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How to create an automatic savings plan

Round up your daily transactions and send the spare change to your savings.

Compare automatic savings apps

Automated savings tools can help you save more money and build a bigger bank balance. Use this table to compare automatic savings apps by fees and interest.

Name Product Annual percentage yield (APY) Fee Minimum deposit to open
Digit
Finder Rating: 3.4 / 5: ★★★★★
Digit
0.10%
$5 per month
(can be waived)
$0
Digit analyzes your spending and automatically saves an appropriate amount every day so you don't have to think about it.
Marcus Insights
Finder Rating: 4.7 / 5: ★★★★★
Marcus Insights
0.50%
$0
$0
This Goldman Sachs tracking tool includes a bill-negotiation service to reduce your annual bill and free credit score monitoring.
Qoins
Finder Rating: 2.7 / 5: ★★★★★
Qoins
APY not advertised
$1.99 per month
(can be waived)
$0
Use spare change from everyday transactions to make an extra payment toward your debt, every month.
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Compare up to 4 providers

Automatic savings are designed to autonomously transfer money into your savings account. It’s usually a small amount each time so you don’t feel the pinch, but it can add up to a lot of money over the course of a few months or a year. Find out how you can start your automatic savings plan and the different types of automatic savings tools available with varying features and transfer frequencies.

Step 1: Identity your savings goals

The first step when developing an automated savings plan is to work out what your savings goals are and what method of automated savings will work best for you. Answering the question, “Why am I saving?” can help you figure out what features you want in your savings plan. For example, if you’re trying to build up an emergency fund, an automatic savings account with a competitive interest rate may be what you need. Your funds can continue to grow over time, but are ready when you need them.

On the other hand, if you want to trim excess expenses from your budget, a budgeting app that tracks and manages your spending and savings might be a better fit.

Step 2: Decide how much to save

If you tend to figure out how much you can spend based on how much is in your account, using a tool that rounds up your purchases can be a good way to help you save without feeling like the plan is too stringent.

If you like to set and stick to a budget, you may be better off budgeting out exactly how much you want to save each month and having it automatically transferred to your savings account. Use a savings calculator to find out how much you’ll save with your current deposits and interest rate.

If you’re not sure what your style is, try out both methods to see how much you can save. You can choose your favorite later on — or continue using multiple tools to save more.

Step 3: Choose an automatic savings tool

There are three main types of automatic savings tools you can take advantage of:

1. Automatic savings accounts

Some digital banks like Varo and Chime offer banking solutions that help you manage your spending, savings and budgeting. These accounts allow you to seamlessly transfer money to your savings each time you get paid.

2. Automatic savings programs

One of the most common ways to round up what you spend is to enroll in a program through your bank that lets you round up money from your checking account and automatically transfer it to your savings account. It works just like an automatic savings account, except you’ll need to opt in — and you’ll have the option to opt out.

3. Automatic savings apps

The best money saving apps help you invest your spare change, save on bills, groceries and more. Some apps have tools that round up your daily transactions and add the loose change to a student loan or an investment portfolio. For example, Acorns rounds up your purchases to the nearest $1 and sends them to your Acorns account to be invested.

When choosing an automatic savings tool, you’ll also want to consider whether you’re getting a competitive interest rate to boost your savings and any potential monthly fees, which can cut into your bottom line.

4 banks with round up savings

Here are a few popular banks with accounts that feature an automatic savings tool.

  1. Bank of America. The BOA Keep the Change program rounds up your debit card purchase to the nearest dollar and transfers the change from your checking account to your savings.
  2. Chase. Chase Autosave lets you create an automatic transfer rule so you can choose how much and how often you want to grow your savings.
  3. Citibank. Citibank Autosave is a savings plan with recurring automatic transfers between your checking and savings account.
  4. Capital One 360. The Capital One 360 Automatic Savings Plan allows you to regularly transfer a fixed amount of money from your linked checking account to your 360 Savings account.

How else can I automate my savings?

