of the company as CEO and CTO respectively.
How does PrizePool work?
The platform allows users to deposit money into a PrizePool account and earn an attractive interest rate of 0.30% on all money stored. Unlike many other savings platforms, it doesn’t charge monthly fees – or any fees, for that matter.
Its funding instead comes from VC investments and its relationship with Evolve. This relationship is key to keeping the platform profitable as user numbers increase. Its association with a partner bank is also part of why PrizePool is considered more trustworthy than many other online money-saving platforms, as it is FDIC-insured through the bank.
Its other main selling point is its monthly lottery bonus. The bonus is drawn on a four-week rotation and offers a $50,000 grand prize as well as some $40,000 spread between almost 6,000 weekly winners (up from 4,000 cash prizes last year). There’s no additional cost to savers for entering this lottery – entries are determined by the volume of cash in the user’s account.
Numerous users have won multiple times, meaning that some have earned more than a $25,000 grand prize on lottery entries alone.
How much does PrizePool cost?
Here’s the part that helps PrizePool stand out as perhaps the best savings account for individuals and families on a tighter budget – it costs nothing. Nada. There are zero fees across its entire operation.
Unlike a checking account offered by most mainstream banks, there’s no risk of an overdraft, so you can’t ever be charged for using this app. I’m a huge fan of this feature, as it means that the app is well-designed for lower-income savers who would earn minimal interest using a regular savings account. Due to PrizePool’s higher interest levels, you’ll see a better return on your savings, and the absence of fees means there’s no risk of becoming a prisoner to overdraft debt.
As of February 2022, it’s exclusively a free platform designed for saving money. Note that this means you’ll have to transfer money into a checking account if you want to spend at present. The cost of transferring money will depend on which bank you’re working with – many are free. PrizePool doesn’t charge for withdrawals.
It’s also worth mentioning that the company aims to release a debit card in Fall 2022 – users can join the waiting list now. This will mean you don’t even need to risk transfer fees to spend money via your PrizePool account.
What sets PrizePool apart from a traditional savings account? Let’s take a look at its key features and benefits.
Free-to-use bank account
Typically, you’ve got two options when you’re looking at saving money:
- An account that offers a relatively low yield but is free to use and consistent.
- A paid service or app that offers a higher yield and bonuses – for a price.
As a free money-saving platform with attractive interest levels, PrizePool has found a goldilocks zone between these options that is ideal for smaller savers. The PrizePool banking account offers a very respectable interest rate without charging users for the privilege.
It’s an unfortunate but reliable rule of thumb that spending more money to save money is a game best left to the very wealthy. When you have huge reserves of disposable income, you can afford to pay fees that guarantee you higher rates. When you have to keep an eye on the rent/mortgage and bills each month, a free service is far more attractive.
Remember what you want to use your savings for. This isn’t stock trading or trying your hand at Forex; it’s not a replacement for your job. It’s a security that you shouldn’t have to think about any more than necessary. If you’re trying to save up for a deposit on a house, a nest egg for your kids’ college, or just to ensure you’re not left high and dry if work dries up, you don’t want to be paying extra for a saving service.
Its free, high-yield savings account is one of the platform’s most attractive features.
Monthly cash prizes
So what’s a lottery savings account when it’s at home? Every four weeks, one lucky winner earns an extra $50,000 in addition to the interest they earn from their savings. This was formerly a $25,000 grand prize with an additional 4,000 cash prizes to be won, but as its userbase increased, the platform decided to reward more users with bonuses and now offers almost 6,000 cash prizes weekly.
Arguably, this means that users who register sooner stand a better chance of winning a cash prize. The fewer users, the better your chances. However, since a key part of PrizePool’s offering is that users can win money for free as well as earn a regular saving bonus, it’s reasonable to assume they’ll increase grand prizes as the company grows.
Users are automatically entered into a guaranteed prizepool of $50,000 per month. Your chance of winning prizes is determined by the number of tickets you have – you have one ticket for every dollar in your account. So if you had $600 in your account, you’d have 600 tickets.
PrizePool drawings work by randomly selecting a ticket. One ticket earns one prize, and users are limited to one prize per month. With a prizepool worth $50,000 each month, you’re not going to be able to retire off a win – but it’s a way to get extra money for free. Who doesn’t want that?
Through its relationship with Evolve Bank & Trust, PrizePool is FDIC-insured. Users’ deposits are insured up to $250,000. What does this mean for the average PrizePool member?
FDIC insurance means that your savings are guaranteed to be returned to you regardless of external events. Say the company vanished overnight, with PrizePool FDIC-insured, you’d still get your deposit of up to $250,000 back.
A concern that users might have when opening an account with a relatively new savings platform is that saving apps are springing up everywhere, and some of them aren’t exactly trustworthy. Knowing that your PrizePool savings are FDIC-insured and protected by bank-level security is a guarantee that many apps can’t meet.
PrizePool gives users a referral code. This can be used when you refer a friend to the platform and gives both of you a 10% increase on any prizes won by your friend.
