Santander Bank New Checking Account $225 Bonus

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sant_logoSantander Bank has a new promotion offer a $225 cash bonus for new deposit customers that satisfy the following conditions:

  • Open an eligible new checking account by 3/31/17 with the promo code WINTER225. You must not have or have had a Santander deposit account in the last 12 months.
  • Have direct deposits totaling $500 or more within the first 90 days.
  • Keep your account open for at least 90 days.
  • After you meet these conditions, the $225 bonus will be paid within 30 days. (Your account must still be open with a positive balance at time of bonus payout, so that’s a total of 120 days.)

You should be able to get this offer by visiting SantanderBank.com/winter225 and using promo code WINTER225. If you want to be extra-super-duper-sure, you can register your information here and request an “exclusive coupon” e-mail to be send to you.

There are three eligible checking types: Simply Right Checking, Basic Checking, Premier Plus Checking. Most people will probably choose the Simply Right Checking with $10 monthly fee that can be waived with at least one transaction every calendar month – a deposit, withdrawal, transfer, or payment. The Basic Checking has a fixed $3 monthly fee, but no minimum activity requirements. For both, minimum opening balance is $25 and paperless statements are free (mailed $3 each).

Note the following text regarding direct deposit. Hopefully you can split your paycheck direct deposits easily to multiple accounts.

**Direct deposits include deposits made by your employer or a federal or state government agency or retirement benefits administrator and generally payments made by corporations or other organizations. They do not include deposits to your account that are made by an individual using online banking or an Internet payment provider such as PayPal.

Here’s the rest of the Fine Print:

*Offer is not available if any account owner is a current deposit customer of Santander or had a Santander deposit account in the last 12 months prior to account opening. Cannot be combined with other offers. Eligible new account must be opened between 02/1/2017 – 03/31/2017. In order to receive the bonus, the account must remain open and in the eligible product type at the time of bonus payout. In addition, the account must have a positive balance at the time of bonus payment. Bonus is considered interest and will be reported to IRS on Form 1099-INT. If multiple accounts are opened with the same signer, only one account will be eligible for the bonus.

Ally Bank 1-Day ACH Funds Transfer Review

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Considering all of the things that can be done instantaneously nowadays, I’m rather disappointed that it still takes 3 business days to move money between most financial institutions. NACHA has been gradually working on same-day ACH transfers – apparently credits are live (like direct deposit), but not debits. Even then, banks may treat this as a premium service and charge a fee.

Ally Bank announced in October 2016 that they would support free 1-day ACH transfers for eligible transfers on 12/3/2016. They later announced a delay until 1/7/17. I finally got around to testing out this new feature in mid-January. Here are their own words:

We can now complete qualified transfers between your Ally Bank and non-Ally Bank accounts in 1 business day – free of charge. If 1-day delivery is unavailable, we’ll deliver your transfer in 3 business days.

Here’s their updated timing chart (note the cut-off times):

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Here are the official reasons why a transfer would be ineligible for 1-day delivery:

  • Your one-time transfer is ineligible due to account inactivity, overdrafts or transfer returns.
  • Your transfer is part of a recurring transfer plan.

In my experience playing around with the website, there may be other additional factors. Here are the results of various combinations of to/from between Ally Savings/Checking and a sample External Bank B. This is what Ally is telling me upfront, before initiating the transfer.

  • Ally Savings to External Bank B = 1-day Transfer
  • External Bank B to Ally Savings = 1-day Transfer
  • Ally Checking to External Bank B = 3-day Transfer
  • External Bank B to Ally Checking = 1-day Transfer

Update – Here’s what a commenter Craig said an Ally CSR told him. I haven’t officially confirmed this but it appears to be consistent with my experiences.

To qualify for the 1 day transfer At Ally Bank, you have to do at least one $250 transfer in and out of the external account and then it goes into effect 2 months after that is done…so ALL your transfer accounts can qualify for 1 day transfers if you follow that rule…They should mention on the website…i found it out from a CSR….

Let us not forget that Alliant reduced the amount of outgoing transfers to $25,000 where as Ally allows $150,000 per transfer…

This usually isn’t a problem since I can make an instant transfer between Ally Checking to Ally Savings and then do a 1-day transfer from there, but savings accounts are only allowed six withdrawals per month. If I have a lot of transfers in any given month, I will eventually run into delays.

Ally has redesigned and improved the user interface of their funds transfer page. They now provide a a nice illustration of when your funds will be debited and when they will be deposited at the target location. It is also explicitly states whether it is a 1-day or 3-day transfer. Here’s an Expedited 1-day transfer:

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Here’s a Standard 3-day transfer (in this case technically it will take only two days):

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Bottom line. Ally Bank now offers 1 business day transfers in eligible cases with an improved user experience. Overall, I’m happy with this development as it applies most of the time (see above for details). I use Ally Bank as my central hub for cash transfers with Ally Bank Savings Account (higher interest, 6 withdrawals per month) as my default location for liquid cash savings and as a free overdraft source from Ally Checking (unlimited withdrawals per month). If I find a high-interest CD that looks good, I move money to/from my Ally account to where it needs to go, so speed can matter.

