Bank Scam #4: Automatic Saving Plans such as BofA “Keep the Change” and Wells Fargo Way2Save

Bank Scam #4: Automatic Saving Plans such as BofA “Keep the Change” and Wells Fargo Way2Save

You may have even seen the commercials for Bank of America “Keep the Change” and Wells Fargo “Way2Save.” Both claim to “help you save” by transferring a small amount of money from your checking account to your savings account each time you use your debit card.

Now, if you read Bank Scams #1, 2, and 3, you know that big banking only serves big banking. But let’s recap what we have uncovered in the first 3 Bank Scams to determine who “automatic saving” plans really help.

  1. The bank uses “Get good credit” to encourage you to accumulate debt.
  2. The bank makes money by paying the lowest rate of interest on your savings–while lending your savings to other Americans at the highest possible interest rate.
  3. The bank can leverage (lend out) up to 10 times the amount held in your savings account into debt. For example, $1,000 in savings can be leveraged into $10,000 of debt.
  4. The bank does not lend any actual “money.” They only log a “bank entry” to track any debt (plus interest) owed to the bank.
  5. The lower your financial education, the more money the bank will take from you in interest, fees, and penalties. However, those who understand how money works, especially banking and interest will allow very little of their money to be taken by bankers.

Yes, these saving plans “automatically” put your money hard at work for the bank, not you. Here is the proof:

  • Bank of America is currently paying .05% on their “growth” savings accounts. $10,000 saved will earn you $5 for the entire year.
  • Wells Fargo is paying 0.1% on savings accounts. $10,000 saved will earn you $10 for the entire year.
  • And to keep your $5 or $10, you must become an expert at dodging fees, as the bank has a list of dozens of possible fees, ranging for $1-$35 (per transaction). One small error could easily eat up 7 years of bank interest!
  • If you manage to avoid all the fees, please keep in mind that carrying a $1,000 balance on a credit card at 24.99% can eat up 50 years of interest! Your banker will tell you, “But you have such a great credit score.” And, here we are back again at Bank Scam #2: “Get Good Credit”…

 

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