At first glance, it’s easy to assume that this probably means that you both get a 10% bonus on the first prize they win. As there are nearly 6,000 weekly prizes available, you might think that most people “use up” their referral code getting an extra $2 each on a friend’s $2o bonus. The truth is much more exciting.
First, we should point out that you can give out a referral code to multiple friends. The code applies to every friend who signs up – so even on a week where you’re not a lucky winner but two of your referred friends are, you’re still going to get 10% of whatever your friends made.
What makes this referral bonus even more attractive is that it never goes away. For as long as you and your referrals are using PrizePool to save, any bonus your friends win will give you a 10% yield. This makes it a great way to consistently earn prize-linked savings.
You’re significantly boosting your chances of winning bigger prizes by using the referral service, so it’s highly recommended. If one of your referrals was the one lucky winner of the grand prize for those four weeks, you’d get an extra $1,000 – and so would they!
These types of prize-linked savings are an integral part of PrizePool’s mission to make saving money fun, as well as free. It’s a very nice touch.
The current realized APR on a PrizePool bank account is 0.30%. That means that if you’ve got $50,000 saved, you’ll earn $30 extra per year. The more money you have saved, the more you earn.
Let’s be clear – 0.30% isn’t exactly going to replace the average saver’s eyes with dollar signs. However, that’s not what savings accounts are for – this is a way to make your money go further rather than a get-rich-quick scheme.
Besides, it’s substantially higher than many other mainstream saving options. Surveys and estimates for interest rates on U.S. savings accounts are generally between 0.05%-0.06%. That means that PrizePool is offering 5x-6x the national average with no fees, and that’s before we get to the bonuses.
High-yield savings accounts with no fees for withdrawing money are also rare. Many high-yield accounts offer an attractive interest level on the condition that the balance of savings remains untouched before a certain time has elapsed.
This is another reason that PrizePool is an attractive savings app for users on low-to-middle incomes. We don’t put money into a savings account because we intend to withdraw it straight away, but when you’re hit by large, unforeseen expenses, sometimes you need to dip into your reserves.
Being hit by account service charges because you need to make a big payment sucks. There’s no other word for it. PrizePool offers very competitive interest levels without charges for early withdrawals – that’s a major plus for savers.
No minimum deposit or fees
There’s no minimum deposit when using PrizePool. This means that you don’t need to worry about being penalized for not meeting your savings goals, or having to withdraw money unexpectedly.
With a minimum balance of zero, you can name your savings goals and work towards them at your own pace. This could be as low as saving $10 each week – even with such a modest deposit, it adds up to over $500 after a year, plus an extra couple of dollars interest.
Equally, you can deposit larger amounts each week if you’re looking to make the most out of the 0.30% savings bonus. If you find you’ve “over-saved” and need some back, you can withdraw up to $2,000 in one day or $10,000 per month with no withdrawal fees.
This can be increased by an arrangement with the company, although the bank will require ID verification to increase your maximum daily withdrawal limit to $10,000.
There’s no option to overdraft your account when using PrizePool. This means you won’t be hit by hidden fees if you withdraw more than your account’s balance – it’s impossible to withdraw over this limit. Likewise, when the PrizePool debit card becomes available (expected Fall 2022), you won’t be able to spend more than you have in your savings account.
My experience researching PrizePool
First of all, opening an account is nice and simple. It’s available on Google Play and the Apple store – you just need your name and contact details to get started, and a bank account to link to your PrizePool savings. There are no sign-up fees.
Something I’ve been repeatedly struck by when writing this PrizePool review is that it’s so well-designed for people on an ordinary income. There’s a conspicuous absence of lofty saving goals or rewards for bigger deposits that you see with regular savings accounts. Of course, the more money in your account, the better your chances in the weekly drawings, but that’s not the main appeal of the platform.
I found the platform very open – it was simple to find all information about deposits, withdrawals, bonuses, and how the company operates. You never want to put money into a company that isn’t transparent, so this is a major point in PrizePool’s favor.
With each PrizePool bank account being FDIC-insured up to $250,000, no required minimum balances, and zero fees across the platform, it’s got all the protections that low-to-middle income earners need. Being able to withdraw and transfer money without a dollar spent on fees is such an advantage over many of its competitors.
The upcoming addition of a debit card is a sign that the platform is looking to make continuous improvements. Savers can apply for a debit card now and can win a prize based on spending in addition to the current weekly drawings.
My feeling is that this is an excellent personal finance app for ordinary people looking to save money. No fees, a very competitive interest rate, and attractive cash prizes – what’s not to like?
Who is PrizePool best for?
So who is this savings app best for? Our PrizePool review provides all the relevant information to help you decide if you should open a PrizePool banking account.
People looking for a savings account with perks
The prize-linked savings bonuses go above and beyond what most accounts offer. You don’t have to pay extra to participate in the weekly drawing, meaning that any day could be your lucky day.
