Legislators Asked To OK Savings Contests
OLYMPIA, Wash. — Lawmakers here have been asked to support a bill that would allow credit unions and banks to offer prized-based savings contests, similar to the one staged by Michigan credit unions last year that awarded $100,000 to one saver.
Similar legislation has also been introduced in Nebraska.
"We're trying to create an outlet of savings when we have an abysmally low savings rate," said Stacy Augustine, chief lobbyist for the CU Association, which is pushing for the bill, being heard for the first time by the state Senate's Labor and Commerce Committee.
The success in Michigan, where participating credit unions say they generated $8.5 million in additional savings through the first year of their contest, is proving irresistible in other states seeking to spur savings for low-income and unbanked consumers without expensive programs. Three states passed legislation last year that will allow credit union-sponsored savings lotteries and as many as six others are working on it this year, according to Augustine.
With the Michigan contest members qualified to participate in drawings by making deposits in their savings accounts.
The Washington bill would amend the state's Gambling Act so that depositing funds into an account does not qualify as gambling, so is not covered under the Act. It would lay out other restrictions. To ease passage, the bill would allow banks to also offer savings-based contests.
Meanwhile, in Nebraska a key lawmaker introduced legislation that would allow credit unions to stage their own savings lottery or raffle, as part of an effort to boost savings among Nebraska's consumers.
"Studies show the average American family spends $540 a year on lottery tickets, when they arguably should be saving some of that money in case of an emergency," said State Sen. Amanda McGill. "Saving raffles are a financially safe way to promote savings among Nebraska families while allowing them a chance to win."
Doorways to Dreams, a national non-profit specializing in expanding asset building opportunities for American families, completed a pilot savings promotion raffle in Michigan. The participating credit unions offered entries for monthly prizes and a large grand prize each time members deposited $25 to this prize-linked savings account. The prizes are taken from part of the interest that would have otherwise been earned on the savings accounts.