Sharonview Federal Credit Union: 64-Month CD at 4% APY

(Update: As of 3/10/18, this offer is expired. If you opened a Sharonview membership by the end of business (5pm ET) on Friday 3/9, you should be able to fund your certificate if done soon. I would contact them for details, they have been quite professional and reasonable based on my own interactions with them.)

sharonview2Sharonview Federal Credit Union has a limited-time certificate special on their 64-month Share Certificate at 4% APY. NCUA-insured. Found via DepositAccounts. Here are the highlights:

  • Minimum new money deposit of $500 required.
  • Regular or IRA option.
  • Deposit up to $100,000 of existing funds.
  • Deposit up to $250,000 of new funds.
  • Penalty for early withdrawal is 365 days dividends on the amount withdrawn. The penalty will, if necessary, be taken from the principal amount of the deposit.
  • For share certificates, there is a 5 day grace period provided at maturity.
  • Hard credit pull with a new membership application (according to various reports)

Membership eligibility. Their eligibility criteria is relatively open. Anyone who lives in North Carolina, South Caroline, Georgia, Tennessee, or Virginia can join if they are a member of the Carolina Consumer Council (CCC). Use promo code SFCU and the dues will even be waived. It has been noted that the CCC falls under the American Consumer Council (ACC), of which some of you may already be a member. It is not completely clear if ACC membership alone is adequate for joining the credit union.

In any case, it appears that anyone nationwide can join Sharonview FCU by joining the Hobby Farmers of America with a one-time $20 fee.

Good deal? If you have a lot of cash that you want to park safely for 5 years, this is a top rate by a full percentage point or so. A 5-year Treasury bond currently yields about 2.6%. The hard credit pull and possible $20 entry fee make it better for high balances to make it worth the trouble. Note that the 365-day early withdrawal penalty is relatively stiff, as for example you would have to keep it in there for at least two years just to get 2% APY. If you withdraw within the first year, you’ll actually lose money.

I think the deal is good enough to worry if this deal will last until next week. This credit union is not tiny, but it isn’t huge either. It is quite possible that there will be enough new applications to overwhelm their staff (and deposit needs). You might pony up $20, start the application process, take the credit pull hit, and have the deal fall apart before you can fund the certificate. I’m not saying this will happen, but it is possible. (I suppose it is also possible that this is only the start of multiple places offering 4% APY CDs). Basically, if you’re interested, I would act immediately.

Best Interest Rates on Cash – March 2018

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We just helped an older relative renew a 12-month CD at her local bank branch for 0.30% APY. She had no need nor desire to move it elsewhere for a higher interest rate. I suppose this partially explains the piddly rates that many traditional banks can offer and still get away with it. But if you’re reading this, you have internet access and an e-mail address! Keep those big banks on their toes and shop around.

Here is my monthly roundup of the best safe rates available, roughly sorted from shortest to longest maturities. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much additional interest you’d earn if you switched over. Rates listed are available to everyone nationwide. Rates checked as of 3/1/18.

High-yield savings accounts
While the huge brick-and-mortar banks rarely offer good yields, there are a number of online savings accounts offering much higher rates. Keep in mind that with savings accounts, the interest rates can change at any time.

  • Some familiar pre-crisis names are rising back up. Remember EmigrantDirect? Its brother DollarSavingsDirect is at 1.80% APY. Former top bank FNBO Direct is now at 1.60% APY. Redneck Bank/All America Bank is at 1.75% APY (max balance $50k).
  • My “hub” bank account is the Ally Bank Savings + Checking combo due to their history of competitive rates, 1-day external bank transfers, and overall user experience. I then move money elsewhere if the rate is significantly higher (and preferably locked in via CD rate). The free overdraft transfers from savings allows to me to keep my checking balance at a minimum. Ally Savings has been raising their rates, but it still lags a bit at 1.45% APY.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, you should know that money market and short-term Treasury rates have been rising. The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 1.52% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.36%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 1.93% SEC Yield ($3,000 min) and 2.03% SEC Yield ($50,000 min). The average duration is ~1 year.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 1.82% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 1.92% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Short-term guaranteed rates (1 year and under)
I am often asked what to do with a big wad of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple. If not a savings account, then put it in a short-term CD under the FDIC limits until you have a plan.