Anyone who wants to avoid paying to save money
I can’t stress it enough – no fees. Anywhere. No monthly fees for users. No hidden costs for inactivity, overdrafts, or being below a minimum deposit amount. This makes it such a good option for low and middle-income users wanting to save money at a pace that suits them.
Savers looking for consistent returns
The 0.30% rate is several times higher than the national average for a savings account. Coupled with the absence of fees, it doesn’t take a personal finance guru to see that this is a great place to achieve a consistent return on your investment.
FDIC insurance and secure banking encryption mean that you’re not putting your money at risk when you open a bank account with PrizePool. Its transparent partnership with Evolve Bank is an encouraging reminder that this isn’t just some startup that came out of nowhere and might disappear just as easily.
Who shouldn’t use PrizePool?
No checking account option
It’s not currently possible to use PrizePool as a checking account, although its debit card is due to launch in Fall 2022. There are also no plans for a PrizePool credit card in the foreseeable future.
No crypto deposits allowed
Anyone looking to make crypto investments will be disappointed to learn that the platform doesn’t accept deposits in cryptocurrencies.
Pros & cons
- No fees — PrizePool charges zero fees, so you can store your money at no cost to you.
- Strong APR — Compared to the trickle of savings you'll earn elsewhere, PrizePool's APR is very impressive.
- Weekly bonuses — You'll be automatically entered to win cash prizes every week, culminating in a $50,000 every month.
- FDIC-insured up to $250,000 — Your money will be insured up to $250,000, thanks to the FDIC insurance PrizePool holds.
- No overdraft — You won't have to worry about any overdraft fees.
- Easy sign-up — Signing up takes just a matter of minutes!
- Excellent referral program — If you refer your friends, you'll earn 10% more in winnings.
- No minimum deposit — You need $0 to open an PrizePool account!
- The company is still fairly new — Compared to big-name banks, PrizePool is definitely the new kid on the block.
- No checking options — While a debit card is on the horizon, PrizePool doesn't currently offer a checking account option.
PrizePool vs. their competitors
Let’s take a look at how the platform fares against some major competitors in the next step of our PrizePool review.
PrizePool vs. Yotta
Yotta is a moved-saving platform founded in 2019. It also boasts a lottery function, and one of its most attractive features is that the maximum win from the weekly Yotta prize draw is $10m. That’s quite a lot more than $10,000.
The $10m isn’t a guaranteed prize – it’s based on lucky numbers, like the regular lottery. Each $25 saved generates one ticket (up to $10,000, when it becomes $150 per ticket). This means that the odds of winning a prize are slimmer for users without much saved.
Like PrizePool, Yotta benefits from no fees across the platform except for a monthly $0.50 fee for accounts under $5. This means you always need to have some money in your account. Its interest rate is also lower than PrizePool’s at 0.20%.
Unlike PrizePool, the platform allows crypto investments. These aren’t covered by the FDIC, however.
While you stand to win a lot more with Yotta if you’re that one lucky user, the benefits to the average PrizePool user seem greater.
PrizePool vs. Qapital
Qapital is a micro-saving service founded in Sweden in 2013. The app uses triggers based on your phone activity to shift small amounts of money from your regular account to your savings.
It’s a paid service -the basic account is $3 per month, but accounts can be upgraded to $6 or $12 per month in exchange for additional features.
It’s designed to make saving easier by removing the need to make deposits. There are intuitive options to allow users to connect small savings to certain actions. However, the micro-saving system means that unless you have the most incremental savings goals, you’ll still likely want to make a voluntary deposit each week/month as well.
Its major disadvantage compared to PrizePool is that it targets small savers but charges a monthly fee for its services. While Qapital has a fascinating savings model, its fees make it less attractive than PrizePool for low and middle-income savers.
FAQs about PrizePool
Is the PrizePool app legit
Yes – your PrizePool savings account is insured by the FDIC and has no fees associated with it. The app is available on the Google Play store and the Apple Store.
Can I withdraw money from PrizePool?
You can withdraw up to $2,000 in one day or $10,000 monthly. There are no fees for this service. You can also apply to have your withdrawal limit upgraded, although this may take a few days plus ID verification to process.
How does PrizePool make money?
PrizePool is partnered with Evolve, a bank & trust service that uses venture capital investments to deliver returns to its shareholders.
How does a PrizePool work?
Users get tickets one-to-one equal to the number of dollars in their account. If a ticket is drawn and matches a prize, the user’s account is credited. You can win one prize per month and the highest reward is $50,000.
How does the PrizePool app work?
Simply go to the website, create an account and start depositing money whenever you’re ready. You won’t be charged at any point and your savings will earn 0.30% APR.
This review has covered just about every part of PrizePool’s operation, and what have we found? We’ve found an extremely impressive, free-to-use way of saving money that is perfect for the average U.S. saver.
Its lottery feature is a great perk, especially in conjunction with its referrals scheme. Signing up and getting started is easy, especially as there are no minimum deposits or inactivity fees.
Color us impressed: PrizePool has a lot to offer and not much going against it. An all-around solid choice for everyday savers.
Featured image: Roman Samborskyi/Shutterstock.com