COLUMBUS, Ind. -
The $600-million credit union is believed to be the first financial institution in the country to offer financial rewards in exchange for savings. Participants in the credit union's "Super Savings" program are eligible for 10 different monthly drawings offering prizes of up to $1,000 each month. Prizes include home video equipment, stereos, or cash.
In exchange for the opportunity to win prizes, the accounts pay a lower rate of interest than the credit union's regular share (savings) account. The Super Savings account pays 0.50%, while the regular share accounts pay 1.4%.
"This is something we believe that will appeal to small savers," said Nancy Morrow, vice president of corporate development for Centra CU, who got the idea from the Filene Research Institute's i3 Group on innovations. "We've test-marketed this at two branches for two months and rolled it out at all of its 20 branches two weeks ago," said Morrow, who was named to the i3 Group in November.
"We're pretty excited about this," said Morrow, who sees this as a way to stem the decline in Americans' savings, especially among the credit union's members.
The idea for prize-based savings came from a report provided to the Filene study group that reviewed similar programs in other countries, specifically England, and in some Latin American venues. The concept was championed by a researcher for the Harvard Business School who made a presentation to the i3 Group, and is also studying the Centra CU pilot.
So far the innovation has shown promise. More than 300 accounts were opened during the two-month test in the branches. The average balance on the accounts is small, about $185. "But that's the average. There are some accounts with several thousand dollars," said Morrow. "I think we've identified the market that this appeals to. It's not for everyone, but there are a lot of people who aren't able to save and this rewards them, even for small savings."
In addition to the monthly drawings for $1,000 of prizes, CCU will stage a quarterly drawing that will award a prize that doubles their savings, up to $1,000. A grand prize valued at $5,000 will be awarded for the year.
The 100,000-member Centra CU was founded in 1940 to serve Cummins Engine and recently converted to a community charter.
