Washington Credit Unions Invited to Learn About New Turnkey Prize-Linked Savings Plan
May 31, 2012
May 31, 2012
Washington credit unions hoping to offer prize-linked savings accounts to their members may finally have the financial and operational support they’ve needed.
The Washington Legislature cleared the decks for credit unions last year, passing prize-linked savings legislation after a strong lobbying effort by credit unions and the Northwest Credit Union Association (NWCUA) legislative affairs team. Prize-linked accounts are believed to incentivize under-banked consumers to deposit savings, because they offer monthly and annual grand prizes while the deposits remain in the accounts and often earn interest.
“The legislature wisely opened the door for us, and we cannot let the opportunity pass us by,” said Mark Minickiello, vice president of legislative affairs for the NWCUA. “There is so much documentation showing that people who are just one emergency away from homelessness or some other disaster can save enough to save themselves and start standing on their own two feet financially.”
“I frequently get questions from the legislators who supported us,” Minickiello added. “It was a popular bill, and the lawmakers really want to see consumers get this opportunity.”
The NWCUA’s board of directors recently approved funding to help Washington credit unions start a prize-linked program. Washington credit union leaders are invited to an informational meeting June 19 at the NWCUA Training Center in Federal Way, Wash., where details of the matching funds pool and operation model will be shared.
Prize-linked plans have been most effective in Michigan, where the Michigan Credit Union League (MCUL) helped to launch the Save to Win program with eight credit unions in 2009. Since then, 995,000 members have deposited nearly $35 million—with the average account holding nearly $2,500 in savings. The MCUL then helped nine Nebraska credit unions launch a similar program in January, and by the end of the first quarter, nearly a thousand accounts had been opened.
The MCUL provides Nebraska credit unions with marketing materials, legal agreements, selection of prize winners and more.
Brandon Luetkenhaus, a spokesman for the Nebraska Credit Union League (NCUL), said the launch was “seamless and not a nightmare at all.”
“They walked us through proposals, rules, everything to get it started,” Luetkenhaus said. “Once we launched, the Michigan league took over. They made it well worth it and very turnkey for us.”
A similar model will be proposed to Washington credit unions at the June meeting.
“The credit unions will likely only have to help fund the prize pool and then market their programs. The Michigan proposal provides the operational support, and the MCUL is offering minimal expenses to credit unions in at least the first year,” said Lynn Heider, vice president of public relations and communications for the NWCUA. “If our credit unions like the Michigan model, it makes sense that we take advantage of an established, successful system.”
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