Prizes for Saving Money: The New Lottery

By Curt Woodward, Associated Press

OLYMPIA, Wash. (AP) — Saving money isn't sexy. But winning money — now that's a different story.

As consumers crawl their way back from the worst savings rates in generations, state lawmakers from coast to coast are looking to spice up financial responsibility by offering lottery-like prizes for people who sock their money away. The concept, which has been employed for years in other countries, is gaining greater attention in the U.S. following a two-year-old experiment in Michigan called "Save to Win."

The idea is pretty simple: Offer consumers a cash prize to do something good for their finances. Since Americans are more than willing to toss some money at the long odds of winning a lottery jackpot or slot machine payout, why wouldn't they enter a contest that promises they'll at least keep their money in the long run?

"The beautiful thing about this is, there is no loser," said Bill Anderson, chairman of the Northwest Credit Union Association. "Worst case scenario, you end up a year later with savings and interest."

Maine, Rhode Island and Maryland passed laws allowing such "prize-linked savings" accounts last year, according to the nonprofit Doorways to Dreams Fund, a driving force behind the idea in the U.S. This year, bills calling for savings lotteries have been drafted in four states — Washington, Iowa, Nebraska and New Mexico — with at least four more considering possible legislation, Doorways to Dreams' Joanna Smith-Ramani said.

In Michigan, where the program was first tried on a large scale in 2009, savers get one entry in the prize pool for each one-year $25 certificate of deposit, with a maximum of $250 in prize entries allowed per month by any one person.