It is sad that a lottery and dreams of something for nothing in a game of chance is the latest mechanism to get people to save money for their future.
Yet, that is what CommunityAmerica Credit Union is thinking about banking on to get people to become regular depositors. It has been working the last five years for credit unions in Michigan, The Kansas City Star reports. Members get a chance at cash prizes when they put money into a “Save to Win” certificate of deposit.
The idea has picked up traction with Congress and the Obama administration. But such a gimmick is illegal in Missouri and Kansas, and it should remain that way.
In the 1970s, interest rates of a standard 7 percent on certificates of deposit used to be a great incentive encouraging people to save. They could see their money grow in banks, savings and loans, and credit unions. Passbook interest of 5 percent also showed savings accumulating, and that certainly spurred more people to save.
CD interest rates jumped to double digits in the 1980s, and then dropped to 3 percent to 5 percent in the 1990s and early 2000s.
Now people are lucky if they get 1 percent on CDs, and interest on passbook accounts is so low it’s not even mentionable.
The so-called “gamification” of everything in this country is a troubling trend. People play state-sanctioned lotteries hoping to win, but an infinitesimal number actually do. The states clean up from the gaming revenue, which also is known as an unofficial tax on everyday folks and the poor.
People also go to casinos, gambling away hard-earned money, but again losers far outnumber winners and the states keep raking in the dough. Savings, and all efforts to reinforce the habit, must be a bed-rock, sure thing.
Otherwise, it will be a fad, and no fad ever lasts long.