Andrews Federal Credit Union 84-Month Certificate at 3.01% APY

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Updated 1/23/17. It appears that Andrews FCU has quietly added back this 7-year 3% APY CD on their share certificate rates page. I don’t know how long this will last. Thanks to FI35 for the tip. Please see my Andrews Federal Credit Union Application and Account Opening Review for more details on the opening process. As I have an active account with Andrews FCU, I verified it as an option today (1/23/17) to open directly online. (Click to enlarge.)

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Original post:

Let’s take a closer look at this 84-month Share Certificate at 3.01% APY. The early withdrawal penalty is a rather modest 180-days of interest. The minimum opening deposit is $1,000. No maximum balance cap. I created a spreadsheet to calculate the effective interest rate if you withdraw early, and here are the results visually:

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If you withdraw after one year, you’ve still earned 1.50% APY after paying the penalty. After 2 years, you’ll have earned 2.25% APY. After 3 years, you’ll have earned 2.51% APY. At all these intervals, you are ahead of nearly all the top rates from other banks and credit unions.

If you don’t qualify directly, anyone can join the credit union by first joining the American Consumer Council for $8. Try the promo code consumer and you should be able to save that five bucks. After that, join AFCU online, and deposit the minimum $5 to open a share account. After your share account is open, you can try to open the promotional CDs online. Alternatively, you may need to call them up directly and expedite things.

Please see my Andrews Federal Credit Union Application and Account Opening Review for more details.

I am striking out the refer-a-friend bonus text below because I no longer see it advertised on their site. This way I can keep the details in case they bring it back.

$50 Refer a Friend Bonus. As part of the holiday promotion, new members can also get a $50 cash bonus if referred by an existing member. The referrer also gets $50. However, the referred person must open a checking account and set up direct deposit of $500 or more. Here are the exact terms:

Refer a friend offer available to existing Andrews Federal members who refer a new member to the credit union. New member must open a new Free or Advantage Checking account with a direct deposit of $500 or more. Direct deposit must be initiated within 30 days of opening new Free or Advantage checking account, and must be received for at least two consecutive monthly statement cycles for both members to be eligible for reward. Account must remain open and in good standing for at least 90 days; accounts closed prior to 90 days will be ineligible. $50.00 will be credited to the referring member’s and the new member’s credit union accounts within 4 weeks after the 90- day period has ended. New member must qualify for credit union membership, which includes the opening of a Base Share Savings account with a minimum balance of $5.00.

I am not exactly sure how this works in practical terms. I believe that during the application process there is a question “Where Did You Hear About Us?” and you can pick “Family/Friend Referral” and you can leave your friend’s name and Andrews FCU membership number in the comments field. If you are looking to open up a checking account and set up direct deposit, I am a member now so if you want a referral please contact me.

Wells Fargo $250 New Checking Account Bonus

wellsfargo_logoWells Fargo has a $250 bonus offer for new checking account customers. You can open any consumer checking account except for Teen Checking. The prepaid Wells Fargo EasyPay® Card is not eligible. You must open the account from the special bonus page with a minimum opening deposit of $25 by February 17, 2017. (You can charge the opening deposit on a credit card.) Within 60 days of account opening, you must also do one of the following:

  • Make 10 debit card purchases/payments.
  • Set up a qualifying Direct Deposit of $500 to your new checking account.

Note that doing any one of these activities every month also waives the $10 monthly service fee on the Wells Fargo Everyday Checking account. Other ways to waive the monthly service fee are to maintain a $1,500 minimum daily balance or link the account to a Wells Fargo Campus ATM or Campus Debit Card.

In addition, to get the bonus you cannot be:

  • A current owner on a Wells Fargo consumer checking account
  • A Wells Fargo team member
  • A recipient of a consumer checking bonus in the past 12 months (limit 1 bonus per customer)

Thanks to Lee and Adam for the tip. The annoying part? The page is contradictory in regards to who is actually eligible. Right above the “Important things to know about the $250 offer:” it says:

This is an exclusive, nontransferable offer.

But then right below that it says:

Offer available in all Wells Fargo branches or online at wellsfargo.com/250offer.

If I had to bet, I would say that Wells Fargo will give the bonus to anyone who applies through this special link and they approve your application. However, I can’t guarantee it so proceed at your own risk. This is a pretty nice offer if you were looking for a checking account at a “Mega Bank”.

Big List of Free Consumer Reports (1/2): See Your Confidential Credit, Banking, and Payday Lending Data

magLinks checked and updated for 2017. Since these are available every 12 months, it is a good idea to check these near or around the same time each year. You can now request your ChexSystems report online, so I did that just to see how huge my file is considering how many bank accounts I’ve opened… You can also request your ChexSystems score for free by snail mail.

