In the US,
Bank of America has had great success with its Keep the Change
debit card savings product, which rounds up to the nearest whole
dollar the amount of every purchase made with a Bank of America
Visa debit card and transfers the difference from the cardholder’s
current account to their savings account. So far, over 3 million
customers have enrolled in the programme and have saved over $200

Now, Lloyds TSB is aiming to replicate Bank of America’s success
in the UK with the launch of its Save the Change programme in
February 2007. At a time when credit card profits are under threat
from challenging UK credit conditions, and consumers prefer to use
debit cards instead of credit cards, Lloyds TSB is hoping that Save
the Change will prove to be a hit with UK consumers, provide a
lucrative cross-selling opportunity and also be a way to add value
to the bank’s debit card products.

Automatic savings

Lloyds TSB’s Save the Change is a first in the UK, and has been
spearheaded by Terri Dial, group executive director of UK retail
banking. As with Bank of America’s programme, customers who choose
to take part in the Save the Change scheme will have purchases made
on their debit cards rounded up to the nearest pound and the change
will be transferred to a Lloyds TSB savings account.

Lloyds TSB said that with every debit card transaction, customers
will automatically be saving. Research conducted by the bank
reveals that nearly one-quarter of the UK population have no
savings at all and of this figure, one in ten said they have never
saved. The main reason people gave for not saving is that they
never have any money left at the end of the month, cited by over
two-thirds of respondents. Nearly half said they do not put loose
change into a jar or money box.

Despite many people saying that they struggle to save, over
one-third of respondents said that they wish they had more
discipline when it comes to saving money. Over three-quarters said
that just a small increase in the amount they could save each month
would have a significant benefit over time.

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Lloyds TSB is aiming to capitalise on the shift in UK consumer
behaviour that has resulted in people using their debit cards more
often than their credit cards for small-ticket transactions.
According to the bank’s research, nearly one-third of people are
using their debit card more often than they were a year ago, and
just over one-third are using their debit card for smaller

When the Save the Change scheme goes live in February 2007, the
bank said, it will match 100 percent of the Save the Change funds
for February and March. Most Lloyds TSB savings accounts will be
eligible for Save the Change. Customers can nominate another person
to receive the savings, for example, a parent can nominate a
child’s savings account. Customers can also top up their savings
account at any time. However, savings transfers will happen only if
the current account is in credit, not if the customer is in
overdraft at the time of making a purchase.

First scheme of its kind

Commenting on the scheme, Dial said: “One in three British
consumers say they want to save but it can be a real struggle. We
want to make it as easy as possible for people to get into the
savings habit and the beauty of Save the Change is that it won’t
even feel like saving but, at the end of the year, customers will
have a nice nest egg to build on for the future. This is the first
scheme of its kind in the UK and it could be the first step towards
starting to close the country’s savings gap.

“Save the Change can help everyone get onto the first rung of the
savings ladder, turning everyday debit card purchases from
groceries, petrol or even a pint of milk into savings.”

In the UK, Lloyds TSB has over 15 million personal customers and in
August 2006 the group posted interim pre-tax profits of £1.75
billion ($3.4 billion), a rise of 8 percent.

Percent of UK population without savings