The 411 on prize-linked savings accounts

Posted at 2:48 PM, Jul 17, 2018

Some say it's better than playing the lottery because in these drawings, whether you win or lose, you still may earn cash. We're talking about ‘Prize-linked’ savings or accounts, CDs or debit cards.

They offer you chances to win big bucks just for saving money. In fact, more than two million dollars in prizes have already been awarded.

How do they work? What do you need to know?

"Save to win” …$1000 grand prize" …"Monthly, quarterly and annual prizes." The headlines and offers for ‘prize-linked’ accounts are enticing.  They usual combine a savings account with an exciting perk: the chance to win some cash.

"These accounts are really growing in popularity,” Liz Weston from NerdWallet says.

Here's how they work: Make a deposit, or open a CD, at some credit unions and banks that offer prize-linked accounts and you’re automatically entered into drawings to win money. 

Sometimes the more money you save the more chances you have to win.

"You are getting the chance to get a much bigger payoff than what the actual dollars you put in,” Weston says. 

Some financial technology companies offer accounts that let you play games to save and win prizes.

And the "Walmart money card" offers one of the largest prize-linked savings programs in the country. 

When it comes to winning we found the payoff can range from: $25 to $5,000 dollars, $25,000…even $1,000,000.

 Deposits are held risk-free and are FDIC insured. 

Most of the accounts earn interest, but all accounts are eligible to win cash prizes. 

Typically, prizes are paid for by marketing budgets or from a portion of the interest that is accrued in the pool of accounts. "Even if you don't win you kind of win because you're saving money. And that really helps people become more financially stable,” Weston says. 

Weston tells us prize-linked accounts are pretty low risk.
"It's hard to see how a prize-linked savings could go wrong, at the worst they're going to have some savings, some money built up,” she says. “And at best they could win a little bit more. They might be disappointed if they don't win, but it's not the kind of thing where people can drive their family into bankruptcy and ruin by doing it."

Some prize linked-accounts do charge withdrawal fees.  And if you don't keep money in your account you aren't eligible to win cash. As with all accounts, be sure to read all the fine print before you sign up for a savings program. 

For more information on prize-linked savings accounts and programs: 

Save to Win