Money To Live

July 28, 2008

Keep the Change?

Filed under: banks — by moneytolive @ 5:00 am
Tags: , ,

Bank of America offers customers an innovative incentive program Keep The Change — the “change” of each debit transaction is moved to a savings account, and Bank of America matches a percentage of your change.

This sounds like a pretty good deal, but it leaves out part of the story — what is the interest rate in the savings account? While your change earns a great rate of return, the rest of your savings will languish.

Here is my analysis on participating in this program for one year and using the savings account as an emergency fund.

I assume that 30 debit transaction are made each month. The average amount of change is $0.50. Total amount of change generated in one month is $15.

First three months

  • Change generated: $45 total
  • Match from the bank (100%): $45

Last 9 months of the year

  • Change generated: $135
  • Match from the bank (5%): $6.75

Totals for the year:

  • Change generated: $180
  • Match from the bank: $51.75

Those numbers look pretty good.

To enroll in Keep the Change, though, you need to have a qualified account, such as the Regular Savings Account, which has a minimum balance of $300 ($3 monthly fee if below), and only pays 0.2% interest.

Your “change” earns a great 100% return for three months and then a respectable return of 5% for nine months. The rest of your money, however, is earning a paltry 0.20% interest (as of July 2008). With an emergency fund of $6,000, using this account means forgoing more than $100 in interest that could have been earned in an account earning 3% interest.

Bank of America can keep its own change.

If you like the concept, set up an automatic transfer of $20/month to a high-yield, no minimum savings account where you keep your emergency fund



  1. Why put $6000 in the BofA savings? Why not start with $300. If you never touch it after that, say you are adding around $220 the first year and $190 the next, the balance stays under $1000. Assuming a 3% interest rate in a high yield savings as the opportunity cost, you are losing at most $30 in potential interest. A better estimate is the average balance in the savings averages $500, and so you lose at most $15 in potential interest. This analysis would say go for it. What are the hidden costs though? 1) Hassle of dealing with one more account (if you value your time at a reasonable rate, the $35 you could generate will this way disappears fast) 2)Use of debit card instead of credit card

    Also, see for a great high-yield savings.

    Comment by Melanie — July 29, 2008 @ 8:22 pm |Reply

  2. Hi Melanie,

    You are exactly right. That is the way to make Keep The Change a “good deal.”

    The downsides are (1) the extra hassle and (2) not using a credit card.

    Is it worth the hassle? That is personal, but I will address the issue in a future post of “maximizers” and “satisficers.”

    To complete the analysis, you need to include the interest you would get from cash during the grace period of using the credit card. When using the credit card, I do not pay the bill for 3 to 6 weeks after my purchases.

    Another consideration is the fraud protection policy. Credit cards typically have better fraud protection than debit cards, but this is changing and some debit cards have comparable protection now. When my wallet was stolen in Santiago, Chile, I spent a half day and $50 recovering the $500 spent on my debit card, but it was trivial to deal with charges on my credit card.

    Comment by Katy — July 29, 2008 @ 9:26 pm |Reply

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