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Save Early; Save Often

By: Andy Elliott

You don’t have to read Suzy Orman’s 2009 Action Plan or attend Dave Ramsey’s Financial Peace University to know that these are tough times for consumers. However, even in the face of diminishing 401(k) plans, skyrocketing unemployment rates and plummeting home values, it seems that Americans have rediscovered savings. 

Personal savings rose from 3.9 percent in December 2008 to 5 percent in January 2009. And while that might not sound like a lot, it’s the first time this rate has been above 2 percent since 2001.

Luckily you already have access to the tools you need to help your customers save, and now is a great time to promote them.

Automatic Transfers

Encourage your customers to schedule recurring automatic transfers from their checking accounts to their savings accounts. A good time to schedule these transfers is on or right after their payroll deposit dates. If a portion of each payroll deposit is immediately transferred to a savings account, customers are more likely to curb unnecessary spending and build their savings. The “out of sight, out of mind” principle really does work.

Cash Management Accounts

Many of your customers have heeded to the advice of financial planners and diversified their investments. And diversification often means that large amounts of cash are moving in and out of their accounts. Reward these customers by telling them about your bank’s cash management accounts.
The benefits for your customers are two-fold:

Supplemental Savings Programs

If fear doesn’t motivate your customers to save for a rainy day, maybe monetary incentives will do the trick. Encourage your customers to enroll in your bank’s supplemental savings program by offering to match their savings for a period of time.  

Many banks are offering these types of electronic debit activity rewards programs to help customers build their savings every time they make a purchase with their debit cards. For each debit card purchase, one debit transaction is created for the actual purchase and a second debit transaction is created for the difference between the transaction amount and the nearest whole dollar amount. The “round up” amount is then credited to the customer’s savings account.

Christmas and Vacation Clubs

Christmas Clubs and Vacation Clubs have been around for years, but just like some of the clothes in the back of your closet, they’re coming back in style. The concept is simple: start early and put back a little each week so that you’re prepared for next Christmas or your next vacation. 

These short term savings accounts are also a good way to avoid the credit card bills and buyer’s remorse that sometimes come in January or after a vacation.

Who hasn’t promised themselves that they’ll be better prepared for next Christmas or their next vacation?  

Remind your customers how easy it is to be prepared with a simple scenario: If you deposit just $10 into a Christmas Club account each week from the first week of January to the end of October, you will have saved $420. Double your weekly deposit to $20 and you will have nearly $1,000 reserved for Christmas shopping.

You may want to promote Christmas and vacation clubs even more by offering interest compounded quarterly.  The interest is typically not a big dollar amount, but it gets the customer’s attention.

Start Saving Now

You can find an overwhelming number of books and websites with advice on how and how much to save.  In fact, potential first time savers may be so overwhelmed with advice that they just give up without trying.

Don’t make saving too complicated.

Don’t overlook traditional savings accounts, IRAs and certificates of deposit.

Do help your customers (and your bank) by promoting sensible, easy ways to save.

Andy Elliott is senior vice president at CSI, Paducah, Ky. Contact him at

Copyright © November 2009 BankNews Publications