It’s hard to put a finger on exactly when multitasking became the norm, but it may have been sometime around when smartphones started occupying a place in everyone’s pocket and purse. Now that your phone can look up GPS directions while you listen to a podcast and text your friend, doing one thing at a time seems a bit boring — and unproductive.
Multitasking has become a way of life for some people, and financial services are getting into the act. After all, why would you simply want to spend money when you could spend money and save or invest it at the same time?
Here’s a look at three companies embracing the idea that financial services can do double-duty.
Bank of America Keep the Change: Spending + Saving
Back in 2005, Bank of America decided people might embrace saving if it were combined with something more exciting — like shopping. The Keep the Change program was born, and customers have saved $8 billion since.
The program works by rounding up every purchase made with an enrolled Bank of America debit card. For example, a $4.40 latte turns into a $5 latte, and the bank transfers the rounded up amount (in this case, 60 cents) into a linked savings account.
“They are going to be small amounts,” says Betty Riess, a Bank of America spokeswoman, “but over time, those will add up.”
Riess says no one will get rich off the Keep the Change program, but by combining spending and saving, the bank hopes the latter won’t feel as painful to consumers. Even better, they might decide they like having money in the bank and work to put more away on their own. “It’s essentially another way to get people into the habit of saving,” Riess says.
Givesurance: Insurance + Philanthropy
While Bank of America wants people to save while they spend, Jennifer Rasiah wants people to give while they spend. Rasiah, CEO and founder of Givesurance, has created a program in which people buy insurance and direct a rebate from their premiums to the charity of their choice.
As a 17-year veteran of the insurance industry, Rasiah watched as brokers spent most of their revenue on marketing and their time on cold calls to potential customers. “At Givesurance, we’re taking our fees and saying there’s a better way to acquire customers,” she says.
That better way involves wooing customers with the opportunity to donate up to 5 percent of their insurance premiums to a participating school or charitable organization. While customers may be concerned they’ll pay more for their coverage to cover the donation, Rasiah says that’s not so.
If your insurer participates with Givesurance, your policy information, including the premium, is transferred to the program. Essentially, your insurer remains the same, but Givesurance becomes the servicer for your policy. Then, you get a credit to up to 5 percent of their billed premium amount. The actual donation credit depends on the insurance company, and it comes out of the money Givesurance makes rather than the premiums themselves.
“It’s a win-win,” Rasiah says.
Upromise: Spending + Saving or Investing or Paying Off Debt
Upromise takes multitasking to a whole new level by letting users choose from several options for their money. The company was launched in 2001 as a way for families to save for college. It has since branched out beyond college savings and was acquired by Sallie Mae in 2006.
Currently, members of the service get cashback rebates when they shop online or in-stores. Then, those rebates can be cashed out or used in one of the following ways:
— Saved in a GoalSaver account, a savings account insured by the FDIC
— Invested in a 529 college savings plan
— Transferred as a payment to an existing student loan
Members receive 1 percent in cash back on all purchases, and certain categories earn more. For example, online shopping earns 5 percent cash back and going to the movies will net you a 2 percent rebate. Like Bank of America, Upromise has no delusions that its program will have consumers rolling in piles of cash. “Maybe Upromise isn’t going to cover the cost of tuition,” says Rick Castellano, a Sallie Mae spokesman, “but it could help cover books.”
“We’ve seen people save as much as $1,000 or $1,500 per year,” adds Abigail Brooks, another company spokeswoman. At that rate, an account opened for a baby born today could have $18,000 to $27,000, plus interest, by the beneficiary’s 18th birthday.
Financial products that do double-duty aren’t necessarily replacements for more traditional accounts. The rebate from your insurance premium probably won’t change the world, and don’t expect cash back or the change for your purchases to fund your retirement.
However, as Castellano says, “If you’re already out there making these purchases, why not get something back?”
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3 Financial Products That Do Double-Duty originally appeared on usnews.com
