Play your way to savings

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Socking away some of your hard-earned dollars is more attractive if you make a game of it. Bipartisan federal legislation that would allow conventional banks to provide certificates of deposit that come with a chance to win money was introduced in the Senate in October 2013.

CDs at U.S. credit unions that allow you to win cash prizes are becoming more common. As of press time, seven states allow credit unions to market prize-linked CDs, with three of those state laws approved in 2013. However, as of press time, the legislation that would let bank customers play is stuck in committee. Legislation-monitoring website govtrack.us gives it only a 1 percent chance of being enacted.

The CDs are part of what experts call gamification, which is the use of game techniques to encourage habits. In this case, that means saving money. National Bureau of Economic Research, which is a private research organization, concluded in a June 2013 report that individuals save at a higher rate if they’re presented with a prize-linked savings choice.

Credit unions widely use a program that’s called “Save to Win,” which allows you to purchase a 12-month CD and earn a ticket to a lottery drawing for every $25 that you deposit into it, up to 10 times a month, according to the program rules. Those lottery tickets give you a crack at monthly drawings at individual credit unions and larger annual statewide prizes.

The interest rates for prize-related CDs vary by credit union, but a review of credit unions’ terms show that these typically are 0.75 percent or less. We found that other CDs at those credit unions typically have the same rates for conventional 12-month CDs, but their rates rise to as much as 1.7 percent on longer term CDs. However, only $25 is required to start, compared with higher minimum amounts—$500 or $1,000— for longer term CDs.