New Feature: Debit Card “Round Up”

For most people, savings is extremely difficult.  My number one savings tip is to try and make it as automatic as possible, such as by splitting the direct deposit for your paycheck between your checking and savings account.  Now some banks are getting into the game with a new feature to automate savings by rounding up all of your debit card transactions to the nearest dollar (or two) and putting that “digital change” into your savings account.  Ask your students if they think this is a feature that they would sign up for.

Here is a description from Mid-USA Credit Union:

When a debit card purchase is made, the transaction is rounded up to the nearest dollar, and the increased amount is then transferred to the savings account selected by you. This transfer account is selected when you open a checking account or anytime in the future. These “round up” funds that are deposited come from your checking account to which the debit card is attached. The round-up adjustment (1 per day for all purchases made that day) will take place on end of day processing and will be withdrawn from your checking account.

Here’s a happy customer:

I have a special savings account at my credit union. It looks at each debit card transaction, then takes the difference between what I actually spent and the next whole dollar and puts it in the savings account. For example, if I spend $4.63 on a cup of coffee, the account pulls another 37 cents from my checking account and puts it into savings. It may not sound like much, but the savings account is over $200 for 2014! That’s a few Xmas gifts and better than not saving at all. (I do have actual savings and am religiously putting $$ in a 401(k).)

A Canadian company, ChangeIt, serves as a middleman between banks and charities and funnels this “spare change” to charitable organizations (The Record):

Card customers of participating financial institutions go to the ChangeIt website, register their card, and sign on to having purchases “rounded up” to the next dollar or two dollars.  They also fill out which of the 86,000 Canada Revenue Agency registered charities they would like their change to go to. At the end of the month, “rounded up” numbers are added together and donated to the charities of their choice. You see the donation as a single charge that comes off your card once a month.