There are many companies out there that make money by collecting and selling data – your personal data. In the past, it was often difficult if not impossible to see what they were telling prospective lenders, landlords, even employers about you. Under the FCRA and/or FACT Acts, many consumer reporting agencies (CRAs) are now legally required to send you a free copy of your report every 12 months, as well as provide a way to dispute incorrect information.

Some have an online request form, but many require snail mail with proof of identity. You probably won’t want to bother checking all of them (for example if you rarely write checks or use payday loans), but if you’ve experienced any sort of rejection or adverse reaction in these areas the cause might be found inside one of these databases. Keep in mind that you may not have a file with all of these places.

Credit-Related

Experian, Equifax, and TransUnion. The three major credit bureaus track your credit accounts, payment history, and other related information like bankrupts and liens. Free copy of each once every 12 months.

CoreLogic Credco. One of the largest credit-related CRAs and often used by mortgage lenders, your CoreLogic Credco Consumer File can contain: previous homeownership and mortgage info, rental payment history, any reported delinquencies, and other debt obligations like child support. Free copy once every 12 months.

LexisNexis. One of the largest personal information databases that includes public records, real estate transaction and ownership data, lien, judgment, and bankruptcy records, professional license information, and historical addresses on file. Free copy, must mail in form.

Innovis. A supplementary credit report and identity verification provider. Free copy once every 12 months.

SageStream, LLC (formerly IDA, Inc.) Per their site, they are a “a credit reporting agency that produces credit reports and scores from our repository of consumer information contributed by a wide array of companies including leading financial services organizations, wireless providers, utilities, retailers, auto lenders and many others” Free copy, must fax or mail in a written form.

Microbilt and subsidiary Payment Reporting Builds Credit (PRBC). Microbilt is a credit reporting agency, per their site a “leading provider of alternative credit data to businesses that want to offer credit and other financial services to the approximately 110 million underserved and underbanked consumers in the United States.” Free copy once every 12 months.

Banking-Related

Chexsystems. A consumer information database used by an estimated 80-90% of all banks to help determine the risk of opening new accounts. Think of it as the banks’ version of a credit bureau. If a person commits check fraud or overdraws their account, it will be listed here. In addition, the simple act of opening or closing a bank account may be recorded in their database. Having a negative ChexSystems record can leave you blacklisted from opening bank accounts at most major banks. Free copy once every 12 months. You can now request your report online.

TeleCheck. Per their site, they provide “industry-leading check acceptance, check processing and risk analytics services to merchants and financial institutions.” One of the major companies that protect businesses and banks from bad checks. Must order by phone or mail.

Certegy Check Services. Per their site, a “check risk management company that provides verification, guarantee and risk analytics to thousands of businesses that choose to accept checks as a form of payment for goods or services.” Clients include check-cashing stores and casinos. Free copy once every 12 months. Must order by phone or mail.

Early Warning Services. A collaboration between a group of big banks including Bank of America, BB&T, Capital One, JPMorgan Chase and Wells Fargo. Provides fraud prevention and risk management in relation to bank accounts and payment transactions. Must order by phone.

Subprime-Related (Payday Lending)

The following companies focus on subprime customers with clients including payday lenders, title loan lenders, rent-to-own stores, and subprime auto loan providers.

Teletrack (affiliated with CoreLogic).

FactorTrust. Free copy once every 12 months.

Clarity Services, Inc. Must mail or fax form.

DataX Ltd. Must mail form.

Sources: ConsumerFinance.gov, FTC.gov, Wikipedia

Andrews Federal Credit Union Application and Account Opening Review

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I keep a portion of my cash reserves in certificates of deposit. As I had some Ally Bank CDs maturing this month, I decided to open a share certificate from Andrews Federal Credit Union during their 2016 Holiday Promotion. Please see my separate post on their 84-month 3% APY CD for details on the specific offer (there is still time!). The review information below should apply to anyone trying to open any deposit account at Andrews FCU.

Joining an eligible group for membership. Here is their page on membership eligibility:

Our field of membership includes Washington, DC, civilian and military personnel of Joint Base Andrews, Joint Base McGuire-Dix-Lakehurst, and military installations in central Germany, Belgium, and The Netherlands; as well as over 200 employer groups throughout Maryland, Virginia and New Jersey. We also have nationwide membership eligibility through the American Consumer Council.

As I do not live the in DC area and do not qualify otherwise, I joined the American Consumer Council (ACC), a non-profit organization dedicated to consumer education, advocacy and financial literacy. Sounds like something worth supporting! You can join through the website. I believe the cost is a one-time $8, although there is a promo code “consumer” that has worked to get the membership fee waived. You can make additional donations as you wish. They will send you an e-mail shortly with your ACC membership number.

Application process. You can then proceed to the Andrews FCU website and start the application. You will need your ACC number to satisfy the eligibility question “I am a member of the American Consumer Council (ACC), and my ACC membership number is ___”.

