Behind the Times - I learn about Keep the Change

By Andrea Karim on 1 February 2007 (Updated 10 June 2007) 26 comments

I tend to ignore most promotions that banks send my way. I use Bank of America for my primary checking account, and they often interrupt my online banking log-in to try to sell me on some kind of promotion, and it’s usually crap.

So it was with Keep the Change – I just assumed that it was another little gimmick that wasn’t worth a second glance, and I would sigh heavily whenever the advertisement prevented me from immediately seeing my account balance when I logged into my online checking account. It wasn’t until a friend told me that she was participating that I started to pay attention.

(Now, to show you just how out of it I am, Keep the Change launched in October 2005, and I’m blogging about it in January 2007. The fact that I know what a "blog" is should probably be surprising. Aren't you glad that I get paid fractions of pennies per day to give you financial advice?)

Keep the Change works like an electronic version of a change jar, but a change jar that doubles the amount that you throw in there. You know how you hear that when you pay cash for something, if you ALWAYS put your leftover change in a jar, at the end of a year, you’ll have several hundred dollars saved up? That’s true if you are the cash-paying type – I’m not, although that may change over time. I tend to use my debit card for everything. And this is where Keep the Change comes in.

Keep the Change pretty much works like a change jar. Every time you pay for something with your B of A debit card, Bank of America will round the total up to the next dollar (no matter what the amount) and deposit the difference in your savings account. So, if your morning latte comes to $3.13, an extra $0.87 is taken from your checking and deposited into your savings account.

So, initially, they take extra money out of your checking account and deposit it into savings. This isn’t really revolutionary, but it’s not a bad idea. What makes it a GOOD idea is that, for the first 90 days, Bank of America will 100% MATCH those rounded-up cents. After that, they’ll match 5% of what is transferred into your savings.

That’s free money. If you’re already a Bank of America customer, and you’re like me, and you tend to ignore most promotional offers because you don't trust your bank, and you're not enrolled, then you should consider it.

From the Bank of America website:

Earn a promotional match up to $250 per anniversary period for each checking account with the Keep the Change savings service. You will not receive the matching funds for: a) credits or other adjustments related to POS purchases, such as those for purchases that are cancelled or returned; b) purchases of cash-like items, such as money orders, traveler’s checks, foreign currency, cashier’s checks, gaming chips, and other similar instruments and things of value; c) Account funding transactions including transfers to open or fund deposit, escrow, or brokerage accounts and purchases of stored value cards. We may terminate the matching promotion at any time without notice.

Pros

  • It makes balancing your checkbook a lot easier. Whole numbers = simple accounting.
  • You save money automatically, without thinking about it.
  • Did I mention that they MATCH the savings earned through the program?
  • Earn as much as you can by tipping – when I go out to eat (every night), I add my tip so that my total comes to exactly one cent over a whole dollar amount - $29.01, for example. That way, Bank of America has to give me $0.99, when the time comes.
  • It appears as though you can go ahead and transfer the money out of savings (although this sort of defeats the purpose of saving the money, and you won’t earn as much interest as if you left it there, but in a pinch, you can grab those funds).
  • You can buy stuff and return it, and still keep the change. There are some restrictions. See the bottom of this page.

Cons

  • There are some catches – if you overdraw your account for a day, you won’t get matched for that day. Only Bank of America checkcards count, so you won’t get it with a regular co-branded Visa.
  • You have to report the promotional matching funds to the IRS (form 1099).
  • They don’t start matching right away. In fact, it might be hard to determine exactly when they start matching. According to the CSR that I spoke to, they will match your funds at the end of your anniversary year – that is, on the anniversary of the day that you opened your account. The matching is fuzzy. I’ve talked to two Customer Service Reps who claim that there is no limit to the amount of money that Bank of America will match. However, on this page, it seems like there is a $250 matching limit.
  • I don’t think it’s really worth it to open a checking and savings account with Bank of America if you don’t already have one. You don’t get great interest rates on savings, and other banks are more than happy to give you better promotional deals.
  • You only make a good deal of money on this if you spend like I do, on tons of little items, many times a day. I do this, but I’m trying hard not to, and trying not to makes it difficult to earn as much money from Bank of America. The other thing that bugs me is the knowledge that banks don’t usually lose money on promotions – there’s a reason why they can afford to give you some free money, and that’s because you give them free money all the time.

