WASHINGTON (1/7/14)--National Public Radio's "Morning Edition" featured a credit union member who won $10,000 through her credit union and its Save to Win program.
Shankar Vedantam, social science correspondent for NPR, interviewed Carolann Broekhuizen of Waterford, Mich., in a piece that aired Monday morning.
Vedantam noted that adding an element of fun and luck to saving--like visiting a casino or buying a lottery ticket--makes it easier for people to do.
Broekhuizen signed up for Save to Win through her credit union, Community Alliance CU, based in Dearborn, Mich. Although she didn't win the first year, she continued to save because there was the chance she could win while she increased her retirement savings.
Then a few months ago, the credit union called her. "My first thought was that a check had bounced and I wasn't real happy," Broekhuizen told her interviewer. "And then she went on to explain that I had won the cash prize, and beyond that I couldn't think for a while because something like this happens to other people; it doesn't happen to me."
Prize-linked savings account programs such as Save to Win are attractive to consumers, said Emel Filiz-Ozbay, assistant professor of economics at the University of Maryland. "We found that indeed people seem more patient or more willing to wait additional weeks to get more money when it is offered in lottery-like form," Filiz-Ozbay told NPR.
With Save to Win accounts, members earn entries into monthly and annual cash prize drawings for every $25 they deposit. All funds deposited into the accounts, including interest earnings, belong to the account holders. In October, both the U.S. House and Senate introduced legislation that would allow financial institutions nationwide to offer prize-linked savings accounts (News Now Oct. 31).
As Filiz-Orbay said, "Unlike the standard lotteries, the consumer is not losing the initial capital, initial principal. So what you invest is always there, you are not losing it."
What did Broekhuizen do with her $10,000? In homage to her mom, who died last year, and in the spirit of the prize, she put it in her savings.
To hear the story, use the link.