Simple messages designed to encourage customers to use prepaid cards to save at tax time increased the likelihood that they would do so, according to results of a study released Tuesday by the federal consumer financial protection agency.
The Consumer Financial Protection Bureau (CFPB) said its study, conducted with the tax preparation company H&R Block during the 2017 tax filing season, showed that early messaging and small incentives were effective at encouraging some customers to save using the savings feature on their prepaid cards.
The study was conducted, CFPB said, with three groups. One group received an email with a message encouraging them to use a savings feature on the prepaid card; another group received an email message offering a $5 incentive to save on the card; the third group received a savings message.
The agency said the message that included the incentive offer was most effective at encouraging customers to save using their prepaid cards. However, it said, the message simply encouraging customers to save also increased the number of customers who saved on the prepaid cards compared to customers who were not sent any savings-related message.
CFPB added that the subset of customers making a deposit into the savings feature before tax time were much more likely to make a deposit at tax time than those customers in the trial who did not make a deposit into the savings feature before tax time.
CFPB reported that at the end of December – eight months after the end of the trial period – the 24% of savers who still had money in the savings feature on their prepaid cards averaged more than $105 in savings. Customers who consented to provide their tax information for research purposes and those who received a larger earned income tax credit were more likely to save. Those who used a refund anticipation check were less likely to save, CFPB said.