Banks Helping you to Save

October 7, 2008 12:00:00 AM PDT
If you've watched your investments take a hit lately, you might be looking for other ways to save.Several bank programs promise they can help you keep more of your money. The way those programs work is, by making automatic deposits every time you use your debit or credit card. But Consumer Reports tallied up a lot more minuses than pluses with these types of programs.

Bank of America's TV Commercial for "Keep the Change" promises an easy way to save, "Every check-card purchase is rounded up and the change slides from your checking to savings ?" Not so fast, says Consumer Reports' Greg Daugherty, who checked out bank saving programs, including Bank of America's: "Even though Bank of America will match some of the money you deposit, after the first three months that match goes way down. And the account pays much less interest than you can get at many other banks."

What about a heavily advertised program from Wachovia Bank? Every time you use your debit card or pay a bill online, it transfers one dollar from your checking to your savings. The TV commercial also adds, "Plus Wachovia will pay you up to 300 dollars just for saving." Daugherty explains, "Sounds good, but to get that full 300-dollar bonus, you'd have to pay bills online or use your debit card 4,800 times in the first year."

Instead of wearing out your debit card, Consumer Reports says there are much better ways to save.

Use direct deposit and put part of your paycheck into a high-yield online savings account that charges no fees and is linked to a free, interest-bearing checking account. If you are looking for an online savings account, you can check out interest rates and fees at www.bankrate.com

Consumer Reports says many employers allow you to deposit your paycheck directly into more than one account to help you keep your savings on track. For example, you could have your paycheck divided between a savings account and an IRA or a college savings plan.



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