Consumer finance groups tout benefits of automatic savings programs

automatic savings programsEarlier today, the Consumer Federation of America (CFA) and the Financial Services Roundtable (FSR) released the results of two new consumer surveys -- both of which you may be interested in.

(But if you aren't interested, here's a video you can click on, featuring a cat playing the piano. I aim to please.)

OK, now, where was I? Oh, yes, these surveys. They were both about automatic saving, as in, the practice of money being taken out of your checking account automatically and going directly to a savings account. As we all know, as a nation, we don't save enough.


So the CFA and FSR wanted to put out some FYI (I love acronyms) to let people know that automatic savings options are out there and that banks should be encouraged to keep offering them.

As for the surveys themselves, I don't think there are a lot of surprises -- but that doesn't mean the data isn't useful.

Here's the gist of what they determined:

Low and moderate income families aren't saving much. Less than one-third (32%) of low-income households and less than half (48%) of moderate-income households have a savings or money market account. Four-fifths (80%) of upper-income households have savings or money market accounts. (See, not surprising. Wouldn't you have expected the well off and loaded to have the extra money for a savings account?)

Automatic savings programs are the way to go. Most Americans (83%) believe that the best way to create personal savings is to automatically transfer funds from paychecks or checking accounts to savings and investments. And if banks would start advertising their automatic savings programs more and make it a top priority, quite a few folks (78%) think American households' savings habits would be more efficient.

And then the CFA and FSR -- in a press conference and in press releases -- also made clear just which big banks are out there that have automatic savings programs. So let's go through that list quickly.

Fifth Third Bank -- Provides a double interest bonus to those who meet a goal in the "Goal Setter Savings."

U.S. Bank -- Offers a $50 Rewards Card for the first $1,000 in savings and another $50 Rewards Card if you keep that balance for a year. It's called the "S.T.A.R.T. Savings Today and Rewards Tomorrow" program.

SunTrust -- Has a "Get Started Savings" program. Next month, it'll be called "Live Solid Savings." They offer a 1.5% rate for two months and a 2% anniversary bonus (up to $50). They also have free overdraft protection for those agreeing to automatically transfer at least $25 monthly to savings. (That's a fantastic idea, one I hadn't known about until now. I wrote about a worry of mine last year in WalletPop, that these automatic transfers might lead some bank customers, if they aren't careful, to going into overdraft, so my hat -- if I wore one -- is off to you, SunTrust.)

Regions Bank -- Offers a 1% interest rate bonus if automatic deposits are made once a month for an entire year.

BBVA Compass -- Established the "Build My Savings" program, which launches in April and matches, on an annual basis, up to 6% of a customer's monthly automatic savings transfer amount.

Bank of America -- Has a "Keep the Change" program, where they round up debit card purchases and transfers the difference from checking to savings. They provide a 100% match for three months and then 5% a year (up to $250 a year).

Wells Fargo -- Planning a program called "The Way2Save" account. Every time you make a debit card purchase or use bill pay, you can transfer $1 into the Way2Save account.

And just why are the CFA and FSR coming out with this now? Because next week is America's Saves Week, a week sponsored by a coalition of federal, regional and state groups, designed to remind Americans to save money! It's important! Really important.

But if you don't think so, here's that video of the cat playing the piano. Again, I aim to please.

Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the new book "Living Well with Bad Credit."



Increase your money and finance knowledge from home

Professional Vs Do it Yourself Investing

Should you get advice or DYI?

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
Paul Sorokin

Hi Geoff,

A really good and informative article! Automating savings is definitely a way to go. You may find relevant a novel financial tool that we developed (SavedPlus mobile app and internet),that allows people to set a goal (or goals), and automatically transfer money from their checking to their savings account (any bank) towards that goal(s) every time they make a purchase or buy something. For instance: you purchased $50 worth of groceries and had set a 5% savings rate, $2.50 will transferred from your checking to your savings account automatically.
Of course there are numerous safeguards to assure that only qualified transactions result in savings.

Cheers,

Paul
Founder

May 15 2013 at 7:14 AM Report abuse rate up rate down Reply