4 Stash Your Cash Deals Most People Haven’t Heard Of

Here are four places to stash your cash that aren’t advertised very heavily, so your co-workers probably haven’t heard of them. They are all FDIC-insured, and offer higher yields than most of their direct competitors. Each one is best depending on your investment time frame and deposit size.

Free Rewards Checking at DanversBank

DanversBank offers their Free Rewards Checking account paying 4.01% APY on balances up to $25,000, provided you satisfy the following each month:

* perform at least 12 debit card transactions (excluding ATMs);
* receive their monthly statement electronically;
* access Online Banking, and
* sign up for direct deposit or receive a recurring ACH.

There are no minimum balance requirement or fees, and ATM fees are refunded as well if you meet the above requirements. The branches are located in the Boston area, but accounts are open to anyone in the US. If you can be diligent every month (otherwise you get piddly interest), these types of account are great interest boosters.

Ally Bank 5-Year CD with Small Early-Withdrawal Penalty

Ally Bank LogoOkay, so Ally does spend a lot of money on advertising, but a feature they rarely mention is actually the best reason to open an account with them. They only hit you with a early withdrawal penalty of 60-days of lost interest if you “break” a CD with them. The Ally Bank 5-year CD currently yields 1.60% APY (as of 10/25/13). Rates change constantly, but let’s assume you have a certificate of deposit from any bank paying 2.99% APY with an early withdrawal penalty of the last 60 days of interest. (2.99% APY ~= 2.95% rate compounded daily.) Here’s how your actual annualized interest rate would fluctuate given your holding period.

If you look carefully at this charts, you’ll see some great deals:

  • After only 4 months, your annualized rate is 1.48%. (Essentially you 2 months out of 4, which is half of 3.04%). This isn’t bad at all, considering their liquid online savings account is currently paying 0.85% APY.
  • After 1 year, your annualized rate is 2.49%. You can’t find a better rate than this at any other bank for a 1-year CD. Likewise, after 2 years, your annualized rate is 2.87%, compared to Ally’s current 2-year CD at 1.05% APY, although it does have a “raise your rate” feature that lets you bump it up once if rates rise.
  • After 3 years, your annualized rate is 2.83%, again a top rate. Thus, even opening a 5-year CD and holding for anywhere between four months and 3 years gets you a better rate than any other bank currently out there (including Ally itself). There’s also no minimum deposit required to open, so you can make each CD as small as you like!

SmartyPig FDIC-Insured Online Piggy Bank

I reviewed SmartyPig.com a while back when they had just broke onto the scene, but they have made a lot of improvements in response to customer feedback since then. You can think of them like an online piggy bank that helps you towards savings goals, but they’ve added so much flexibility that you can pretty much use them like any other savings account. The best part? They currently pay 2.15% APY on balances up to $50,000 (FDIC-insured). That’s better than any other savings account out there, with no additional requirements. No minimums, no maintenance fees.

An added feature is that if you set a savings goal and reach it, they offer “boosts” if you redeem your cash for a gift card in their mall. My favorite is the 4% boost at Amazon, which for example will get you a $260 gift card for $250 cash. Other highlights include Macy’s at 12% and Travelocity at 10% boost.

Sallie Mae Bank – Online Savings Account

Sallie Mae is best known as the huge student loan originator and servicer. Their new Sallie Mae Bank is an FDIC-insured bank that offers a very competitive 1.40% APY in their online savings account. Not a bad deal to lend out money to captive students at high interest rates, and pay much less as a bank! Hopefully this means that they can keep their rates higher than other banks.

The quickest way to describe it is as another clone of Capital One 360 (currently paying 0.75%). That means… liquid, no minimum balance, no minimum fees, and no deposit caps or tiers (just the $250k FDIC insurance limit to worry about). It’s designed to complement your existing accounts. You can link an unlimited amount of other bank accounts for easy online transfers, which take the usual 2-3 days to complete. Interest is compounded daily and credited monthly.

Also, if you have an account at Upromise, you can link your Sallie Mae account and have your Upromise earning deposited there. You can even get a 10% extra bonus if you do one of the following:

To be eligible for the 10% annual match on your Upromise earnings from Upromise you must link your High-Yield Savings Account to your Upromise Account and, within 90 days of opening your High-Yield Savings Account, either: (1) set up an Automatic Savings Plan with a monthly deposit of $25 or more, or (2) fund the account with $5,000 or more. Upromise will match 10% of your Upromise earnings posted as “funded” to your Upromise Account during the calendar year of January 1 through December 31. Your 10% annual match will be deposited into your High-Yield Savings Account in February of the following year provided that both accounts remain active and are in good standing at the time of transfer.

Comments

  1. For those concerned with an institution named SmartyPig, your deposits are actually held in a FDIC-insured account at a bank. That bank is currently West Bank in Iowa, but it will soon be BBVA Compass.

  2. If you’re not too impressed with the high fees associated with Upromise’s 529′s, you can link your Upromise account (which doesn’t earn interest) to a SallieMae checking account to sweep your Upromise earnings (when you make those qualified purchases). It sweeps only if you have a minimum $10 and only once a month. Upromise is owned by SallieMae. One has to open the SallieMae account through Upromise’s website and has to link the account to Upromise. The name of the Upromise beneficiary has to match the SallieMae account holder. I had to call Upromise’s customer service when I discovered it wasn’t sweeping.