Note: Applying for an account will result in a hard credit inquiry. At least for me, they checked my TransUnion credit report. If you have TrueIdentity and have your TransUnion report secured using their free lock feature, you will want to unlock it before submitting this application. (This delayed my application because they are pretty busy right now and did not notify me immediately.) You can lock it back up again after account approval.

You will need to provide the usual personal information – name, address, SSN, driver’s license, etc. You will also need to provide them with a bank account routing and account number to fund the initial share account. The minimum amount is $5. You will need to keep $5 in your Share account for as long as you are an Andrews FCU member. I just started with $5.

Account approval. Once your account is approved, you should get the following message:

Congratulations, your account with Andrews Federal Credit Union has been opened. Your member number is XXXXXXXX. The signature card has been sent to your email address via DocuSign for you to sign electronically.

Your new account funding is being processed and will be posted to your new account once received by us from your other institution. If you requested an ATM or VISA Debit Card as part of your application, your card order has been placed. The routing number for Andrews Federal is 255074111.

You may now enroll for SmartConnect, our online banking system, by visiting our web site www.andrewsfcu.org and selecting Online Banking Enrollment. If you require further assistance, please call us at 800.487.5500.

Thank you for choosing Andrews Federal Credit Union.

It’s nice that you can do the signature card via DocuSign. That meant my entire application process was completed online. I did try to call them a few times, but had some trouble navigating their phone tree without a member number. However, if I didn’t have my TransUnion report locked, I wouldn’t have had any reason to call them at all. Other than that delay, I would say the application took only one or two days to process.

Funding your checking, savings, or certificate account. I found the easiest way to open my share certificate was to move money into my share savings account, and then fund the certificate from the share savings. I use Ally Bank as my banking hub, so I added Andrews FCU as an external account in my Ally account using my share account number and routing number (255074111). For some reason, the direct login verification didn’t work for me, so I completed the verification using two small test deposits. It took 2 business days for the test deposits, and 2 business days for the transfer from Ally to Andrews FCU.

Opening the share certificate. Once the funds arrived, I opened the share certificate online by clicking on “Open an Additional Account”. Despite the promotion stating you had to call in, the special certificates were available online. Here’s a screenshot (click to enlarge):

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You will need to chose your dividend reinvestment and maturity options. That’s it. The share certificate now shows up on my online banking page, right next to the share savings account. The process was pretty straightforward, just be sure to remove any credit locks or freezes on your TransUnion credit report. Remember that you’ll need to fund your special certificate by any stated deadline.

$50 Refer a Friend Bonus. As part of the holiday promotion, new members can also get a $50 cash bonus if referred by an existing member. The referrer also gets $50. However, the referred person must open a checking account and set up direct deposit of $500 or more. Here are the exact terms:

Refer a friend offer available to existing Andrews Federal members who refer a new member to the credit union. New member must open a new Free or Advantage Checking account with a direct deposit of $500 or more. Direct deposit must be initiated within 30 days of opening new Free or Advantage checking account, and must be received for at least two consecutive monthly statement cycles for both members to be eligible for reward. Account must remain open and in good standing for at least 90 days; accounts closed prior to 90 days will be ineligible. $50.00 will be credited to the referring member’s and the new member’s credit union accounts within 4 weeks after the 90- day period has ended. New member must qualify for credit union membership, which includes the opening of a Base Share Savings account with a minimum balance of $5.00.

In practical terms, I believe that during the application process there is a question “Where Did You Hear About Us?” and you can pick “Family/Friend Referral” and you can leave your friend’s name and Andrews FCU membership number in the comments field. If you are looking to open up a checking account and set up direct deposit, I am a member now so if you want a referral please contact me.

Navy Federal Credit Union CD Special: 2% APY for 17 Months + $150 IRA Bonus

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Navy Federal Credit Union announced a Special 17-month Certificate at 2% APY for a limited-time. That is a very competitive rate for that term length. Valid on regular taxable accounts, IRAs, and ESAs. Here are the highlights:

  • Open with as little as $50.
  • Make additional deposits anytime.
  • $50,000 maximum balance.

You probably won’t want to break this early, as certificates with a term greater than one year have an early withdrawal penalty of 180 days of interest (or all the interest earned so far, whichever is less). At least you can break it if it’s a true emergency. You may also notice their Special EasyStart Certificate at 3% APY, but there is a $3,000 maximum balance and it also requires direct deposit and checking.

Thanks to reader Chris for the tip. Note that it’s still not too late to get in on the 3% APY 84-month CD from Andrews FCU (must fund by 12/31/16). I would still consider this is NavyFed CD a good deal if you want a shorter term or don’t want the small risk of potential hassles from early withdrawals.

