Bank of America Keep the Change Program Review: Automatic Transfers to Help You Save
You're having trouble sticking to a savings strategy and came across Bank of America's Keep the Change program.
It is an interesting approach offered by one of the country's biggest banks.
While the program is rather simple, you might want to see how it works before signing up.
In this review, we'll take a look at the Keep the Change program to see if it is right for you, in addition to alternatives that might be available.
Here you'll learn:
- How the program works
- What it costs
- Worth your consideration?
What is Keep the Change?
Bank of America’s Keep the Change Program allows customers with both a checking account and savings account to save money automatically.
One of the best ways to build up your savings is to make additions to it on a regular basis.
For many, the truth is:
Making regular additions is one of the hardest parts of saving.
You need to set aside extra money, avoid the temptation to spend it, and actually remember to transfer it to your savings account.
Small, automatic transfers
It does this by:
- Round up the price of every debit card purchase to the next whole dollar value
- The difference in the whole dollar value and the purchase amount is transferred from your checking to your savings
For example, you go out for lunch and spend $10.24 on food.
When you swipe your debit card, your checking account will be debited for $11.
Of that $11, $10.24 will go to the restaurant and $0.76 will be sent to your savings account.
In this way, you will consistently add small amounts of money to your savings account.
The automatic transfers don’t just happen when you swipe your debit card at a store. Your online debit card purchases are also eligible.
You need three things to sign up for Bank of America’s Keep the Change Program:
- A Bank of America checking account
- A Bank of America savings account
- A Bank of America debit card
If you have all three, you can enroll in the program and start taking advantage of the benefits immediately.
If you don’t, you’ll need to open the requisite accounts before you can use the program.
Note: You cannot have the money transferred to an external savings account.
Here's the best part:
There is no direct cost for signing up for the Keep the Change Program. You can sign up and start saving money without paying for the service. There are, however, potentials for indirect costs.
One indirect cost you may face is an account fee.
To sign up for the program, you must open Bank of America checking and Savings accounts. These accounts often charge monthly fees.
While there are ways to avoid the fees, you do have to jump through a few hoops to do so.
If you open an account just to use Keep the Change and are unable to meet the fee-waiver requirements, you could pay a monthly fee of $10. While this isn’t a direct cost to use Keep the Change, it is a fee you wouldn’t have paid otherwise.
Another indirect cost is the fact that the program may cause you to spend more money.
If you start thinking about making purchases as a way of saving, it might be easy to justify spending money on things you don’t need.
You could wind up spending far more because you feel good about saving every time you swipe your card.
This will actually hamper your ability to save and cost you a lot of money.
Should You Use It?
The question of whether you should use the Keep the Change Program can be difficult to answer.
It requires some insight into your spending habits and your self-discipline.
The Keep the Change Program doesn’t do anything beyond move money from your checking account to your savings account.
To be clear:
You don’t get any free money out of the deal.
You’re simply moving your own money between accounts.
There’s nothing stopping you from immediately moving the money back to your checking account if you want to.
There’s also nothing stopping you from doing what the Keep the Change Program does on your own. It simply makes moving money to your savings account more convenient.
If you have good saving habits, it would be better to make the transfers on your own. This gives you more control over exactly how much money you are saving each month.
Where the Keep the Change Program helps is if you have trouble with saving money.
Whether it’s because you don’t remember to move money to your savings or simply have trouble with not spending all your money, the program can help.
However, even in this case, setting up automatic savings transfers can help while giving you more control over the process.
Again, one of the advantages of the Keep the Change program is that you're putting money into savings without knowing it.
It requires minimal effort on your part.
By scheduling recurring transfers, you're doing the same thing, essentially.
The issue is...
The transfer amount is tough to gauge for someone who's checking balance varies greatly from month to month.
So, it is best to start small.
Configure automatic transfers for $10 to $25 per month and slowly increase it as you see fit.
The kicker is:
You can use any online savings account with this strategy.
With online banks paying 100 times what Bank of America savings accounts will pay out, your interest earnings will make a big difference.
Rewards credit card
One major downside of the Keep the Change program is that it forces you to use a Bank of America debit card.
Debit cards can be convenient, but they are generally worse to use than rewards credit cards.
Credit cards offer a number of benefits that debit cards do not.
One benefit of credit cards is that they offer much better consumer protections than debit cards do.
If your credit card is used without your permission, you will not be held liable for the fraudulent charges.
When it comes to building up savings, the bigger argument in favor of credit cards is their rewards.
Rewards credit cards tend to offer between 1% and 5% cash back or rewards on every purchase you make.
Unlike the Keep the Change Program, which simply moves your money around, these rewards are like free money for using a credit card.
Third-party financial apps
There are many new financial companies that have come up with different ways to help people save.
They may have different savings programs that could help you accumulate a higher savings balance.
Comparison of financial apps features
|How it works||Save automatically by analyzing your spending habits||You choose or create "rules" that trigger a savings transfer||Save automatically after each paycheck, after a purchase, or based on spending habits|
|Cost||$2.99/month (free for the first 100 days)||No fees||Pay what you want|
|Interest earnings||1% annual savings bonus paid every 3 months, based on avg. daily balance per quarter||0.10% APY||0.90% APY|
|Deposit insurance||FDIC-insured up to $250,000||FDIC-insured up to $250,000||SIPC-insured up to $250,000|
|Security||128-bit bank level encryption||SSL/TLS bank-level encryption||256-bit encryption|
|Mobile access||Mobile apps on iOS and Android||Mobile apps on iOS and Android||Mobile-friendly browser app (iOS and Android apps on the way)|
The Bank of America Keep the Change Program is a good way for people who have trouble with saving to build up some savings.
There are better alternatives, such as automatic savings transfers, but using the program is better than doing nothing.
If you feel comfortable doing so, a better plan would be to use rewards credit cards to build your savings.
They give you cash back on every purchase and will often let you save faster than the Keep the Change Program would.