SAN DIEGO, Calif. — Savings programs might be more successful if they are linked to credit programs, said Sarah Shirley, director of the Consumer Federation of America's Military Saves program. Shirley addressed the Defense Credit Union Summit this morning as part of NAFCU's 41st Annual Conference.
"Our culture is so credit dependent, it might not make sense to stay so hard line on separating saving from the use of credit. Instead, maybe we should admit we're a credit dependent culture, and use it to our advantage," she said.
Shirley recommended modifying existing programs to encourage saving for specific purposes. For example, an auto loan might include a savings allotment designated for repairs and maintenance.
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She also lauded credit unions that have "stood rates on their heads," offering higher dividends for lower balances, and those who have set stricter rules for savings withdrawal.
"People don't like to be treated paternalistically, and that's why payday lenders are so popular, because customers don't get a lecture," Shirley said. "Humans seem to respond better to incentives than punishment, so if you can incent instead of punish, that's the way to go."
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