Save to Win Programs

By David A. Wolfe, Esq.

In January 2009, eight Michigan credit unions pioneered a sweepstakes savings program to increase the savings of people who typically do not save through traditional programs, particularly low income members, and develop the habit of setting aside money on a regular basis.  Instead of traditional payment of interest, this unique program offers members a return in the form of a chance to win cash prizes.  For members who deposit $25 or more into a Save to Win one-year certificate of deposit, the program provides raffle entries for a chance to win an annual grand prize of $100,000 or smaller monthly prizes sponsored by individual credit unions ranging from $125 to $1,000. 

The program has achieved measurable success.  In 2010, the members of the 36 participating credit unions saved approximately $28 million according to the Michigan Credit Union League.  Through June 2011, participation increased to 42 credit unions and the league estimates member savings at $21.6 million. 

The unique certificate of deposit accounts are federally guaranteed by the National Credit Union Administration and pay between 1% and 1.5% interest annually.  While these rates are lower than conventional certificate of deposit rates, the opportunity to win cash prizes encourages members to increase their savings and improve their financial future.    

In developing the Save to Win program, the Michigan Credit Union League worked with the Filene Research Institute and the Doorways to Dreams Fund to implement an idea developed by Peter Tufano from the Harvard Business School.  This prize-linked savings program is based on centuries-old practice of using lotteries to raise capital for public and private ventures that includes the Premium Bonds program in Great Britain.  In 1956, the British government introduced the bond program to help control inflation and encourage savings following the Second World War.  The program was an immediate success and today, nearly 40% of Britain’s population participates, with nearly 23 million people holding more than $50 billion in Premium Bonds.  

Through the Save to Win program, Michigan credit unions have a program that has proved to be a fun and effective way for members to watch their money grow.  While expansion of similar programs in other states may be limited by existing laws and regulations, lawmakers in Nebraska, North Carolina and Washington have passed enabling legislation to expedite the implementation in order to successfully leverage the overlap between savings and lotteries.

David Wolfe is an associate in Consumer Collections based in the Detroit office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 248.362.6142 and dwolfe@weltman.com.

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