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CFPB Releases Research on Tax Time Savings

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) released today the results of a pilot study, Planning for tax-time savings, launched with the tax preparation company H&R Block that shows that simple messages encouraging customers to use their prepaid card to save at tax time increased the likelihood that they would do so.  

The pilot study, conducted during the 2017 tax filing season, randomly assigned a subset of H&R Block’s prepaid card customers to one of three groups. One group was sent an email with a message encouraging them to save using a savings feature on the prepaid card, one was sent an email message offering them a $5 incentive to save on the card, and one was not sent any savings message.  

The study showed that early messaging and small incentives were effective at encouraging some customers to save using the savings feature on their prepaid card. The message that included the incentive offer was most effective at encouraging customers to save using their prepaid card, but the message simply encouraging customers to save also increased the number of customers who saved on the prepaid card compared to customers who were not sent any savings-related message. Further, the subset of customers who made a deposit into the savings feature before tax time were much more likely to make a deposit at tax time than customers in the trial who did not make a deposit into the savings feature before tax time. Although the proportion of savers with money in savings decreased over time, at the end of December—eight months after the end of the trial period—the 24 percent of savers that still had money in the savings feature on their prepaid card averaged more than $105 in savings. Additionally, for customers who consented to provide their tax information for research purposes, those who received a larger earned income tax credit were more likely to save, while those who used a refund anticipation check were less likely to save.  

“One of my priorities is to move the needle in the number of Americans who can cover a financial shock,” said Consumer Financial Protection Bureau Kathleen L. Kraninger. “There are many statistics underscoring the lack of savings, including a recent one by the Federal Reserve showing that 40 percent of Americans would turn to credit to cover a $400 emergency. As the Bureau continues to identify solutions to encourage consumers to save, the results from this study shows that even with small encouragement, consumers will save.”

A link to the pilot study can be found here: https://files.consumerfinance.gov/f/documents/cfpb_planning-for-tax-time-savings_report.pdf


The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.