  3. I just opened a Salle Mae saving account. It’s tied to Upromise and if you save education fund for yourself or kids, this might be a great deal.
    You can get reward just linking your Upromise account and Sallie Mae. My husband linked to his student loan account, too.

  4. I think you should also compare IBonds along with the rest of the options. There are some limitations, but they are a good option for stashing away cash (and not many people know about them).

  5. I recently opened several Ally 5-year CDs. I opted open multiple CDs versus one large one so that in the event that I want to access only a portion of my savings I could cash-out some of the CDs early and leave the others intact.

  6. For Jonathan or anyone with the Danvers RCA: regarding the last requirement in the list to receive the 4% rate, would a recurring ACH include a monthly push into the account from an external bank or paypal?

  7. @Jason and Monica – Thanks for reminding me about the Upromise connection. I also added info about 10% bonus you can get on Upromise earnings via Sallie Mae to the main post.

    @Ryan – Good idea. I did the same, although I didn’t go to small to keep things manageable. With another bank, I once opened 5 x $1,000 instead of $5,000.

    @Tony – I don’t know for sure, but there may still be a difference between what they tell you and the actual truth. Banks pretty much can’t tell the difference between an ACH and a direct deposit until they manually check every month, and most don’t. But this web page specifically states only “recurring ACH” which by definition should include a simple bank/paypal funds deposit.

  8. Is there any reason to think that Danvers will keep its high rate? Just about everybody else has dropped theirs, and surely some more rate chasers will invade Danvers now. 4.0% as a nationwide rate seems to be a failing proposition. I’d love to move my money there, but I have a feeling it will be a lot of work for very little money when I need to move it out again next month.

  9. I’ve been leaving a lot of money on the table by only earning 0.9% on my cash. Unfortunately, a rewards checking account would be way too much hassle for me. The Ally CD deal sounds tempting, though. Does anyone know what’s involved in redeeming a CD early, and how long it takes? Is it a matter of clicking a few times to set up an ACH transaction, or contacting the bank and asking them to put a check in the mail?

  10. Glad to see Smartypig getting some kind words. I’ve had a good experience using them for a couple of years now. I’ve held multiple “Goals”. I haven’t had a desire to use their gift card option yet but may in the future. Until now I’ve just been using them strictly as a no-hassle savings vehicle.

  11. For those who don’t need SmartyPig’s social aspect, and are setting goals of $1,000 or more, a better option is an installment savings account. These are very common at banks that cater to Korean-Americans.

    I have a “Rainbow Savings Account” at Wilshire State Bank. Assuming that you also open a free checking account with them, the rates range from 2.53% for a 12-month account to 3.30% for a 36-month account. You commit to making the same contribution each month, and they commit to pay that interest rate for the duration of the account. The account pays out interest quarterly, and the early withdrawal penalty is only the unpaid interest, so the risk of agreeing to a 36-month commitment is low.

  12. Thanks for the pointer, I opened a 5 year CD with them and was able to negotiate a 25 bps higher rate. This makes the 5 year CD rate @3.2%, with their redemption policy I think it is one of the best places to park liquid cash

  13. Does anyone know whether with Smartypig, one has to set up goals on a mandatory basis? I’m just attracted to the high 2.15 APY so can i just park my $$ there indefinitely without setting goals?

  14. @Raj – I’d just set up a generically-named goal with a fairly high target, like

    Future Fun Fund – $45,000

    There’s no penalty for stopping short of your “goal”, and you don’t have to share your goal with anyone else.

  15. Somebody set me straight: Is there an inherent problem with setting an arbitrary number of $250 goals just to keep cashing in on $260 Amazon gift certs (assuming you buy a lot of stuff on Amazon)? I don’t see the inherent benefit of setting higher goals…

  16. @Kenneth – No, you can pretty much “bend” the rules to get 4% bonus on Amazon certificates as you like. My guess is Smartypig buys these at more than a 4% discount anyway so they don’t mind either. The primary benefits would be just psychological in case your goal is actually higher than $250 or whatever.

  17. Anyone know if the Citi Forward credit card still offers 5% back on Amazon purchases? Assuming you’re good about paying your balances in full, would that still be a better “deal” than setting goals and cashing out on 4% Amazon gift cards (and whatever amount of interest accumulates meanwhile) with SmartyPig?

  18. Thanks! I haven’t heard of DanversBank but I just opened an account.

  19. @Kenneth yes Citi Forward still considers Amazon.com purchases (including even that from Amazon.com third party sellers) as “bookstore” purchases eligible for the 5% back.

  20. @Kenneth – Yes, the Citi Forward card still does 5x points back at Amazon. I have the card as my default card in Amazon. Very handy.

    It’s more literally about 3.6%-3.8% “cash” back and 5% back in the form of retail gift cards. Again we see that gift cards can be bought at discount in bulk. :) More details here:

    http://www.mymoneyblog.com/arc.....oncom.html

  21. The Danvers offer has dropped to 3.01%.

Trackbacks

  1. [...] As an opportunity to arbitrage some profit by borrowing at the low rate and investing it elsewhere, it would probably be unlikely even you really tried with a bank CD, and maybe a little better chance with one of those 4% rewards checking accounts. [...]

  2. [...] still provides a very competitive yield even if you withdraw early before the 5 years is up. (See here for more [...]

Speak Your Mind

*