Additional IRA Bonuses up to $150. If you’re looking for very conservative investment for part of your retirement portfolio, you can open this certificate in an IRA. For a limited time, NavyFed is offering $50 when you open your first IRA with Navy Federal, plus you can earn another $100 when you setup a recurring automatic transfer of at least $50 per month to your new IRA. If, for example, you put in $5,000 towards a new IRA and got $150 + 2% APY of $100, that would work out to effectively 5% annualized interest for the first year.

Membership. The official eligibility options for NavyFed are primarily restricted to Marine Corps, Navy, Air Force, and Coast Guard regular Active Duty and reservists, and Army and Air National Guard personnel, but also includes family and household members of existing NavyFed members and some civilian employees in the Department of Defense. If you are looking for other ways to qualify, you might research this discussion on the Navy Federal Facebook page.

Navy Federal Credit Union has solid bank and loan products, including checking accounts with ATM rebates, competitive mortgage rates, and limited-time 0% balance transfer promotions. Readers have commented on their excellent customer service and the fact that they often keep and service the mortgages and other loans they originate.

When “Saving Money” Doesn’t Actually Grow Your Savings Account…

savebuttonbankThis time of year, we are surrounded by discounts. 40% off here. 80% off there. I always wonder to myself, does it really make any difference? If you save $35 on a $50 sweater, you feel good that you got a bargain. But where does that “savings” go? Are you actually any richer? Don’t you just go out and buy more stuff? Does chasing all these sales actually help or hurt your net worth?

What if, every time you bought something with a discount and think “Oh I totally needed that anyway and I saved $20!”, you immediately transferred $20 into a savings account. That way, you will have actually put $20 aside instead of the vague notion of “I saved $20”. Eventually, you can invest that money into productive assets like stocks or a house downpayment. This leads to my brainstorming question…

What is the easiest way to transfer money into a savings account “piggy bank”?

Digit Savings Text Bot. This is my current favorite. Once you have it all set up, I just text Digit the words “save 6 bucks” and it will move $6 from my linked checking account into my Digit savings account. You can even play around with the language, you know, if you’re a goofball like me. Here’s a screenshot:

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You don’t even technically need a smartphone or a cellular data plan for this app to work, just SMS text capability. I can also have it work on my laptop through my Apple Messages app. See my Digit review for more details on their auto-saving feature.

Dobot (“Dough-bot”) is another similar saving bot app that I am trying out right now, and they are offering a $5 new user bonus (If you get $5, I get $5 too). However, everything is done in-app and not through text.

Online Bank App. Most online banks have smartphone apps, and even better is the fact that most will now let me log in using my fingerprint. I tested out a $5 transfer from my checking to savings account using the Ally Bank app and I counted 13 taps total. Here’s a quick screenshot.

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Using the bank app was certainly not difficult, but texting Digit simply felt more natural. Keep in mind that you can have unlimited transfers from Ally checking to savings, but per federal bank regulations, you can only make 6 outgoing transfers per month from any bank savings account.

Pen and paper. Write your discount savings in a notebook or scrap of paper, and then add them up later at the end of the day, week, or month and initiate a transfer. Seems simple enough, but in the real world that delay would mean that I wouldn’t do it.

Siri, Google Assistant, or Amazon Alexa? Perhaps the easiest way would be to just say “Hey Scary AI Robot, send $5 into savings for me” and it would transfer from my checking to savings. You’d have to add in some security firewalls so the transfers only go between internal bank accounts (and not some hacker’s bank account). I don’t know of any actual setups that would do this, but I did see that Alexa already has some limited integration with Capital One.

Ally Bank CD Maturity Review: Phone and Online Redemptions

allyreview_logoUpdated with online maturity information and screenshots. If you have money in a bank certificate of deposit (CD), you should be aware that most of them will renew automatically for the same term length upon maturity. That means if you don’t specifically tell them otherwise, your 5-year CD will roll over for another 5 years if you’re caught snoozing during the grace period. Different banks set different grace period lengths and renewal instructions; the best ones in my opinion let you set the decision ahead of time (i.e. Pentagon Federal Credit Union).

I bring this up again because I have a few Ally Bank CDs coming up for renewal. Here’s a quick review of the process for other Ally Bank account holders. First, here is the official policy taken from their website:

What happens to my CD at maturity?
You’ll have a 10-day grace period starting on your maturity date to:

Change the term
Make additional deposits or withdraw funds
Close the CD

If you don’t make changes to your CD by phone or in online banking by the end of the 10-day grace period, it will automatically renew into the same term. To provide renewal instructions in online banking:

Log in to your account
Go to the Main Menu , then Manage CDs
Select Make Changes

Here’s the timeline.

Roughly 30 days before maturity. If you have chosen paperless documents, you’ll receive a somewhat vague e-mail from Ally Bank with the subject line “You have new correspondence in online banking.” This is actually your official “Certificate of Deposit Maturity Notice”, so don’t overlook it! If you have paper statements, you’ll get a separate letter from Ally via snail mail.

