Last night I was watching TV and an interesting new ad from Bank of America came on. The add was for a new Bank of America chequing account that automatically rounded every purchase you made via debit up to the next dollar and deposited the difference in your savings account. So if you bought something for $5.52 it would round the purchase up to $6 and deposit 48 cents into your savings account.
The sad thing about the ad was that it didn’t explain why this was a good thing to do or the power of it.
Suze Orman has been saying for a long time that on purchases where you pay cash, put the change into a savings account, exact same idea, but the Bank of America product automates it. If you were to do so you could assume that on average you would put $30 a month into a savings account. If you start with $500 in that account and add $30 in change every month, you would have $500 000 in just over 50 years if you assume a 10% rate of return. Not to bad of return for simply collecting coins, even better if you have a Bank of America account it is automatic.
