| Programs like Bank of America's Keep the Change, | | | | debit card if you are carrying credit card debt. If your |
| Wachovia's Way2Save, and Capital One's | | | | credit card has a balance on it, your payments might |
| SmartCents offer easy, hardly noticeable ways to | | | | have interest rates as high as 30 percent. Placing your |
| save your money while you're spending it. They allow | | | | money into a low-interest savings account, rather than |
| customers to boost their savings accounts without | | | | using it to pay off your debt, does not earn you more |
| altering their day-to-day behavior. Seems like a great | | | | than you owe. |
| deal - but how do you know if one of these programs | | | | However, if |
| is right for you? As in all things, the happiest customer | | | | (1) you pay off your credit card in full each month |
| will be the one whose expectations are set correctly | | | | (2) your debit card is your go-to card of choice |
| at the outset. With that in mind, we've compiled a list of | | | | You won't be tempted by the fallacy of spending |
| four simple rules you should follow when researching | | | | more to save more a debit-linked saving program |
| debit card-based saving programs. Read on to learn | | | | offers minimal downside. |
| more. | | | | Rule #3: Hidden Fees Can Cost You |
| Rule #1: It Won't Make You Rich | | | | While banks may promote their savings programs as |
| On average, customers who enroll in a debit-linked | | | | free, you may find that gratis service is based on you |
| saving program save $120-$150 annually. If your goal is | | | | meeting your end of the bargain. You may be required |
| to save a few hundred dollars for a purchase or a | | | | to: |
| contribution to your summer vacation fund, slow | | | | * Maintain an account balance above a minimum |
| build-up of a moderate nest egg may be an ideal | | | | threshold (Bank of America's Keep the Change |
| solution for you. Programs like Bank of America's | | | | requires a minimum $300 balance to avoid a $5 |
| Keep the Change and Wachovia's Way2Save offer | | | | monthly maintenance fee) |
| attractive account-opening bonuses, high-interest | | | | * Transfer funds from checking to saving each month |
| bonuses, and matches on saved funds throughout the | | | | in addition to the funds you deposit through your |
| first year of account activity - so while they won't | | | | standard debit card usage (Bank of America's Keep |
| make you rich, you'll at least turn a tidy profit. | | | | the Change requires you to deposit a minimum of $25 |
| If your goal is to build significant capital, however, you | | | | monthly into your savings account) |
| are always better off investing your money where | | | | * Make a debit card purchase once per month or pay |
| you cannot spend it (e.g., a company-sponsored 401K | | | | an online bill once per month to avoid a servicing fee |
| plan or a CD or money market fund). Ultimately, the | | | | (Wachovia's Way2Save charges customers who do |
| size of your reward depends on the frequency of | | | | not meet this minimum threshold) |
| your debit card usage. Of course, the flip side of high | | | | If your spending and saving behavior places you |
| debit card usage is high spending - which leads us to | | | | comfortably, and without adjustment, within the |
| our next rule. | | | | restrictions set by your selected program, then these |
| Rule #2: It Might Encourage You to Overspend | | | | monthly maintenance fees may never haunt you. But |
| Since the rewards (i.e., the savings) are tied to your | | | | it's always better to know about them ahead of time |
| spending habits, you may be tempted to use your | | | | than to face an unpleasant surprise later on. |
| debit card more frequently to transfer more funds to | | | | Rule #4: Privacy is Paramount |
| your savings account. Ultimately, such behavior may | | | | We've all heard that debit cards are generally not as |
| lead you to spend more than you intended, or even | | | | secure as credit cards - so do we expose ourselves |
| spend more than you save. Adjusting your spending | | | | to unnecessary risk and the possibility of debit card |
| habits to accrue rewards only makes sense if the | | | | fraud if we link those cards to our savings accounts? |
| adjustment benefits you, and not just your bank. | | | | The answer is yes and no. It goes without saying that |
| Always keep in mind that banks are not altruists, and | | | | by managing your finances online, you are exposing |
| they are not encouraging you to save just for savings' | | | | personal information - such as your name, address, |
| sake. Every time you deposit funds into your savings | | | | phone number, and bank account - to a potential |
| account, the bank makes money. Make sure you're in | | | | security breach. The risks don't seem to be any |
| control of your spending and saving habits and not | | | | greater for debit-linked savings programs than they |
| allowing them to be dictated by a bank that is most | | | | are for online banking as a whole - but if the risk of |
| interested in bringing about a behavior desirable to their | | | | online banking are enough to deter you, then you may |
| bottom lines. | | | | want to steer clear of these programs as well. |
| You should be particularly mindful of overusing your | | | | |