Last night on Marketplace, a story about how a handful of Michigan credit unions are offering prize-linked savings accounts caught my attention.
According to the story, these credit unions have opened about 15,000 new accounts this year and have taken in $18 million in deposits.
The basic premise is to combine a lottery with a savings account. These accounts would pay below market rates; but the prize money comes from the difference between what people would typically earn in interest and the lower interest rate that depositors are being paid.
These accounts are viewed as no-lose lotteries; because your principal is not at risk.
Currently, Michigan is the only state that allows such accounts to be offered by credit unions.
The idea of prise-linked savings isn't the best but certainly better for consumers as long as there isn't corruption. I the vig is so bad in lotteries that its probably the same or better odds with these novel accounts. I would hope, for the poor's sake that these accounts take on. My wife loves playing the lottery (which I hate) at least this way she can have the excitement of playing with me knowing she isn't losing our money! I'm looking to open account now. hopefully you don't need to be a resident.
ReplyDeleteSteve
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