I’d Like a Prize-linked Savings Account, Please

PBS Newshour has a terrific segment on prize-linked savings accounts — accounts which give savers the chance to enter a lottery to win prizes as small as $50 and as large as $30,000. The more money an individual puts into his or her savings account, the more chances there are to win. The difference between this lottery and something like “Mega Millions” is that it doesn’t cost anything — the person gets to keep all the money saved, plus any accrued interest. The prize-linked savings accounts are typically CDs, which means savers are putting their money into accounts that they can’t touch for at least a year, and this has helped people who weren’t savers before change their behavior. In addition, the odds of winning are much better: In Nebraska, 1,500 savers are in the running to win a $25,000 grand prize.

Right now, only four states offer prize-linked savings account, which are only offered at credit unions governed by individual states. It’s illegal for federally-insured banks to participate in these kinds of lotteries, but lawmakers from both sides of the aisle are trying to amend a law to allow prize-linked savings accounts available all across the U.S. I hope it happens — it’s a great idea.

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