If you have watched this wonderful talk by Rory Sutherland “TED Talk : Rory Sutherland: Life lessons from an ad man”, you must have seen this big Red button, showed while explaining that “interface” determines the behavior.
Paraphrasing a bit, “if there is a large red button on a wall in your home and every time you press this button it will save you $50, then you will save a lot. Because interface fundamentally determines our behavior. Marketing has done a very very good job of creating opportunities for impulse buying but never for impulse saving”.
And of course, as he admits, that is against consumerism and act against the very ambitions of companies that create these advertisements, so probably will never build such an interface.
So, when a company says they built an interface that makes saving money a lot easier, you better bring your instincts and not believe it at once.
When I saw the promotional advertisement “Keep the change” by Bank Of America that will make saving a lot easier, I did not believe it. It almost looked like that “simple red button” interface that could help you save more.
Well, its not. More over, this is a perfect example of marketing mentioned in that presentation. I went on to its website and read here the details of “Keep the change”.
Basically, when you pay with your charge card, BoA will round up to the nearest dollar and put those (your own) pennies in to a savings account. What it means? BoA wants you to spend dollars with their charge card more so that you can save ‘your own pennies’ more. Of course, first 3 months they will match those pennies 100% and 5% afterwards. And the tag line, “keep the change” try to infer that you may loose the change if you don’t enroll in this program. Isn’t it true that you always keep your change?
And here is one thing to remember. If those pennies add up to a significant amount, if you think or BoA thinks, then your checking account is also depleted faster now. Here is the magic part. Now, if you accidentally run over your balance even by a few pennies, you may attract a hefty overdraft fee, which wouldn’t have happened if you had left those pennies in your checking account.
A better way to save money is if Bank of America offer to move some pennies automatically and for free from Savings account to the Charge card when it runs out so that customers don’t have to pay about $35 or more in overdraft fee to cover say 35 cents over the balance.
If they can move money from Checking to Savings for free, why can’t they offer to move money from Savings to Checking when needed for free.
What do you think?