NWCUA Legislative Effort Gets National Spotlight
February 1, 2011
February 3, 2011
A story picked up around the nation this week focuses on the Northwest Credit Union Association’s (NWCUA) Washington state effort to pass legislation encouraging non-savers to sock away a short term nest egg. Senate Bill 5232 authorizes prize linked savings deposits.
Headlined Prizes for thriftiness? WA eyes savings lotteries, and written by AP Olympia reporter Curt Woodward, the piece outlines the simplicity of this innovative idea that gives consumers chances to win monthly prizes in the lead up to a chance to win a very large grand prize at the end of the savings term.
“The beautiful thing about this is, there is no loser. Worst case scenario, you end up a year later with savings and interest,” Bill Anderson, NWCUA Chairman and President & CEO of Mid-Oregon Credit Union in Bend, Ore., is quoted in the piece.
On Wednesday, Feb. 3, Chairman Anderson expanded on his thoughts about prize linked savings diring an interview with Ross Reynolds on KUOW-Seattle’s noon current events program, The Conversation. KUOW is a popular public radio station in the Puget Sound region.
“Since Americans are more than willing to toss some money at the long odds of winning a lottery jackpot or slot machine payout, why wouldn’t they enter a contest that promises they’ll at least keep their money in the long run,” asks Woodward?
According to Doorways to Dreams‘ Joanna Smith-Ramani, who was a keynote speaker during the Washington state GAC last week, consumers are attracted to the prize linked savings because participating is fun. Doorway to Dreams mission is to help low-moderate income Americans become financially stable.
Michigan’s Save to Win, which is the name of that state’s new prize-linked savings program, attracted some $8.5 million in savings from more than 11,500 people in its first year, according to a report from Doorways to Dreams, which was a co-sponsor of the program, according to the piece. In just one year, those numbers ballooned to $28.1 million and 16,800, respectively.
According to a Doorway to Dreams survey, 56 percent of participants in teh Michigan “Save to Win” program were not regular savers before participating int eh program. And, 59 percent of participants spent money on a lottery in the previous six months. According to Woodward, “that indicates the concept was not only bringing in new savers, but might divert cash from a gamble into an actual investment. And even relatively minor rewards could spur increased interest: People who won a smaller monthly prize were more likely to up their savings the next month.”
While increased consumer savings won’t necessarily help state coffers, it can supplement financially strapped state governments that are unable to offer their own savings incentives, such as matched savings accounts, tax credits, or even financial education programs, according to Smith-Ramani said.
“Government’s not going to be able to do everything,” said state Sen. Derek Kilmer, D-Gig Harbor, the primary sponsor of Washington’s prize-linked savings in the piece. “Looking at opportunities to help folks become more self-supporting is important.”