Keep the Change – Yet another way to save money

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First off, a disclaimer…I dont work for Bank of America. That being said, I think their “Keep the Change” program is an incredible way for the “troubled saver” to actually save some money. I think it was back in November of 2005 when I first heard of this program, and we immediately signed up. How does it work? Well, for every debit card purchase that you make, BofA will round up your purchase to the nearest dollar. So when your bill at 7-11 comes to $4.81, BofA will debit your account for $4.81, and transfer $0.19 to your savings account automatically. This in effect makes your bill at 7-11 $5.00. Now, I realize that $0.19 is not a lot of money, but say you make 3 different purchases on your debit card during the day as follows:

7-11 – $4.81 – $0.19 transferred to savings
Grocery Store – $101.02 – $0.98 transferred to savings
Gas Station – $40.32 – $0.68 transferred to savings

Total savings for that one day would be $1.85. If you did the that same amount of purchases every day, you would be saving $1.85 X 30 days = $55.50 per month, or $666.00 PER YEAR.

This to me seems like a no-brainer. I mean, how much would you really miss $1.85 per day? Ever since we enrolled in it, we have not missed the extra dollar or 2 every day, and its been nice to see the savings account go up without even making an effort. This program is great for people that might have trouble putting aside money every time they get paid, as I suggested in my previous post about paying down our debt and saving money.

The added bonus to the Keep the Change program? For the first year, they will match your savings…and for every year after that, they will match 5% of your savings. Free money is ALWAYS the way to go! Its like getting a company match on your 401K, but without having to put the money away yourself..its all automatic, you dont miss the daily withdrawals, and it all ads up in the end.

If you do bank with BofA, please be sure to look into this program. We have socked away hundreds of dollars without any effort, and in a few months we will be getting our matching check…Free Money!

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Comments

  1. Thanks Blazer1986 for your input. However, I must respectfully disagree.

    First off, not everyone can get a credit card at all, never mind one that gives you a % back on your purchases. Sometimes a debit card is the only way to go for some people. We use both, depending on where we are shopping.

    Its not a card to cancel as its a debit card, and you only get your purchases rounded up when used as one.

    You are right that putting $37.50 or $50.00 into an ING or Emigrant account is better…we do that too. But for some people, saving money is a near impossible task, so if they are using this debit card as they normally would use one, its nice that they automatically get to keep a little bit of money at the end of the month.

  2. I agree that this card is really clever, but I’m not sure it’s actually that great of a financial deal. 2 important caveats:

    1. When most people use a card (debit or credit), they have a tendency to spend more money than they would if they paid cash. To learn why, check out “Why Smart People Make Big Money Mistakes…” by Belsky and Gilovich for an explanation. Basically it’s because you’re disconnecting the pleasure of getting something you want NOW from the pain of parting with the money

    2. The match is really small compared to what you would get if you made the same transactions with a cash back card. Let’s say you do 3 transactions/day at ~$10/transaction and the roundup is on average 50 cents. Assuming 300 days of spending, you will have done 900 transactions, spent $9,000, saved $450 of your own money and gotten ~$130 in matching (they only match 100% for 3 months, not 1 year). Going forward you’ll only get $22.50/year in matching money (5% of $450). If you use a 1% cash back card, you would get $90 each year.

    SO…my opinion is that the best thing to do is to get the card and use it like crazy for 3 months so you maximize the match. After that, cancel the thing, get a 1% cashback card and set up an automatic $37.50/month deposit into a higher yielding savings account than BOA’s (I couldn’t find any savings account on their site that paid more than 1% unless you had big balances). You’ll end up with more savings better interest rate.

    That said, switching to paying with cash and setting up an automatic savings of $50/month is probably the BEST thing to do…you’ll spend less AND save more doing this.

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