  • CIT Bank 11-Month No-Penalty CD is at 1.85% APY with a $1,000 minimum deposit and no withdrawal penalty seven days or later after funds have been received. The lack of early withdrawal penalty means that your interest rate can never go down for 11 months, but you can always jump ship if rates rise. Full review. You can open multiple CDs in smaller increments if you want more flexibility.
  • NASA Federal Credit Union has a promotional 11-month CD at 2.25% APY ($20,000 minimum). However, you should be sure to keep it in there the entire term as the Early withdrawal penalty is 182 days of interest. Ally Bank has a 12-month CD at 2.00% APY again, but with $25,000 minimum deposit. Early withdrawal penalty is 60 days of interest.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2017 and April 2018 will earn a 2.58% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. At the very minimum, the total yield after 12 months will be 1.29% with additional upside potential. More info here.
  • In mid-April 2018, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). The offers also tend to disappear with little notice. Some folks don’t mind the extra work and attention required, while others do.

  • 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. Earning 4% extra interest on $5,000 is $200 a year.

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. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop quickly, leaving a “bait-and-switch” feeling. For example, Northpointe Bank was mentioned for several months here but recently stopped accepting new applications and a few months later dropped to 1% APY for existing customers. That’s just how it goes with these types of accounts.

  • Consumers Credit Union offers up to 4.59% APY on up to a $20k balance, although getting 3.09% APY on a $10k balance has a much shorter list of requirements. The 4.59% APY requires you to apply for a 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 after-tax). Find a local rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
You might have larger balances, either because you are using CDs instead of bonds or you simply want a large cash reserves. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider a custom CD ladder of different maturity lengths such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account.

  • Live Oak Bank has an 18-month CD at 2.30% APY ($2,500 min). Early withdrawal penalty is 90 days of interest. Both Fidelity and Vanguard have 2-year brokered CDs at 2.50% APY (see below).
  • Ally Bank has a 5-year CD at 2.50% APY ($25,000 minimum) with a relatively short 150-day early withdrawal penalty and no credit union membership hoops. For example, if you closed this CD after 2 years you’d still get an 1.99% effective APY even after accounting for the penalty.
  • Both Connexus Credit Union and Mountain America Credit Union have a 5-year Share Certificate at 3.00% APY (minimum deposit varies). Both can be joined via a partner organization for a one-time $5 fee, usually right on the online application. I previously ran a Ally vs. Connexus 5-year CD comparison to show the effect of a larger early withdrawal penalty. Ally rates have risen a bit since that post was published.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is showing a 10-year non-callable CD at 3.05% APY (Watch out for higher rates from callable CDs from Fidelity.) Unfortunately, current CD rates do not rise much higher even as you extend beyond a 5-year maturity.
  • 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). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years.

All rates were checked as of 3/1/18.


CIT Bank No-Penalty CD

Citi ThankYou Premier Card Review – 50,000 Bonus Points

Citi Premier CardThe Citi ThankYou® Premier Card has re-launched from our partner Citi, with an 50,000 point sign-up bonus (worth $625 in airfare towards any airline) plus a waived annual fee for the first year. Here are the rest of the highlights:

  • Earn 50,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening*
  • Earn 3X Points on Travel, Including Gas Stations
  • Earn 2X Points on Dining Out and Entertainment
  • Earn 1X Points on All Other Purchases
  • Points are redeemable for $625 in airfare on any airline, anytime with no blackout dates when booked through the ThankYou® Travel Center, or $500 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • Points Transfer allows you to transfer points to participating airline and hotel loyalty programs.
  • No Foreign Transaction Fees on purchases*

Triple points include both air/hotel/car rental and daily commute items. The triple (3X) points on on travel includes hotels, airfare, taxis, car rental, public transportation, parking, cruises, and even gas. When combined with the 25% travel premium, makes that equivalent to a 3.75% reward towards gas and travel booked through Citi Travel Center. The double (2X) on restaurants (includes bars and fast food) and entertainment (sporting events) makes that 2.5% towards travel booked through Citi Travel Center.

