Finance

How prize-linked savings accounts work for everyday savers

Rive News Research Desk

Published October 27, 2026 · 10 min read

By Rive News / Research desk | Rive News / Published October 27, 2026 at 9:00 AM PKT

Key takeaways

A prize-linked savings account gives depositors entries into cash prize drawings instead of, or in addition to, regular interest.
Deposits are never lost in the drawing: savers keep their money plus any interest, whether they win or not.
Entries usually come in fixed steps, such as one entry per 25 dollars saved, with monthly caps on how many entries one person can earn.

A hand depositing a coin into a piggy bank savings account

A hand depositing a coin into a piggy bank. Photograph: the piggy bank shown

Image Credits: Wikimedia Commons

This is general educational information, not financial advice.

What a prize-linked savings account is

A prize-linked savings account is a savings account that replaces some or all of its interest with entries into prize drawings. Each deposit earns chances to win cash, while the deposit itself stays safe in the account.

Wikipedia defines the product plainly: a prize-linked savings account is one in which some of the interest payment on deposits, or marketing dollars, are distributed as prizes based on chance. The account works both as a sweepstakes and as a savings vehicle, since the deposit is never lost, unlike a normal lottery ticket.

This article explains how prize-linked savings accounts work, including the entry mechanism, the US programs that made them famous, the legal rules behind them, and the trade-offs compared with ordinary savings.

The core mechanism: deposits become entries

The mechanism has three parts.

First, the saver deposits money into an account at a participating bank or credit union. Second, each qualifying deposit earns entries into scheduled drawings. Third, winners are drawn at random, and everyone else keeps their savings.

The entry step is usually fixed. In the best-known US program, Save to Win, each 25 dollar increase in the account balance earns one entry. People Driven Credit Union states the same rule for its Save to Win options: one entry for each qualifying 25 dollar increase in the account or certificate balance.

Caps limit how many entries one person can earn. People Driven Credit Union caps entries at 100 per month, and AmFirst reports the same monthly cap, with 300 entries per quarter and 1,200 per year for its annual drawing.

Drawings run on a schedule, typically monthly with larger quarterly and annual prizes. AmFirst awards 1,500 dollars and 500 dollars to monthly winners and 2,500 dollars to a quarterly winner in its own drawings, alongside national Save to Win drawings.

The interest treatment varies. Some accounts pay a small base interest rate plus prize entries, while others pay no interest and put the whole return into prizes. Either way, the principal remains the saver's money.

Why the idea appeals to savers

The appeal is psychological as much as financial. A lottery ticket offers excitement but guarantees a loss for nearly every buyer, while a prize-linked account offers the same excitement with the money intact.

Research behind the first US program found a striking audience. During the research for Save to Win, 56 percent of participants were non-savers before the program, according to Wikipedia's summary of the program's history.

That finding shaped the pitch: prize-linked savings reach people who do not respond to interest rates alone. A small chance of a large prize motivates deposits from people who would otherwise spend the money.

The structure also suits small, regular saving. A 25 dollar entry step turns a modest deposit into a tangible chance, and monthly drawings give frequent feedback that keeps the habit going.

For institutions, the prize pool is funded from interest that would otherwise be paid out in small amounts to every saver, or from marketing budgets. Pooling that money into prizes costs the institution roughly the same while changing how savers perceive the return.

The US story: Michigan, Save to Win, and federal law

The first large-scale prize-linked program in the United States launched in Michigan in 2009 under the name Save to Win. Wikipedia records that it was created as a demonstration by Commonwealth, the Filene Research Institute, and the Michigan Credit Union League, following research by Harvard Business School professor Peter Tufano.

The Michigan program spread to other states in the following years. Nebraska launched its own Save to Win program in 2012, and other statewide credit union programs followed in 2013.

State law was the first hurdle, since lotteries and raffles are regulated state by state. By 2013, eight states had authorized financial institutions to offer prize-linked accounts, and the number kept growing.

Federal law was the second hurdle. The American Savings Promotion Act, signed into law in 2014, removed obstacles in federal law faced by state-authorized programs. The act used the term "savings promotion raffle" for these accounts.

By 2018, 33 states had passed legislation or taken legal action to ensure banks and credit unions could offer savings promotion raffles, according to Wikipedia. In some states only credit unions may offer them, which is why the best-known programs still run through credit unions.

Eligibility rules still vary by state. People Driven Credit Union requires members to be at least 18 years old and to live in a state where prize-linked savings is permitted, and similar age and residency rules apply across programs.

Savings accounts, certificates, and round-ups

Programs usually offer more than one version of the account. People Driven Credit Union offers three: a Save to Win savings account, a Save to Win certificate, and a Round Up to Win option.

