‘Prize-Linked Savings Accounts’ 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 signed into law today.
Intended to provide incentives for depositors to open and maintain savings accounts, the law, S-2495, authorizes 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. These accounts are like playing the lottery without any risk of losing your money,” said Senator Codey (D-Essex, Morris). “Prize-linked savings accounts provide a great incentive for New Jersey customers to save. It’s a win-win for consumers.”
Under this law, 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 law will 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.
“Everyone is a winner with these ‘play-to-win’ accounts,” said Senator Rice (D-Essex). “Today’s high prices for everything, from food to home expenses to energy costs, make it seem impossible 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.”
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 law takes effect on the 180th day following enactment, except the Commissioner of Banking and Insurance may take anticipatory action as necessary for its implementation.