Bonus details. The sign-up bonus was formerly 30,000 ThankYou points, and while we have seen 60,000 for short periods in the past, it has been a while and 50,000 points is a historically high number. Note the following fine print:

Bonus ThankYou Points are not available if you have had a ThankYou Preferred, ThankYou Premier or Citi Prestige card opened or closed in the past 24 months.

What can you do with 50,000 ThankYou Points? Citi has been trying to improve the value and flexibility of ThankYou points, so here is a rundown of what you can do with 50,000 of them. Bonus ThankYou Points not available if you have had a Citi ThankYou Premier card opened or closed in the past 18 months.

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$625 towards flexible airfare, hotel nights, car rentals, and cruises. With the new Citi Premier card, you get a 20% discount on the standard number of points needed for a travel redemption. That is the same as saying 1 ThankYou point = 1.25 cents towards travel. Note that this 25% bonus applies all of your points from all Citi cards linked to the same ThankYou account, thus boosting the value of all your other points.

That means 50,000 ThankYou points will get you $625 in airfare, hotel nights, car rentals, and cruises book through the Citi Travel Center, which in my experience had the same total price with taxes as compared to Expedia, Orbitz, etc. Since you can book any flight that can be otherwise purchased with cash, there are “no blackout dates”.

This can be even more flexible because you can use it across multiple flights, multiple passengers, and you can even do partial redemptions. Let’s say you found a ticket that want for $200 = 16,000 points, but only have 10,000 points available. Citi now lets you pay the difference, so in this case you can get your $200 ticket for 10,000 points and $75. This makes it much easier to use up all of your points at a 25% premium.

$500 in gift, $500 check towards student loan or mortgage. You can view your redemption options at ThankYou.com. I took a quick look and it takes 10,000 ThankYou (TY) points to redeem for a $100 gift card to retailers like Gap, Banana Republic, Barnes & Noble, Bath and Body Works, Bed Bath & Beyond, Cabelas, CVS Pharmacy, Kohl’s, Land’s End, LL Bean, Sears, Lowe’s, Home Depot, Staples, and Walmart. So with 50,000 TY points, you could get five $100 gift cards from different stores.

For a check mailed to you, it is 8,000 points for $50 (1 points = 0.625 cent). A better conversion ratio comes from a check mailed towards your mortgage payment or student loan (it arrives made out to your lender), which is 7,500 points for $75 (1 points = 1 cent).

Hotel points and airline miles transfer options. Citi ThankYou points are also now available to transfer to certain airline mileage programs on a 1:1 basis including JetBlue, Cathay Pacific, EVA Air, Etihad, Flying Blue by Air France and KLM, Singapore Airlines, and Thai Airways. For example, 50,000 TY points can get you 50,000 Singapore Airlines KrisFlyer miles. If you know how to redeem these points wisely, you can get a lot of value.

Bottom line.  Now that I am booking family travel around school schedules, I appreciate the ability to redeem ThankYou points towards any airline without worrying about using a specific airline or hunting for “saver awards”. 50,000 points = $625 in airfare on any airline, anytime with no blackout dates when booked through the ThankYou travel center. The $95 annual fee is waived for the first 12 months, so you can “try before you buy”. If you are willing to do the legwork, the airline transfer partners may get you better value for international flights (or JetBlue for domestic).

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.”

Amex EveryDay Credit Card from American Express: $0 Balance Transfer Fee Offer

Amex Everyday Card w ButtonAmerican Express has improved the new member offer on the The Amex EveryDay® Credit Card from American Express card to include no balance transfer fee on their intro 0% APR period. Here are the details:

  • 0% intro APR for 15 months on purchases and balance transfers for new card members. After that, a variable APR applies.
  • $0 balance transfer fees on balance transfers made within the first 60 days of account opening.
  • Welcome bonus of 10,000 Membership Rewards Points after making $1,000 in purchases in the first 3 months for new card members.

It has been a long time since I recall an AmEx with a no balance transfer fee offer. If you have high-interest balances on other card issuers (Chase, Citi, Bank of America, Wells Fargo, etc), this may be a good opportunity to lower your interest charges and pay off that debt faster. Note the following:

Welcome bonus offer not available to applicants who have or have had this product.

