In many markets there are good, solid savings options in place today.
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Meanwhile, about 1 in 4 Americans has no emergency savings, according to a June 2014 Bankrate survey.A big challenge is that saving is not much fun.How prize-linked savings accounts work, prize-linked savings accounts work just like regular savings accounts, except that instead of earning interest on your money, you get a chance to take home a potentially sizable cash prize.Usually, PLS accounts are considered savings promotion raffles.Duke University reports that the poorest third of households in the country buy half of all lottery tickets sold - the same people who are the most vulnerable in the face of financial emergencies.If I have this correct, prize-linked savings accounts still generate some interest, but not as much as other savings accounts.And while you'd think more folks would be motivated to save by virtue of wanting protection against the unknown, clearly, countless Americans are willing to just wing it instead.
Has allowed lottery-driven savings for more than 50 years.
As with all cash awards, winners of any program still have to pay state and federal taxes on their prize money.The aarps John says prize-linked savings likely will be of interest first to small to midsize credit unions that serve a low-income population before any of the major financial institutions start to offer them.A 2 million jackpot is on the table for participants in the San Francisco-based for-profit SaveUp program, which awards members for saving and paying down debt.Now if you ask any logical person who's low on savings whether it pays to stash spare cash in the bank versus gamble it away, the response would most likely favor the former.Prizes vary by state.The program also raffles off vacations, merchandise and other cash prizes.Lotteries and slot machines, by contrast, offer more of a prospective upside.We could require some sort of review of the winners, though, or the process by which winners are chosen.
In lieu of what would normally be interest payments, that money gets pooled into a giant pot and is raffled off periodically to account holders.