Britain's savers love a prize draw, with 23million holding money in National Savings & Investments' Premium Bonds. 

But with the Premium Bonds prize fund rate set to fall again in April, some might be looking for alternative options. 

The Treasury-backed bank is cutting the rate from 3.6 per cent to 3.3 per cent, and also lengthening the odds for each £1 bond winning a prize to 23,000 to 1 from the current 22,000 to 1. 

It means the number of £100,000 prizes will fall from 78 in the most recent draw, to an estimated 71 in April.

Chip's lesser-known Prize Savings Account also offers a monthly draw to win tax-free prizes straight to your account. 

Today, the savings app will draw its quarterly 'big prize draw', where one lucky saver will win £250,000. 

In December, Lisa, from Hampshire, won the grand prize of a quarter of a million pounds. 

Having used Chip since 2018, Lisa put the money towards paying off her mortgage, paying towards her stepdaughter's wedding and helping fund her 16-year-old's future university education. 

We run the rule over how savers can qualify for the prize draw, how likely they are to win and whether an interest-paying account is a better bet. 

How does Chip's Prize Savings Account work? 

Just like with Premium Bonds, savers do not earn interest on their balance. Instead, they are entered into a monthly prize draw. 

Of course, this means there is a strong possibility they will get nothing at all. If they put their money in a cash Isa, they could earn 4 per cent per year or even more.

You don't need to do anything to enter, this happens automatically.  

Savings expert Andrew Hagger told This is Money: 'Say if you have £5,000 in the account and don't win, you get nothing. 

'Whereas in a savings account paying 4 per cent you'd get the equivalent of £16.66 per month or £200 per year.'

Usually, Chip's monthly draw offers at least one grand prize of £10,000 and 250 additional prizes of £10.

But in this quarter's 'big prize draw' there are 100 prizes of £1,000, 5,000 prizes of £10 and 20,000 prizes of £5 - as well as the grand prize of £250,000. 

For every £10 you deposit, you get one entry into the monthly draw up to a maximum of £85,000.

Hagger added: 'You need an average balance across the whole month of a minimum of £10 to enter the draw and each multiple of £10 gives you another entry, so the more you put in, the more chances you have.'

All winnings are tax-free and deposits are backed by the Financial Services Compensation Scheme.

What are the odds? 

We know that there are 25,101 prizes in total, ranging from £5 to £25,000 - but we don't know the number of customers that are eligible or how big their balances are. 

This means it's not possible to work out the odds of winning, and Chip would not confirm this to This  is Money.  

'There's no indication of how many Chip customers there are and total balances so it's not possible to calculate the odds of you winning,' Hagger explains. 

We do know that Premium Bonds offers more big prizes than Chip. Two lucky savers a month can win £1million, while 78 can win £100,000. 

The odds of winning them, however, are tiny. For every £25 you invest in Premium Bonds, the likelihood of winning £1million is 1 in 2,737,381,167.

'You earn no interest but there's always that chance you may win big - it's a bit like the lottery but with Chip and Premium Bonds you never lose your stake,' Hagger added.

Should you just open an interest-paying account? 

Both the Premium Bonds and Chip accounts are unlikely to beat the current rate of inflation at 3 per cent - unless you are extremely lucky. 

This means the buying power of your savings is being eroded over time.  

If you want to be in with a chance of winning £250,000, it could be worth keeping a small portion of your savings in this account, but bear in mind the guaranteed interest you could be earning elsewhere. 

'With both prize draws, the chances of winning are pretty slim, so if you want to grow your savings steadily month by month then you're better off with a savings account or cash Isa,' Hagger says. 

'It's not a get rich quick method, but saving each month will see your interest and your balance grow steadily over time.'