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Cashback With A Twist – Amex and BoA

CNNMoney reported about two new cash back programs [3] from BoA and Amex. Cash back programs have been here for quite a while and many of us consumers are getting to be pretty savvy with them, getting 1% just isn’t good enough anymore. Credit card issuers have tried almost all the vanilla options – straight cash back [4], points for merchandise [5], points for travel [6], better than average cashback on gasoline/groceries/drugs [7], cash back to a brokerage account, cashback towards education, and even cashback aimed at heavy drivers [8]. What’s next? How about “Keep the Change” from Bank of America and “One” from American Express?

Bank of America’s “Keep The Change”
Debit card users can opt into this program where their purchase is rounded up to the next dollar and that difference is deposited into a savings account [9]. And for the first three months, BoA will match that deposit. After three months, they’ll match 5% up to $250 (each year). Here is a page on their site [10] explaining this is greater detail. Something you should be careful of is that you have to pick which savings account it will go into and that account may be subject to minimums and fees.

Breakeven point: Tony brings up an excellent point as to where the break even point is between the bonus money you earn from a 1% card versus this BoA program. The break even point for the BoA Keep the Change Program is $99 in the first three months. After 3 months, the break even point is $5. With the 100% match, at $99.01 you will get 99 cents change with a match of 99 cents from BoA. With a 1% cash back card, you will get 99 cents in cash back. Above $99.01 and the cash back is greater and under $99.01 the BoA change matching program is greater. After three months, at $5.01 you will get 5 cents at 1% cash back and 4.95 cents on the 5% match of the 99 cents difference.

American Express “One”
In this program, American Express will put the 1% cash back into a savings account earning 3.15%. It’s a twist on the typical “give you your cash back” plan and it has a fancy name but its regular vanilla with a twist.

Honestly, both programs sound stupid and a waste of time. A dollar spent is a penny saved is a clever little catchphrase but, much to CNN Money’s credit for noting this, it’s a counter intuitive and destructive idea to be planting in the minds of our save-phobic society. While it’s nice to put the “change” in a jar (that only earns 0.5% if you aren’t dinged for fees), it’s better to keep that change in there in the first place and preferably in a high-yield savings account (Emigrant [11] at 4%!)