The savings account version is flexible, allowing deposits and withdrawals like an ordinary savings account. Entries come from balance increases, so money added during the month earns entries even if some is later withdrawn.

The certificate version works like a 12-month certificate of deposit. It requires a 25 dollar minimum opening deposit, and early withdrawal penalties may apply, which makes it better for money the saver can leave untouched.

Round Up to Win links saving to spending. It rounds eligible debit card purchases to the nearest dollar and deposits the spare change into the savings account, where each qualifying 25 dollar increase earns an entry.

Some programs also run their own member-only drawings alongside national ones. AmFirst, for example, awards its own monthly and quarterly prizes in addition to entering members in national Save to Win drawings.

What it costs and what you give up

The main cost of a prize-linked account is opportunity, not fees. Money in a prize-linked account usually earns less interest than money in a competitive ordinary savings account, because part of the return funds the prizes.

That trade is the whole point of the product, but it deserves a clear-eyed look. A saver who deposits steadily and never wins ends up with less interest than a saver in a high-yield account, even though both keep their principal.

The odds also deserve honesty. Winning is random, and earning entries does not guarantee a prize, as People Driven Credit Union states directly. Most participants never win a large prize, and the expected return of a prize-linked account is typically lower than a plain savings account paying market interest.

Liquidity differs by version. Flexible savings versions allow withdrawals, while certificate versions penalize early withdrawal, sometimes reducing earnings. Savers should check whether withdrawals cancel entries, since rules vary: AmFirst notes that withdrawals do not remove entries already earned, but other programs may differ.

Deposit insurance still applies where the institution is insured. People Driven Credit Union notes that its savings are federally insured to at least 250,000 dollars by the National Credit Union Administration, the credit union equivalent of bank deposit insurance.

Prize-linked savings outside the United States

The idea is older than the US programs. Prize-linked savings have a long history in Europe, where premium bonds in the United Kingdom have offered prize-based returns since the 1950s.

The Heritage Foundation's analysis of the idea notes that the concept successfully encourages bond sales in many European countries, and it describes the US credit union programs as a later adoption of the same principle.

In the UK system, savers buy bonds that enter a monthly prize draw instead of earning interest, with prizes ranging from small amounts to a million-pound jackpot. The bonds themselves remain redeemable in full.

Other countries have run similar programs through banks, postal savings systems, and state lotteries. The common thread is always the same: the saver keeps the principal, and chance decides who gets the pooled return.

Who benefits most, and who should skip it

Prize-linked accounts help most the saver who otherwise would not save at all. For someone with no savings habit, a prize-linked account that turns deposits into a game can build a balance that interest alone never motivated.

They also suit savers who value the excitement and accept lower interest as the price of it. A saver who enjoys the monthly drawing and treats prizes as a bonus, not an expectation, gets the product's full psychological benefit.

They suit less the saver chasing the highest return. A saver with an established habit and a large balance will almost always earn more in a competitive high-yield savings account, since the prize pool cannot beat market interest on average.

They also suit less the saver who needs the money soon. Certificate versions lock money up for 12 months, and early withdrawal penalties can erase the benefit of the prize entries.

A pink piggy bank. Photograph: the piggy bank shown

Image Credits: Wikimedia Commons

Frequently asked questions

Do I lose my money if I do not win?

No. Deposits stay in the account whether you win or not, plus any interest the account pays. That is the key difference from a lottery ticket.

How many entries do I get per deposit?

It depends on the program, but 25 dollars per entry is the standard in US Save to Win programs. A 100 dollar deposit increase typically earns four entries, subject to monthly caps.

Are prize-linked savings accounts legal everywhere?

No. They are permitted only in states that have authorized them, and eligibility usually requires being at least 18 and living in a permitted state. Programs in other countries follow their own national rules.

Is a prize-linked account better than a regular savings account?

It depends on the goal. It is better for building a saving habit when interest alone does not motivate, but worse for maximizing return, since part of the return funds prizes instead of interest.

The bottom line

Prize-linked savings accounts swap some interest for a chance to win, turning each deposit into raffle entries while keeping the money safe. The model has grown from a 2009 Michigan experiment into programs across dozens of states, because it reaches savers that interest rates alone do not.

Treat the prizes as a bonus, not a plan. The account succeeds when it builds a balance that would not otherwise exist, and it disappoints only when it is mistaken for an investment.

Tags: savings, banking, personal finance

Rive News's research desk covers everyday science and practical how-to topics, drawing on public sources and financial guidance.

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Standards: facts are drawn from cited public sources; corrections are published when an error is found.

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