Saving Your Change

genchan · #1 (**permalink**) 10-06-2005, 08:21 AM

I just read about the bank of America new account that rounds up your debit card purchases and puts it in your savings in the news

<A HREF="http://www.savingadvice.com/forums/showthread.php?goto=newpost&t=9542">LINK</A>

What do you think about this. Is it good? Am I missing something hidden where it could cost me a lot of money?

sweeps · #2 (**permalink**) 10-06-2005, 11:36 AM

Seems like a bit of a gimmick to me. I'd prefer to stick with my rewards credit card. (Remember the 5% match only is for the roundup, not the entire purchase.)

But I guess if you're already using a BoA debit card for purchases, then having them kick in free money is a nice bonus.

BAGAGT1 · #3 (**permalink**) 10-07-2005, 10:50 AM

Hmmm. My first thought was GREAT!!! maybe Americans will save more money, then I thought, what if the thought of getting a "free" round-up makes you spend more money? Afterall, there has to be something in it for BOA right?

ken1706 · #4 (**permalink**) 10-07-2005, 12:23 PM

Banks charge merchants 1% to 2% for each debit card purchase. So BOA will make money if people start using their debit cards more. And since BOA's savings account only pays 0.5%, it won't cost them much in interest.

The first 3 months in which BOA matches the change 100% is a good deal. After the first 3 months they only match 5%. If you make 1000 debit card transactions a year and if the average change for each transaction is 50 cents, you'll only get an extra $25 ($500*.05). Probably better off using a rewards credit card.

jmjj215 · #5 (**permalink**) 10-07-2005, 03:31 PM

If all of your purchases were exactly $.50, (and not considering the three month 100% match, but looked at in the long-term) you would make the same from a 5% rewards card or the Keep the Change program. Is this information useful or realistic? Not really

You would've saved more money w/ the KtC program though - something to think about. People like automatic savings and this is one way to do it.

BofA's motive? This increases their deposit balance, which means they can make more loans w/o encroaching on required reserves, which means they make their money from the interest on those loans.

robby · #6 (**permalink**) 10-07-2005, 04:32 PM

Quote:

Originally Posted by jmjj215

If all of your purchases were exactly $.50, (and not considering the three month 100% match, but looked at in the long-term) you would make the same from a 5% rewards card or the Keep the Change program.

Please correct me if I'm wrong, but the way I read it is the 5% is on the money that they put into your savings, not the total purchase. If you purchase something for $49.50, they would credit your account with 2.5 cents, not $2.50

Tree0164 · #7 (**permalink**) 10-08-2005, 03:46 AM

It is just the change portion that will be getting the 5%.

I have a BOA debit card and we do use it all time, so for us it would be extra few dollars a year. Probably won't change my spending at all.

jmjj215 · #8 (**permalink**) 10-08-2005, 12:23 PM

Quote:

Originally Posted by robby

Please correct me if I'm wrong, but the way I read it is the 5% is on the money that they put into your savings, not the total purchase. If you purchase something for $49.50, they would credit your account with 2.5 cents, not $2.50

That's right Robby. And the way to maximize that (the least you could spend to get that 2.5 cents) would be to purchase $.50 items. So for every $.50 you spend, they give you 2.5 cents (5% of the 50 cent roundup) which is 5% on your purchase. That will never happen - just a thought though.

jmjj215 · #9 (**permalink**) 10-08-2005, 12:24 PM

I think we're missing that they also move money from your checking account into your savings account as part of the roundup. You spend $49.50 on your checkcard, they will pull out another $.50 from your checking account and put it in your savings, then match that by 5%

sweeps · #10 (**permalink**) 10-08-2005, 02:05 PM

Quote:

Originally Posted by jmjj215

That's right Robby. And the way to maximize that (the least you could spend to get that 2.5 cents) would be to purchase $.50 items. So for every $.50 you spend, they give you 2.5 cents (5% of the 50 cent roundup) which is 5% on your purchase. That will never happen - just a thought though.

The way that I read it is that they will always round up, so your best bet would be to buy a $.01 item a couple thousand times. I don't think you're going to find too many merchants that will let you do that though.