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A Lottery You Can’t Lose: Prize-linked Savings Accounts

What if every time you put money into your savings account you were entered to win a cash prize? Seem too good to be true? Think again!

Currently, the rate of savings in America is at an historical low point:

  • According to a recent report issued by the non-profit Corporation for Enterprise Development, almost one third of all Americans have no savings accounts at all1.
  • And, about 44% of Americans don’t have sufficient savings or liquid assets to keep themselves out of poverty for more than three months should they lose their income.

So, it’s more important than ever for consumers to attempt to build at least some financial cushion – no matter how small at first – should an unexpected emergency arise. In an attempt to help motivate Americans, more and more financial institutions are looking for ways to make saving exciting and fun (yes, fun) and one idea that is gaining ground is the prize-linked savings account.

Prize-linked savings (PLS) are accounts that reward good saving behavior by automatically entering the account holder in a weekly, monthly, or yearly cash prize drawing every time they make a deposit (each PLS has different rules of how much has to be deposited and how often they draw winners). The best part is that there’s nothing to lose. Even those who don’t win the prize are still saving, earning interest, and safeguarding their futures. And, the prize pool is usually funded by the credit union or a third-party so it doesn’t cost the consumer anything to enter the drawing, other than the required deposit amount2.

The first PLS program was started by the Michigan Credit Union League3  with over 40 credit unions participating within that state. Many other states are beginning to take notice and follow suit, for example:  Washington, Nebraska, Maryland, Rhode Island and North Carolina are all pursuing their own PLS programs. Most credit unions are hoping to use these programs to attract the most vulnerable consumers who are considered asset-poor and only one emergency away from financial disaster.

The prize-linked savings idea is catching the attention of leading economists and financial experts throughout the country, including the authors of Freakonomics, and the dean of the University of Oxford Business School who see it as a viable way to encourage smart saving for people all over the world4. PLS programs in England have proven themselves to be highly popular, with more than 20 million participants and cash prizes of up to one million pounds5

So if you’re heading to the convenience store to spend your hard-earned money on a lottery ticket and hoping against astronomical odds that you’ll win, you may want to consider using that money to build a more stable financial future through a PLS instead. Just be sure to research the terms and rules associated with the PLS you want to join. You can save big, and you just might win big too!


  1. NPR, http://www.npr.org/2013/01/30/170561872/study-nearly-half-in-u-s-lack-financial-safety-net
  2. Northwest Credit Union Association, http://www.nwcua.org/member-resources/anthem/two-washington-credit-unions-approve-prize-linked-savings-programs
  3. D2D Fund, http://www.d2dfund.org/prize_linked_savings
  4. BizJournals.com, http://www.bizjournals.com/triangle/blog/2012/08/credit-union-prepares-lottery-like.html
  5. Governing.com, http://www.governing.com/topics/economic-dev/states-considering-allowing-prize-linked-savings-programs.html
  6. Daily Finance, http://www.dailyfinance.com/2012/04/04/gaming-your-personal-finances-saveup-helps-you-save-and-win/ 

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