Here’s our roundup of the four best tools banks offer to help boost your savings. We’ve included a quiver of tools from Citizen’s Bank, Capital One, Wells Fargo and PNC bank. The tools include automatic savings plans, goal trackers, savings bonuses, incentives and more.
A Warning About Savings Accounts
Let’s get something important out of the way first. Savings accounts are NOT a good way to grow your money. A consumer who’s looking to save for the long term will want their money pile to get bigger. The first reason is that inflation in the U.S. has traditionally hovered between 1% and 3%. That means $10,000 saved now will shrink in value to anywhere from $9,135 to $7,602 in ten years unless it’s invested.
The second reason to grow money is that compound interest is magic. The same $10,000 invested at 8% would be worth almost $20,000 in ten years.
Most savings accounts pay very little interest. How little? Wells Fargo is one of the biggest banks in the U.S. Their savings accounts pay very typical rates of about .01% interest. That means your $10,000 will earn a whole $1 in the first year. By year ten, it will earn about $9. That means someone working in a minimum wage job would earn more in an hour and fifteen minutes at the fryolator than a pile of $10,000 in a typical savings account will earn in ten years.
Savings accounts, therefore, are NOT a good place to keep money long term. That said, savings accounts are a great place to park money short term, as a sort of pit stop before the money gets invested.
Some banks do offer savings accounts that outdo the .01% interest rule. Notable exceptions include Capital One with a .75% rate and Synchrony Bank with a 1.05% rate. Still not a great investment, but better than most other savings accounts. $10,000 at 1.05% for ten years earns almost $1,000.
Related: 8 Smart Money Tips to Get Richer Now
1. Citizens Bank’s Savings Toolkit
“Savings Toolkit” isn’t the Bank’s name for the nifty set of smoothly integrated savings tools they’ve put together, but that’s what it amounts to. Their set of savings boosters includes an automatic savings plan and a variety of savings accounts with incentives for different needs. They also throw in a very handy tracking and bonus tool called GoalTrack Savings. We’ll break them all out below.
Citizen’s Bank’s Steady Save
Steady Save is Citizen’s Bank’s automatic savings plan. Steady Save lets customers set up automatic transfers from a checking account to a savings account or money market account, so the savings happens in the background.
The interest rate on the bank’s savings accounts is a rock bottom .01%, so nothing to crow about there. But the bank’s other quiver of interlocking tools makes up for the low rate. Any of the accounts below can be linked to a Steady Save automatic savings plan, including:
Citizen’s Bank’s College Saver
A College Saver account is just a savings account with a very big twist. Account holders who deposit a minimum of $50 a month into the account from the child’s 12th birthday get a fat $1,000 bonus when the child turns 18. Doing the math, that means a parent who puts $3,600 into this account over a period of six years walks away with an extra $1,000. That’s the same as earning 7% interest. The only other place you can get that kind of return risk free these days involves REM sleep. We had to put a screengrab below just so you’d believe us.
College Saver accounts can be linked to a Steady Save automatic savings plan, to guarantee the account holder never misses a deposit and definitely gets the $1,000 bonus.
Citizen’s Bank Home Buyer Savings
The Citizen’s Bank Home Buyer Savings account works a lot like their College Saver account. Customers deposit a minimum of $100 a month into the account for 36 months. If they never miss a deposit, at the end of the 36 months they’ll receive a $1,000 credit on a mortgage financed through the bank.
This one isn’t quite as much of a stellar deal as the College Saver because savers are locked into a mortgage from Citizen’s Bank. That said, for someone who already plans to to business with the bank during home buying time anyway, it’s still a good deal.
Citizen’s Bank’s IRA Savings Plan
To be honest, this tool isn’t the best of Citizen’s otherwise impressive bunch. While the bank will set up an IRA for any customer, their interest rates are nothing to write home about. Account holders can set up automatic savings deposits through a Steady Save plan that ensure the money gets moved from checking to an IRA on a regular basis, but the money would do a lot better in almost any other investment.
For example, even someone who scores Citizen’s Bank’s highest interest rate on their 48 month Gold Circle CD would earn only 1%. Assuming they kept re-investing the money until retirement, a 20 year old who put the maximum of $5,500 a year into their plan would have $313,000 by retirement age. That may sound like a lot, but even investing in relatively stable bonds would likely give a much higher return of about $800,000.