Between 30 days before maturity to 10 days after maturity. If you want anything besides an auto-renewal of the same term at current market rates, then you must notify the either by phone at 1-877-247-ALLY (2559) or online. (Less than 2 years ago, there was no online option.) Here’s a screenshot of where I clicked after reaching my CD page (click to enlarge).

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If you call them, they’ll ask you a bunch of identity verification questions, much more than other phone calls. You can also ask if they still offer a Loyalty Bonus where you’ll get an extra 0.05% APY if you renew your CD. I was not shown any such offer when renewing online. (The Ally Ten Day Best Rate Guarantee also applies.) If you want to make a withdrawal or other changes, they’ll ask you why. Nothing high pressure, but they’ll softly encourage you to renew.

I decided to withdraw my funds this time. If you have multiple CDs like I do (for minimizing penalties in case of early redemption), they will have to read you the details and disclosures for each one. You can just skip over it if you do it online. I do my daily banking at Ally so I just swept it into one of my online savings accounts while I decide what to do with it. Here’s a screenshot:

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Remember that the phone wait time is shown live on the top of their main website (I only call if it is around a minute). Closing two CDs over the phone took about 15 minutes. Closing three CDs online took under 5 minutes. I’m glad they added the online option, it was much faster.

Also see: Ally Bank Savings Account Review.

Best Interest Rates on Cash Reserves – November 2016

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Our family keeps a year’s worth of expenses (not income) put aside in cash reserves; it provides financial insurance with the side benefits of lower stress and less concern about stock market gyrations. Emergency funds can have a better return on investment than what you see on your bank statement. In my experience, having a solid cash cushion is the first step towards financial independence.

I don’t chase rates nearly as much as I used to, but it still pays to shop around. Chase Bank on a 1-year CD? 0.02% APY. Bank of America on a 10-year CD? 0.15% APY. Who buys these things?!? Meanwhile, the rates below vary from 1% up to over 3% annualized.

As of 11/6/2016, below is a roundup of the best rates backed by the full faith and credit of the US government (FDIC-insured, NCUA-insured, US Treasury Bonds, US Savings Bonds). I will try to sort them from the shortest to longest maturities.

High-yield savings accounts

  • Online savings accounts, everyone’s got one these days. Currently, the ones with a history of competitive rates are around 1% APY. These savings accounts can change their interest rate at any time, so if you’re going to just pick the highest one, be ready to move your money. I prefer the ones with a history of competitive rates, and I’ve been with Ally Bank for over 5 years. Their online savings is currently at 1% APY.

Short-term guaranteed rates (under 1 year)

  • If you’ve got a big wad of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, inheritance), I say just keep it safe until you’re ready to invest it properly. Palladian Private Bank has a 6-month promotional rate of 1.30% APY guaranteed (maximum initial deposit of $100k) for new accounts. After the first 6 months, the rate reverts back to their normal rate (currently 1.10% APY). Since the initial promo rate is fixed, this makes it the higher 6-month CD rate available.

Flexible Savings Bonds

  • Series I Savings Bonds offer rates that are linked to inflation. “I Bonds” bought right now will earn a 2.76% rate for the first six months, and then a variable rate based on ongoing inflation after that. You must hold them for a year, and if you redeem them within 5 years there is a penalty of the last 3 months of interest. While future rates are unknown, at the very minimum it will be competitive with the best 1-year CD rates. More info here.

Prepaid Cards with Attached Savings Accounts

  • A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with high interest rates. The risks are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). The other catch is that these good features may be killed off without much notice. I pulled my money out of my NetSpend card after the eligible balance dropped to $1,000 (no longer worth the effort for extra $3 a month in interest).
  • Insight Card is one of the best remaining cards with 5% APY on up to $5,000 as of this writing. Fees to avoid include the $1 per purchase fee, $2.50 for each ATM withdrawal, and the $3.95 inactivity fee if there is no activity within 90 days. If you can navigate it carefully (basically only use ACH transfers and keep up your activity regularly) you can still end up with more interest than other options.

Rewards checking accounts

  • These unique checking accounts pay above-average interest rates, but with some risk. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Rates can also drop quickly, leaving a “bait-and-switch” feeling. But the rates can be high while they last.
  • Consumers Credit Union offers up to 4.59% APY on up to a $20k balance, although 3.09% APY on a $10k balance might be easier to achieve unless you satisfy a long list of requirements. Note that the 4.59% APY requires you to apply and get approved for an additional credit card through them (other credit cards offer $500+ in sign-up bonuses). Keep your 12 debit purchases small as well, as for every $500 in monthly purchases you may be losing out on 2% cashback (or $10 a month on after-tax benefit).

