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On the way home from a ski trip my friend Emily told me she saved $800 over two years without thinking. WHAT?!?
Emily signed up for a Bank of America program called Keep the Change. It puts aside the change rounded up to a dollar from every purchase she makes with her debit card. So if her groceries comes to, say $32.50, Bank of America takes $.50 from her checking and puts it into a special savings account. If she spends $12.03 on lunch, $.97 is deposited into her special account. If gas cost $28.46, she automatically saves $.54.
Each time she makes a purchase with debit, she doesn’t have to approve the deposit or even think about it. Over time, Emily’s little chunks of money grew to $800. It helped that for the first three months, Bank of America matched her contributions 100%. That’s free money! After three months, the match falls to 5% up to $250 per year. B of A is one of many banks that offer this type of automatic savings program. The Armed Forces Bank and Academy Bank have a Saving Cent$ program.
There are lots of caveats to the B of A program, however. To participate, you need to have or open a B of A savings account and checking account with a debit card. Purchases with rewards or ATM cards are not eligible for matching. A minimum balance of $25 is required upon opening. Matching funds will be reported to the IRS on Form 1099 and fees may reduce earnings. You can open up to five of these accounts per person or household, whichever is less.
But before you run out and sign up for Keep the Change, there are a few things to watch out for:
- The annual percentage yield is very low, a half of one percent (.05%).
- The money you are saving is transferred to you once a year on the anniversary of the date you opened the account. So you don’t have access to the money a very long time.
- You may face fees if you do not meet minimum deposit or other requirements.
This program, and others like it, are not new. B of A’s Keep the Change program dates back to Dec. 2005. I have never used this type of savings account and prefer to take out a chunk each month by automatic deposit. But for folks who struggle to pay themselves first, this may be a good first step.
Have you use this type of savings program? Would you recommend it?
January 14th, 2011 at 8:54 am
Great concept for keep the change but I found that basically all the change I got from the month ended up going to fees charged by bank of america because I did not have the required minimal amount for free savings. So Peter was robbing Paul. Just another way of our major companies sucking more money from the hard working tax paying Americans. Sorry but true
January 14th, 2011 at 10:09 am
I’m signed up with this program too, and while I’ve saved “$634 without thinking”, it also was spent. And like Ron said, it gets eaten up by fees.
January 14th, 2011 at 12:14 pm
Past negative experiences with BofA would keep me from ever having dealings with them again. It’s all about fees and hidden charges, so unless you always read all the fine print, you’ll find you’ve lost more than you’ve gained. Also, be sure to check your monthly statement with a fine-toothed comb, as BofA is infamous for making clerical errors, and it can cost you a bundle!
January 14th, 2011 at 3:24 pm
I actually heard about this program, but didn’t want to switch banks. So I did it on my own. Every entry in my checkbook, I rounded up to the next dollar, and just kept track of the change in the back of my register. I use my debit card constantly, and it seriously adds up. Plus no fees! I left about $200 in my account as “phantom money” (aka my own personal overdraft protection plan, if you will) and move the remainder out every few months to my savings account. It’s worked out very well for me!
January 15th, 2011 at 3:19 am
“The money you are saving is transferred to you once a year on the anniversary of the date you opened the account. So you don’t have access to the money a very long time.”
Just an FYI, I participate in B of A’s Keep the Change program, and the above statement isn’t completely accurate. While B of A’s matched contributions are only transferred to your savings account once a year, the change saved (from your purchases being rounded to the nearest dollar) is available in your savings account anytime. Just thought your readers should know!
January 15th, 2011 at 11:58 am
I have saved over $1,000 on this program. I have been happy with it.
January 16th, 2011 at 6:21 am
You can do this for yourself, can’t you? I build a “buffer” in my checking account by rounding transactions up to the next dollar in my check register. Whether I cut a check or use the debit card, I round up the amount I pay out to the next dollar. I have free checking anyway (for now) so I don’t have to worry about fees. At the very least it builds in a safeguard against bounced check fees, etc.
January 16th, 2011 at 5:03 pm
I love this program, and I have never had any fees. I keep the minimum in my savings to avoid that. I have saved over 600 as well. If you already have a B of A checking & savings you should totally do this.
January 18th, 2011 at 12:16 pm
I enrolled into this and I love it. I avoid the monthly fees by having monthly scheduled transfers from my checking to savings (min. $25) which I was already doing. Also you have to have the discipline not to touch the savings in order for it to stack up. Your savings is always available however it is what BofA matches that becomes available on your anniversary.