New York City, USA, Aug. 10, 2020 (GLOBE NEWSWIRE) -- No one thinks saving accounts are exciting, right? Who wants to set money aside for the future, when there are so many things to spend our money on right now? In fact, according to a 2019 GOBankingRates survey, nearly half of all Americans have no savings at all. Unfortunately, without sufficient savings, millions of Americans are in a highly vulnerable financial position.
Luckily, Yotta Savings is working to change this. Entrepreneur and co-founder of Yotta Savings, Adam Moelis, says, "Yotta is using the idea of prize-linked savings to help everyday people save far more than they realized was possible.”
So how does the process work?
What Is Prize-Linked Savings?
Prize-linked savings is the concept of offering cash prizes or other incentives to people who deposit money into their savings account. Many people in the U.S. are unfamiliar with the idea of prize-linked savings. This isn’t surprising, since it hasn't been around for very long in America.
The American Savings Promotion Act is what makes this type of savings account possible. This act allows financial institutions to hold contests, in which the more money you've deposited into a savings account, the more likely you are to win cash prizes. This act was made law in 2014.
The Lottery System
Every year, Americans spend $80 billion on the lottery. The average household spends over $640 per year on lottery tickets. All this money goes toward lottery tickets, despite the fact that the chances of winning are very low.
The lottery has a terrible ROI. The reason people buy tickets, though, is because it's fun. According to co-founder, Ben Doyle "The lottery provides immediate hope and excitement. Yotta Savings does that, as well, while also helping people become more financially stable."
For every $25 you save with Yotta in their FDIC-insured account, you get a recurring ticket, which enters you into weekly drawings with prizes ranging from a few cents up to the $10 million jackpot. Unlike the actual lottery, when you lose, you still have a pile of money in your savings account. For anyone who plays the lottery, Yotta offers an alternative that feels similar but offers a much higher long term reward.
Using Human Psychology
Before Moelis began working on Yotta Savings, he had a major interest in behavioral psychology. He wanted to use his knowledge of human behavior to build something that helps people with their finances.
Moelis spoke about how human nature plays a role in his business. He said, "Human nature makes it difficult to adopt habits we know are healthy in the long-run but painful in the short run. Think about exercising. It’s the same thing. The idea behind prize-linked savings is to use psychology to make saving exciting in the short run so that people will get the long-run benefit."
For years, the lottery has used knowledge of basic human nature to make money. Now that knowledge is being put to good use. As Yotta attracts an increasing number of users, there will be a growing number of people who have enough savings to cover emergencies or future purchases.
The Inspiration Behind the Idea
According to Moelis, the idea for Yotta didn't come out of thin air. When asked about the concept he says, "There were two main things that helped us with the concept for Yotta.”
The Premium Bond program was one of those sources of inspiration. This program has been running in England since the 1950s. The British government wanted to encourage savings and thus began offering cash prizes for those who invested in savings. In the United Kingdom, this program is still going strong today, with over $100 billion deposited by over 33 percent of the British population.
Because the U.S. doesn't have any similar government program, the founders of Yotta saw the perfect opportunity to start a FinTech business using the same concept. The success of the Premium Bond program in the U.K. is proof that prize-linked savings really does work.
The U.K's premium bonds can't take all the credit for the idea, however. "Freakonomics," a popular economics podcast, aired an episode in 2017 about the idea of a lottery that was impossible to lose. The podcast asked, "Is America ready for a no-lose lottery?"
Yotta Savings is answering the question asked by “Freakonomics" right now. They believe America is ready for a no-lose lottery and that Americans can improve their financial situation by using this lottery-style savings account.
How Much Can You Win?
Of course, the jackpot prize is worth $10 million. Similar to the lottery, though, the majority of people won’t walk away with quite that much. So how much money do typical Yotta customers make?
While a lucky Yotta customer may earn the $10 million jackpot eventually, for those who aren’t as lucky, there are smaller rewards available. There are weekly drawings and many customers will see small-scale rewards quite frequently.
According to Doyle, “Even if you never win a prize, the return for this savings account is 20 times that of a typical savings account at a large bank like Wells Fargo or Chase.” Because of the lottery system, some customers will see returns that are much higher than that. For a lot of people, the fun part is in that potential.
Name: Adam Moelis
Company Name: Yotta Savings
Telephone: (310) 924-0005