Related: 2014 Roth IRA Rules
Citizen’s Bank’s GoalTrack Savings Tool
GoalTrack might have been just a nice add-on idea: you tell the online tool how much you want to save and when you want to save it, and it gives you nice percentage charts and “Good Job!” attaboys as you make progress toward your goal. But the bank added a nice perk to the process. Bonuses. Deposit between $25 and $49 a month into a savings account, and GoalTrack pays off with a $5 to $20 gift card every five to eight months. The gift card amounts max out at a $250 value for saving $400 a month. The gift cards can be redeemed at retailers like Barnes & Noble, Lowes, Target, Exxon, Apple iTunes and more.
The biggest drawback to Citizen’s Bank’s savings booster toolkit is it’s only available in 18 states.
2. Capital One 360’s Automatic Savings Plan
Automatically transferring money into a savings account once or twice a month is a great way to save, because the money is out of sight, out of mind. Money that’s deducted from checking in this way, without having to think about it, is a lot less likely to get spent on frivolous purchases.
Capital One 360’s Automatic Savings Plan lets account holders set up automatic transfers from checking accounts to any savings account. Capital One customers can customize the plan to transfer fixed amounts weekly, bi-weekly or monthly. They can also choose to make their transfers happen on the 1st and 15th, on the 15th and 31st, or on the month’s last day only.
Capital One’s competitive savings account interest rate of .75% makes this savings tool a big win for consumers.
Capital One 360’s “My Savings Goals” Tool
Capital One has another savings boosting tool called “My Savings Goals.” This tool allows customers to set goals for savings accounts, including how much they want to save and when they want to reach their target. Based on these facts, users get a widget that shows them how much they need to save each paycheck, week or month.
3. Wells Fargo’s Way2Save Savings
Wells Fargo’s Way2Save Savings takes the idea of an automatic savings plan one step further. Not only does the plan let customers make automatic transfers from their checking accounts to savings accounts, it also offers another way to save called Save As You Go.
Save As You Go transfers $1 from checking to savings every time a customer does one of three things:
- Makes a debit card purchase.
- Pays bills online with Wells Fargo Bill Pay.
- Makes automatic payments from a checking account.
Save As You Go works kind of like someone hacked your account and is stealing sums of money so small you don’t notice them, but instead of blowing the money on video game consoles and booze binges, they’re sticking it into your savings account while your back is turned.
The Save As You Go plan is kind of brilliant, but consumers should be careful. One downside is that anyone with a lot of credit card debt who’s paying upwards of 22.9% interest shouldn’t really be socking money into a savings account where it’s earning .01%. The math doesn’t add up. It’s like working for $8 an hour in a factory but paying someone $3,000 a day to fly you there in a private jet.
Another caveat is that consumers who aren’t careful could rack up extra fees and wind up with less money than they might’ve had if they hadn’t “saved” at all.
One fix for the extra fee issue is that Wells Fargo waives the monthly service fee when customers maintain a $300 minimum balance in their savings account. The $5 monthly fee is also waived when a customer sets up one or more automatic and recurring transfer options.
As far as Wells Fargo’s automatic transfers go, they can be set up to happen once a month or once a day. The once a month withdrawals have to be at least $25 and the daily transfers have to be at least $1. Done this way, someone who sets up their automatic savings plan to siphon off $3 a day from a checking account would save about $780 a year. While that’s not a lot, a consumer who starts that kind of saving at age 20 and invests it at 8% would have over $715,000 by their 75th birthday.
Wells Fargo’s automatic savings tool would’ve wound up higher on our list if not for their .01% interest rate.
4. PNC Bank’s Auto Savings
PNC is one of the ten largest banks in the U.S., bigger than Capital One or TD Bank.
Their Auto Savings plan is flexible, letting customers decide how much and how often they want money automatically moved from checking into savings. The plan lets users waive the monthly $4 service charge if they keep a $400 minimum balance or transfer at least $25 a month into the account automatically from checking. The monthly fee is also waived for those under 18.
One nice feature of the plan is that it can be used for overdraft protection. Any time a user’s checking account dips too low, the user’s savings account can provide a nice fallback.
PNC’s interest rates for savings accounts are low, meeting the national average of .01% to .11% for those depositing $1,000,000 or more.