Big List of Bank / Credit Card Privacy Opt-Out Links

If you have any sort of financial account, you’ve probably gotten one of these privacy forms in the mail:

optout_chase2

The information they are talking about can include:

  • Social Security number
  • How much you make (Income)
  • How much money you have (Balances)
  • What you buy (Transaction history)
  • How much you borrow (Credit and payment history)

The amount of sharing varies widely:

  • For our affiliates to market to you = We can share with companies who are under the same ownership or control.
  • For non-affiliates to market to you = We can sell your information to anyone! They don’t even have to be financially-related companies.

These companies lobbied heavily to make these forms work on an Opt-Out basis instead of Opt-In. That means that unless you tell them not to, they can share however they want. The fact that you are busy with your own life benefits them by default.

It is just so tempting to not bother, but if you can commit a chunk of time, I’ve tried to collect the information for most of the largest financial institutions below. That way, you can knock them all out at once, and hopefully be done for a few years at least. You’ll often need the bank account or credit card number to complete the form.

* If you are really short on time: At the time of writing here are the companies that share with non-affiliates: Ally, Capital One, Chase, Citibank (bank and credit cards), Discover, FIA Cardservices. Opt out of these first, if applicable.

Ally Financial

American Express

Bank of America

Barclaycard US

Capital One

Charles Schwab

Chase

Citibank (Bank Accounts)

Citi Credit Cards

Discover Card

FIA Cardservices

US Bank

Wells Fargo

  • Privacy Notice
  • Online: Log on to wellsfargo.com, and choose Change Privacy Preferences under the Account Services tab.
  • Phone: 1-888-528-8460

Netspend Card 5% APY Savings Account Review

netspend0

(Update: On 5/31, NetSpend effectively issued a 30-day notice that the rate structure will be changed as of July 1st, 2016 such that the 5% APY will apply up to $1,000 and anything above that gets 0.50% APY. The 5% APY will apply to up to $5,000 until June 30, 2016 which is when the next quarterly interest payment will post. Thanks to all who notified me of this change.)

Prepaid debit cards are a growing niche for the “under-banked” or “un-banked” who can’t or don’t want to use traditional checking accounts to hold their cash. In order to promote the adoption of prepaid debit cards as their sole financial hub, many now offer the option of an attached high-interest savings account.

The NetSpend Prepaid Visa offers 5% APY on balances up to $5,000. For balances over $5,000, it pays 0.50% APY. Even with the balance limit, this is an attractive rate and worth a look even if you don’t need a prepaid debit card otherwise. I’ve had this card open since September 2015, but a quirk of this card is that interest is only paid quarterly, so I waited to see if the 5% APY (4.91% APR) would post correctly. As you can see in the screenshot below, the interest for all 3 months was credited as promised at roughly $20.50 per month. (The 0.50% APY on balances above $5,000 is credited on a separate line.)

netspend5

For the purposes of this review, I will not focus on most aspects of the prepaid debit card. I am primarily interested in maximizing the savings account feature and the avoidance of any fees.

Account opening process. Visit the Netspend website and enter your personal details to order a card (name, address, e-mail). No credit check. No application fee. You will eventually need to provide your Social Security number as required by law, since you’ll be opening a FDIC-insured bank account. If you are referred by an existing user (links above are mine, thanks if you use it), both get an additional $20 bonus after depositing at least $40. After signing up, you can also refer your own friend and family for more $20 bonuses.

Once the physical card arrives in about a week, follow the included directions and activate your account online. You will be provided your unique account number and a routing number, which will allow you to make electronic ACH transfers from your external bank accounts. You can also use this information to have direct deposit set up with your payroll or government benefits.

netspend1

5% APY savings account funding directions. Previously, you had to upgrade to Netspend Premier to get the 5% APY savings account option. This requirement appears to have been removed. You must use an external bank to “push” money over into the Netspend card. I used my Ally Bank savings account as the transfer agent (screenshot below). I used the account and routing numbers provided, which confirmed that the underlying FDIC-insured bank is MetaBank of Sioux Falls, South Dakota. Other banks that they say may be used are BofI Federal Bank and The Bancorp Bank.

netspend2

Then, all you need to do is move over $5,000 from your external bank to your Card Balance, and then move that $5,000 over to your Savings Balance. Your Card Balance is the part that can be spent via prepaid debit card, but it will not earn any interest, so be sure to move it over to Savings Balance. They are separate buckets! Here are the before and after screenshots (click to enlarge).

netspend3

netspend4

The Savings Account has no monthly minimum balance requirement and no monthly fees. Transfers between Card Balance and Savings Balance are free, but the number of withdrawals from Savings Balance are limited to 6 per calendar month by federal banking laws.

