Two Washington Credit Unions Approve Prize Linked Savings Programs
August 30, 2012
August 30, 2012
The boards of two Washington credit unions—TwinStar Credit Union in Olympia and Connection Credit Union in Silverdale—have signed resolutions supporting a 2013 launch of prize-linked savings programs. A group of additional Washington credit unions continues to study whether the programs are right for their members as well as whether next year is the right time, according to Lynn Heider, vice president of communications and public relations for the Northwest Credit Union Association (NWCUA).
“The programs are definitely picking up traction in Nebraska, where after launching just seven months ago in ten credit unions, members have saved over $1.1 million,” Heider said. “And of course in Michigan, more than 40 credit unions now offer the program to over 16,000 consumers.”
The Michigan Credit Union League (MCUL) will work with the NWCUA to operate the Washington program should enough credit unions opt in, Heider said. Michigan launched its program, called Save to Win, in 2009 and currently also operates Nebraska’s program. The Michigan League’s team has estimated that at least six Washington credit unions would need to launch in 2013 in order to make the program successful.
“Our Washington credit unions have spent the last several months studying costs, operations models and whether the program is right for them,” Heider said. “We know two are ‘in’ so far and expect to hear from several others by the end of November.”
Prize-linked savings accounts allow consumers to build assets while earning chances to win monthly or annual cash prizes. Typically the prize pool is funded by credit unions and their trade associations so that all deposits stay in the accounts. In the Michigan and Nebraska models, account holders receive a chance to win monthly or annual prizes for every $25 savings increment.
If Washington credit unions opt into Save to Win, the NWCUA will fund a prize pool offering multiple monthly prizes as well as an annual prize for three years, while Michigan’s organization will provide the operating structure, marketing materials and other support.
“The program generally targets the asset-poor who are one emergency away from financial disaster,” Heider said. “With account balances averaging about $850 in Nebraska and about $2,000 in Michigan, you could be building relationships with people who had zero savings before, and maybe today’s savers will become tomorrow’s responsible borrowers.”
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Posted in NWCUA.