Banks offering plans that deposit money into a savings account every time you spend money are encouraging their customers to build up their savings account, which is a good thing. But when the Consumer Reports Money Lab researched competing plans it found that most of them aren't the best solution for people serious about saving. Here is a summary breakdown from the November issue. Have you participated in programs like these?
- Bank of America's Keep the Change: The bank rounds up purchase amounts to the nearest dollar and transfers the difference to your savings account, so if a total purchase is $332.49, 51 cents will be transferred to your savings account. The interest paid on the basic savings account was recently .2 percent and 1.75 percent for the money market account, so even though the bank matches the transfer amount for the first three months and five percent after that, you'd be better off saving in accounts that pay more interest.
- Wachovia's Way2Save: Wachovia moves $1 into your savings account every time you make a debit purchase or pay a bill online. It pays 5 percent interest during year one and a 5 percent bonus, but only pays a 2 percent interest rate after that. After year one, the program isn't going to do much to boost your savings.
- American Express One: Because the card pays 1 percent cash back on purchases but charges a $35 annual fee, you'd need to charge $3,500 to break even. You'd be better off getting a card with greater rewards, minus the annual fee.
Promod
Karen Millen
Pineapple
And all of BoA's savings accounts have so many freakin' fees! It's a mega rip off. Banks are not where it's at when it comes to savings, credit unions are.
1Actually, I've never been charged a fee on my BofA savings account. The Keep The Change program is for people who are awful savers, like myself. The money gets saved without me having to put any actual effort into it, and there's no "Well, I could put another $50 in to savings, or I could go buy a new dress" because it's just change. It actually adds up pretty quickly, though.
2I have BoA's keep the change. My account is free because I set up a monthly transfer from my checking to savings. Of course, because the interest rate is ridiculously low, every month I transfer the monthly checking to savings transfer plus the KTC savings to a higher interest ING account. I save around $10-15 a month w/ KTC--I use my check card for almost everything.
3i don't have a program like this, but i do the saving your change thing on my own and it's so easy. just stop paying for things with change, or giving change to get bills back. every few days i throw my change in a container in my closet and when that gets fairly full, i cash it in at my bank. it does take a while to build up, but last year i cashed my change in for my spring break trip and had almost 200 bucks! of course i didn't earn any interest on it though, but given my horrible savings history, i saved more without any interest than i would have in an account with interest lol.
4I don't know, I'd just rather have an automatic system set up. Like a standard deduction from my account each month - or even set up with payroll a portion of my check to go to savings.
5can i just say that my husband and i just enrolled in way2save and it rocks!!! we did the automatic $100 a month on top of the $1 per debit card purchase! we JUST started on oct 1st and we've already saved $139 so far! sooooo...let's just say we do about $200 a month at 5% for a year...yep, that's a pretty penny at hte end of that year of SAVING! plus, we asked the guy if we could virtually just 'close' the account at hte end of the year and OPEN ANOTHER way2save again...and he said OF COURSE!! soooo, you can beat hte system and get the 5% over and over again! hahaha! so yes...i LOVE this concept...$1 everytime you use your debit is NOT that much! and it ADDS UP!!!!!
6I have Keep the Change and it works fine. I don't pay any fees on my account, except when I make too many transfers in a month, and that's my own fault. I wouldn't rely on this as my only method of saving (I have regular transfers to savings already), but it's a good little bonus, plus you get a little match on the money at the end of the year.
When I signed up for the program I was worried about overdrafts - but if you are near a zero balance then they don't make the KTC transfer for the day. (Yes, it's sad that I know that ...)
7I hate Wachovia. They automatically signed me up for this saving thing when I had to replace my old account [which was free checking that someone compromised]. I hate keeping a minimum balance in an account of a bank that doesn't even have an adequate number of branches in NYC. I can't access my money except making purchases, and I'm already on my third ATM card this year because the damn things keep failing on me. No thanks to Wachovia I end up using my check card for my other bank because the Wachovia card never works properly.
8I've never really understood these plans. I like making my own decisions about where my money goes.
9I have a pretty high interest savings account and just link it to my checking account so I transfer money before I have time to spend it.
10i kinda do this with my cash transactions like coffee & lunch. i put away the coins + $1. at the end of the month, the coins go to a starbucks card & i transfer the value of the bills to my ing savings account.
11i've contemplated doing BoA's keep the change thing but honestly, i don't know how i feel about having money automatically transfered when i use my card - so i haven't signed up. i do appreciate that you've shared a bit of insight on this one though so it validates my decision - since i know that i could be saving more in other ways.
12Wow, very eye opening. Thanks. I think I'll just keep stashing money in my ING account. I set it up so it deducts automatically so it's just as mindless as these.
13Post New Comment
Please share your opinion with our community, but make sure it is on topic and follows our Community Rules. We moderate comments and prohibit personal attacks, threats, spam, lewd images, or the promotion of your personal website.