Avoiding Debit Card fees. Now, the Savings Account has no monthly fees, but the Debit Card does have a choice of plans with their own fee schedules. Since I don’t plan on making any actual purchases using this debit card, I chose the Pay As You Go plan with no monthly fee. Now, with this plan there is also an account maintenance fee of $5.95 per month:

Account Maintenance Fee $5.95 per month (fee applies if Card Account has not had any activity, that is, no purchases; no cash withdrawals; no load transactions; or no balance inquiry fee for 90 days). If enrolled in any FeeAdvantage Plan and your Card Account has had no activity as described above, this fee applies instead of the Plan Fee.

The simple solution to avoid this fee is to load a few dollars once every 90 days via your original ACH transfer source. Most banks will even let you set up an automated transfer schedule; I like every month just because it serves as a monthly reminder to check the balance, APY, etc. You could also use their mobile app and make a check deposit.

Withdrawals. The easiest way to make a withdrawal is again via “ACH pull” from your external transfer bank. Remember, you’ll have to move the funds over from “Savings” to “Card”. Another free alternative is to use the BillPay feature and pay down a credit card bill using your funds. If you have a credit card that you use regularly, you can even make an overpayment and simply hold a negative balance until it gets used up by future credit card purchases. Finally, you could just use the Visa feature to buy something or make an ATM withdrawal (subject to daily limits), but you may be subject to transaction fees.

Additional cards. If you have a spouse or partner, you could both get a NetSpend Prepaid card which would bring your 5% APY limit to $10,000. There are also other cards which offer a similar setup, including Brink’s Prepaid (I have this one as well), Ace Elite, and Western Union. If you had one of each of these (which is still allowed to the best of my knowledge), then that would bring your theoretical limit to $20,000 for an individual or $40,000 for a couple.

Recap. Yes, it really works, as long as you set it up properly and maintain an active account. As compared to a 1% APY savings account, each $5,000 balance at 5% APY would earn $200 more in taxable interest income each year. It is up to you to weigh the potential reward vs. effort, also taking into account the size of your cash balances.

Optimize Your Bank Account Setup: Megabanks, Credit Unions, Online Banks, and Prepaid Cards

crjan2016cover

Consumer Reports is getting more into financial products, with their January 2016 issue cover article on Choosing The Best Bank For You, most of which was also made available to the public without a subscription. If you haven’t optimized your bank account setup recently and you missed it the first time around, the article is worth a read. Perhaps it was just anecdotal, but I read somewhere that most people are still with their first bank account out of high school.

Here are their high-level conclusions:

  • Mega Banks: Best for Convenience, Technology, Security
  • Credit Unions: Best for In-Person Customer Service, Lower Costs
  • Primarily Online Banks: Best for Online Customer Service, Higher Savings Rates, Lower Costs
  • Smaller Regional and Community Banks: Best for Personal Service
  • Prepaid Cards: Easier to get than a bank checking account but some are loaded with gotchas.

It appears that Consumer Reports is still keeping their specific rankings and numbers behind a subscription paywall. But they do agree with me about the idea of spreading your wealth and choosing your financial accounts a la carte to get the best deals.

Now, I am not the ideal person to emulate as I have too much complexity in my financial accounts. The only good news is that I have tried so many of them. Here are the accounts that I currently have open, and what I think about them. For the most part, my experiences align with the Consumer Reports findings.

Megabank: Bank of America

  • Pros: ATMs and branches everywhere nearby. Good online and app user interface (Touch ID). Good perks when combined with brokerage and credit cards.
  • Cons: Basically-zero interest rates.

Credit Union: Local, Community CU

  • Pros: Free notary, low interest rate HELOC.
  • Cons: Small ATM and branch footprint, poor online and app user interface, current low interest rates (used to have a rewards checking account).

Primarily Online Bank: Ally Bank (see Ally review)

  • Pros: High interest rates, fast and flexible interbank transfers, good customer service, good online and app user interface (Touch ID).
  • Cons: No physical branches.

