Making a habit of saving money is crucial to developing long-term financial wellbeing.
Yet over 10 million working aged people in the UK do not save regularly – with 2 million people not having any savings at all. Without this savings buffer, people could be left vulnerable to unexpected costs and unmanageable debt, particularly with the current cost of living pressures.
To help people save more of their money, banks, building societies and credit unions have launched accounts in recent years known as prize-linked savings accounts. These accounts represent an innovative approach that enters savers into a periodic cash prize-draw if they save regularly. They can be a powerful tool to get more people to save.
This project explored how prize-linked savings can be better communicated to potential savers. For this, we conducted an evidence review and experiment with Money and Pensions Service and Nationwide Building Society that gave us a closer look at how people that might typically save less interact with prize-linked savings accounts.
Key findings
- Prize-linked savings accounts can encourage saving behaviour. To maximise sign-ups, the size and frequency of the prize should be communicated clearly in promotional material.
- Deposits should be framed in daily terms to increase interest and confidence in savingand encourage people to sign up to a savings account.
- Consider smaller prizes, won by savers more frequently to increase interest in the account and to maintain saving behaviour over time
