The Bank of America is introducing a new way for Visa debit card holders to save money when using their debit card. This new program is called “Keep the Change” and it is predicted to save debit card holders approximately $250 a year.
When a person purchases an item and pays by debit card, the total amount of the purchase is rounded up to the nearest dollar. The difference in change is put directly into the person’s savings account. For example, if a person makes a purchase for $8.75, the sum can be rounded up to $9.00 and the extra 25 cents will be deposited directly into the person’s savings account. This may not seem like much, but as the person uses his or her debit card more and more the extra change will add up. The change will not go into the person’s checking account, rather it will be added to their savings account.
Bank of America is also proposing another way to increase the amount of money in their Visa debit card holders saving account by matching the amount they save from the “Keep the Change” program. For the first three months Bank of America will match the consumer’s savings at 100 percent. After the first three months are over, Bank of America will continue to match five percent every year.
This new program sounds very rewarding to some people. Sophomore Chris Sweeney said, “The “Keep the Change” program, in the long run, is designating specific amounts of money to your savings account, little by little. Then at the end of the year, you have a nice sum of money.” Sweeney compared this idea to saving all his pocket change. He said, “It’ll all add up. I saved my pocket change for three years one time. When senior week came around I cashed it in for $351!”
John Heiberger, associate professor of business, took a similar view on “Keep the Change” as Sweeney. Heiberger said, “As students in my personal finance class learn, the secret to financial success is in doing small things.” Heiberger also thought that the important aspect of “Keep the Change” is that it encourages people to save. He said, “Americans are generally poor savers which create all kinds of problems for our economy in general and them in particular.”
However, there are some skeptics who see some negative aspects to “Keep the Change.” Some believe that the only reason that Bank of America is creating this program is to encourage consumers to use their debit card. This will benefit Bank of America because every time a person uses their debit card, the bank receives a profit.
Ed Mierzwinksi, consumer advocate and program director for the U.S. Public Interest Research Group, agrees with the claim that the bank is trying to gain profit. Mierzwinksi said, “The savings are diminished compared to how much more the bank will make in these transactions.”
Many people also feel that this ultimately makes items more expensive. For, example, a person makes a purchase for $12.50, if they pay with cash it will be the exact amount. However, if they pay with debit card and round up, the purchase ends up being $13.00.
According to a story by the Associated Press, the spokeswomen for Bank of America refused to comment on this claim. Bank of America also would not release the number of people enrolled in “Keep the Change.”
Sophomore Brittany Caprice, an elementary education major, said she would definitely take part in “Keep the Change.” Caprice said, “I think this is a great idea. At the time, that extra 20 cents or so is not a big deal but as you keep using the card, all of that money adds up. This way you have money saved up for a rainy day!”
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Posted to the web by Shane Evans