'Save more money to win’ is an amazing idea for inspiring people about saving money. The idea was supported by Sen. Jerry Moran, a Kansas Republican, and U.S. Rep. Tom Cotton, an Arkansas Republican. They proposed the American Savings Promotion Act, a bipartisan bill in October 2013. The goal of this Act was interestingly explained in the bill. The actual purpose of the American Savings Promotion Act is to encourage people about saving money. This program will work as an "innovative tool to encourage saving" said Moran and Cotton. Moreover, almost dozens of states accepted ,that this is a fun way to inspire people to save money. On the other hand the idea is worthy enough as there is no requirement of state’s fund.
States where the PLS Act has been passed
- Maine
- Rhode Island
- Maryland
- Indiana
- Connecticut
Credit unions of Michigan, Nebraska, North Carolina and Washington are instructed to offer prizes to people as an incentive. The PLS Bill is waiting for Democratic Gov. Andrew Cuomo's signature to become legal in New York.
Criteria for prize-linked savings program
- Participants have to open a 12- month share certificate at $25.
- Participants can earn an entry and it will depend on that month's drawing.
- A participant can earn another entry on upto 10 deposits for $25 per month.
- Participants (savers) are not allowed to withdraw money before 12 months.
- $25 will be charged if any participants withdraw the money before 12 months.
Possibilities of success of PLS program
- People will be attracted to the prize winning features and want to save money to become a winner.
- Consumer will encouraged to make regular deposit or signing up for deposit linked to the PLS account.
- This program will increase product popularity among consumers.
- Even who don’t win the prize are eligible to earn the interest if they keep the principal.
- No states fund are needed, credit union will carry all expenses of this program.
What is "save to win" program?
Save to win is basically a product related to prize-linked savings program. Save to win idea was launched in 2009 in Michigan. This product was developed with 58 credit unions in Michigan. Participants of this save to win program will earn cash as prize. They can be a winner only by saving money in their balance building share certificate. The deposit certificate will open for 1 year. Deposited amount will increase the chances of winning and saving more money. Many people have won prize in Michigan since 2009. They have deposited $15 per month to win $100,000 grand prize in 2012. At present, credit unions of Michigan has finalised the six $10,000 grand prizes a year instead of single annual prize. Jessica Demorest, project manager for the Save to Win program said that, "We’ve always promoted this as it’s not intended to make a huge profit for credit unions - but to teach people to save."
Experts are expecting to get huge success. According to them, this program will force people to save money for their emergencies. Nebraska state Sen. Amanda McGill, a Democrat. said,
Most of the things we do in the legislature are so abstract, and it’s hard to see the benefits. But this really gets people happy and engaged, and they are saving.
According to a survey on this concept, the Prize-Linked Savings account will work successfully among low to moderate incomers, non savers, for the people in poverty. Because this group of peoples ever think about saving money. So the concept will insist them to think of it and to improve their financial situation. Moran and Cotton said that, “Increasing savings is not only a win-win for individuals and families, it will also provide a boost for financial institutions and the greater American economy”.
Can PLS actually motivate people for saving money?
According to the survey of Doorways to Dreams Fund (D2D), since 2009, around 50,000 accounts have been opened and the amount of saved money was around $94 million. D2D executive Timothy Flacke said, that saving has a rational demand. He compared the appeal of saving money with "the appeal of eating your vegetables or going to the dentist," Moreover, PLS offers a chance to save money at more than a comparable interest rate.
Lastly, PLS programs have all the power to enhance saving nationwide. But, the program need to become legal first. People are waiting to see if the Act passes. With the help of this program, low- and middle-income Americans can save money, increase their saving rates and be motivated to reduce expenses.
