With its largest-ever consumer ad budget, Wachovia is introducing Way2Save, a program that will make it "fun" for consumers to build up their savings accounts, says Kathryn Black, savings director for Wachovia Bank N.A.
Tied to its core checking accounts, the program transfers $1 into a new special savings account every time a consumer uses a debit card or makes an electronic payment. The savings account pays a 5% annual percentage rate plus a 5% bonus in the first year, with a 2% annual bonus in the second and third years, when it turns into a regular savings account. Consumers are also allowed to transfer up to $100 a month.
The Charlotte, N.C.-based bank developed the product after two years of consumer research on saving habits, which revealed plenty of anxiety. "People are really concerned that they aren't saving enough," says Black. "Our research shows that consumers want tools and education to help them save, and they wanted an easy way to get started."
While the product is aimed at a mass audience, she says Wachovia has been surprised by how well it has tested in certain segments, including Hispanic consumers and early-affluents. "Even though they may be saving for retirement via a 401K, there are a lot of affluents who just don't have liquid funds for an emergency."
A typical consumer, with about 23 debit card transactions, four electronic payments, and transferring $25 a month would earn $671 (including interest and bonus) in the first year, $1,328 in the second, and $1,997. "We didn't want to make it painful to start saving," she says. "We're putting unprecedented marketing and advertising dollars behind it, because we believe this is going to grow our core checking business. Consumers told us they needed help getting started, and this appeals to people--they even told us it seemed like fun."
Consumer-spending experts have expressed major concerns about American's apparent inability to save. In 2006, the latest full year for which statistics are available, the U.S. Commerce Department says that the nation's personal savings was a negative 1%--the lowest it's been in 73 years. That followed a negative 0.4% rate in the prior year. The only other years in which the savings rate dipped into the negative were 1932 and 1933, during the Depression era.
And as the housing crunch continues to ripple through credit markets, it's clear that many consumers do not have adequate savings and are falling behind on their bills. Credit-card delinquencies have been on the rise, and this week, American Express took a $275 million fourth-quarter charge, in part because of higher delinquencies.
In addition to the TV, radio, print and online campaign breaking later this month, Black says the company will also sponsor savings seminars at branches and through its Wachovia at Work program. Seminar content was developed in conjunction with the Consumer Federation of America and its America Saves campaign (americasaves.org).