FDIC to Explore Prize-linked Savings

[Helena]

FDIC Advisory Committee to Explore Prize-linked Savings,
Outreach to Underserved and Low-income Consumers


July 23, 2009



[FONT=arial, helvetica, sans-serif]"Our advisory committee will look at how game-based incentives to encourage saving, so-called 'prize-linked savings,' such as sweepstakes and rewards, can promote saving, particularly among lower-income consumers," said FDIC Chairman Sheila C. Bair. "The group will explore a number of innovations, including how to leverage state lottery participation into a mechanism to start consumers on the path to long-term saving for their futures."[/FONT]


FDIC: Press Releases - PR-128-2009 7/23/2009



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[ziggy29]

So what is this? Some sort of "rewards program" for frequent lottery customers who blow way too much of their low incomes on lottery tickets?

"For every $100 you spend in lottery tickets, we'll put $5 into your savings account!"

Such a deal!

 

[Bestwifeever]

Can I get a toaster?

PS: Helena, you must have a take on this story or you would not have posted the excerpt and the link. Care to share why you did?

 

[Leonidas]

[FONT=arial, helvetica, sans-serif]so-called 'prize-linked savings,' such as sweepstakes and rewards, can promote saving, particularly among lower-income consumers," [/FONT]

So, the FDIC is saying lower income people are too stupid, unsophisticated, or whatever to do what's in their own best interest, so they're gonna trick them into saving money?

At what point do we start expecting people to step up to the plate and make the right choices or suffer the consequences? When do we stop treating everyone like they're dumb children who have to be lured into making good decisions?

 

[DangerMouse]

Maybe it will work something like Premium Bonds do in the UK. Basically you buy government backed bonds, which don't pay any interest to individual bonds. Each month the interest from total bonds is pooled and lottery like bond numbers are drawn. If you are the lucky one you win 1 million pounds. The benefit of this is it is gambling but you never lose your principal.

National Savings & Investments - Premium Bonds

 

[Gone4Good]

When do we stop treating everyone like they're dumb children who have to be lured into making good decisions?

As soon as everyone stops acting like dumb children who don't need to be lured into making good decisions.

 

[Alan]

The UK govt has been using gambling to attract savers for over 50 years. It was common practice to buy kids premium bonds for birthdays and the like when I was nobbut a lad. eee, bah gum I remember 'ow we used to wait for ERNIE to spit out the winning numbers every month.

Premium Bond - Wikipedia, the free encyclopedia

A Premium Bond is a lottery bond issued by the United Kingdom government's National Savings and Investments scheme. The government promises to buy back the bond, on request, for its original price.
Premium Bonds were first indroduced by Harold Macmillan's in his budget of 17 April 1956,[1] with the aim of controlling inflation[2] and to encourage people to save in the period after the war.[3] On 1 November, 1956, at a ceremony in front of the Royal Exchange in the City of London, The Lord Mayor of London, Alderman Sir Cuthbert Ackroyd bought the first bond from the Postmaster-General, Dr. Charles Hill for £1.

The government pays interest on the bond (pegged at 1% in June 2009). But instead of the interest being paid into individual accounts, it is paid into a prize fund from which a monthly lottery distributes tax-free prizes, or premiums, to selected bond-holders whose numbers come up. The machine that generates random numbers for the lottery is called ERNIE, which stands for Electronic Random Number Indicator Equipment.[5] There are many different prizes ranging from £25 to the top prize of £1,000,000 (between 2005 and 2009, there were two £1m prizes each month - now there is just one; and prior to 2009, the minimum prize was £50). Investors can purchase bonds at any time; after 30 days, their bonds are eligible for the draw; and their numbers are entered each month, with an equal chance of winning any prize, until the bond has been cashed in.
The prize draw is conducted so that the winners of the jackpot can be notified on the first working day of the month although the actual date of the draw varies for administrative reasons. The online prize finder is updated by the third or fourth working day of the month.
From 1 January 2009 the odds of winning a prize for each bond number held is 36,000 to 1. Around 23 million people own Premium Bonds,[citation needed] over one third of the UK population. Each person may own up to £30,000 in Premium Bonds. Bonds are currently sold in multiples of 10, with a value of £1 per bond and a minimum purchase of 100 bonds (or 50 bonds when paying by Standing Order). When they were first introduced in 1957 they were very popular — perhaps because the only other similar games of chance available to the general public were the football pools; the National Lottery did not exist until 1994. In Ireland, a similar investment scheme called Prize Bond also originated in early 1957.

 

[Helena]

PS: Helena, you must have a take on this story or you would not have posted the excerpt and the link. Care to share why you did?

Lower income people are more apt to have less savings
and waste money playing the lottery.

I'm curious how the FDIC plans to join gambling vice with
saving virtue.


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