Learn to save as banks, others offer incentives to help customers build up their balances
IF YOU RESOLVED TO SAVE MORE this year, you're not alone.
Â Â Â Â The average American not only spent all of his or her earnings but also borrowed against or sold 1 percent of assets in November, the most recent month tracked by the U.S. Bureau of Economic Analysis.
Â Â Â Â There are obvious ways to build a savings account: divert the daily latte bill or collect every day's pocket change. This column focuses on incentives local financial institutions are offering account holders to boost their bottom line -- without pinching it.
Â Â Â Â Savings match plans: WithÂ branches throughout the United States, Bank of America has a plan in which savers can "Keep the Change." The bank automatically rounds up check debit card purchases to the nearest dollar and deposits the difference in the customer's savings account. The first $250 is matched by the bank, 100 percent for the first three months and 5 percent after that.
Â Â Â Â Also tap into your employer for any match programs it may offer.
Â Â Â Â Breaks for automatic deposits: At Bank of America, setting up an automatic transfer of $25 each month from checking to savings means no fees, year after year, for your savings account.
Â Â Â Â "The Keep the Change program is great, but think about adding $10 to that each month from your paycheck -- pretty soon you're talking about real money," says Andy Jamison, a certified financial planner and adviser for Ameriprise Financial.
Â Â Â Opening deposit bonuses:Â From April through July at Seattle-based Homestreet Bank, accounts opened with $50 for anyone under age 18 usually come with a bonus. "We give you an extra $10 to start off with," says Karyn Smith, a Homestreet branch manager. "That way, $50 turns into $60 instantaneously."
Â Â Â Â Meanwhile, First Tech Credit Union puts $5 into new savings accounts. "We cover your membership share," says First Tech's Tracy Aouifi.
Â Â Â Â Ameriprise Financial's former parent company, American Express, has its own deposit bonus. Its "One by American Express" credit card matches 1 percent of users' purchases and deposits the match into its "One" personal savings account, now earning 5 percent annually. Savers get an extra $25 for their account with the first purchase.
Â Â Â Â Savings money market accounts: Many institutions offer better interest rates on money market accounts, which can be withdrawn at anytime without penalty. For example, Northwest BankÂ pays 0.5 percent for regular savings, but 1 percent to 4.9 percent annual percentage yield on its consumer money market accounts.
Â Â Â Â "We're new to consumer banking, so this is something we're really excited about," says Audri Amirhakimi, a Northwest Bank new-accounts representative.
Â Â Â Â Homestreet Bank has an indexed money market paying 4.74 percent annually on balances of $25,000 or more. AndÂ Rivermark Community Credit Union in Beaverton, Oregon,Â pays 0.75 percent for regular savings, but 4 percent annual percentage yield on its highest balance money market accounts.
Â Â Â Â Gifts with new accounts: Though free toasters have gone the way of eight-tracks, you'll sometimes still stumble on a free gift for new savings accounts. This is one way to boost your assets.
Â Â Â Â On Key Bank's April anniversary "we occasionally offer gifts with savings accounts, from radios to iPod nano or a TV with DVD player," says Peggy Latta, a teller at Key Bank.Â If you're looking to open a new savings account, keep an eye out for special promotions such as this.
Â Â Â Â Themed savings: Rivermark offers either a holiday savings account or a tax savings account at 1.15 annual percentage yield. That's 0.35 percentage points more interest than its regular savings.
Â Â Â Â "The tax savings account, for instance, can be started anytime, but funds can't be taken out until March 15 to April 30 or there's a fee of $10," says Rivermark's Flocer Nacoste. The goal of the fee, she says, is simply to keep people on track.
Â Â Â Â "Goal-oriented plans are very helpful for people," says Jamison, theÂ certified financial planner. "If you know youâ€™re going to spend $1,000 at Christmas, then save $83 per month. You put a little money into an account and by the end of the year you have $1,000 for your gift giving.â€
Â Â Â Â These offers may not make you wealthy, but they do provide the one thing many resolution-makers need to stay on track: incentives.
Â Â Â Â "People have a tough time saving money," Jamison says. "The best thing to do is to pay yourself first $50 a month, or whatever you're not going to notice. I've had clients who, when we started, had $400 to their name between paychecks, and now they have a $6,000 to $7,000 savings bankrool just because they've paid themselves first.Â Â Â Â Â "[P]rograms like these do help get people on track," he says. "And when it comes to resolutions, that's a pretty effective strategy."
Business journalist and financial author Jennifer D. Meacham writes a personal/business finance column for three of The Oregonian's weekly sections. She can be reached at firstname.lastname@example.org.