TO S

AVE

UP!

ROUND

DOW

N

By Sean Doherty

a Raise the Rate Idea

The United States

savings rate is at a

dismal level, despite

an abundance of

opportunities and tools

with which to save.

1975

1985

1995

2005

0%

2%

4%

6%

United States Per-sonal Savings Rate

United States Sav-ings Rate

BACKGROUND

Data gathered from Congressional Research Service:: Savings in the United States: Calculations and Comparisons, by Craig K. Elwell, September 14, 2010. http://www.fas.org/sgp/crs/misc/RS21480.pdf

To develop a plan to increase savings in the United States and to help Raise the Rate of personal savings to 10% over

the next two years.

PURPOSE:

Problem

U.S. savings rate is at a dismal level

Solution

An automatic savings program will help consumers save and thus Raise the Rate

PROBLEM / SOLUTION

Problem

Too many purchases are made with credit cards and other forms of borrowing

Solution

Savings accounts can help consumers plan for large purchases, rather than rely on credit

PROBLEM / SOLUTION

A TREMENDOUS OPPORTUNITY

Everyone knows that money makes the world go round.

But conversations about money generally only refer to lump sum amounts and large deposits. Few people bother to talk about the single dollar bills and spare change.

A TREMENDOUS OPPORTUNITYA secondary flow of money lies underneath the large

deposits, and goes by largely unnoticed.

Charities have partnered with retailers to “round up” purchases and have successfully raised large amounts of donated money from the “under economy” of those rounded purchases.

This ‘under economy’ of ‘loose change’ is not being served and provides a tremendous opportunity! In today’s tight economy, families are looking to stretch every dollar now, perhaps more than ever! But, until now, banks have ignored money that is right under their noses!

An innovative Savings Plan will find new ways to look at money

and banking.

HOW CAN BANKS CAPTURE THIS TREMENDOUS

OPPORTUNITY…

…WHILE SERVING THE BEST INTERESTS OF THEIR

CLIENTS?

(AND WILL THE PLAN RAISE THE RATE?)

PROPOSAL

• Develop an automatic savings plan

• Involve the major banks, credit unions, and community banks

• Allow banks to be creative

• Popularize the idea within U.S. culture

• Have fun!

Round Down to Save Up: Check deposits are rarely in round, whole number amounts ($200 or $1,000, etc.). Rather, deposits usually end up with decimals and ‘loose dollars’ ($214.76 or $1,483.01, etc)

A healthy savings program can be developed by using those ‘loose dollars’ and the ‘spare

change.’

DEVELOP AN AUTOMATIC SAVINGS PLAN

An effective Savings Plan will involve automatic deposits and will find sources of income that

are relatively untapped.

Banking customers will be presented with the option to enroll in an automatic savings account program to maximize the power of their ‘loose dollars.’

Option 10: checking deposits are rounded down to the nearest multiple of

ten with the rounded amount being automatically placed into the client’s

saving account.

$256.43 becomes:

$250.00 in checking

$6.43 in savings

$2578.99 becomes:

$2570.00 in checking

$8.99 in savings

ROUND DOWN TO SAVE UP

A feasible Savings Plan will take place automatically without the

hassle of continuous action by the client.

Consumers who are committed to strong savings goals will be able to round down in larger amounts, thereby increasing the amount contributed to savings.

Option 20: round down to multiples of 20

$278 becomes $260 in checking, $18 in savings

Option 50: round down to multiples of 50

$1,490 becomes $1,450 in checking, $40 in savings

GREATER SAVING POWER

Encourage participation from banks of all shapes and sizes by designating a contest winner for each category:

INVOLVE BANKS

Large-size banks

Mid-size banks

Small-size banks

Credit Unions

Community banks

ALLOW BANKS TO BE CREATIVE

Free banks to be creative and innovative. How? By developing an initiative with goals, but by giving banks only minor direction on how to fulfill it. Each bank will, in competition, develop their own best practice ways to out compete the others.

When banks can freely compete- in the interest of serving their consumers by increasing savings deposits- then they will develop innovative and creative methods to attract new customers and encourage use of their savings accounts.

WHAT WILL CREATIVITY IN BANKING MEAN?

Rather than just following a plan to increase savings, banks that are

competing for top deposits might:

Develop attractive incentives for new savings accounts

Implement visualization tools to help clients visualize their savings goals becoming a reality.

Coach clients to save money regularly, with each paycheck.

Develop new mobile apps!

Make it fun and interesting

- the name says it all: Round Down to Save Up!

- A great complement to the Raise the Rate theme

Make it viral:

-Facebook and social media

-Competition among banks means new programs and incentives to save.

-New programs and incentives will fuel workplace discussions and friendly competition among family and friends

POPULARIZE THE IDEA

Imagine bankers asking their clients:

“How do you manage your ‘loose change?’”

WHAT WILL THIS LOOK LIKE?

Imagine friends saying to one another:

“What do you do with your ‘loose change?’”

And most important, picture clients saying:

“This savings plan has really paid off. I’m so glad I began to ‘Round Down to Save Up!’”

Thank You!Thank you TIAA-CREF for the sponsorship of this contest and for the work done to

help Raise the Rate!