Certificates of deposit

  • If you have a large cushion, it’s quite likely to just sit there for years. Why not put some money in longer-term investments where you can still take it out in a true emergency and pay an early withdrawal penalty. For example, UNIFY Financial Credit Union (formerly Western Federal Credit Union) is offering a 5-year Share Certificate paying 2.00% APY ($1,000 minimum balance) with an early withdrawal penalty of only 90 days interest. For example, if you withdraw from this CD after 2 years and pay the penalty, your effective rate earned will still be 1.76%. Anyone can join this credit union via partner organization, it appears it might be free or at most a one-time $25 fee.

Longer-term Instruments

  • Willing to lock up your money for 10+ years? Did you know that you can buy certificates of deposit via Vanguard’s bond desk? These “brokered CDs” offer the same FDIC-insurance and are often through commercial banks like Goldman Sachs. As of this writing, you can get a 10-year CD maturing 11/9/2026 that pays 2.10% APY. (Unfortunately, current long-term CD rates do not rise much higher even as you extend beyond a 5-year maturity.) Prices will vary regularly.
  • How about two decades!? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). Think of it as a huge early withdrawal penalty. You really, really want to be sure you’ll keep it for 20 years.

All rates were checked as of 11/6/16.

Hanscom Federal CU Thrive Review: 3% APY High Interest Starter Account

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Updated with additional $30 bonus. Hanscom Federal Credit Union (HFCU) has a CU Thrive account, which works like a certificate of deposit that rewards consistent saving. The rate is set for 12 months, and during those 12 months you can transfer up to $500 every month from a HFCU checking account. No monthly fees. However, you cannot make any withdrawals during those 12 months, or you will be subject to an early withdrawal penalty of 90 days interest.

This product is not meant for big balances. Instead, it is meant to encourage a modest savings habit. The current interest rate of 3% APY is triple what the top high-yield savings accounts offer right now, and more than double what the top 1-year bank CDs are offering. HFCU is NCUA-insured, which is the credit union equivalent of FDIC-insured banks.

How much interest can I earn? At 3% APY, if you maxed out this account and set aside $500 a month for 12 months, at the end you’d have put in $6,000 and earned about $90 in interest (~$97 if you made every transfer on the 1st of the each month by my quick calculations). Not life-changing, but again federally-insured and triple what you could get at another bank. $6,000 also happens to be just about the same amount as a full Roth IRA contribution. Hint, hint.

At the end of the 12 months, all accrued savings plus earned dividends will be transferred into your primary savings account. Each member can only have one CU Thrive account open at one time, but after one 12-month period ends you can open up another one (assuming it is still offered). Full disclosure (PDF).

Eligibility details. To open a CU Thrive account, you must first open an HFCU checking account in addition to the savings account required for all members. HFCU offers a free checking account with no direct deposit and no minimum balance requirement. To open a checking account, just must be a member. Like most credit unions, membership is open by family, employer, or by membership in a partner organization (which makes it open to nearly everyone). For example, you could join the Nashua River Watershed Association for a one-time $35 fee and thus be eligible for HFCU membership. You must also keep $25 in the share savings account as long as you are a member.

New refer-a-friend program. They have re-activated their referral program, which allows you to join receive an additional $30 cash bonus after being an active member for 90 days. The referring member gets $30 as well. You may still be required to otherwise qualify for membership. I would recommend saying that you plan on joining the Nashua River Watershed Association but also listing yourself as being referred by an existing member. If you would like a referral from me, please me send your full name, e-mail address, the text “HFCU referral” via my contact form. I will use this information only to fill out their referral form.

Account opening process. I started the online application and said I would join the Nashua River Watershed Association for a one-time $35 fee (I didn’t know about the refer-a-friend option at the time). I had to provide the usual personal information and then answer questions based on my credit report to verify my identity. Based on my free credit monitoring, they did not perform a hard pull on my credit report. You can fund with an online bank transfer but they also gave me the option to fund with credit card up to $2,000. They didn’t mention if this would be considered a cash advance or not, but it showed up as a purchase on my American Express card. Finally, you must print out, sign, and mail in a signature card. You can also open an account in-person. All of their physical branches appear to be located in Massachusetts.

My 1-year experience. I had set the maximum $500 to be transferred every month to my CU Thrive account from my HFCU Checking account. I made 11 transfers but missed one because my checking balance was too low on the date of automatic transfer. My fault. When that happens, the account basically just skips the transfer. There is no penalty, you just don’t get to earn interest on that money. I called them but they said there was no way to replace that transfer, even if I moved more money into the checking account a day later. Other than that, everything went very smoothly and I was paid my interest as promised. At the 1-year maturity date, the funds were automatically transferred to my HFCU savings account and the CU Thrive no longer shows up on my online account page. I can now open up another CU Thrive account, if I wish.

I also discovered that Hanscom Federal has paid a Loyalty Dividend to its Credit Union members for over 15 consecutive years. For both 2014 and 2015, they paid a 2% bonus on dividends earned and consumer finance charges paid over the year. So on top my my $78.46 of interest earned, I earned another $1.57 in bonus loyalty dividends.