There are several ways to set up transfers:

  • Split your paycheck. Ask your employer if it offers the capability to split your paycheck and send a portion to your savings account and a portion to your checking account. If your paycheck fluctuates, ask if it can be split by percentages, like 15% to savings and 85% to checking.
  • Schedule transfers to a savings account. It’s quick and easy to set up a regular direct debit from your checking account to a linked savings account. You can specify that you want the funds to be automatically transferred to your savings account with the same frequency you receive your salary, such as weekly, biweekly or monthly. A portion of each paycheck will then be sent straight to your savings account, where it can earn a higher rate of interest.
  • Schedule transfers to a retirement account. In some cases this will work just like a scheduled transfer to a savings account. But if you have retirement options through your employer, you can have the funds taken out before you even get your paycheck — and before it’s taxed.
  • Use a sweep account. Sweep accounts automate transfers to and from a linked savings or investment account. All you have to do is set a minimum and maximum limit for your checking account balance, and your bank will automatically move money between the two accounts while making sure your balance stays within the limits you set. If you open a sweep account, set a realistic minimum limit for your checking account balance to make sure you can cover any urgent expenses that may arise.

6 benefits of automatic savings

There are several reasons why it’s worthwhile setting up an automated savings plan:

  1. It’s quick and easy to do. It only takes 5–10 minutes to set up everything required to automate your savings.
  2. It’s convenient. Automating the process takes the work out of saving. When funds are automatically deposited into your savings account, you don’t have to remember to manually transfer savings funds every time you get paid.
  3. It takes matters out of your hands. Automating your savings means you don’t have to rely on your own financial discipline to ensure your nest egg keeps growing.
  4. You put yourself first. When most people get paid they pay their creditors first rent to the landlord, bills to utility companies, debt payments to credit card providers. Automating your savings means you pay yourself before you pay anyone else, allowing you to prioritize your financial future above all else.
  5. Your balance grows all the time. Your savings balance will grow steadily, and the power of compound interest also kicks in to provide an even bigger boost.
  6. You can achieve your financial goals. As your savings balance builds without you having to lift a finger, you can reach your financial goals without putting in any effort.

What else can I do to maximize my savings?

Once you’ve automated your savings, there’s plenty more you can do to build a bigger bank balance:

  • Make extra deposits. Even though you have an automated plan in place to take care of your savings, don’t be afraid to make additional contributions to your savings account when you come into some extra cash. For example, if you get a substantial tax refund, deposit some of those funds into your savings account before spending anything.
  • Review your deposit amount. Your financial circumstances change all the time, so it’s a good idea to review how much you’re automatically transferring to your savings account a couple times a year.
  • Review your account. While the savings account you chose six months ago might have offered the best interest rate available at the time, a lot can change in half a year. There might be another bank offering a much better savings deal, so compare your options regularly and shop around for the highest interest rate you can find.
  • Avoid account fees. Paying unnecessary fees can quickly eat into your savings. Look for a savings account that doesn’t charge any fees, and make sure any linked checking accounts are similarly fee-free.
  • Automate your payments. Setting your bills on autopay can help you save money by avoiding late fees. And some providers offer autopay discounts to help you save even more.

3 things to watch out for when automating your savings

Beware of the following drawbacks when you enroll in automatic savings:

  1. Insufficient funds. If you move too much money from your checking account to your savings, you may incur overdraft fees. Regularly check your bank account while you’re getting used to your new savings plan to make sure you’re not transferring too much, or talk with your bank to find out if you’re able to enroll in an overdraft protection program that automatically transfers money from your savings account when your checking account can’t cover a transaction.
  2. Third-party access. Some saving programs require a direct debit agreement. When you sign this type of agreement, you may hand control of your bank account over to a third party, so it’s important that you trust the merchant you’re dealing with and know exactly what you’re getting into.
  3. Cancelation delays. It may take several days to process requests to stop your automatic savings transfers. Some banks may also require an in-person visit to a branch. Find out ahead of time the process of canceling your automated savings plans so you’re ready if you ever need to.
  4. Bottom line

    Just by taking a few minutes to set up an automated savings plan, you can quickly start building a bigger bank balance. And the more you manage to put aside each week, the better.

    To save the most, compare savings accounts to find one with a competitive interest rate that fits your needs.

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