Prepaid Card: NetSpend (see NetSpend review)

  • Pros: 5% APY on $5,000 balance if card kept active. (Update: 5% APY on $1,000 starting 7/1/16.)
  • Cons: Certain fees and fine print to work around.

In terms of the convenience factor, my new favorite feature is Touch ID with Apple iPhones. (Android has their own version, I’m just not familiar with it.) BofA, Ally Bank, Mint, Fidelity, and Robinhood supporting this app feature, I can now get full access to transaction history and even initiate online transfers in under 10 seconds. I hope Vanguard adds this soon (cough, cough!).

Santander Bank extra20 Checking: Ending July 1st for Existing Customers

Update April 2016. I originally wrote about this promotion in October 2013, and many readers have been getting $20 of interest every month on a relatively low balance (worked out to 16% APY on $1,500 average balance). With a 1% APY savings account, you’d need $24,000 to get the same amount of interest! Unfortunately, Santander Bank recently announced that this promotion will end and accounts will be converted to a Simply Right checking account later this year (reports include either July 1st or December 1st, 2016).

I would note that this deal lasted for over 2.5 years, longer than I thought it would. Just like with 5% APY Netspend prepaid cards, you can’t really predict how long deals will last. Some end earlier than you think, some end later. Don’t forget to close your account in July, unless you’ve gotten attached to your Santander account (which was always the idea!).

Original post from October 2013 (deal is no longer available):

[Read more…]

John Oliver on Why The Credit Report Industry is Awful

John Oliver of HBO’s Last Week Tonight did a humorous monologue on why credit reporting bureaus are awful. Appropriately, it was last week and I finally got around to watching the 18-minute video tonight. Here is the full video link, embedded below:

Here’s the condensed version:

  • Your credit report can affect your ability to borrow (and thus buy a home), your ability to rent, the price you pay for all kinds of stuff, and even your ability to get a job. Sheesh, what else is there left?
  • 1 in 20 credit reports have errors that are significant enough to hurt your chances at the rather important things I just listed above. That’s 10 million Americans.
  • In an effort to show Equifax, Experian, and TransUnion how such errors can hurt both reputations and business, they created the three websites Equifacks.com, Experianne.com, and TramsOnion.com. (Warning: I left some of these unlinked because they may be considered NSFW.)

In general, I do not micromanage my credit score, but it is scary than an error outside your control could have such harmful effects on your day-to-day life. Perhaps this information will also motivate you to check your credit and consumer reports if you haven’t done so recently. There are also an increasing number of free and/or ad-supported sources of credit reports, credit monitoring, and credit scores. The bad news is that the error dispute process is still slow and complicated, and after you try patience and perseverance, you may need to lawyer up in order to get their attention.

Nickel: Kid Allowance App + Debit Card + Set Your Own Custom Interest Rate

nickelapplogo

If you’re reading this, you obviously value financial knowledge and creating a secure life for you and your family. If you have kids, then you want them to develop the same skills. The NYT bestseller book The Opposite of Spoiled explored the many modern ways to teach kids about money. One recommendation for allowances is to split it up into three jars: savings, giving, and spending.

For that saving jar, an additional hack would be to pay your kids interest on their savings. For example, you could pay a monthly interest rate of 10%, which is huge in the adult world, but for a kid you need it to be large enough to be “felt” and hopefully teach them the following concepts:

  • Regular, automatic savings. Let’s say you give them $10 a week that is automatically saved. (They don’t manually move money over every week, it just happens like a 401k plan.) Even with no interest, two and half months later, they’ll have a hundred bucks!
  • Passive income. Now you could introduce the concept of paying interest. When they see their $100 pay $10 in interest at the end of the month, perhaps they will start to understand the power of passive income. “I could keep the $100 in there and still get to spend $10 every month forever!”
  • Compound interest. Now show them how they can get interest on their interest. If they start with $100, don’t take any money out, don’t save a penny more, at 10% monthly interest they will still have $314 after 12 months of compounding.
  • Compound interest + regular savings! If they start with $100, don’t take any money out, keep saving another $10 a week, at 10% monthly interest they will have $549 after a 12 months of compounding. This is starting to become serious money!
  • Passive income revisited. A year later, that passive income isn’t $10 a month anymore, it has become $55 a month! This would be a good time to tell you that parents pay the interest, so if you have a little Warren Buffett at home you should set a cap on interest payments upfront. 😉

There are a growing number of “allowance apps” to cater to this market, but Nickel (iOS only, Android “not yet”) is one of the first services that I’ve seen implement this custom interest rate feature. Designed for kids age 8 and up, Nickel offers a reloadable debit card and a smartphone app for you and the kid. The parent can view all transactions and control things like allowance amount, one-time transfers, and interest rates.

