The Impact of Grocery Store Rewards Cards on Saving and Asset Accumulation in Children’s Savings Account Programs

Abstract

Objective: Although children's savings accounts (CSAs) are designed for accumulating higher education savings with specific incentives and explicit structures to encourage savings, they often benefit low-income families the least because these families' saving efforts are frequently hindered by their scarce financial resources. To address this issue, some CSA programs have experimented with grocery store rewards cards that pay a percentage of purchases directly to CSAs. Method: This study conducted two cluster randomized trials using household-level random assignment to test the impact of a rewards card program in two locations: Wabash County, IN (Study 1: N=1,390 households; 1,817 account holders), and St. Louis, MO (Study 2: N=8,351 households; 9,586 account holders. Results: The treatment group in Indiana had a nearly twofold increase in savings activity in CSAs compared to the control group. In St Louis, the treatment group had a greater than sevenfold increase in savings activity in CSAs compared to the control group. Conclusions: These findings suggest that rewards cards can be an effective strategy for engaging families of different backgrounds in saving activities.