News & Press: WINcentive Savings News

No Powerball win? Try no-risk credit union prize-linked savings

Friday, January 15, 2016  
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CUNA News Now © January 15, 2016 – While consumers from around the world looked to cash in on the $1.6 billion Powerball jackpot this week, credit unions in many states offered a much more pragmatic and mathematically realistic alternative: prize-linked savings (PLS) accounts.

The accounts, designed to encourage savings, work by offering members entries into cash-prize drawings each time they deposit a set amount of money into savings.

There’s no risk for the members, as those who lose out on prizes still win in the form of healthy savings accounts. At a time when many people lack funds for even basic needs, these accounts are financially sound alternative to traditionally lotteries.

In Texas, Andrea Marshall, a member of Neighborhood CU, Dallas, last week won $25,000 for her participation in the credit union’s prize savings account program. A surprised Marshall opened her front door Tuesday morning to a group of Neighborhood CU leaders who hand-delivered a $25,000 prize as a reward for her good savings habits.

Neighborhood CU members receive one drawing entry for every $25 monthly average balance in their prize savings accounts. The greater the savings, the greater the chance a member has of winning. Members are eligible for monthly drawings and quarterly $10,000 drawings. At the start of each year, a winner is drawn for the $25,000 grand prize based on the average monthly balance in the savings account at close of business Dec. 31.

“Andrea Marshall is a shining example of how a person can reap tangible rewards by building good savings habits,” said Carolyn Jordan, Neighborhood CU senior vice president. “She is a consistent saver, setting aside a little bit of each paycheck to pay herself first.”

In Michigan, “Save to Win” was developed in 2009 as a way to encourage low- to moderate-income residents to develop better savings habits. Product manager Jessica Thelen said the program offers the incentive of winning a prize without the risk (Public News Service Jan. 13).

“When you buy that lottery ticket or a scratch-off, that money’s gone like if you were to go to the casino,” said Thelen. “With a savings account, regardless of the drawing outcome, the winner is going to have that savings account, plus interest.”

A high percentage of Save to Win participants are considered financially fragile, a population Thelen said tends to spend more on state lotteries than those who are well-off. While the odds of winning with Save to Win are much better, she said the prizes aren’t meant to compete with Powerball or other lottery jackpots.

“Even though it’s not a million dollars, $5,000 is still enough to change someone’s life, or make their life easier, or help them out in their day-to-day life,” said Thelen.

Save to Win was launched in Connecticut April 2015. Connecticut credit union members finished the year with nearly half a million dollars saved and have received thousands paid out in prizes.

Save to Win gives state residents the chance at winning up to $5,000 just for saving their money. Prizes range from $25 for monthly drawings and offer $500, $1,000, and $5,000 drawings quarterly. Credit union savers earn entries for every $25 they save in a given month, with a maximum of 10 entries per month.

Currently, credit unions are authorized to conduct prize-linked savings programs in 15 states. Those states are Michigan, Rhode Island, Maine, Washington, North Carolina, Nebraska, Maryland, Connecticut, Indiana, New York, Arkansas, Illinois, Minnesota, Oregon and Virginia.

Minnesota Credit Union Network
555 Wabasha Street N, Suite 200
St. Paul, MN 55102

(651) 288-5170
(800) 477-1034