A recent article published by CU Journal explained the benefits of prize-linked savings programs, which a growing number of credit unions are adding as a way to boost liquidity.
Prize-linked savings programs require participating consumers to make a minimum deposit into a certificate or savings account, with each deposit counting as an entry toward a prize funded by the credit union.
More institutions are expected to launch a prize-linked savings program later this year, according to the article. Members from approximately 32 Wisconsin credit unions, which makes up about 25 percent of all the credit unions in the state, have saved more than $1.6 million since the program began in 2018. The article noted that those institutions have awarded more than $37,000 to 269 winners in the state.
“It’s not going to solve your liquidity issues but it helps,” said Tara Krejcarek, VP of strategic partnerships at the Wisconsin Credit Union League, which created the prize-linked savings program, Saver’s Sweepstakes.
Total accounts at the Crane Credit Union in Indiana have already risen 14 percent, with balances increasing by more than 24 percent in 2019.
“If you compare that against the rate growth with our other deposit products, it stands up there,” Crane Credit Union AVP of Marketing Michael Hostetler said in the article. “We’re not talking about a large dollar amount of deposits, but looking at percentage growth it continues to be pretty strong.”
In New York, the New York Credit Union Association offers credit unions the opportunity to participate in Lucky Savers, a statewide prize-linked savings program. Members can open the account with a $25 deposit. For every $25 in month-over-month balance increases, account holders earn one entry into the state-wide monthly and quarterly cash-prize drawings, including prizes of $5,000 and $1,000 each quarter.
Credit unions that participate also have the opportunity to conduct drawings just for their membership in order to guarantee winners from their credit union on a regular basis. Interest and account value caps are set by each participating credit union, with a maximum of 10 prize-drawing entries per member, per month.
To date, Lucky Savers participants have accumulated over $12 million in savings. Across New York, there are more than 6,000 Lucky Savers accounts with an average savings of $2,060 per account.
To learn more about Lucky Savers, contact program coordinator Chris Pajak at firstname.lastname@example.org or (800) 342-9835 ext. 8188.