What if every time you played the lottery, you couldn’t lose? Well we don’t want to get your hopes up. Like most forms of gambling, your odds of striking gold in a traditional lottery are terrible. Consider Powerball, one of the country’s most popular games: your chances of winning are about one in 175.2 million — good luck with that. But 34 banks and credit unions in four states are experimenting with a different way to entice people to save money instead of wagering it on scratch tickets. With “Save to Win” programs, every $25 that a customer deposits into a special account (up to 10 deposits a month) earns them an entry in a small monthly prize drawing, as well as a yearly grand prize. Even if members don’t win one of the “sweepstakes” — American banks aren’t allowed to run raffles or lotteries — they get to keep all the money they put in, plus interest.
Prizes and rules for prize-based savings programs vary by credit unions and states, but monthly drawings can range from $10 to $100, and the grand prize can be up to $10,000 — no small sum for customers who struggle to scrap together a valid emergency fund. Save to Win was first launched in 2008 at eight credit unions in Michigan with the help of Doorways to Dreams, an organization that works with federal and state governments to allow banks to offer prize-linked savings, along with Michigan Credit Union League, the Center for Financial Services Innovation and the Filene Research Foundation. These groups designed how the program would run, and also paid for the administrative costs and the prizes — including 10 grand prizes, totaling $100,000.
Save to Win was an immediate success at Communicating Arts Credit Union in Detroit, where about 800 people — an eighth of their members — signed up, each saving an average of $300 extra. “I was struggling. I had tried lots of different things to get people to save,” Hank Hubbard, the credit union’s president and chief executive, told the New York Times, saying he even offered a certificate of deposit with 10 percent interest with a minimum deposit of $500 to encourage saving. “But our members can’t scrape together $500.” While the number of participants at Hubbard’s bank has dropped over the years, mostly due to the recession, the program still has between 500 and 600 accounts.
Now, D2D is trying another way to get people to “play to save.” The organization is developing a savings card, which can be sold at corner stores next to lottery tickets. For $15, customers can buy one of these cards and register an account online where they can add more cards as they buy them. These accounts would be held by the state in either personal or pooled bank accounts. Customers would be able to withdraw funds, while also being eligible to win prizes for as many cards as they purchase. D2D hopes to have a state pilot this program in 2015, giving people another way to win the lottery, without risking their savings.