Will Prizes and Digital Coins Encourage Americans to Save?
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Here's your money briefing for Monday, September 12th. I'm J.R. Whelan for The Wall Street Journal. People aren't putting away all that much money to save for the future, and so banks and financial apps are stepping up efforts to encourage savings through incentives and prizes.
So it may be a chance to win weekly or monthly prizes based on savings. So similar to a lottery, but based on how much you put in the account. Or you may get some kind of a digital currency.
But is this really a good way to grow your money? Wall Street Journal contributor Cheryl Wintercrew-Monk spoke to financial experts about how they'd recommend people work these apps into a savings plan. We'll check in with her after the break.
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Why are U.S. savings rates falling and why does it matter?
As inflation takes a bigger and bigger bite out of people's personal finances, the savings rate in the U.S. is in decline. Now some financial apps are trying to put saving back on Americans' to-do list by offering savers incentives and prizes based on how much they put away. Wall Street Journal contributor Cheryl Winokur Monk looked into these apps and what financial experts have to say about them, and she joins us to discuss. Cheryl, thank you very much for being with us.
Thanks for having me.
So Cheryl, you know, linking prizes to savings isn't new, but why have these apps become more popular now?
Well, remember a while back, banks were routinely giving out toasters to new customers as a way to incentivize them. Nowadays, it's all about apps. So that's just the way that people function these days, and that's what people are using, and that's a way to incentivize people to save. There's a big push across the financial services industry as a whole to encourage people to save and to save more. It's a big problem. People generally aren't saving. They're not saving for their day-to-day needs. They're not saving for retirement. They're not saving for college. They're just not saving in general, and many times they're living paycheck to paycheck. So this push using these kinds of apps could be a way to get people.
The thought is it's an encouragement to get them to save more.
So what kinds of apps are we talking about and what types of incentives do some of them offer?
How are financial apps using prizes and digital coins to encourage saving?
So it may be a chance to win weekly or monthly prizes based on savings. So similar to a lottery, but based on how much you put in the account. Or you may get some kind of a digital currency, a coin per se, that you can use to play games. And the more you save, the more coins you earn. And then you can, of course, play more games with that. Some of the apps that do this are backed by banks, and a few of them are Long Game, which was acquired recently by Truist Financial Corp., and that was in early May, and Yada Savings, whose banking partner is Evolve Bank & Trust, and that banking partner holds the FDIC-insured money.
But isn't there a disconnect here? You know, there's this renewed effort to sign up savers, but haven't the banks been sort of slow to raise their savings rates?
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