Round-up savings accounts have become more popular in recent years thanks to technology and apps and the current financial climate.
Many people find it difficult to save any money at all as they are burdened with high rent and debt. A Bankrate survey showed 76 percent of Americans say they are living paycheck-to-paycheck and 50 percent have less than a three-month cushion in their savings account. About 27 percent of Americans don’t have anything saved at all.
They must get creative with how they save money, including with round-up programs. With most round-up savings apps, users get their purchases automatically rounded to the next dollar, and then that difference goes into a savings account.
How Round-Up Savings Apps Work
With round-up programs, if someone spends $4.75 on a cup of coffee, that amount would be rounded to $5, and the extra 25 cents would go into a savings account. It’s an effortless and automated way to start small with how you save money. Many people feel better more comfortable with that method, as opposed to stashing away larger amounts of money all at once.
While certain round-up accounts are simple in how they work, others will let people set up specific goals they want to achieve with their savings. Some apps automatically invest the spare change, which lets users take advantage of compounding growth.
One of the original round-up programs was the Wells Fargo Way2Save program. Bank of America also has an option. Now, a growing number of financial technology options and apps have also become part of the landscape.
Best Round-Up Savings Apps and Accounts
While the Wells Fargo Ways2Save Savings program remains a good option. With this program, users need a minimum opening deposit of $25. They can automatically link their savings account and choose the way they want to save automatically.
With this program, every time an account holder uses online bill pay or their debit card, or makes an automatic bill pay, they get an automatic $1 transfer from their checking account to their savings account. If you were to move $3 per day and maximize this offering, you could save around $780 a year. The Ways2Save program isn’t exactly the same as some of the apps offering roundups, but it does let users save without having to think about it
The downside to this program is that the interest rates offered by Wells Fargo on savings accounts are low.
Acorns tagline is “invest your spare change.” This app is a micro-investing platform. Users can set it up so that their spare change is invested, or they can make extra cash deposits into their investment account whenever they choose.
One option is the round-up where the spare change is invested from daily purchases. Beyond that, users can set up recurring investments, which can happen daily, weekly or monthly. You can also make one-time investments to give your account an extra boost.
Acorns Later is a feature that lets you save for retirement, and Acorns Spend is a checking account with a debit card that automatically helps users save and invest.
Chime is an increasingly popular banking platform. It features the opportunity to get the Chime Visa Debit Card, a spending account, and a Savings Account. Everything is managed through a mobile app.
The Chime Automatic Savings feature helps users add money to their savings account every time they make a purchase with the Chime Visa Debit Card or pay a bill. This “Save When You Spend” feature automatically rounds up purchases to the next dollar. Then, that difference is transferred to the user’s savings account.
Chime also features options to automatically have money put into savings from each direct deposit paycheck. For example, users can set it up so that 10 percent of each paycheck goes right into their savings account.
Keep the Change
Keep the Change is a straightforward round-up program offered by Bank of America. It rounds up every purchase and then adds the spare change to the designated savings account. To participate, customers of Bank of America need to enroll their Bank of America debit card.
Then, whenever they shop, pay bills or get a recurring charge, those dollar amounts are rounded up. The change can be deposited into your own savings account, or you can deposit it into your child’s savings account.
Stash is a micro-investing app that’s somewhat similar to Acorns. Stash lets users invest in curated stocks and Exchange Traded Funds (ETFs) with highly customized investment plans. Users can start investing with only $5.
Along with automated investing, Stash also offers automatic savings tools and features. Its Smart-Save feature lets users tailor how much they put aside to earn interest on those savings. The Smart-Save feature calculates when the user has extra cash and then saves a portion of that.
Users can adjust the rate of savings whenever they chose. The automated savings projections are based on a comparison of the user’s monthly income versus their average monthly spending and projected bills.
Finally, another great automatic savings option is called Digit, which automatically analyzes how much you spend, and then creates an automatic savings plan based on the analysis.
With Digit, you can save for specific goals that you create. Digit is free for the first 30 days, so you can see how the advanced savings algorithm works. After that, it’s $2.99 a month. There are a lot of perks that come with Digit. For example, you can use Digit Pay to eliminate credit card debt, and you get a one percent savings bonus every three months.
There’s low balance protection with transfers made to your checking account, unlimited savings goals, and no minimums for the account. If Digit puts too much into savings, it will cover the resulting overdraft fees.
Automatic round-up programs, automated savings, and automated investments can benefit your long-term financial health. These programs make saving money feel attainable and manageable. Because the amounts are so small, it doesn’t feel as overwhelming as it would be to save money otherwise. These tools allow you to create a foundation when you’re just starting out with saving and investing.
Of course, you shouldn’t overspend as a way to save more with a round-up savings app. It’s also important that as you progress in your career and you earn more money, you put aside more for savings and retirement. Round-up savings accounts are great tools, but they shouldn’t be the only thing you rely on to save money.