‘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 Assembly.
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.
“Most people don’t save as much as they’d like to. Prize-linked savings accounts provide a great incentive for New Jersey customers to save,” said Senator Codey (D-Essex, Morris). “These accounts are like playing the lottery without any risk of losing your money. It’s a win-win situation for consumers.”
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.
“Today’s high prices for everything, from food to home expenses to energy costs, make it seem less possible to save. But these 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). “Everyone is a winner with these ‘play-to-win’ accounts.”
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 today by the Assembly with a vote of 67-0. It now heads back to the Senate to concur with Assembly amendments.