Association for Public Policy Analysis & Management

We present the results of a large field study exploring consumers’ use of the Reserve “set aside” feature on the American Express (the company) Serve prepaid card. The study aimed to address two key questions: 1) Can certain strategies encourage consumer saving behavior; and 2) Is saving behavior associated with better outcomes for consumers, particularly for low-income and underserved consumers?

 To encourage consumer saving behavior, the company tested four strategies in the field to promote savings to prepaid customers who had not previously signed up for the savings feature. The strategies included: 1) encouragement to save via email; 2) encouragement to save via direct mail; 3) promotional incentives; and 4) encouragement to enroll in automatic transfers to the savings feature.

 Results from the pilot indicate that, in particular, offering customers a $10 incentive for using the savings feature during a 12-week period was highly effective at encouraging enrollment in the savings feature. Non-zero balances remained relatively constant through the remainder of the year, suggesting that for consumers still using the savings feature, balances generally did not decrease even after the treatment period ended.

The company also surveyed a random sample of study participants nine months post intervention to learn more about a broad range of personal finance topics. Results from the survey showed that participants who were sent an incentive offer as part of the messaging reported statistically significantly less payday loan use compared to those in the control group.

 The results emerging from this pilot suggest that incentivizing prepaid card customers to save, and providing an opportunity for them to do so using a savings feature that keeps funds dedicated for saving separate from those used for spending, could provide tangible financial benefits. Consumers in this pilot demonstrated a willingness to take up the savings feature, indicating interest in alternative savings vehicles, and some customers also reported actual changes in their financial behavior.