Banks that can't offer enticing interest rates because of regulatory pressures have an new option via a system that offers rewards based on incentives to save more money.

SaveUp's service is a rewards program that can be linked to any account, such as a savings, an IRA, 401(K) or a debt that a consumer is paying down. Consumers earn credits by paying down the principal on their debts or increasing savings. The more points a consumer has, the higher the odds of winning a "prize" through monthly drawings or other online games. The prizes are funded through sponsorships and advertising, and also through financial referrals. 

"The more you put into savings, the more of a chance you have to win," Laxmi Poruri, director of business development for SaveUp.

Washington, Nebraska, North Carolina, Rhode Island, Michigan, and Maine are the only states whose legislatures have voted to allow prize-linked savings.  Alaska, Arizona, Georgia, and New Mexico have existing laws that may allow for the products to be offered.

SaveUp executives say the model is new alternative to prize-linked savings, which is facing some regulatory hurdles, particularly since not all states explicitly permit it. 

The argument against prize-linked savings is they resemble and encourage gambling. Advocacy groups such as Doorways to Dreams argue that since consumers can't loose money on the deposits, the programs aren't gambling or a lottery. The prize-linked savings model has been used in the U.K., South Africa, India and other markets to encourage decreases in debt and increases in savings balances. 

SaveUp plans to launch in November with a handful of marketing and financial institution partners, which it would not disclose. The technology behind the service is driven by Intuit Inc., which is providing back-end account aggregation, which makes the service compatable with more than 18,000 financial institutions. This technology allows customers of participating banks to offer SaveUp and manage activity on the accounts as part of their existing loyalty rewards programs. SaveUp just received $2 million in seed funding form Bluerun Ventures and True Ventures.

"As a consumer earns [points] he or she gets a snapshot of their progress in building their savings," Poruri says, adding SaveUp is in discussion with personal financial management providers such as (which is owned by Intuit), but has not signed a partnership agreement yet. SaveUp's website is in beta with about 400 users in prep for its formal launch in a few weeks.

Companies such as SaveUp are also hoping to tap consumer concerns over dwindling savings. The Employee Benefit Research Institute says almost half of workers say they have less than $10,000 in savings, and only 69% said they saved for retirement in 2010.