Not long ago, I received an email from Wachovia Bank advertising a new program called Way2Save. It’s one example of the automatic savings programs now being offered by a range of different banks. Here’s how it works at Wachovia:
We’ll transfer $1 from your Wachovia checking account to your Way2Save account when you make everyday purchases like: Check Card purchases; Pay bills online […]; Make automatic payments from your checking account.
Bank of America has a similar program that they’re calling Keep the Change. Each time you make a purchase with your debit card, the folks at B of A round the purchase price up to the next whole dollar, and deposit the difference in a savings account for you.
As we’ve written about before, many Americans are living paycheck-to-paycheck, and may be under the impression that it’s too expensive to save. Automatic savings programs are appealing because, as the name implies, you don’t have to choose to put money in savings – the bank does it for you. By saving small amounts, you can build up an emergency fund over time without taking a chunk out of your budget.
There is a catch, though – most of these accounts have some sort of fee associated with them. For instance, the Wachovia account has a person-to-person transfer fee, a teller service fee, and a monthly fee that applies in limited instances. Bank of America, who markets their program as a free service, will reportedly charge a $5 maintenance fee if your Keep the Change savings account falls below the minimum $25 balance.
These fees are all fairly small and don’t apply if you follow the account rules, so there’s really no reason you can’t start saving today. However, for those whose banks don’t offer automatic savings plans, take heart – the New America Foundation is currently testing a pilot program that would allow you to automatically deduct money from your paycheck and place it in a savings account.
As always, you can learn more about saving by revisiting earlier Econ4U posts under the “Saving Money” category.