During the last session, the S.C. Legislature passed a measure allowing state financial institutions to offer prize-linked savings accounts. The intent of the legislation – according to lawmakers – is to provide incentive for people to save more money.
Starting Oct. 1, Upstate-based SC Telco Federal Credit Union plans to be the first financial institution in the state to offer such a program.
The Save to Win program allows people to open a savings account. For every $25 deposited, the account holder has one entry into a drawing to win a $25 monthly prize and quarterly prizes ranging from $500 to $5,000. Account holders can have up to 10 entries per month. The program is a national program with South Carolina becoming the 10th state to join.
According to Steve Harkins, president and CEO of SC Telco, the program has led to nearly $140 million saved since 2009 with an average balance of $735.
“We were eager to offer this program as soon as it became available so we could better serve our members,” Harkins said. “In 2015, 86%-90% of members who were surveyed were classified as being financially vulnerable. More than half of the program’s participants reported that they had no regular savings plan prior to opening this account and that Save to Win was their first share-certificate or certificate of deposit.”
Michigan became the first state to allow credit unions in that state the ability to offer similar prize-linked savings accounts. In 2015, the program added Connecticut, Nebraska and Virginia. North Carolina, Indiana, Illinois and Oregon joined the program in 2016. Washington and New York have state programs as their state laws prevent them from joining the national program.
Sen. Larry Martin, R-Pickens, introduced S. 652, the Saving Promotion Contests bill, which allows state credit unions the option to offer the Save To Win savings program. The bill passed unanimously in both the S.C. House and S.C. Senate and was signed into law by Gov. Nikki Haley in June.
“Increasing our savings rate is important, and this program is another way to encourage putting some money back for a rainy day,” Martin said.
Harkins said the program is available to any SC Telco Federal Credit Union member. He said the Save to Win accounts pay dividends of 0.25% and will match the 12-month certificate rate offered by the institution. The difference between a standard savings account and the Save to Win account at SC Telco is the standard account does not pay a dividend until the account balance has reached $250.
“The new Save to Win account will make it possible for anyone to begin a savings account with just $25 and earn dividends no matter the balance size,” Harkins said.