Spend-to-save cards: Use with caution
By Laura Bruce • Bankrate.com

Two major financial institutions are offering customers a way to save money by spending money.

Sounds sort of like one of those ads that say you can eat more and lose weight. There's little doubt that other banks will jump on this bandwagon and offer similar programs. But will customers really save money in a meaningful way, or will they just pile on debt?

'Keep the Change'
Bank of America's "Keep the Change" offer rounds up to the next whole dollar every purchase paid for with its debit card. Spend $23.54 on groceries and your checking account statement will register a $24 debit. The $0.46 difference is deposited electronically in a savings account. Bank of America says it will match 100 percent of the deposits for the first three months. After that, it will match 5 percent to a maximum of $250 annually.

Bank of America spokeswoman Tara Murphy Burke says "Keep the Change" scored highly with customers in a test run.

"We listened to our customers. We did research, and they want a more-effective and easier way to save money, an additional vehicle. With this they don't even have to think about it -- it's done for them."

But customers had better be careful about balancing the checkbook. Forget to round up those debits and you could eventually overdraw your account. Bounce a check and the ensuing fee will offset the match and the interest in your newfound savings account pretty fast, unless you're spending beaucoup bucks.

Bank of America lets customers deposit the savings in a regular savings account that currently pays 0.5 percent interest or in a money market account currently paying 0.55 percent on balances of less than $2,500; 0.6 percent on balances of $2,500 to $9,999; and 1.5 percent on $10,000 to $24,999.

American Express trots 'One' out
American Express says it wants to help customers stash some cash with its "One" credit cards. The company will deposit an amount equal to 1 percent of your purchases into a high-yield savings account currently paying 3.15 percent. The savings account is at American Express Bank and can be accessed online. Additionally, the company will contribute $25 to the account with the first purchase.

Spokeswoman Simran Kalra says the "One" account is for anyone looking to save money.

"These people may not be interested in spending money on designer handbags or the best theatre seats. They may be more interested in spending on home improvements. They know they have to spend, but they also want more ways to save. It's another egg in the basket."

Use with caution
Keep in mind that the financial institutions are keeping some eggs, too. They earn fees from retailers every time you use their cards; they'd probably be happy if you used them with abandon. In addition, you'll pay interest on revolving debt with the One card.

Consider this: American Express waives its $35 annual fee the first year, but after that you'll need to spend $3,500 to work off that fee.

"With American Express you need to compare the annual-fee card with a no-annual-fee card that has a 1-percent cash rebate," says Gail Hillebrand, senior attorney with Consumers Union. "The high interest savings versus regular savings won't offset the $35 fee unless you spend a lot. As for the Bank of America card, don't fool yourself into thinking that this is the way to save. For real savings you need to set aside a specific amount every pay period. Nickels and dimes won't do it."

To compare checking accounts (and their associated ATM fees), use Bankrate's semiannual checking study, and its credit card search can help you find the card that's right for you.