Indiana House has OK’d prize-linked savings plans helping Hoosiers
For immediate release:
Feb. 11, 2015
INDIANAPOLIS – A popular program that encourages Hoosiers to save money may be expanded, due to diligent efforts from State Rep. Gail Riecken (D-Evansville).
House Bill 1287 expands current laws to enable banks to offer prize-linked savings programs to patrons. Presently, credit unions are the only institutions eligible to participate in these programs.
“Too many people pay overdraft fees and rely on high interest loans for emergency expenses like a new air conditioner, car repairs, or expenses incurred during temporary layoffs,” said Riecken. “Remaining in that kind of situation is tremendously overwhelming. If they had money in the bank, future emergencies might not be so financially devastating.”
Participating individuals will be rewarded for opening and maintaining their prize-linked savings account. With each deposit into an account, the person receives an entry into a raffle with cash prizes. There is never a risk of losing the deposits.
“Realistically, I understand that not everyone has the money to start a savings account,” noted Riecken. “Those individuals can still participate in the program—and receive raffle entries—by taking debt reduction and financial literacy classes. They will have the chance to win money while learning how to budget and save money.
In other states offering related programs, as many as 11 percent of people became members because of the prize-linked savings accounts. To date nationally, there are 50,000 accounts containing deposits of approximately $100 million.
Riecken recognized the efforts of State Reps. Woody Burton (R-Whiteland) and Justin Moed (D-Indianapolis) in the bill’s advancement to the Indiana Senate.
House Bill 1287 was unanimously passed by members of the Indiana House of Representatives on a vote of 97-0 last week (Feb. 5). The bill now goes to the Indiana Senate for further action.