Here is the ongoing rewards program:

  • 2x points at US supermarkets on up to $6,000 per year in purchases.
  • 1x points on all other purchases for every eligible dollar you spend.
  • 20% more points: Make 20 or more purchases with your Card in a billing period and earn 20% more points on those purchases less returns and credits.
  • No annual fee.

The unique benefit of this consumer card is that it earns Membership Rewards (MR) points with no annual fee. In addition, if you have Membership Rewards points earned from other American Express cards, having this card would keep all of your MR points from expiring even if you closed those other cards (perhaps to avoid the annual fees). You could always spend or convert the points immediately, but this way you keep the flexibility to transfer the points into a variety of frequent flier miles as needed.

Bottom line. The Amex EveryDay® Credit Card from American Express allows to you earn and maintain Membership Rewards points with no annual fee. The sign-up perks have been improved to include a $0 balance transfer fee and an extended 0% intro APR for 15 months on purchases and balance transfers. If you have high-interest balances on other card issuers, this may be a good opportunity to lower your interest charges and pay off that debt faster.

Discover Card + Amazon 1-Click $10 Promotion

Updated. It looks like this offer is back as of February 2018. I was able to get another $10 credit even though I already got the previous $10 credit back in September. I still had the Discover card as my default 1-click payment method, but I did change to a Chase card right before clicking on the promo link below (not sure if that made any difference).

Original post:

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Amazon has a targeted offer for $10 Amazon credit when you switch your 1-Click default payment method to an eligible Discover credit card. They’ve run similar offers for Citi and Chase in the past.

The link should show your eligibility (for the account that is currently signed-in). It probably won’t work if your 1-click default method is already Discover. You could try and remove it first. I had a Discover card already in my account, but not set as 1-click, and it worked for me. $10 credit valid on items both sold and shipped by Amazon.

If you have a Discover card, you may also want to sign up for their free Social Security Number Monitoring and New Account Alerts. I keep my Discover it card open for its rotating 5% cash back rewards.

Amazon Audible: Free Trial w/ 2 Free AudioBooks + $15 Prime Now Credit (New Members)

audible2promo0Amazon Audible has an targeted promotion with a free 1-month trial with 2 audiobook credits + $15 Prime Now credit (minimum $35 Prime Now order). This offer is only available to Prime Members who will be new Audible customers (not valid for existing subscribers or if you have utilized a free trial in the last 12 months). If this offer is available for you then you will see the banner ‘Enjoy books in a whole new way and get a $15 Prime Now credit’ when you log in to your Amazon Prime account.

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Your Audible audiobooks will remain in your account forever even if you stop the monthly membership fee. So you’re basically getting $30+ worth of audiobooks + $15 in PrimeNow credit for free. If you do nothing, after 30 days you’ll be charged the normal $14.95/month membership fee that includes 1 audiobook credit per month. If you are worried about forgetting to cancel, I would recommend picking out two books quickly and canceling right afterward. Prime Now Credit expires 60 days from when you redeem the offer.

Additional Audible membership features include being able to swap out audiobooks if you don’t like it after listening for a bit, and 30% off the list price of additional audiobooks. You can even have Alexa read your audiobook to you.

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During my first trial, I listened to Shoe Dog (Nike origin story) and When Breathe Becomes Air. Here’s my Shoe Dog review; I enjoyed it in audiobook format. When Breathe Becomes Air was poignant, but I think I’d rather have read it as a physical book.

Finally, I recently finished I Can’t Make This Up: Life Lessons from Kevin Hart. which was quite funny and interesting. Next up, probably The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life.

Hawaii Hilton Grand Vacations Package (Discount for Attending Timeshare Presentation)

hiltongv2If you’re somewhere cold and dreaming of sunny Hawaiian beaches, I just got this e-mail from Hilton Grand Vacations for a discounted Hawaii vacation package if you attend their timeshare presentation. I appears to be open to all. Offer expires 2/28/18.

  • 5 nights at a Hilton property in Honolulu (Oahu) or Waikoloa (Big Island) for $699. $299 non-refundable deposit initial deposit required. Balance of $400 + tax due when travel dates are selected. Looks like taxes are another $93-$98. You have up to 12 months from purchase date to travel.
  • 5,000 Hilton Honors™ Points.
  • $200 Spend a Night on Us certificate toward your next Hilton hotel stay.
  • Flexible travel dates – reserve your package now and select your travel dates at your convenience
  • You must attend a two-hour timeshare sales presentation “where you’ll learn how you and your family can enjoy the many benefits and privileges of vacation ownership with Hilton Grand Vacations Club”. Married couples must attend together.