In addition to the CU Thrive and free checking options, HFCU also has a competitive Home Equity Line of Credit (HELoC) with no application fee, no annual fee, and no closing costs if you keep it open for 24 months. I’m thinking of opening one just to have around, does anyone have experience with this HELOC product?

Bottom line. The CU Thrive account is a good option for people looking to build up a savings habit, with a possible 3% APY for 12 months, $30 sign-up bonus, and free membership eligibility. However, the system really works best if you use HFCU’s free checking as your primary checking account. Juggling it as an external savings account is perfectly possible, but you have to keep on top of your transfers to avoid idle cash earning zero interest. I received all of the interest promised, the customer service was nice and polite when contacted, and any errors were my own.

BankAmericard Cash Rewards™ Credit Card Review: $100 Bonus, Preferred Rewards Bonus

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Updated. As of April 1st, 2017, the 2% cash back includes both grocery stores and wholesale clubs (up to 3.5% with Platinum Honors Preferred Rewards), with the spending cap raised to $2,500 in combined gas, grocery, and wholesale club purchases per quarter. This is a permanent (non-rotating) category addition that includes Costco, Sam’s Club, and BJs wholesale clubs.

The BankAmericard Cash Rewards™ Credit Card is the mainstream “cash back rewards” credit card branded by Bank of America. In this review, I’ll cover the basic card features but also focus on a lesser-known opportunity – if you’re a Preferred Rewards client, you can increase that bonus to 25% – 75%. For such “relationship” customers, the bonus can change this card from good to great. Read on for details.

Here are the highlights of this card:

  • No annual fee
  • $100 online cash rewards bonus after you spend at least $500 on purchases in the first 90 days of account opening
  • Earn 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas up to the first $2,500 in combined grocery/wholesale club/gas purchases each quarter
  • No changing categories and no expiration on rewards
  • 0% Introductory APR for 12 billing cycles for purchases AND for any balance transfers made in the first 60 days, then, 13.74% – 23.74% Variable APR. 3% fee (min $10) applies to balance transfers
  • Get a 10% customer bonus every time you redeem your cash back into a Bank of America® checking or savings account
  • If you’re a Preferred Rewards client, you can increase that bonus to 25% – 75%
  • See additional BankAmericard Cash Rewards™ Credit Card details

The Preferred Rewards program is designed to rewards clients with multiple account and higher assets located at Bank of America banking, Merrill Edge® online brokerage, and Merrill Lynch® investment accounts. Here is a partial table taken from their comparison chart (click to enlarge):

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Let’s consider the options. Bank of America’s interest rates on cash accounts tend to be lower than highest-available outside banks, so moving cash over to qualify may reduce your interest earnings. Merrill Lynch advisory accounts also usually come with management fees. However, if you have brokerage assets like mutual funds and ETFs, moving them over to Merrill Edge may actually reduce your costs because at the Platinum and Platinum Plus levels they will actually give you 30 to 100 free online stock trades every month.

I recently moved a little over $100k of brokerage assets (Vanguard funds) over to Merrill Edge to qualify for Platinum Honors. I realize not everyone will have this level of assets to move around, but if you do then it is worth considering. Also, I later realized that it will take a while for my “3-month average combined balance” to actually reach the $100k level and officially qualify for Platinum Honors. After that the 25% – 75% rewards bonus on credit card rewards kick in.

Cash Back Rewards Tiers for Preferred Rewards

Recall that the basic structure is “1/2/3”; you get 1% cash back on every purchase, 2% at grocery stores and wholesale clubs and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter (1/2/3). Here’s how the bonuses work out:

  • Platinum Honors 1.75/3.5/5.25: 1.75% cash back on every purchase, 3.5% at grocery stores and wholesale clubs, and 5.25% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
  • Platinum 1.5/3/4.5: 1.5% cash back on every purchase, 3% at grocery stores and wholesale clubs, and 4.5% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
  • Gold 1.25/2.5/3.75: 1.25% cash back on every purchase, 2.5% at grocery stores and wholesale clubs, and 3.75% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.

Note that the terms state “The Preferred Rewards bonus will replace the customer bonus you may already receive with the card.”, which I interpret to mean that you will lose the 10% bonus for redeeming your cash back into a Bank of America® checking or savings account.

Well, I wish my cable company would offer such nice “bundling” incentives, as now Bank of America has managed to convince me to go from only having a checking account with them to now also having a Merrill Edge brokerage account with 100 free trades per month and a new Bank of America credit card.

(Side note: Stack this offer with the separate Merrill Edge brokerage sign-up bonus.)

Not all Bank of America consumer credit cards qualify for Preferred Rewards. Another card that does qualify is the BankAmericard Travel Rewards® credit card. I initially picked the BankAmericard Travel Rewards credit card myself, but will probably add this card now for the potential to get 3.5% cash back on all my Costco wholesale club purchases. Also, this card gives you cash while the Travel Rewards card rewards must be redeemed against travel purchases.

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