All about prize-linked savings accounts
Minnesota residents have a new, fun way to build savings. As of June 2015, credit unions can offer prize-linked savings (PLS) accounts. This is good news for Minnesota residents who have found it challenging to save money on a regular basis.
What is a prize-linked savings account?
PLS accounts combine fun with the financial advantage of building savings. Here’s how PLS accounts work. People open a savings account that gives them the chance to win cash prizes by making deposits. PLS accounts treat deposits as tickets in a drawing. Small drawings happen every month and bigger drawings once or twice a year. PLS accounts offer savers the opportunity to win cash with no risk of losing their savings.
Why are PLS accounts successful?
Many people recognize the importance of building savings but have difficulty doing it. PLS accounts give people an incentive to start saving money. The incentive of a chance to win a cash prize seems to be the nudge that people need to save! For instance, PLS account holders in Michigan have saved more than $28 million since 2009. Here’s what one Michigan account holder said about her PLS account:
“If it wasn’t for (the PLS account), I wouldn’t have direct deposit. Now I have it and I like it. I started with $25 in my account. Now, I put in $100 every two weeks. Before this I had zero savings.”
More about PLS accounts
Customers earn an entry into the next prize drawing for every $25 deposited in their PLS account. Customers can have up to four entries per month.
Keep in mind that, there is a fee if you make a withdrawal from an account less than a year old.
Learn more about Minnesota’s PLS account program at Wincentive Savings.
You may also be interested in the following resources from the Consumer Financial Protection Bureau.
- Checklist for opening an account (also en español)
- Selecting Financial Products and Services(also en español)
Abbi, S., Hahnel, A., & Smith-Ramani, J. (2013). Building financial security through fun: findings from the save to win expansion. Allston, MA: Doorways to Dreams Fund.
Credit Union National Association. (2016, March 18). Minn. N.Y., N.C. report prize-linked savings success.
Doorways to Dreams Fund. (2015). Prize-linked savings: Creating financial confidence and opportunity.
Reviewed in 2018