Some Banks Are Starting to Reward Customers for Saving

some banks are starting to reward customers for saving

According to a study conducted my Moody’s Analytics, people under the age of 35 can’t seem to save. Adults between thirty-five and forty-four are in better shape compared to their younger counterparts. Their savings, on average, actually have increased by about 3%. Still, most US residents have little to no savings.

There are a couple of institutions that are trying to change things. They will be rewarding certain account holders with prizes simply for saving their money. A federal legislation that was passed in 2014 will legalize the practice for both credit unions and large bank institutions in any state to award prizes. A co-sponsor of the bill, Representative Derek Kilmer, stated it doesn’t matter if there was a job someone had lost or there was a medical emergency, having a savings account is an important cushion everyone should have. The bill flew through both the Democratic and Republic houses. The passing of the bill has removed federal boundaries across a couple of laws. It will permit several institutions to clone successful programs in North Carolina, Michigan, Washington, and Nebraska, There is also a minimum of six other states that have recently passed laws that allow similar programs.

The initial large-scale prize-linked saving program came to the US by way of the state of Michigan around 2009. They called the program “Save to Win,” and it focused on rewarding current account customers for each $25 deposit. There were always certificates of deposit (CD) accounts who would receive entries from the raffle year round. Winners would have monthly prizes bestowed to them amounting in as much as $3,570. There were also annual prizes where someone could get as much as $10,000. Kilmer added that he thought the idea itself is nice because it’s a win-win situation. He states that the worst case scenario is that you have saved yourself a chunk of money and the best case scenario is that you have money in your savins, and you get the cash prize.

The non-for-profit Doorways to Dreams Fund D2D), who helped create the program, mentioned that a majority of the participants never used to save their cash before they became part of “Save to Win.” Vice president of the credit union, senior vice president Kim Vermander stated that citizens that don’t make a lot of money often struggle to save their funds. However, a great deal of these individuals fully commited themselves to save at least $12.50 from every paycheck they earned so they have the chance to join the program.

For the past several years, the jackpot has been a pretty big deal. Vermander states that there are lots of people simply donating and giving away the prize to the winner without expecting anything in return. Vermander continued to state that if people are about to do that, why shouldn’t they be able to save with a program like this? It is a complete no-brainer.

From the time the program opened its doors, it has spread the love of about $1.6 million in prizes to almost 14,000 lucky winners. The program encourages many consumers to stick their hundred dollar bills in a safe place they can use for rainy days. As of February 2016, the program has helped over 70,000 US citizens saves over $40 million!

Executive Director of the D2D Fund, Timothy Flacke says that a majority of people look at their savings account no differently than how a kid looks at their vegetables. A program like this will add room for fun and allow people to save. With the new legislation in place, more large banks will have the ability to adopt the same thing. Flacke believes that implementing them will be quite the task, at least until more states change their laws that block prize-linked accounts.

 

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