Prize-Linked Savings Programs Gain Some Traction
ALPENA, Mich.-One of the most enticing aspects of a prize-linked savings program is that it only takes one entry to win.
That thinking helped Charmain Hanners, a member at Alpena Alcona Area CU, sign up for the Michigan CU League's Save to Win program and then take home $100,000 in the latest annual grand prize drawing. Hanners, a retired cafeteria worker, said she is going to use the winnings, and the money she saves in the program, to fund education for her grandchildren. She's also dedicating a portion of her winnings to help the homeless and battered women.
AAACU CEO Donald Mills believes prize-linked savings not only teach those who are not accustomed to saving to put money away, often redirecting money away from lottery tickets, but help credit unions give back to the community.
Part of Reinvesting in Community
"We see our participation in Save to Win as a vital part of our community reinvestment efforts, helping our membership understand the value of saving-many starting to establish a nest egg for the first time-and encouraging them not to waste money on games of chance."
The $246-million AAACU jumped into Save to Win in the summer of 2010, and in just one-half year attracted 157 accounts for $84,000 in deposits. "We got in the game late, but you can see the attention the program drew in a short amount of time," Mills said.
Run by the Michigan Credit Union League and Affiliates, Save to Win allows members to add monthly deposits to a one-year CD to gain chances at an annual $100,000 grand prize. For each deposit of $25 or more, members earn one entry into the grand prize drawing and become eligible for monthly awards. Rates for the CDs vary based on each credit union's pricing
Statewide, 16,833 members from 36 CUs saved $28 million through Save to Win last year, and MCUL CEO David Adams said the success and interest is building. "We have seen a great response from credit unions and their members in just the second year of the program. We are very optimistic."
Adams said that growth is important to the long-term viability of Save to Win, and the league hopes the number of CUs will eventually reach between 50 to 70, spreading the cost of the program comfortably across credit unions.
Ensuring Program is Sustainable
"Save to Win will only be sustainable if a growing number of credit unions participate," Adams said. "In the early stages the league is subsidizing the program because we want it to build. So the first two years we have been waiving the entry fee for credit unions. Beginning next year, we will likely ask credit unions to pay those annual participation fees."
Adams said the fees can average from $2,000 to $10,000 annually depending on the CU's size and participation.
Adams noted that the league is backing Save to Win with a $700,000 advertising spend this year.