Filene Research Institute

Through independent research and innovation, the Filene Research Institute explores issues vital to the future of credit unions and consumer finance.

Prize-Linked Savings

Adding Excitement to Saving

Coop-etition results as of June 30, 2009

According to Peter Tufano of Harvard Business School, the average household spends $514 a year on lotteries. Imagine a scenario where credit union members deposit their $514, making them eligible for interest and prizes, preserving their initial investment, and developing life-long savings habits. Prize-Linked Savings is the solution that adds excitement to the discipline of saving.

Credit unions can define and organize the prizes as sweepstakes (similar to promotions regularly run by major credit card companies) to avoid the gambling stigma and address legal and regulatory compliance issues. To participate, members simply deposit money into a specific Prized-Linked Savings account and earn entries based on the amount saved.

A Prize-Linked Savings pilot currently underway in Michigan called Save to Win features eight credit unions collaborating to offer a $100,000 grand prize, in addition to smaller monthly prizes. The program is supported by a partnership among the Filene Research Institute, the D2D Fund, and the Michigan Credit Union League, with funding from the Center for Financial Services Innovation. Tune in to learn more about how Save to Win can help credit union members from the perspective of employees and members from Communicating Arts Credit Union.

Save to Win is heating up for the summer. The pilot credit unions* are now participating in a friendly challenge called the Coop-etition. Follow along with their results: Week 1, Week 2, Week 3, Week 4, Week 5, final.

For further insight from Professor Tufano, see Innovative Ways to Encourage Personal Saving. Also, check out a 2008 article in Fast Company about the trend in prize-based savings.

*Participating credit unions include Central Macomb Community Credit Union, Christian Financial Credit Union, Communicating Arts Credit Union , E&A Credit Union, ELGA Credit Union, Frankenmuth Credit Union, NuUnion Credit Union, and Option1 Credit Union.

Marketing Materials

Comments

4

  1. Credit Union Innovators—If you’re implementing a prize-based savings account, or something similar, please let us know by sounding off here.

    Filene is developing a Savings Special Report, and we would love to include your credit union’s experiences in it.

    Link to this comment

  2. Hello – I’d encourage credit unions interested in Prize-Based Savings to check out “Win-Win Savings,” a product developed by my 30 under 30 group. It’s basically Prize-Based Savings modified to young adults with a charitable component.

    The full business plan is available here:

    http://filene.org/filestore/1307/Win-Win_SavingsBusiness_Brief_-_FINAL.pdf

    Link to this comment

    • Kevin Fernandes
    • Mar 1, 2009

    Prize LInked Savings are old hat with banks in the middle east.

    Please do a google search for banks like NBB, Bahrain, Bank Muscat, Oman, Al Ahli Bank, Qatar, Mashreq Bank, Qatar, National Bank of Kuwait, Kuwait et al.

    This is a Copy Cat of products that have been extensively used in the Middle East region.

    Regards, Kevin

    Link to this comment

  4. @Kevin: the programs might be a Copy Cat from banks in the Middle East. That doesn’t make the programs less interesting for the target audience. The target audience needs to learn to save money and they need to break their habit of spending (all their) money. Regards, Benny

    Link to this comment

Post a comment

  • ( optional )

  • What is the number before twelve?

    For numeric answers, simply type in the number
    (e.g. What is five times five? Answer: 25)

    We're annoyed by questions like this too, but we're even more annoyed by spam (except the yummy canned kind).

  • Logged-in users can attach files to comments and aren't required to answer spam protection questions.

  • Submit

Project Toolkit

The Team