Wachovia's Way2Save: 4U?

If you have a Wachovia Account, you’ve probably heard of Way2Save; if not, inquire about it. Wachovia has been quite slow about entering the high-interest savings market, but they have finally come to the table…kinda.

Wachovia’s Way2Save (W2S) is somewhat similar to Bank Of America’s “Keep the Change” program. Bank Of America has a program that rounds up any purchases you have to the nearest dollar and they transfer that money into a high-yield savings account. With Wachovia’s W2S, every time you make a debit/check card purchase, $1 is transferred into a high-yield savings account. In addition, you are allowed to transfer $100 a month into this account, which gains an APY of 5%, which is the probably near top in the market right now. To up the ante Wachovia is also offering an additional 5% for money you hold in the account for up to one year, meaning you can pull some serious interest.

That’s the good news.

Here are some of the challenges you should be aware of if you’re interested. First, the 5% APY is for one year only; after that if will fall to about 2%, far below the rates offered by the likes on ING Direct, Emigrant Direct, and E*Trade. Also, the account transferring money does depend on your heavy use of your check card—as long as you don’t run the risk of losing track of how you spend your money and your account doesn’t go into the red, you’ll be in good shape. As we’ve said before, it’s pretty easy to lose track of $10 here, $5 there when there’s no real cash exchanging hands. Studies show that consumers make about 23 debit purchases a month. That’s $23 you have to be aware of that’s going into you new account (and OUT OF your base checking account).

I’m always a fan of finding ways to encourage Americans to save money. Because we have a relatively large safety net, many of us don’t bother saving for the future; so it’s no surprise that we have a small savings rate. If you’re responsible enough and are willing to move your money from your current savings vehicle, then this may be a rewarding step to take. I set my account up (as an existing customer) and it took about 7 minutes. I’ll give this account a spin and let you know how it’s going. If any of you have already tried it out, let us know how it’s working for you.