I've been enrolled in Keep the Change for a little over a month, and I've set aside a little over $70. Which means that Bank of America eventually has to give me $70, at least. Hey, it's not a lot, but it's a manicure and pedicure, right there.

I should add that if anyone has gotten screwed over by this promotion, please do let me know. I'd love to have something to scream about.

 

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Will Chen's picture

You're not the only person who ignores promotional offers.  I've heard about this program (how can you not, their advertising is everywhere) for a while now but never tried it because I just don't trust most promotions.  But I do trust you Andrea, so I'm going to give it a shot.  Can't ignore $250!  That's at least one trip to the bar.

Andrea Karim's picture

If you go to Target, lots and lots of shoes. Right, Will? Pretty, shiny shoes?

Speaking of which, remind me to send you pics of the ones I got at lunch. They are so cute that I actually let out a little squeal every time I see them.

Will Chen's picture

I do not have a fetish about women's shoes!  That's an ugly, ugly rumor that is only 75% true, at best.

Andrea Karim's picture

I believe my words were "unhealthy and unnatural mental-sexual dependence upon". I don't think I ever said "fetish".

I kid you not, though. Cutest shoes ever. I had been really disappointed in Target's hooker heels that seemed to dominate the Seattle area market for the past five or six months, but the Spring collection is coming in and, DAMN. I'm in love.

Guest's picture
Guest

Keep the Change is only a win during the promotional period over a rewards credit card. Take a purchase of say $5.01. During the promotional period KtC gives you 99cents, a 1% cash back CC gives you 5 cents. Outside the promotional period KtC also gives you 5 cents.

 

Given that the example is probably overly favorable to KtC (most purchases are probably more than $5 and the average KtC bonus will be closer to 5% of 50 cents or 2.5 cents) I would use a rewards CC when possible after the inital period.

 

$70 in 1 month!

 

 

Andrea Karim's picture

Thank you, guest. I agree that a credit card with rewards would be even better. But alas, I cut up all of my credit cards a few years ago and am working on paying off the balance through credit consolidation. So, for those of us who have given up the credit, this is a nice little option.

Guest's picture
Brendan

It just isn't a good deal.  You get 5% back, but only upto spending $5000 a year.  Since I use cards for everything I'm way over that amount.  I'm much better off with a credit card that gives 5%.  

Andrea Karim's picture

Yeah, I totally said that Keep the Change was the best thing in the entire world and that everyone should sign up and that Bank of America is totally awesome and that the program is better than credit card reward programs. That's exactly what I said. I'm glad you were able to see through the lies and speak truth to power.

You know what? Giving up coffee isn't nearly as fun as every said it would be. I apologize, Brendan. I'm just a little short on, you know, patience and understanding right now.

I agree that there are better promotional money-back programs out there. I didn't mean to imply that B of A was doing anything remarkable or altruistic. I'm just saying that for B of A customers who don't usually sign up for B of A promos, this one might be worth it. Especially for people WHO DON'T USE CREDIT CARDS BECAUSE THEY HAVE F'ED UP CREDIT BUT USE THEIR DEBIT CARDS A LOT.

The good think about quitting coffee, however, is that I can start drinking whiskey much eariler in the day.

 

Guest's picture
Shonnie

Thanks for your funny and useful post Andrea. My husband and I enrolled in KtC in 2005 and received our first match in Nov. 2006 ($50+). Though I agree with Brendan that there are other ways to "earn" rewards/cash when spending, I think that the "forced savings" that KtC offers may help some peple develop a habit of saving which many Americans are loathe to do (See an interesting article about saving on Investment News.)

Andrea Karim's picture

Hey, Shonnie,

What a great segway into my next blog post! I meant to post about this yesterday, when I first heard the news. Thanks for pointing it out - I KNEW our readers were really informed.

Guest's picture
RY

Thanks for sharing your experience. I've been a BoA customer for years now and I have noticed this program, but like you I never gave it a thought. And mostly because I didn't hear or read about anyone else using it. So thanks for sharing your thoughts, and the pros and cons.

