Kilmer Bill Aims to Help Lower-Income Families Boost Their Savings
Seeking to help reverse a decline in Americans’ personal savings rates, Representative Derek Kilmer today introduced the bipartisan American Savings Promotion Act with Representatives Tom Cotton and Niki Tsongas. This bill would allow more financial institutions to offer raffle-based, prize linked savings accounts – a safe, regulated, and innovative product that is designed to encourage saving.
Prize-linked savings accounts are typical savings products that offer participants the chance to win prizes. The more participants save, the more chances they have to win prizes. Consequently, they also are strengthening their safety net and preparing themselves to meet future financial needs. Money in the account is never at risk – so even if someone does not win a prize, they still maintain all of their savings.
“Today, most Americans aren’t saving enough money. Whether it’s to buy a home, get a child through college, prepare for retirement, or deal with sudden, unexpected costs, many Americans struggle to set aside adequate financial resources,” said Representative Derek Kilmer. “This bill will encourage folks to save by creating a chance to win a prize with each deposit. The best that can happen is you reap a windfall. The worst that can happen is you’ve saved money.”
Northwest Credit Union Association Vice President of Legislative Affairs Mark Minickiello said, “We are encouraged to hear that Congressman Kilmer is addressing a federal law that has prohibited some consumers from accessing prize-linked savings programs. Credit unions in Washington State are committed to helping consumers save and this bill will extend the reach of the program.”
Sharon Hall, CEO of Express Credit Union said, “Prize linked savings has a positive effect on our members' savings behavior and is a program that we value a great deal. It has allowed us to find a way to engage our low to very low income individuals and families for the purposes of saving, and more importantly instill a behavior, practice, and value in saving.”
Tim Flacke, Executive Director of Doorways to Dreams Fund said, “As a non-profit focused on innovation in financial services, we have invested a great deal of work to evaluate the enormous impact of PLS on improving the financial security of Americans. We are delighted to see this important opportunity brought to the federal level and applaud Congressman Kilmer and his colleagues Congressman Cotton and Congresswoman Tsongas for their ongoing leadership.”
Representative Tom Cotton, a sponsor of the bill said, “For families across Arkansas and the country, the financial cushion provided by personal savings reflects hard-work and sacrifice. But it also provides independence and confidence—even in the most trying times. With public budgets under strain, the continued lack of full-time jobs, and the stagnation in household incomes, our financial system should encourage more saving. That’s good for families, taxpayers, and our economy.”
Representative Kilmer previously sponsored and passed legislation in the Washington Senate to bring prize-linked savings accounts to Washington State. Currently, eight states including Washington have passed legislation allowing financial institutions to offer these regulated products. However, due to outdated federal regulations, banks and federally chartered financial institutions are unable to offer prize-linked savings accounts. The American Savings Promotion Act would remove this regulatory barrier and ensure more consumers can access these safe financial products, without creating a new government program or spending scarce federal resources.
Prize-linked savings accounts have been featured subjects on Freakonomics, USA Today, and Bloomberg for their potential to help lower-income families boost their savings.