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

Abstract

Children’s savings accounts (CSAs) are designed for accumulating higher education savings with specific incentives and explicit structures to encourage savings, but often benefit low-income families the least because these families’ saving efforts are often hurdled by their scarce financial resources. To address this issue, some CSA programs recently experimented with grocery store rewards cards that pay a percentage of purchases directly to CSAs. This study conducted two cluster randomized trials using household-level random assignment to test the impact of a rewards cards program at two different locations: Wabash County Indiana and the City of St. Louis. Findings show the treatment group in Indiana had a greater than three-fold increase in savings activity in CSAs, and in St Louis had a greater than seven-fold increase in savings activity in CSAs. These findings suggest that rewards cards can be an effective strategy for engaging families of different backgrounds in saving activities.