Should we pay people to save?

Long ago, people were rewarded for saving. Banks contributed something known as “interest” to the amounts deposited in savings accounts.

OK, technically they still do, but you’d be forgiven for not noticing the tiny amounts added in a low-rate environment. The current average interest rate on savings accounts is 0.06 percent.

Anemic rates may not be a major reason why Americans don’t save enough, but there’s some evidence that better rewards could induce more people to save. Two approaches that seem to work: matching funds and prize-linked accounts.

In my latest for the Associated Press, could rewarding people for saving get them to save more?

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Comments

  1. What a great idea, especially for lower income people. It sure would motivate me to save more!

  2. What a SCAM by Banks & Federal Govt.
    The Banks are being allowed to collect more money, BUT it is not being passed over to the public. Rates which banks could charge are being raised since late 206 OR 2017. BUT banks are not passing those rate increases to the public BUT filling their coffers by making more profits. WHY doe snot the Bank regulatory branch of the Federal Govt. investigate this and take criminal action against Bank CEOs?

    • Liz Weston says:

      Banks have long been slower to pass along rate increases to their savings customers than they are to their borrowers. If nobody went to jail for the mortgage mess, it’s highly unlikely anyone is going to push the banks to boost their interest rates a fraction of a percentage point.