CFPB, American Express partner to promote savings

The Consumer Financial Protection Bureau will sponsor a Project Catalyst research pilot, in conjunction with American Express, to analyze the effectiveness of certain practices designed to encourage positive saving habits.

The research will focus on saving behavior among low- and moderate-income prepaid card users who often do not have access to traditional savings accounts and who may face unique challenges building regular saving habits.

“Developing saving habits can help people reach their short-term and long-term financial goals,” says CFPB Director Richard Cordray. “This project can help us better understand how to promote saving among consumers, especially those who may be low-income and economically vulnerable.”

The Dodd-Frank Act mandates that CFPB work to empower consumers to make better-informed financial decisions. As part of this effort, promoting saving among consumers has been a focus for CFPB. Many consumers, especially those with low incomes, may not have savings accounts. These consumers often must instead rely on a single checking or prepaid account for both day-to-day expenses as well as saving, which can make developing regular saving habits particularly challenging.

As part of the CFPB’s Project Catalyst initiative, American Express has agreed to share insights with the bureau from its trial program focused on encouraging saving among certain prepaid card users. Through its program, American Express is evaluating the effectiveness of a product feature that allows prepaid card users to set money aside in a savings “wallet” that is separate from funds used for regular transactions. The information shared by American Express will be de-identified, and appropriate precautions will be taken to ensure that individual consumers cannot be identified through the data.

The bureau’s Project Catalyst initiative is designed to encourage consumer-friendly developments in markets for consumer financial products and services. The bureau views this initiative as an important means of fulfilling its mandate under the law to provide all consumers access to fair, transparent, competitive, and innovative markets.

Summary of research project