I was very intrigued a few years back upon hearing about BOA’s Keep the Change program, but I wasn’t about to switch after the issues my wife and I each had with Nationsbank once upon a time. I don’t consider myself one to hold a grudge, but apparently that statute of limitations hadn’t hit yet. So I was pretty psyched when I saw Wachovia was rolling out their answer, Way2Save, and that it actually ups the ante, siphoning off an entire buck for every debit card or bill pay transaction. And pays at a 5% APY, with a 5% bonus at the end of the first year (which scales down in subsequent years) on all money transferred.
That’s the basic gist, and from there it gets rather silly. You can’t funnel other cash into the account with the exception of an extra $100/month. And you can’t set that transfer up online, you actually have to call Wachovia to set it up. And that money has to come from checking, not an already existing savings account. And I think you have to call on the third Tuesday of each month, speak in a Scottish brogue, and answer a few basic trivia questions about the Reformation.
Still, it has its uses. Although the means and restrictions of getting cash into the account mean you’ll never rack up the interest, 5% beats the tar out of what my MMF is yielding these days, so why not throw $100 bucks at it each month? The dollar-per-transaction transfer, while not a subsitute for a routine and automatic savings plan, is still a neat trick to sock a little extra cash away. I’m averaging about $50 a month getting siphoned out of checking, and in increments you really don’t notice. And it provides a psychological firewall of sorts — with less money in my checking account, I’m that much more prone to spend less.
At my current pace, I should be at about $1500 at the end of the first year, which with the interest and the year-end bonus should net another $100. When the rate drops next year, I’ll move it to the MMF if those yields have improved.
It also makes for a really good starting point for teenagers with their first bank accounts, who aren’t prone to saving money on their own. For that matter, adults that have yet to take saving money seriously should give it a look. At worst, they could build up some sort of buffer against unexpected expenses.