Encourage saving through education

By John K. Sorensen

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The Iowa Legislature is considering a bill that would allow financial institutions to conduct raffles as an incentive for Iowans to deposit money in a savings account. Iowa credit unions argue that tying personal savings to a game of chance is in a consumer's best interest. But Iowa banks believe there is a better way to encourage saving - and it starts with financial education.

April is National Financial Literacy Month, and Iowa banks believe that empowering Iowans with the skills for long-term financial success is the key to developing savings habits that will last a lifetime. That's why 97 Iowa banks committed to teach savings lessons in local classrooms as a part of National Teach Children to Save Day on April 12.

It's also the reason one Iowa bank invested $500,000 to develop a financial literacy institute dedicated to enhancing financial education within the bank's local school district.

And it's why dozens of banks across the state are sponsoring an innovative online financial literacy platform for local high schools as a part of the Iowa Financial Literacy Program. The program will enable hundreds of Iowa high school students to become certified in more than 600 topics of personal finance, equipping them for long-term financial success.

Bankers support these initiatives because we view financial education as an investment in the future of Iowans. We urge Iowa legislators to recognize that Senate File 490 is counterintuitive to our state's financial literacy efforts.

Does our state want to encourage consumers to select a financial institution with the biggest raffle payout rather than the best savings option or the best interest rate? Does our state want to encourage financial institutions to attract deposits by offering a chance at a large cash prize rather than offering more competitive interest rates for all customers?

Unlike hard-working Iowans, credit unions are exempt from paying state and federal income tax. Offering a $100,000 raffle prize to one lucky winner is not an appropriate use of the credit unions' tax exemption. The Legislature should instead be ensuring that the tax exemption with which credit unions are entrusted is being used to the benefit of all credit union members, not just the ones who have the resources to save the most money.

The solution to a better financial future starts by empowering Iowans with financial education - not by offering a game of chance.

John K. Sorensen is president and CEO, Iowa Bankers Association. Comments: jsorensen@iowabankers.com