In 2004, Bank of America retained a consulting firm to learn how to motivate consumers – particularly women with children – to open new savings and checking accounts. The bank and its consultants observed bill-paying and saving behavior in three cities. Bank of America then developed a product to encourage customers to save more. In October 2005, it introduced the Keep the Change™ savings program in a marketing event at Grand Central Station in New York.
Currently, over 3 million customers are enrolled in Keep the Change, which provides a matching component from the bank and is based on rounding up transactions to the next highest dollar. This program is available to all customers throughout Bank of America’s service area, which consists of 30 states, including Delaware, New Jersey, and Pennsylvania, as well as Washington, D.C.
Diane Wagner, national media relations spokesperson at Bank of America, said 99 percent of the customers who signed up for the program are still enrolled and customers have saved over $200 million of their money to date. In addition, the program has generated 1.3 million new checking accounts and 1.8 million new savings accounts for Bank of America. Wagner highlighted that “the program is not intended for long-term retirement saving, rather it is intended to be a gateway for customers to get into the habit of saving.”
In order to enroll in Keep the Change, a customer must open checking and savings accounts with Bank of America. Any purchases made using a Bank of America debit card are rounded up to the next dollar. The amount of the rounding (the change) is transferred to the Bank of America savings account. For example, if a customer makes a purchase of $3.50 using his or her debit card, the amount is rounded up and the debit card is charged $4.00 and $.50 is transferred to a savings account.
All Keep the Change funds are transferred from the checking account to the savings account on a daily basis as a single transaction, and customers are able to view all debit card transactions and the daily transfers to their savings account through the Bank of America website if they participate in online banking.
Bank of America matches 100 percent of the amount a customer saves for the first three months after enrolling in the program. After this time, the bank matches 5 percent a year. The maximum annual match, including the initial three-month period, is $250. Bank of America matches the funds one time each year based on when the customer enrolled in the program. In order to receive the match, a customer must be enrolled in the program for the full year and his or her checking and savings accounts must be in good standing. The portion matched by Bank of America is considered earned interest and is reported to the IRS.
Bank of America does not charge additional fees to its customers for participating in the program. Only personal checking and savings accounts can be used for this program and standard fees and minimum balance requirements associated with these accounts do apply. The most frequently used checking account is the MyAccess Checking account. This account has no minimum balance requirement; there is a $5.95 monthly service fee, but this is waived if the customer has direct deposit. The basic savings account has a $300 minimum balance requirement with no service fee and had a 0.20 annual percentage yield as of November 30, 2006. Certain transactions, including the purchase of cash-like items such as money orders, are not eligible for the bank match.
In September, Bank of America received the 2006 Outstanding Corporate Innovator Award from the Product Development and Management Association for its services and products, including the Keep the Change program.
If a customer makes 30 purchases using his or her debit card in a month, and the average amount per transaction that is rounded up (and transferred to the savings account) is $.50, the customer would save $15.00 for the month (30 x .50).
Assuming the same purchase pattern continues for three months, the total saved would be $45 ($15 x 3). For the first three months, Bank of America matches 100 percent, or $45. The total savings for three months would be $90 ($45 from the customer and $45 from Bank of America).
After the initial three months in the program, Bank of America matches 5 percent. Assuming the same pattern continues, the customer saves $135 over the next nine months ($15 x 9). Bank of America would match $6.75 ($135 x.05).
The total savings for the year would be $231.75 ($180 from the customer and $51.75 from Bank of America).