Panel Paper: Transforming Spending into Saving: The Impact of Rewards Cards on Saving Outcomes of Participants in Children’s Savings Account Programs (CSAs)

Friday, November 9, 2018
8228 - Lobby Level (Marriott Wardman Park)

*Names in bold indicate Presenter

William Elliott1, Nicholas Sorensen2, Megan O'Brien1,2, Elizabeth Burland1 and Briana Starks1, (1)University of Michigan, (2)Center on Assets, Education, and Inclusion

Children’s Savings Account (CSA) programs are interventions that seek to build assets for children to use as long-term investments, particularly for postsecondary education (Sherraden, 1991). However, the provision of CSAs results in family savings rates between 8% to 30% for opt-out CSA programs and about 40% to 46% for opt-in CSA programs. CSA programs have sought to use a variety of program features (such as matches and incentives) to solve the problem of limited saving engagement, particularly among low-income families. However, these approaches cannot fully overcome the fact that low-income families have little or no money to save after they pay for basic needs such as food, clothing, and shelter. Rewards cards might be one way to address this problem. They are a low-cost intervention that provides users with a rebate that goes directly into their CSA each time they make a purchase at a participating grocery store. This study addresses the question: What is the impact of providing rewards cards to families of students with CSA’s in regard to whether or not families make a contribution to their child’s CSA, the number of contributions to CSA’s, as well as the average amount of contributions, total contributions, and total assets within the CSA? To answer the question, 1,962 CSA account holders were randomly assigned to receive a rewards card (treatment) or to continue their normal use of their CSA (control). Findings from this study make an important contribution to understanding whether or not rewards card can address one of the most important questions in the CSA field today, low savings rates.