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Clark Howard’s Commentary On Program That Mixes Savings Accounts With Lotteries

Tuesday, June 25, 2013 - 5:08 PM
From Clark Howard show notes:
Some credit unions in these states [MI, NE, NC & WA] have joined together under an initiative called Save To Win.  This programs allows you to open a savings account for $25, and that essentially buys you one "lottery ticket" for a monthly drawing of anywhere from $125 to $1,000. Every $25 you deposit is another entry to win.

Your initial $25 deposit also enters you to win an annual jackpot of $100,000. (Your entries into the game of chance are capped at 10 per month, based on the amount you deposit.) But no matter whether you win or lose, you get to keep all the money you've deposited, plus any interest.

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The only problem I see is that I assume the money that pays for the jackpots come from interest on the deposits. So it seems like this would effectively reduce the interest rates that the credit unions pay on these savings accounts. With interest rates so low, I wonder how they can afford large jackpots. If the credit union siphons off 0.50% on savings accounts to pay for the jackpot, a $100 deposit over one year would only add 50 cents to the jackpot.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Tuesday, June 25, 2013 - 5:42 PM
How about some higher yields on deposits instead of gimmicks.
ShorebreakShorebreak2,700 posts since
Apr 6, 2010
Rep Points: 14,633
2. Tuesday, June 25, 2013 - 8:55 PM
First Community in Michigan had that savings account. Not sure they still do. In Jan this year account holders were given an extra dividend. I had about $700 deposited. Not sure how they calculated it. 

A couple of years ago Omni Credit Union in Michigan also had a large payout. It was not advertised. Just announced in Dec that account owners of accounts open on Dec 31 would be given a bonus dividend in Jan. 
Ally6770Ally6770943 posts since
Jan 16, 2010
Rep Points: 2,742