Much like adult prepaid cards with 5% APY savings accounts, there are two buckets of money: the “Card” account which is available to spend via Mastercard debit, and “Pocket” account which earns interest. Here’s a 1-minute video explainer and some screenshots of the interest rate feature:

nickelapp2

Finally, apps are cool, but let’s not forget the core values and character traits that lead to good behavior in general.

The New Financial Bundle: Checking + Savings + Credit Card + Brokerage + Retirement Advice

allytk

Last week, Ally Financial announced that they are acquiring TradeKing. What made this interesting was that they didn’t refer to TradeKing as a discount brokerage firm, but a “digital wealth management company”. This another move from independent start-up (TradeKing merged with Zecco earlier) to big, corporate “bundle”. The traditional communications bundle includes TV, home internet, home phone, cellular phone, and cellular data. The new financial bundle will include:

  • Checking account – Daily cash management, paycheck target, online bill payment, ATM access, debit cards.
  • Savings account – Liquid savings, higher interest rate.
  • Credit card – Easily-accessed credit line.
  • Self-directed brokerage account – DIY investments including individual stocks, options trading.
  • Professional portfolio management – Managed accounts including advice regarding asset allocation, taxes, retirement income, and more. Both lower-cost robo-advisor and higher-touch human advisor platforms.

Here’s my opinionated rundown on some of the bigger firms in this new area. Some of the “pros” aren’t that strong, and some of the “cons” aren’t that bad, but it helps organize my thoughts.

Ally Financial / TradeKing

  • Pros: Competitive interest rates on checking and savings, ATM fee reimbursements, $5 brokerage trades.
  • Cons: No physical branches. No credit cards (yet). Robo-advisor program is still relatively small and new.

Bank of America

  • Pros: Huge physical branch and in-house ATM footprint. Merrill Edge commission-free trades starting at $25k minimum asset balance, $6.95 trades otherwise. Credit card rewards bonus with minimum asset balance.
  • Cons: Low interest rates on banking products. Merrill Lynch advisor network is big and uses traditional fee system, so I’m not a huge fan but others may like it. No robo-advisor program (yet).

Fidelity

  • Pros: Decent cash management account with ATM fee reimbursements, selected commission-free ETFs, somewhat limited but low-cost index fund selection, $7.95 trades otherwise, 2% cash back credit card.
  • Cons: Low interest rates on banking products, human-based Portfolio Advice is relatively expensive and pushes expensive actively-managed funds. Lower-cost robo-advisor is probably coming soon, but yet released.

Schwab

  • Pros: Decent cash management account with ATM fee reimbursements, commission-free Schwab ETF trades with low-cost index options, $8.95 trades otherwise, 1.5% cash back American Express, low-cost robo-advisor via Intelligent Portfolios.
  • Cons: Low interest rates on banking products.

Vanguard

  • Pros: Large selection of low-cost funds and ETFs, commission-free Vanguard ETF trades for all, $7 non-Vanguard ETF/stock trades (or less based on asset level). Portfolio advice includes robo-component plus available human representative.
  • Cons: Limited availability and features on banking accounts. Limited portfolio support for buying non-Vanguard products. No credit cards.

I still believe that the self-directed investor is best off picking individual products a la carte, but it will be interesting to see how things change in the coming years. Each financial mega-institution will likely improve upon their weaknesses, and offer significant perks and discounts for keeping all your money with them.

Bank of America Overdraft Fee Refund

boansfUpdated. Although I originally wrote this post a few years ago, it (unfortunately) still gets regular traffic. Bank reforms instituted in 2010 made overdraft “protection” only applicable on an opt-in basis on ATM/debit card usage. Despite this fact, U.S. banks still collected over $6 billion dollars in overdraft fees in 2015.

The advice below on how to get a BofA overdraft fee refunded still works, as many positive e-mails and comments will attest. But you should also ask to turn OFF your overdraft protection as many people are confused on the actual meaning of the service. If you opt-out of overdraft protection and try to use your debit card with an insufficient balance, you will simply get denied with no fee. If you opt-in to overdraft protection and try to use your debit card with an insufficient balance, your purchase will go through but you will get charged a fee of roughly $35 on each instance. Now you know why I put quotation marks around “protection”.

