This is a prize based savings account.  The work to develop it took place in conjunction with researchers at Harvard Business School and Filene Research Institute.

While Centra Credit Union takes the prize as the first U.S. financial institution to put the Prize-based Savings idea to work, we believe many more will follow. See program details at www.insideindianabusiness.com. In addition, see the entire business plan posted in the i3 section.

Source: Home : Filene Research Institute

The encouragement to save more is the incentive to win prizes.

Centra Credit Union’s program is called “Super Savings,” and is essentially a savings account that allows members to earn prizes for the money they save. The prizes range in amount and value. There are 10 different monthly prizes that members can win, with the top prize being worth $1,000 each month. In addition, a quarterly drawing awards a prize that doubles the winner’s savings balance up to $1,000 in prize money, and there will be an annual grand prize valued at $5,000. For every $25 in average balance in the Super Savings account, members get another chance to win a prize.

According to Dr. Peter Tufano at Harvard, Great Britain and several South American countries have been very successful offering prize-based savings accounts to help increase national savings rates.
“We believe Super Savings fits our mission of helping members save so that they can reach their financial goals,” said Nan Morrow, Centra vice president corporate development. “The pilot program was successful, so we’re excited about providing this new savings opportunity to all of our members. Super Savings is a fun new way to save money!”

Thus far, Centra’s program has proven very successful. With other financial institutions watching,“prize-based savings” could have a dramatic effect on the savings products offered by financial institutions in the future.

The first to offer this account is Columbus-based Centra Credit Union.

Prizes! Vacations! Savings!

When you open a Super Savings Account, you’re eligible for random drawings for more than $1,000 in exciting prizes every month, plus quarterly and annual drawings, including a grand prize luxury vacation for two. For every $25 you save, you earn additional chances to win!

This is an interesting departure from the normal construction of an account, and based on the results in other countries it does bring results, deposits that would otherwise have gone elsewhere.  It also introduces an element of fun to Banking, if that’s possible 🙂