The program is being initiated with accounts at the Del-One Federal Credit Union.

Everyone agrees it’s a good idea to save for the future. But it’s also recognized that putting money away is not always an easy thing to do.

With the proverbial stroke of a pen, Gov. John Carney has made it possible for Delawareans to save money and be rewarded at the same time.

Those rewards, however, reach beyond just the comfort of having financial security -- they’ll involve cash and other prizes.

House Bill 31, signed by Carney May 2, makes Delaware the 15th state to create what are known as “prize-linked” savings accounts. Carney approved the legislation in a ceremony at the Del-One Federal Credit Union in Dover.

Essentially, it means account holders become eligible for a reward every time they make a deposit in their savings accounts. Del-One is the first, and so far only, financial institution in the state to offer the program at its 10 branches within the First State.

First time in Delaware

This was the second time around for the legislation; although introduced by Rep. Sean Matthews, D-Talleyville, in December 2015, it never made it to the floor for a vote. Matthews brought the bill back along with Sen. Brian Townsend, D-Newark, in January and this time it sailed through both chambers of the General Assembly without gathering a single negative vote. Because it uses a raffle-type system to select winners, it specifically states the prize-linked program is not considered wagering, which otherwise would be illegal, or a type of lottery.

Similar programs have been used in several different countries for more than 20 years. According to the U.S. Legislative Coordinating Commission, the first prize-linked program in the United States, dubbed “Save to Win,” was initiated in 2009 by eight credit unions in Michigan. Account holders who made a minimum $25 deposit were entered into a raffle, with the chances of winning increasing as the number of deposits increased.

In Michigan for example, prizes are awarded monthly with an annual grand prize; in 2016, seven participating credit unions awarded $35,000 in prizes.

Since its inception there, more than 60,000 people in Michigan also have saved more than $140 million, an average of more than $2,300 per account. It’s estimated 56 percent of those with “Save to Win” accounts had never before held a savings account.

Saving responsibly

The program is supported by $tand by Me, a statewide group administered by the United Way of Delaware and the Department of Health and Social Services. The group works to provide one-on-one coaching to help Delawareans achieve financial security.

One of their local customers is Shamica Spencer who, along with her husband, is receiving financial counseling. So far, the couple has saved $2,500 toward the purchase of a new house. They learned how to save responsibly with an eye toward supporting their future, she said.

As clients of Del-One, they’ll be taking part in the credit union’s prize linked program.

“There are a lot of people who have no clue on how to save, and something like this will really motivate them to put their money aside and not spend it on things they don’t need,” she said.

Spencer, who coincidentally had just moved to Delaware from Michigan, hadn’t known about the prize linked savings programs when living there.

If she had, she definitely would have enrolled.

“I feel great about this,” Spencer said.

Before actually signing HB 31, Carney noted that while a congressman, he had voted to approve the federal legislation behind the program.

A fellow congressman, Derek Kilmer of Washington, had encouraged him to look at the idea, Carney said.

“‘The worst that can happen is that people save a ton of money. The best that can happen is they save a ton of money and they get a prize,’” Kilmer told Carney.

“This may be the only time I’ll ever have the chance to sign a piece of legislation here that creates a program, that enables a program here in Delaware, that I actually voted on in Congress to enable states to do in the first instance,” the governor said.

After the ceremony, Spencer received the pen Carney used to sign the bill.

United Way of Delaware Chief Operating Officer Jerry Hunter said Del-One is the only financial institution in Delaware to participate in the program, although others could eventually join.

Del-One leadership took an interest in HB 31 early on, and followed the bill’s progress through the General Assembly, he said.

The credit union is putting up its own money for the program as funding for prizes comes out of its budget.

“To get people to save, they’re making an investment,” Hunter said. “That’s not to say others won’t jump onboard, but others also will have to make the same investment.”

Del-One still is working out the parameters of the program, to include what prizes will be awarded, how often deposits must be made and other requirements, Chief Administrative Officer Stephanie J.S. Preece added.

The opening date for the program will be announced on the credit union’s website.