As a former Certified Financial Planner, I can tell you that from a financial advisor standpoint, nothing is better than automatic. Automatic savings, automatic investing, automatic 401k, automatic bill pay, are all great ways to improve your personal finances.
It seems like the financial industry agrees. One such automatic savings program comes from Bank of America and is called Keep the Change Savings Program. It works similarly to the Acorns automatic savings and investing app, but with a few small differences.
Automatic Savings By Rounding Up Purchases
There are a lot of ways to save automatically, including just setting up an automatic transfer to a savings account. However, some people are reluctant to commit to doing so. Ironically, these same people might sometimes be willing to save an equivalent amount of money if it can somehow be seen to be painless. The psychology of money is a powerful thing.
Enter Keep the Change from Bank of America.
Instead of setting up a specific amount to save each money, the Keep the Change program lets you by rounding up your purchases made on the debit card and then transferring the money to your savings account automatically.
So, if you buy lunch for $8.38, then Bank of America will transfer $0.62 into your savings account. Over time, this could add up to some real money if you use your debit card a lot.
Technically, Bank of America keeps track of your transactions for one day and then makes one end of day transfer. So, if you make eight transactions, all eight round-ups will be added together and then one transaction for the total amount will transfer into your savings account.
Why Keep the Change Works
Keep the Change, and this type of automatic savings works wonders for certain kinds of people. Many people don’t actively budget their money, but they do watch their account balance and then adjust their spending accordingly. These are the people automatic round up savings like Keep the Change works best for.
The irony is that if you end up with something like $2 per day average in transfers, it is no different than just setting up an automatic $60 per month savings. But, since the money doesn’t come out right away, in one big chunk, it can seem less intimidating, and therefore more likely to happen.
The biggest catch for Keep the Change is that it will only work with your Bank of America debit card. If you don’t really use your debit card that much, then it won’t really matter.
If you are the sort of person who carefully budgets your money and then spends accordingly, then Keep the Change won’t work very well for you.
In other words, if you spend based on your checking account balance, then Keep the Change will work great for you. But, if you spend based upon a budget, or some other form of overall money management, then you will get no benefit out of the Keep the Change program from Bank of America.
Either way, the only real benefit comes if you don’t transfer the money back out of your savings account. If you are the kind of person who raids their savings account whenever they need more money, then this isn’t going to do anything other than increase the number of transactions you have.
By law, you can only make six withdrawals from a savings account each month. So, if you do need to get your money back out of savings, make sure you aren’t trying to transfer those small daily amounts. Instead, transfer what you need all at once so that you have more transfers if you need them later in the month.