Let’s run some numbers. Say you use your debit card 30 times in a month (which is a lot more than I do, but isn’t unreasonable). Assume the average rounded amount is $0.50, so you’re depositing $15/month into the account. At a 10.5% rate compounded monthly, you end up with a bit over $10.50 in interest at the end of the year.
If you instead put it in a regular savings account at 4% interest, you’d get about $4.00. So this new account is netting you around $6-7 in a year.
If there are no restrictions on the money, then go for it – free money is free money. But no one’s getting rich off it, and the bank isn’t losing money, given they probably made $300+ in swipe fees off you.
ETA: of course, if you leave it in there for many years (and the bank doesn’t restrict how long that rate lasts), it continues to compound. At the end of five years, you’ve netted around $70. Don’t touch your money for 20 years or so, and you might even get $1000 out of it.
I’ve had a feature just like it for many years called “Keep the Change”. Any debit purchase I make is rounded up to the next dollar and the pennies are put into a savings account. I get interest on that account, and despite not making regular deposits into it myself (though I can any time I want) I have thousands of dollars in it.
My APY on that account is 0.01% though, a far cry from the 10% in the OP. It’s not an investment account as much as just a place to park money. I only make maybe 2 cents a month on average; practically nothing. It’s just a way to set aside extra money as an emergency fund or whatever. I hope to never have to tap into it, and haven’t for many years. I looked it up on Google, and that tiny rate is pretty typical for the large brick-and-mortar banks.
My bank is Bank of America by the way before anyone asks.
It sounds like some store coupons back in the day. The system can be gamed, but 99% of people in the program aren’t willing to devote the time and energy to do so.
When you go to the grocery store buy everything as a separate txn> rather than pay for everything all at once. However, even if the store is slow & there’s not a line angry mob behind you it’s still going to take you longer overall to check out. Is it really worth the time for a couple of pennies?
Many a grocery store have one employee for the entire self-checkout, which can be two or three banks in some stores. If your terminal isn’t flashing the light that you’re stuck I doubt they’d come over all that quickly. Even if they do, if it’s a HS kid I doubt they’d catch on to what your doing.
Hell, when I go to the cashier, I lay out stuff on the conveyer belt how I want it packed, sometimes creating a gap, say between the cold stuff & the non-perishables so that I get all the cold stuff to bag first in one bag as opposed to needing to unpack them all as soon as I get home. I’ve had cashiers ask me if that’s a separate order over a maybe 6" gap, so a given cashier might even be thinking that & not even realize what you’re doing.
If the restriction relies on the checkers, just use self-checkout. If there is one, enforcement will almost certainly be automated. I wouldn’t be surprised if there is no swipe limit, relying on the fact that few people would go to the trouble.
Let me make sure I understand this right. If I use my debit card to pay 4.60 for something, my bank will deposit .40 into my savings jar account. This $ is coming from my checking account, correct?
So you find a grocery store that doesn’t monitor their self-checkouts and won’t suggest you move along after doing this multiple times. (Given their profit margin and swipe fees, I doubt you will get away with this for long).
Let’s say you attempt to sequence your items to maximize the change, so for every swipe you’re putting $0.80 in your 10% savings account. After a year, that $0.80 is now $0.88 for a profit of 8 cents.
It probably takes 1-2 extra minutes for each transaction. Congrats, you’ve found a scam that pays $2 to $5/hour, and tops out at $30/year.
Yes, that’s the nature of the round-up programs I’ve seen so far. It’s the customer’s money that gets stashed into the customer’s magic piggy bank, just in amounts that count as “loose change”. I doubt this one is different.
