By Chanelle Bessette
When Wesley Villafane, a health care worker from San Francisco, decided to open a prize-linked savings account, he was just trying to find a better way to get his money to work for him.
“I wanted to try another aspect of banking out because my normal bank interest rates were not giving me any significant returns,” he said.
2020’s low bank rates meant he wasn’t earning much interest on his regular accounts, so Villafane decided to go with a lottery-style savings app called Yotta. The app enters its customers into weekly cash prize drawings in exchange for saving money and referring others to the app.
For a while Villafane only won very small amounts — less than a dollar — in the drawings. Then, the Monday before Thanksgiving, he got the news. He had won $2,500.
While not everyone will win big, prize-linked savings accounts can be an opportunity for consumers to win money simply by saving it.
Tara Krejcarek, a spokesperson for one such program called Saver’s Sweepstakes, says prize-linked accounts help consumers improve their financial well-being.
“There are zero risks. Participants earn entries to win cash prizes by depositing a minimal amount each month. It’s a no-lose proposition,” she says. “Even those who don’t win cash prizes still win because they are saving money to help secure their financial future.”
Here’s how these accounts work and what to know about them.
Where to Find a Prize-Linked Account
A prize-linked savings account works like a lottery or a sweepstakes, in which consumers open a savings account and enter to win sums of money ranging from less than a dollar to millions. After an initial period during which people can join the contest, sign-ups close and a winner or winners are selected. Here are some examples of these accounts from around the country.
- Save to Win. Save to Win is a program offered by a nationwide selection of participating credit unions. Credit union members can open a 12-month Save to Win share certificate (the credit union equivalent of a certificate of deposit) with a minimum of $25, and if they continue to add to their balance for the next 12 months, they’re entered into drawings for either monthly, quarterly or annual prizes.
- Walmart’s Prize Savings. Walmart (WMT) – Get Report does a monthly cash sweepstakes for consumers who either transfer money from their Walmart MoneyCard account to their MoneyCard savings account or who mail in an entry (no purchase necessary in either case).
- WINcentive Savings. This prize program is open to members at participating credit unions in Minnesota. For every $25 a customer saves, they are entered into a prize drawing that either occurs monthly, quarterly or annually.
- Saver’s Sweepstakes. This sweepstakes is offered by certain credit unions in Wisconsin and for every $25 that a member grows their monthly balance, they are entered into a monthly, quarterly and annual cash drawing.
- Yotta Savings. Yotta Savings — an app that you can link to a regular savings account — incentivizes customers to save by offering entries into weekly drawings with the chance to win up to $10 million. Every $25 saved gives a customer another entry into the lottery, and the account itself has no minimum deposit requirements or monthly fees. Yotta users can also refer potential customers to earn extra entries.
Pros of Opening Prize-Linked Savings Accounts
The opportunity to win cash. It’s an obvious pro: a chance to win money with little effort.
It encourages saving. Some prize-linked accounts give people more chances to win money the longer they contribute to a savings account. So even if the customer doesn’t win a prize, they’ll beef up their savings account in the process.
“It’s not always easy to save,” said Krejcarek. “Saving is like dieting; you have good intentions, you know it’s good for you, but you keep putting it off because it’s not fun or you are not motivated. Prizes motivate savings. Prize-linked accounts tie the thrill of winning to saving.“
If it’s a sweepstakes, you can typically enter without opening a savings account. Sweepstakes in general usually have a stipulation in the fine print that no purchase is necessary to enter. In the case of a prize-linked savings account, you may be able to enter a sweepstakes without opening an account, such as by mailing in an entry or emailing your contact information to the sweepstakes organizer.
Things to Think About Besides the Prize
The account might…
Read More: Win Cash Prizes Just for Saving