Keep the change is good for you, great for Bank of America

Readers have been interested in Bank of America’s Keep the Change program, which began in 2005, as a vehicle for boosting savings, and possibly charitable donations. There’s no charity option yet, but what about the savings benefits to participants? A 2008 Peter Tufano and Daniel Schneider paper has some answers.

Bank of America attributes 1.8 million new savings accounts to the Keep the Change program…and as of April 2007, its 4.3 million program participants had saved approximately $400 million collectively or about $93 on average – a steady rise from average savings of $30 in April 2006 and $67 in October of 2006.

How much has KTC benefited BofA?

Bank reports indicate that the program is a valuable customer acquisition tool, bringing in 1.8 million new savings accounts and 1.3 million new checking accounts over 19 months of program operation…The program has the potential to increase debit card use, can reduce bank costs associated with processing paper checks, and generate incremental interchange revenues from each debit card transaction…While the deposits generated by Keep the Change pale relative to Bank of America’s total assets of $1.46 trillion, the funds currently earn an interest rate of just 0.20 percent in the bank’s regular savings account permitting the bank to profit from the net interest margin.

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3 Responses to “Keep the change is good for you, great for Bank of America”

  1. Paul Brandon Says:

    I assume that the point of this post is that it’s an example of a nudge that’s good for the nudger and bad for the nudgee.
    Another name for this is coercion.

  2. Melany Jameson Says:

    I had no idea that BofA’s Keep the Change program was so successful! From what I’ve read, there are some great benefits to their program. Besides getting to round up on your purchases and putting those extra cents in your savings account, they’ll also match your contributions up to $250 per year!

  3. Paul Brandon Says:

    Melany–
    It’s still not clear WHO BOA’s program benefits.
    $250 could be easily covered by the money that the bank earns on funds that individuals deposit at a low rate.
    So people make cents; the bank makes megadollars.
    The jury is still out.

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