Just Ask!

I was hit with an overdraft fee from Bank of America when I was trying to close out an account. Luckily, I was able to get it refunded to me. The answer is always no if you don’t ask, so don’t give up the opportunity to save hundreds of dollars with a 10-minute phone call! A few tips:

  • Be nice but firm. Customer service reps are people. This is not the time to outline all the reasons why their overdraft system is unfair. The employee is never going to be able to admit “Yes, they are unfair!”, and you’re only going to put them on the defensive.
  • Admit you made a mistake, and include your personal story. Perhaps you and your spouse had a miscommunication and lost track of the bank balance. Your contractor finally cashed a check from 8 months ago that you forgot about. A spokesperson from Bank of America said they “may waive unemployed consumers’ fees on a case-by-case basis.”
  • Help them find a reason to help you. Are you a first-time offender? Are you a long-time customer? Do you have other accounts with Bank of America? Credit card, loans, or business accounts? Show them you are a profitable customer worth keeping.
  • Try different communication avenues. I used to visit my local branch a lot, and have had some good success with going directly there. Your mileage my vary, but also try any combination of Live Chat, E-mail, and Telephone.

“Hi, I was recently charged an overdraft fee when an old check got cashed. I totally forgot about it and it was my fault. However, I’ve been with BofA for X years, and this is my first overdraft fee. I am calling to see if I am able to get this waived.”

Denied? Escalate!

If you’re not satisfied with your response, it has paid off for many customers to escalate your request to the “Executive Customer Relations” division of Bank of America. Read the many relieved comments below.

Call Executive Customer Relations:
Executive Customer Relations general line: 704-386-5687

E-mail a Bank of America Customer Advocate:
Melissa Russell
Customer Advocate
Office of the Chairman
800-669-2443 Ext 2809
melissa.d.russell@bankofamerica.com

Crystal R. Peterson
Customer Advocate
Office of the CEO and President
336-805-3126
crystal.peterson@bankofamerica.com

A sample success story:

Emailed the office of the chairman 2 weeks ago and received a call today from that office. They credited back $440 in overdraft fees. Issue was my fault since i made the purchases but the merchant submitted all transactions for 3 months on one day. Pretty happy with the result.

Write a snail-mail letter to the CEO:
Brian Thomas Moynihan
100 N. Tryon Street
Mail Code NC-1-007-18-01
Charlotte, NC 28255

Another success story:

Thank you, thank you, thank you. After reading the post about the BoA customer who got $280 in NSF fees refunded, I wrote BoA myself. They had charged me 7 NSF fees in succession (which sucked ass) and was my fault. […] So I wrote a formal letter of complaint to Kenneth Lewis. This past Saturday, they refunded all of the fees – even though it was my fault. I can’t believe it. That rocks. People do have the power.

MaxMyInterest.com Review: Automated Interest Rate Chasing

mmi_logoBack when interest rates were higher, I was a “rate chaser” that was constantly shifting my cash balances to whatever promotional rate was highest. With the growing popularity of “robo-advisors” that manage your retirement portfolio using automated software, what if there was a robo-advisor for rate chasing? Instead of switching between ETFs or mutual funds, you would switch between banks.

That’s the basic idea behind MaxMyInterest.com (Max). You set a Target Value you’d like to keep in your standard “brick-and-mortar” checking account. Max will then sweep any excess funds into whatever online savings bank has the highest yield. If their rates change, Max can move your money again. If your checking account balance gets low, Max will move money back into your checking account for you. The ole’ hub and spoke graphic:

mmi_spoke

If your balance exceeds the FDIC insurance limits of $250,000 per account type, Max will move the rest into the bank with the next-highest yield, and so on. This screenshot is a bit dated, but it shows you the general idea for very large balances.

mmi_ui

What banks does it work with? They officially support checking accounts from the following big banks. Their application suggests that they may support other checking accounts. (The official list has also expanded a bit since their launch.)

  • Bank of America
  • Citibank
  • First Republic Bank
  • JPMorgan/Chase
  • Wells Fargo
  • Charles Schwab Bank
  • US Bank

Max will use one of these five online banks as your spokes (others may be added in the future, but only these work right now):

  • Ally Bank
  • American Express
  • Barclays
  • Capital One 360
  • GE Capital

You can have them open already, or you can only open a few, or you can use their “common application” to apply for all of them at once.

