Providing small financial incentives to save can lead to lasting savings habits, according to a study of American Express prepaid card users released today by the Consumer Financial Protection Bureau. The study examined savings behaviors of customers using AmEx’s Serve prepaid card and their use of a new feature, called Reserve, that allowed customers to set aside designated savings funds within the prepaid account.
According to the bureau, use of the savings wallet more than doubled for customers offered a small financial incentive — in this case, $10 to enroll. Balances tended not to decrease over the three-month pilot period, and after nine months, the typical balance in the savings wallet was $100. The program helped customers set aside funds for unexpected emergencies too, the CFPB found, noting that payday loan use fell by 20 percent for customers offered a savings incentive and by about 40 percent for those both offered an incentive and proactively encouraged to use the savings wallet.