-RY

Guest's picture
M.Coleman

My wife and I have used the Keep The Change program since its inception...and we LOVE it!! There are NO fees for the automatic transfer that B of A does from Checking -> Savings with this program. Last year, we saved over $650 using this program (we average about $40-$60 per month). Our 100% match for the first 3 months when we got it was over $125!! As you can tell, we use our debit card A LOT!! I think this was a REALLY good idea from B of A. Use the program correctly, and you can save HUNDREDS of dollars EVERY year without even doing anything (although we do "dip" into the savings every now and then when we need to)!!

We have other accounts from other banks that we use quite often, but we use these accounts for the "everyday" things we buy when we use our debit card most often.

It's really not a bad program if you use it correctly. Now if they could offer higher savings rates...they would have a hard-to-beat combination...

Guest's picture
Guest

Remember - you are in effect transferring your own money from your checking account into a savings account. Now, note the interest rate of the checking account and the savings account. The savings account rate currently (Nov. 2007) is .23%. And the checking rate is .25%. Those rates are ridiculously low. They can afford to pay you a matching amount for the first few months to get you tied to the program, because you are earning nothing on you money. (My A.G. Edwards Ultra Asset Account pays me 4.25% and I have checkwriting and a debit card.

The reason BAC is doing this is because studies show that when customers have three accounts at one location , they are less likely to move their accounts. This is all about business. They are not focused on trying to help you save. They are trying to make money for the bank. (Last year the bank earned about $40 Billion in fees.)

Consumer beware. Don't be penny wise and pound foolish.

Guest's picture
Guest

Remember - you are in effect transferring your own money from your checking account into a savings account. Now, note the interest rate of the checking account and the savings account. The savings account rate currently (Nov. 2007) is .23%. And the checking rate is .25%. Those rates are ridiculously low. They can afford to pay you a matching amount for the first few months to get you tied to the program, because you are earning nothing on you money. (My A.G. Edwards Ultra Asset Account pays me 4.25% and I have checkwriting and a debit card.

The reason BAC is doing this is because studies show that when customers have three accounts at one location , they are less likely to move their accounts. This is all about business. They are not focused on trying to help you save. They are trying to make money for the bank. (Last year the bank earned about $40 Billion in fees.)

Consumer beware. Don't be penny wise and pound foolish.

Andrea Karim's picture

Why three accounts? I only have two with Bank of America - I've always had a savings account with them, so it made sense to join up.

I just got my match of $140, and I'm happy enough.

Guest's picture
Daniel

I have been using Keep the Change for almost a year now and am finding I have lost money in the long run.

My socioeconomic status is that I have recently graduated college and use my debit card sparingly. Every few days or so I check my BOA account and see a notice of how much I have saved this month on Keep the Change. The reality of it is that the money I have 'saved' was just money transfered from my checking to the savings. On top of that the bank takes out a $3.00 US fee every month to run this service.

In essence, I lose $3.00 a month just to have my money brought from one account to another. I read above that someone mentioned BOA will match 5% of your savings. If that 5% match is not over $3.00 (meaning you didn't save more then $60.00 a month in your Keep the Change account) you just lost money.

If my information is misplaced, please someone correct me.

Thanks
Daniel

Guest's picture
Guest

Daniel,

I am pretty sure that they do not charge a $3.00 monthly fee. Please correct me if I am wrong.

I know that if you sign up online, the regular checking account maintenance fee is waived for the life of the account with no minimum balance or direct deposit requirement.

Please inform if I am mistaken because I do not want to lose money when I think I am earning money.

Thank you

Doug

Guest's picture
Guest

I was told that there was no maintence fee when someone at the bank talked me into signing up. I just got charged $3 for an account I never used. I am so sick of BOA and their scams.

Andrea Karim's picture

 I've heard similar things from other people recently - I might write a new article about this soon.

Guest's picture
Bobby

Here is what I thought - Whatever you charge (let's say $5.50, the bank rounds it up to $6.00 and give's you the remaining 50 cents.

Here is what happens. You charge $5.50, the bank rounds it up to %6.00, and gives you the 50 cents...from your own account! So their not giving you extra money. Their just giving you your own money!...which you can't get til a year later lol. Sure your having a savings...but it's just transfering your cash.

