Bank of America's Keep The Change

Some time ago, Bank of America introduced a new program for its checking account, savings account, and debit card holders called Keep The Change. A friend of mine asked me to write about this program quite some time ago, and I said I would do so. I try to keep my word.

The premise is straghtforward.

Every purchase you make with the debit card is rounded up to the nearest whole dollar. When the debit card is used to make a purchase, the amount deducted from your checking account is the rounded up number. For example, if at item is purchased for $15.25, $16.00 is deducted from the account.

Of that $16.00, the difference due to rounding, $0.75, is transferred directly into your Bank of America savings account, where presumably it will earn some interest. Of the remaining $15.25, Bank of America keeps about $0.25, a standard merchant transaction fee, and the merchant receives the remaining amount, approximately $15.00.

Additionally, for the first three months, BoA will match your remaindered savings at 100% (credited annually). Following that three month bonus period, each year a 5% bonus will be deposited into the savings account. $250 is the maximum for the match in any one year period.

The benefit for the consumer is they are encouraged to put away savings, little by little. That can add up quickly if you use the Bank of America debit card often. This brings us to the benefit of Bank of America, stemming from those $0.25 merchant transaction fees. That is huge bucks for the company; here is the business reason for offering this plan to its customers in the first place. The more people they can convince to use their debit cards, the more revenue for the company.

So, would I recommend this to people? Personally, I stay away from debit cards. They don’t provide the same protection as credit cards. Generally with credit cards, if fraudulent charges appear on your statement, the credit card issuer will reverse them right away — at least temporarily — and do the appropriate research to protect your credit. With a debit card, fraudulent charges are immediately deducted from your checking account and it can take weeks or months to sort the issue out.

While more protections were introduced to debit cards in the last year, it’s not a transaction method I would support. If you want to save some money every time you make a purchase, use a credit card with a cash back option, like the Citi Dividend Platinum Select, pay off the balance every month, ask for a bonus check as often as possible or reasonable, and deposit that money into a savings account offering above average interest, like Emigrant Direct.