‘Prize-Linked Savings Accounts’ Would Be Authorized For NJ Banks
TRENTON – Legislation sponsored by Senators Richard J. Codey and Ronald L. Rice that would authorize New Jersey banks to offer savings promotions, also known as “prize-linked savings accounts,” was approved today by the Senate.
Intended to provide incentives for depositors to open and maintain savings accounts, the legislation, S-2495, would authorize state-chartered banks, savings banks and credit unions to conduct promotions in which a minimum deposit in an amount predetermined by the institution qualifies for a chance to win prizes.
“Everyone loves the thrill of winning, and prize-linked savings accounts are like playing the lottery without any risk of losing your money,” said Senator Codey, D-Essex and Morris. “It’s a win-win situation, and a great incentive for New Jersey customers to save.”
Under this legislation, every deposit would equally qualify as a ticket in a prize-winning raffle, and a minimum age of 18 would be required to participate in the promotion. The bill also requires that the rules and conditions are fully disclosed to account holders and that interest rates and fees are competitive with other non-qualifying accounts.
“Prize-linked savings accounts promote a regular habit of saving while providing customers with opportunities to be rewarded simply for putting money aside,” said Senator Rice, D-Essex. “In the long run, with these ‘play-to-win’ accounts, everyone is a winner.”
The idea has been put into practice in a number of states by non-profits and credit unions, and has been successfully implemented internationally. New York, Connecticut, Michigan and Indiana have modified their state banking laws to allow for these programs and legislation has been introduced in Congress to make similar revisions to federal banking laws.
The bill was approved by the Senate with a vote of 35-0. It now heads to the Assembly for consideration.