I
came across an
interesting article in the New York Times that really grabbed my
attention. At first, I figured that it
was a joke, but then I realized that it was for real and does actually work!
For most
folks, when faced with the chore of putting away money as compared to the
allure of winning mega bucks in a lottery, the majority will forego of the
first and go with the second, hoping to get their hands on the proverbial “pot
of gold.” The article outlines how an increasing
numbers of credit unions and nonprofit groups are now using prize-linked
savings accounts to get folks to save money.
Essentially, every deposit is treated as a ticket toward a prize-winning
raffle. The author states that, “The
idea is to offer the thrill of gambling without
the risk. Even perennial losers keep their savings.” He adds that, “One of the goals of these
programs is to help change financial habits.”
Although these
accounts form a small portion of those available in the world of banking, they
are slowly growing in number. One
program created 50,000 accounts for a total of $94 million dollars. One credit union gets account holders to buy
one-year certificates, and for every $25 share that they purchase, they get an
entry into the monthly lottery. Another
credit union offers “monthly prizes ranging from $25 to $100, a few quarterly
prizes of $500 to $1,500, and one $30,000 jackpot.” One customer said that she “got addicted when
[she] won $100, and [she] was thrilled to death.” Not bad at all!
Sounds too
good to be true! There must be a catch,
right? For some accounts, the catch is
that the money can only be withdrawn for emergencies. For other accounts, there is a penalty if the
money is withdrawn early. The only other
catch is for the US Congress to modify federal
banking laws and permit more financial institutions to offer prize-linked
accounts. Time will tell what will come
of it!
All I can say is, “Wow!” I hope
that this takes root in Canada as well! Imagine
a world where people have money in retirement rather than being poor. All that is left to do is to get more people
to participate. If, for some reason,
there are barriers to this idea or people choose not to take advantage of it, I
for one will simply…blame it on fast foods.
- B. J. T. Pepin
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