HARRISBURG, Pa., and SALEM, Ore. (5/15/15)--Two more states are inching closer to ratifying laws that would allow credit unions and other financial institutions to offer prize-linked savings (PLS) accounts.
The Pennsylvania House approved Rep. Rosemary M. Brown’s (R-Monroe) bill earlier this week that would authorize savings promotion raffles in the state. PLS programs incentivize members to save by offering them entries into cash-prize drawings every time they put money into savings.
The kicker is that even if the member doesn’t win the cash, they still have improved their financial health by bolstering their savings and building stronger savings habits.
With these products, “the depositors’ balance is never at risk,” Brown said in a press release. “I wanted to start a program like this in Pennsylvania because savings promotion raffles can be a building block to encourage and bring attention to families to start establishing their own financial reserves.”
Added Patrick Conway, president/CEO of the Pennsylvania Credit Union Association: “Prize-linked savings in other states has proven to encourage savings among non-savers” (Life is a Highway May 14).
The bill now goes to the Senate for consideration.
Twelve states have approved PLS account legislation, including Arkansas, Connecticut, Indiana, Maine, Maryland, Michigan, Nebraska, New York, North Carolina, Rhode Island, Virginia and Washington.
Oregon may be next to join that growing group.
With a 30-0 vote this week, the Oregon Senate passed HB 2893, which would permit financial institutions in the state to offer PLS accounts.
The bill now heads to Gov. Kate Brown’s desk to be signed.
PLS accounts are “designed to appeal to a broad demographic, with specific features to make the product easily accessible to financially vulnerable members,” said Jeff Kennedy, president/CEO, TwinStar CU, Lacey, Wash., during his testimony in support of the bill. “The program successfully attracts low- to moderate-income families and has positively impacted their savings behavior.”
With backing from member credit unions, the Northwest Credit Union Association (NWCUA) supported the Oregon legislation. Similar legislation passed in Washington state several years ago, and six NWCUA member credit unions are offering the program. In Washington, more than 1,400 accounts have been opened, allowing consumers to save more than $1.7 million.
A similar bill was recently passed by the Minnesota Legislature and awaits Gov. Mark Dayton’s signature as well. Illinois, Massachusetts, New Jersey, North Carolina, South Carolina and Texas also have legislation pending.