The cost? 0.02% per quarter, or 0.08% per year.

Recap. I certainly think the idea is a neat one. But considering the cost and restrictions to the specific five online banks, the greatest appeal of MaxMyInterest is probably to people with $250,000+ balances that want the maintain the safety FDIC-insurance without having to juggle multiple accounts on their own. Money market funds in brokerage accounts are still stuck offering relatively low yields. You can get an idea of their target audience from their marketing materials. I didn’t even know Hermes sold ties, let alone that they cost $200 a pop!

mmi_hermes

For most people that don’t have that much sitting around in cash, simply picking a single online savings account with a good track record of offering high interest rates should be good enough. These days, I primarily use Ally Bank (review). At this writing (2/28/16), GE Capital is the highest out of the 5, at 1.05% while Ally offers 1.00%, so with the 0.08% fee I’m still better off on my own. With more modest balances of about $5,000 to $20,000, you can actually get higher interest rates using rewards checking accounts or prepaid-linked savings accounts, albeit with some hoops each month to jump through.

Consumers Credit Union Free Rewards Checking Review – New Rate Tiers

ccu_logo_200Consumers Credit Union (CCU) has a Free Rewards Checking account that offers a high interest rate between 3.09% and 4.59% APY if you meet certain requirements. As with similar accounts elsewhere, the catch is if you don’t jump through all of the hoops, you effectively won’t earn any interest at all that month (0.01% APY). As of February 1st, 2016, their rates, balance tiers, and requirements were changed. Let’s take a closer look at the new structure.

Membership
To open a Rewards Checking account, you must be a member. However, CCU has a very open membership policy; basically anyone nationwide can join if they do the following:

  • Join the Consumers Cooperative Association with a one-time $5 fee.
  • Open and maintain a share savings account with a minimum $5 deposit.

Earn 3.09% APY on up to $10,000 + ATM Fee Refunds if you:

  • Complete at least 12 Debit/Check Card point-of-sale purchases (transactions must be made without using your personal identification number [PIN] to count toward the minimum of 12 and must post and clear your account on or before the last day of the calendar month). In stores, select to run it as a “credit” purchase.
  • At least one of the following transactions must post and clear on or before the last day of the calendar month: direct deposit OR ACH debit OR electronic bill payment via CCU’s Free Online Bill Pay.
  • Access Online or Mobile Banking at least once each calendar month
  • Receive e-Documents (enroll and accept the disclosure)

Earn 3.59% APY on up to $15,000 + ATM Fee Refunds if you:

  • Complete all of the 3.09% Tier requirements above, plus
  • $500 or more in CCU VISA Credit Card purchase transactions

Earn 4.59% APY on up to $20,000 + ATM Fee Refunds if you:

  • Complete all of the 3.09% Tier requirements above, plus
  • $1,000 or more in CCU VISA Credit Card purchase transactions

A nice feature is that their online interface has a progress tracker, updated daily, telling you number of debit card transaction and the total spend on your CCU credit card.

ccu_tracker

Tracking is also available via their smartphone app (Apple/Android):

ccu_trackerapp

All tiers will also receive:

  • No minimum balance. No monthly service fees.
  • Free online Bill Pay.
  • Mobile check deposit via smartphone app.

Excess Balances
Note that each tier has it’s own specific APY and balance limitations. Here is a table that shows the APY if you exceed the high-interest balance limits.

ccu_excess

Qualifying Credit Cards
If you don’t have a CCU credit card, the best you can do is the 3.09% APY tier. Here is a list of their credit cards. It looks like the best one is their Visa Signature Cash Rebate Card, which offers a 3% cash rebate on up to $6,000 in “Grocery/Convenience Store” purchases annually, 2% cash rebate for “Gas” purchases, and 1% cash rebate for all other purchases. No annual fee.

Cost/Benefit Analysis
As a benchmark, I choose a “no hassle” high-yield savings account which would roughly yield 1% APY. You could also use a certificate of deposit, but a rewards checking account is liquid with no early withdrawal penalties.

  • $10,000 times 3.09% APY would be $309 per year, or $25.75 per month in interest. $10,000 times 1.00% APY would be $100 per year, or $8.33 per month in interest.
  • $15,000 times 3.59% APY would be $538.50 per year, or $44.88 per month in interest. $15,000 times 1.00% APY would be $200 per year, or $16.67 per month in interest.
  • $20,000 times 4.59% APY would be $918 per year, or $76.50 per month in interest. $20,000 times 1.00% APY would be $300 per year, or $25 per month in interest.

