Keep Your Own Change
Monday, August 25th, 2008In an earlier post I highlighted American Express’s One Card, a program that lets you save while you spend. Amex contributes 1% of whatever you spend and deposits it in a high-yield savings account. This was rather a clever way of defeating the cognition that blocks our ability to save namely, the overpowering desire to consume and the fact that we tend to under value savings we will have in the future.
Bank of America (BOA) has introduced a related product called keep the change. The idea is when you spend whatever change is left from rounding up to the nearest dollar is automatically put into your savings account.
BOA matches every dollar you save for the first three months and then 5% after that for a total of $250/yr. They even provide a simple calculator to let you estimate your savings.
I heard on the radio the other day that over $1B has been saved by customers. Interestingly, BOA has filed a patent to protect this unique product idea.
This is like a 401(k) plan with a systematic withdrawal of your own money sweetened with someone else making a matching contribution. Feels more like a savings plan than the One Card which feels more like a cash back card.
No matter, both are excellent examples of taking deep cognitive biases and leveraging them to our benefit.
