Wal-Mart's Unconventional Approach To Get People To Save: Prizes Many Americans don't have enough savings to get through an emergency. Wal-Mart is offering a new program where you can win money by saving money.

Wal-Mart's Unconventional Approach To Get People To Save: Prizes

Wal-Mart's Unconventional Approach To Get People To Save: Prizes

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Many Americans don't have enough savings to get through an emergency. Wal-Mart is offering a new program where you can win money by saving money.


A lot of Americans do not have enough savings. A study this year by the FDIC, the people who insure your bank accounts, found that almost half of us would not have $400 to cover an emergency cost. Now, there's a new program in all 50 states that gives you the chance to win money if you do manage to save. Wal-Mart is running it. A disclosure here - the Walton Family Foundation connected to Wal-Mart is a frequent sponsor of NPR. Here's Sally Helm of our Planet Money podcast.

SALLY HELM, BYLINE: I talked to Alicia Scott a few weeks ago, and she had just won the savings lottery.

How much money was it?

ALICIA SCOTT: One thousand dollars. Thank you. Thank you, God.

HELM: That thousand bucks was loaded onto Scott's Wal-Mart money card. She keeps all of her money there. It's a prepaid card issued by Green Dot Bank, and it's kind of like a gift card, except that you can spend the money anywhere. The card also has this thing that's like a savings account. It's called the vault. When she can, Scott puts some of her money away in the vault, and that's why she got the $1,000 payment. She won the prize for saving.

DANIEL ECKERT: Yeah, it taps into a key insight that's being driven from behavioral economics.

HELM: That's Daniel Eckert, a Wal-Mart executive. He helped create the program with Green Dot and with a group called Commonwealth. Eckert says research shows that if people have the chance to win money for saving, they'll save more. So the program works like this - if you keep money in the vault, you get entered into a sweepstakes. Every month, one person wins a thousand bucks, and hundreds of other people win $25 each. If the research is right, that should make people save more.

And is it working?

ECKERT: It is. We're pretty excited about it. It's still early days, and we're seeing some really great results so far. You know, we saw immediately a 45-percent increase in users of the prize savings vault.

HELM: So more and more Wal-Mart customers are saving, and that's good for their financial security. It's also good for Wal-Mart. There's no fee for prize savings, but Wal-Mart and Green Dot Bank do make money from other fees on the card. And, of course, the money card does work at Wal-Mart.

So do you guys partly want people to save more money so that they can ultimately spend more money at Wal-Mart?

ECKERT: No, it's - again, this was really about a critical insight that we saw in our shopper base. We saw a growing crisis in the United States around having access to, for lack of a better phrase, rainy-day funds.

HELM: Another reason that Eckert says this program is a big deal - a lot of Wal-Mart customers don't have a conventional bank account. I talked to Andrew Davidson about this. He's an expert in payments and consumer trends at Mintel. And he said that Wal-Mart is reaching a group of people that aren't profitable for conventional banks.

ANDREW DAVIDSON: There really is a gap in the marketplace. At The moment, a lot of these consumers need sort of survival services. And really why - this is why this money card really comes into play and is really quite effective.

HELM: If you're a bank, these first-time account holders might seem risky, especially if they're likely to have low balances. But if you're Wal-Mart, the picture is different. After all, people without a lot of money do shop in their stores. Offering these financial services and these thousand-dollar prizes can make for more loyal, more profitable customers. I asked Eckert, the Wal-Mart exec, about this.

I mean, are you guys, like, becoming a bank?

ECKERT: (Laughter). We have no plans or intentions to be a bank. I think we're great at being a retailer.

HELM: Of course, offering more banking products doesn't hurt the retail side of Wal-Mart's business. Alicia Scott, the woman who won a thousand bucks through the Wal-Mart program, she told me that she plans to spend all of that money at Wal-Mart.

Sally Helm, NPR News.

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