Banking with CDs: A No-Risk Gamble
Interested in gambling-but only if you can win and never, ever lose? What's the catch? There isn't one. You can bank on it. Literally.
"Save to Win" certificates of deposit are new savings accounts available at some credit unions in a handful of states. The CDs work like this: You invest $25 in a CD. Your name is entered in a drawing for a cash prize, some annual and some monthly. The larger prizes ranged in the thousands of dollars (up to six figures). You won't always win, but your investment money is never lost-unlike with traditional gambling, that money is always yours.
Thus far, the states that offer this type of savings account include Michigan, Nebraska, North Carolina, and Washington State. Currently, federal laws are such that banks and thrifts aren't allowed to have anything to do with lotteries or gambling.
A proposed law, the American Savings Promotion Act, would allow federally chartered financial institutions to offer the CDs. Supporters of the act believe that it is one way to inspire Americans to save money.
For anyone involved in business, these CDs are good business. Every businessperson-every person, in fact-should have money put away in case of an emergency. Unfortunately, a National Bureau of Economic Research study shows that only about half of all Americans could pull together $2,000 within a month's time if necessary, according to "Save Money, Draw Interest-And Maybe Hit a Jackpot," a McClatchy Washington Bureau article in a July 2014 issue of the Omaha World-Herald. The prize-linked CDs do tack on penalties for early withdrawal-but this is also true of many other types of CDs.
Although the possible prizes are far less than could be won in a traditional gambling venue, the risk is far less, too. In fact, the risk is virtually nonexistent. And if it becomes addictive, well, saving is not such a bad addiction at all.
|