The good thing is for the first three months they match everything you save, so if you save lets say $60.00 after adding all the change, they'll match that with another $60.00 now (or at least that is what I think so don't depend on me because I could be wrong then). So it's ok if you do this anyway. But if you don't, then I don't think it's that good then. Maybe for the first three months. But after that they match about 5% and then I think they won't go past $250. So once again if something is to good to be true it just might be then .

Andrea Karim's picture

 Uh, yeah, Bobby - no one was under the impression that the bank was giving you money with every transaction. They were simply putting the remainder into your savings account, where it was immediately available for you to use should you need it. They did match up to a certain amount, and THAT money, you couldn't get at for a year. So, they did give you some free money, but that wasn't the point - the point was that you could save money without trying to - automatic deductions from your checking account were put into your savings account, and at the end of a couple of months, you might have a couple of hundred bucks saved.

I've since withdrawn from Keep the Change - I was never charged any fees for it, but I found it difficult to balance my checkbook with the constant transferring of funds from one account to another. Also, I'm much less pleased with Bank of America than I used to be.

Guest's picture
Dave

Initially "Keep the Change" seemed like a great idea. But I didn't use my BoA debit card much and the Regular Savings account they linked to it went largely ignored. I also failed to read the fine print: if you fail to meet certain criteria (not transferring $25/mo into the account, etc) they assess $5/mo fee to your "savings account." Of course this schedule of fees is not disclosed to you up front. So essentially BoA ends up siphoning your change in their coffers through assessing this "Maintenance nce" fee. When I tried to close the account, they would not refund the assessed fees. Looks like BoA kept my change instead!!!

During the Introductory period Keep the Change seems like a great way to pocket some cash. Thereafter, it's not such a great deal. Do the math: you can earn up to 5% cash back with the maximum of $250 dollars. $250 dollars is 5% of $5000. That means in order to earn $250 annually (outside of the promotion period) you would need to perform, at the minimum, 5000 debit transactions where the balance ended in ".00" and $1.00 was transferred through Keep the Change to your "savings" account each time. Of course the actual amount transferred to your account varies significantly (between 1 and 100 cents) and is usually much less than $1, so you can imagine how many annual transactions one would have to perform to actually accrue a substantial amount of money!

Guest's picture
Guest

I signed up on Friday. By Saturday, I had made several purchases with my check card. I checked my acct. oline. Although I was clearly enrolled in Keep The Change--none of the purchase amounts had been rounded up. So, I contacted a B of A representative online.

This is amazing, the rep told me that, yes I was enrolled and on Monday or Tuesday--the "change" would be put into my savings accout. I mentioned that the amounts had not been rounded off in my checking account (I was looking at it online) and the rep. said, they wont be. On Monday or Tuesday, they will calculate the TOTAL amount of change resulting from the purchases, subtract that whole amount from my checking and move it to the savings side of my account. This sounds like a nightmare to track and balance. Im hoping the rep. has misunderstood the process.

Guest's picture
Guest

I had the BoA promotion for about a few months, and for the first couple of months things were fine. However, soon after I started noticing the $3 monthly maintenance fee. Typical BoA scam. I was basically being charged for moving my money around. Lesson learned.

Guest's picture
Bob

Couldn't I just sign up for the program (assuming I keep a decent checking balance), go to the gas station, pump about .01 cent of gas in my car repeatedly for 253 straight transactions. If I average .02 cents of gas per fill up, this would take 256 transactions at the pump and so on. This would allow me to capitalize on the free $250 that BofA would allow during their promotion and then quit the program. I would have to keep 250 dollars in my checking account so I wouldn't overdraft. I'd have to read the fine print (# of transactions, quitting the program, etc). Maybe I can scam BofA for once!!!

Guest's picture
Guest

This promo is not worth risking use of a Debit Card. identity theft is rampant and the last thing you want is to be using your debit card extensively. if the money is stolen, you wont have it for a long time.

and the worst part is the 5% matching after the first 3 months. so the $70 you are talking about would be matched by just $3.5 after the first 3 months. but the bank actually makes 1% interchange fee from the merchants for every $1 you spend. which means say you spend $4.99 . the bank makes 5Cents. but only matches 5% of 1 cent to you.

you should learn more about how banks work before endorsing products. there is no free meal. .. and this one is actually a free meal to BOA not us.