Bank programs boost savings, reward customers

Based on the latest statistics on Americans' savings habits, is it possible America is embracing the concept of delayed gratification?

In 2007, Americans were spending $100.50 for every $100 they made, according to data released by the U.S. Bureau of Economic Analysis. Now, after months of economic shocks and watching unemployment rise to 10 percent, savings rates brushed 5 percent earlier this year and settled to about 3 percent last quarter, showing Americans' increased interest in socking it away for a rainy day.

"Consumers are just getting smarter," said Shelly Lyons, district manager for U.S. Bank. "They're not wanting to borrow as much. They're wanting to be able to depend on themselves."

Banks are doing their part in trying to lift the savings rate by developing a host of savings programs designed to give their customers an incentive to save and to help them stash away money without having to think about it. Such programs, including those found locally at U.S. Bank, Empire Bank, Commerce Bank and Bank of America, use different methods, but all are designed to make savings easy - and rewarding - for accountholders.

"There are a lot of people who want to save, but they don't know how," Lyons said. "They want the banks to help them do that."

 

Getting STARTed

To offer that help, U.S. Bank in September began testing its Savings Today and Rewards Tomorrow - or START - program, in Springfield, Seattle and Cincinnati.

START enables customers to transfer a set amount of money from checking to savings each month - $25, for example - or to designate an amount to be moved from checking to savings with each use of their debit or credit card.

"You can do a dollar, quarter, however much you want," said Lyons, who is based in Springfield.

When the savings account builds to $1,000, the customer is rewarded with a $50 Rewards Visa Card. If they maintain that balance for one year, they are rewarded with another $50 card.

The response has been strong, Lyons said.

"They like it because it's easy. Once they learn they get a $50 rewards card, they think 'That's more than I can get from interest.'"

The customer can use the cards for anything they like - but they can't put the money into their savings accounts, "because we're going to actually reward them," Lyons said with a laugh.

 

Advocating for savings

Empire Bank is sweetening the savings pot by offering the SaveUp savings account, which requires an initial deposit of $250 and offers double the standard interest rate through August when customers set up automatic transfers from their checking to their savings account.

There's no minimum transfer amount to participate in SaveUp, but if customers fail to make the transfers, the double interest is forfeited, according to Shelly Titus, executive vice president of retail banking with Empire.

"It's as flexible as they want it to be, which is great because some people may only be able to save $5 a month or $5 a week," Titus said.

SaveUp was launched last fall when Empire recognized the need to help customers save more money.

"I really think it gets to the heart of consumer advocacy because now more than ever ... people need to understand how to manage their finances," Titus said. "I think teaching people to save is just going to help them be more prudent financial stewards of their money, and that benefits everybody."

Commerce's myRewards program, which rolled out four months ago, was developed in direct response to what Commerce customers wanted - rewards for doing business with the bank - said Stephanie Rutledge, vice president and retail group manager.

"We know that in these economic conditions, everyone is taking a look at their financial goals, and we feel it's our job to help our customers meet their goals," she said.

The program allows customers to establish up to five savings accounts for whatever purpose they choose with as little as a $1 deposit. They can nickname the accounts online - house down payment, car, vacation, etc. ... - and watch the account grow toward their goal.

Once a customer has made 11 consecutive monthly deposits of the same amount, Commerce will make the 12th, with a household limit of $100.

"If you're committed to saving, we want to help you along that path," Rutledge said, adding that it has attracted new customers to Commerce.

 

Setting the saving pace

Bank of America may have been ahead of the pack with its Keep the Change program, launched four years ago. The premise of the program comes from the idea of tossing spare change in a jar. Each time a customer's debit card is swiped, the amount deducted from checking is rounded up to the next dollar, with the difference deposited into savings.

For the first three months an account is open, the bank will match Keep the Change savings penny for penny. After that, savings are matched up to 5 percent annually with a cap of $250 per year.

"The response has been absolutely tremendous," said Jamie Esch, consumer market executive for Bank of America's southwest Missouri locations. He noted that since 2005, Bank of America customers nationwide have saved more than $2 billion.

Because of that success, Esch thinks Keep the Change will be around for a long time.

"I don't see an ending point at all," Esch said.