Banks and Credit Unions are Offering Prizes to Save Money in Savings Accounts
Just like many Americans, you're probably not great at saving money but don't mind spending a few dollars on lottery tickets. Bankrate.com's 2014 Financial Security Index showed that 76 percent of Americans didn't have the recommended 6 months of expenses in an emergency savings account. A more depressing statistic is that 26 percent of Americans had no emergency savings at all and live paycheck to paycheck.
Because of recent changes in Federal Legislation on prize-linked savings (PLS) accounts, you can play the lottery, so to speak, and save money at the same time.
Federal laws used to prevent big banks from offering prize-linked savings accounts and only a few states allowed credit unions to offer these accounts. The recently passed American Savings Promotion Act Bill (H.R.3374), with rare bi-partisan support, makes PLS legal for big banks and credit unions in any state that does not prohibit it.
The law is designed to help people save more money by offering an incentive. In 2012, Americans spent $78 billion on lottery tickets according to the North American State and Provincial Lotteries (NASPL). Ideally, some of this money will find its way into savings accounts because Americans are not saving enough. Though current savings rates are low, low rates shouldn't be an excuse not to save and possibly win money.
D2D and Michigan credit unions created Save to Win, the first scaled PLS program. A majority of participants in the program rolled their savings account over from 2010 to 2011. The program has over 50,000 unique accounts saving a total of more than $94 million.
Michigan launched a PLS program more than six years ago. The Save to Win program, one of the largest around, offers the chance to win prizes based on how much money you save each month. Every monthly $25 deposit earns an entry into a monthly prize drawing with a maximum of 10 entries a month per person.
There are monthly, quarterly and some states also offer annual prizes as much as $10,000. Even if you don't win, you save money and earn interest on your savings. The Save to Win program has been a tremendous success.
Check to see if your state passed laws allowing prize-linked savings accounts.
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