New Products: Making Savings More Automatic
Plenty of start-ups working on ways to make saving even more automatic. From American Banker:
The Digit product’s debut comes as consumer advocates are encouraging the financial sector to develop technologies that help people save. American Express, for example, has created an initiative to reimagine savings for its reloadable prepaid card Serve. Even, which is in pilot mode, will automate deposits to savings accounts on weeks when users have earned more money than they do on average. SmartyPig, in Iowa, lets people create goal-based savings accounts. Qapital, which partners with Lincoln Savings Bank and targets millenials, is readying to launch its savings app in March. And prize-linked savings are now legal for banks in some states.
Might be fun to have students research one of these products (Digit, AMEX’s Serve, Even, SmartyPig, Qapital and prize-linked savings accounts) and report back to the class on:
- How does it work to encourage saving?
- How do the companies make money on these products?
- What are the fees with the product?
- What are the pros/cons of using the product?
- Would you use it? Why or why not?
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.