The 3.09% APY tier would be an increase of $17.42 per month over 1% APY, in exchange for tracking 12 debit card purchases a month. If you keep those debit purchases small, then you’d come out ahead by about $200 per year.

The 3.59% APY tier would be an increase of $28.21 per month over 1% APY, in exchange for tracking 12 debit card purchases a month plus $500 in credit card purchases. Let’s say you could earn 2% cash back on credit card purchases elsewhere, but only 1% on a CCU credit card. That is a loss of $5 in (non-taxable) rewards per month, for a net increase of $23.21 per month ($278 per year).

The 4.59% APY tier would be an increase of $51.50 per month over 1% APY, in exchange for tracking 12 debit card purchases a month plus $1,000 in credit card purchases. Let’s say you could earn 2% cash back on credit card purchases elsewhere, but only 1% on a CCU credit card. That is a loss of $10 in (non-taxable) rewards per month, for a net increase of $41.50 per month ($498 per year).

To qualify for the 3.59% APY and 4.59% APY tiers, you’d also have to apply for a new credit card, which would entail a credit check. There is an opportunity cost here, as there are other new credit cards that offer $400 or $500 in sign-up incentives within a few months. You can apply for multiple new credit cards, but once you reach a certain number it will hurt your chances for getting the next one.

My thoughts. These types of checking accounts are not for everyone. Not only do you have to jump through hoops each month to get a reward (higher interest than no-hassle account), if you don’t you’ll actually get punished in a way (lower interest than a no-hassle account). Try to create a reliable system where you satisfy the requirements early on in the month, for example putting some automatic insurance, phone, or utility bills on the credit card. My favorite feature is their qualification tracking; I wish all rewards checking accounts had this feature.

To justify the opportunity cost of getting a new credit card, you should definitely try to reach the 4.59% APY tier. The changes have made the middle 3.59% APY tier much less attractive than before. Otherwise, the debit card-only 3.09% APY tier isn’t bad for more modest balances. Keep in mind that there is no longer any guarantee on how long these rates will last. The positive spin would be that CCU has been running a rewards checking account now for well over 5 years, so hopefully they have crunched the numbers and set the rates at sustainable levels.

FileThis App Review: Automatically Backup Your Online Statements

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A few months ago on my post about Paperless vs. Paper Statements, I received this helpful comment from reader Daveraham:

I like the services FileThis.com. It’s setup similar to MInt, where it stores account information, but instead of fetching dollar amounts and transactions, it grabs every statement available and stores them where you direct. Personally I store it an evernote account and then periodically pull it off to store on a removable HD that get’s stored in a fireproof box. Overkill?? Sure…. But its the point. You want to keep that snapshot of data for a long period of time.

I made a mental note to check the site out and… promptly forgot. I was again reminded in this Liz Weston article about apps to organize your financial life. In November 2015, FileThis announced their 2.0 version with new features. You can use the FileThis.com website, iOS app, or Android app (1.0 version only for now).

FileThis is now one of many “bill organizers” that ask for your account passwords in order to sift through your accounts and remind you of due dates. Personally, I don’t need or use due date reminders. I sit down at the end of every month, read through all my paper statements, track expenses, and pay my bills. I’m an old fart like that (although I do use free online billpay).

I previously shared that I maintain physical statements for critical financial accounts and have it mailed to a secure PO Box. But I also have several other financial accounts which are either dormant, temporarily opened for reviews or experiments, or have low balances which are set to paperless. Ideally, I would still log in and download those PDF statements every month and back them up. But I never do.

FileThis will log in and automatically download all your paperless statements and then save them to your cloud service of choice: Evernote, Dropbox, Google Drive, Box, Amazon Cloud, and more. You can even use their in-house storage (500 mb free). The cost options:

  • Free for up to six (6) connections. Checks weekly.
  • $2 a month ($20 a year upfront) for up to 12 connections. Checks weekly.
  • $5 a month ($50 a year upfront) for up to 30 connections. Checks daily.

Besides things like bank accounts, credit cards, and brokerage statements, FileThis will grab stuff from your mortgage provider, car loan servicer, cell phone bill, utility bills, insurance bills, and even online shopping accounts like Amazon. An added bonus is that they will even grab tax documents like 1099 forms.

