I got email from HSBC the other day about the “Dash Sweepstake” promotion they are running between 10/6/07 and 11/30/07. The prizes are as follows:

  • One $20,000 Grand Prize
  • One $10,000 1st Place Prize
  • Four $5,000 2nd Place Prizes

Each customer gets an entry for each $250 increase in funds (not attributed to interest), and for each week of maintaining the balance increase. I realize it’s probably a bit foolish, but I’ve decided to maximize my chances. I had some money in another savings account (Citibank) that I had once considered transferring over to HSBC. Now, I’m going to go ahead and transfer that money in $250 increments daily until 11/30/07. There are basically 36 Business days left on which I can transfer money. The total of 9600 I transfer will give me approximately 40 additional chances to win. 1 for each transfer for 36 and 1 for each week for another 4 chances I keep my balance up.

So what are my chances? Depends on the number of customers of HSBC has. My best guess is that the company has about 500k direct customers. According to this article they had about about 350k in January of 2007.  I’m sure they’ve grown since they, so 500k I believe is a reasonable estimate. My approximate chance of winning  is .008% (40 out of 500,000) - not very good odds.  My expected value if $4.20.  For those unfamiliar with expected value, it’s basically the probability of an event multiplied by the value of the event. If there were only 1 grand prize winner, my expected value would simply .008% X 20,0000 = $1.60. However because there are other prizes, I can add up the expected value of those other outcomes which totals $2.20.  $4.20 is not all that great.

HSBC is making out running a promotion like this instead of offering higher rates if all customers behave like me (both by keeping my money in and adding to it).  The truth is I’m actually losing out in interest. At Citibank I get 5% vs 4.5% at HSBC.   I get 5% via Citibank’s Ultimate Money Market Account when I make two bill pays with the linked checking account which I regularly do.  I’ve been expecting them to lower the rate ever since the Fed lowered rates, but they haven’t.  As a result of transferring over $9000 to HSBC, I’ll be out about $3.75 in interest.  Effectively, my potential winnings pays for my lost interest.