I linked up a few accounts, the list is relatively extensive but it couldn’t find a local credit union. Here are some screenshots from my website and smartphone app.

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Remember that the actual files are on your cloud service. Here’s a screenshot from my Dropbox app. The files are stored in the folder Dropbox > Apps > FileThis.

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This is pretty cool. The initial download basically grabbed all the older documents that were available as well (up to last 3 years, supposedly). They’ll even grab PDF statements if you also get mailed paper statements (assuming they are available), giving you an additional backup copy.

By allowing backups directly to a third-party cloud service (Dropbox in my case), I will still have all of my online statements even if FileThis shuts down some day (remember Manilla?).

The trade-off here is that another FinTech startup has your account logins and passwords. Their security measures seem fair enough (encrypted SSL transmission, passwords are encrypted on server, the documents can be stored at your cloud service). I already track my paperless accounts in real-time with Mint, but I am willing to make this trade-off as I think it’s worth it to have my old statements backed up for me. (Why can’t Mint do this for me too?) The only other service I know that offers something similar is Finovera, but I think they store the statements on their own servers as opposed to your personal Dropbox.

As an existing user, if you sign up using my referral link, both you and I will receive an additional free connection (so you’d have a total of 7 free to start) and an additional 250 mb of free in-house cloud storage.

Square IPO, Direct Deposit Loans, and Controlling Your Cashflow

squaredongleAs you’ve probably heard, the Square IPO was completed last week. For a while, I didn’t understand how a company could have a $4 billion valuation when they basically offer a simplified merchant account. They let small businesses accept credit cards, which means they skim a tiny bit off the 2.75% they charge while most of it goes straight to the networks. (Add in their other expenses, and Square has never made a profit.) Wouldn’t you rather own Visa or American Express directly?

Then I read this Bloomberg Businessweek article How Two Guys Lost God and Found $40 Million (And sold Wall Street on a shady new kind of finance). Although I try my best to avoid carrying any debt, I do try to keep up with the industry. With a normal credit card, you are waiting around for the borrower to pay you back your principal + interest. The borrower gets their paycheck, pays for rent and food and whatever else, and hopefully gets around to pay you some interest. Here’s a cashflow visual:

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What these guys profiled in Businessweek did is give struggling small businesses a merchant account, and also lend them money. The key difference of their “merchant cash advance” service is that they would take the loan payments (including interest) directly from their gross credit card receipts! They were lending to horrible credit risks at sky-high rates (because nobody else would lend to them), but they knew they’d be fine because were first in line to snatch any incoming money before the business owner could even touch it. Here the modified cashflow visual:

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Hmmm… if Square can pull something like that off on a big scale, maybe they can be worth billions. It turns out that both Square and Paypal do this same sort of lending. They lend to small businesses and taking money out from the incoming transactions. From a WSJ article dated May 2015:

Paypal said it has doled out $500 million in loans in the first year-and-a-half since it introduced the lending program. And rival Square recently said it had extended more than $100 million in cash advances in the year since it started its own version. […] PayPal, like Square, deducts money from merchants’ accounts based on their receipts, so that they aren’t on the hook if business slows.

From another WSJ article dated September 2015:

At both PayPal and Square, payments are taken as a portion of transaction volume, meaning merchants repay more when sales are high and don’t pay on days without sales. That allows for easier repayments, but makes it difficult to calculate an annual interest rate.

Wow. Ingenious or evil genius? It would be like lending to everyday people but being able to intercept their paychecks before they even landed in their bank accounts. You’d get the money before people could even have the chance to default (or pay for food). Some banks already have something called “direct deposit loans” allow them direct access to bank accounts, taking payments almost immediately after your paycheck arrives. It is possible for motivated people to switch off their direct deposit or move banks, but you’re giving the lenders a built-in advantage.

(A problem for Square is that competitor PayPal also does the free credit card swiper thing, but PayPal can avoid paying Visa and Mastercard whenever a user buys something with their existing PayPal balance. They just move some money around internally and pocket the savings.)

So what’s my point? For one, Square may have a growing profit source from these first-in-line loans to small businesses. Second, as a smart consumer, you should be careful to stay in control of your cashflow. I’d never give a lender permission to withdraw money at any time from my bank account. They should have to wait for me to pay them.