I’ve only done one timeshare presentation in my life, and as a young couple it felt worth exchanging our time for the free show tickets if a bit mind-numbing. They will do some theoretical math that if you travel X times at Y room rate at Z inflation/annual price hikes, you will spend $253,332.45 dollars. Surprise! The timeshare is always “cheaper” using their numbers.

Keep in mind you can always buy after the presentation is over, it’s not like they will say no down the road, no matter what “limited-time pricing” they dangle in front of you. Once you are out of the pressure cooker, you can do a reality check and compare what they are asking retail and the current resale value. If anything you might buy resale instead, keeping in mind that those annual maintenance fees also go up every year…

Here is the fine print. Paying what works out to ~$160 per night including taxes could be a sizable discount to booking directly. I’m unlikely to participate, but I am interested to see what others think. Has anyone had experience with this type of Hilton Grand Vacations offer?

Wyndham Hotels Promotion: Stay Twice, Get One Free Night at Any Wyndham

wyndham_rewardsWyndham Hotels has a new Stay Twice, Get a Free Night promotion. Wyndham Hotels is an interesting chain of hotels that includes Days Inn, Travelodge, Super 8, Howard Johnson, Ramada, Dolce, Wingate, and Wyndham Grand hotels. If you register here first as a Wyndham Rewards member, book by 6/30/18, and make two stays by 7/1/18, they will give you an additional bonus of 15,000 Wyndham Rewards points (on top of the points you’d otherwise earn).

15,000 Wyndham Rewards points are good for one standard bedroom night at any hotel under the Wyndham umbrella. So you could pay for two nights (make sure it’s two separate stays) at a Days Inn, and then redeem for a free night at a Wyndham Grand hotel. Don’t forget to join Wyndham Rewards for free and register first. If you got in on the (now expired) Wyndham credit card / 3 free night promo, you could make an extended vacation out of it.

This was timely for me because I was researching some family vacation possibilities and the Howard Johnson Anaheim (Disneyland) is also a Wyndham property. This is an often-recommended “Good Neighbor” Disneyland hotel with a huge water park that is also right across the street from Disneyland. The standard rooms often go for $200+ per night with taxes. If you live more on the luxurious side, there is the Wyndham Grand Chicago Waterfront.

Grubhub: $20 off $20+ For New Customers (Now $7 off $15)

(Update: At least for some folks, the promotion has been reduced to $7 off $15.)

grubhubHere’s a Grubhub promotion that will get you $20 off your first $20+ food delivery order. You must agree to accept promotional e-mails.

*Valid for first time Grubhub users only (per person and per email address). For one-time use only. Cannot be combined with other discounts. To redeem, enter code at checkout on Grubhub’s website and app (cannot be combined with cash), and $20 will be taken off of minimum orders of $20, before tax, tip and delivery fee. Only valid on personal (non-corporate) accounts. Offer expires at 3:00am ET on March 1, 2019.

Best Interest Rates on Cash – February 2018

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Short-term interest rates continue to rise, as are inflation expectations. Meanwhile, the megabanks make billions by pay you nothing for your idle cash. Here is my monthly roundup of the best safe rates available, roughly sorted from shortest to longest maturities. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much additional interest you’d earn if you switched over. Rates listed are available to everyone nationwide. Rates checked as of 2/4/18.

High-yield savings accounts
While the huge brick-and-mortar banks rarely offer good yields, there are a number of online savings accounts offering much higher rates. Keep in mind that with savings accounts, the interest rates can change at any time.

  • AbleBanking at 1.70% APY, DollarSavingsDirect and Live Oak Bank at 1.60% APY, CIT Bank at 1.55% APY, all with no minimum balance requirement. SalemFiveDirect, Marcus/GS Bank at 1.50% APY.
  • I currently keep my “hub” account at Ally Bank Savings + Checking combo due to their history of competitive rates, 1-day external bank transfers, and overall user experience. I then move money elsewhere if the rate is significantly higher (and preferably locked in via CD rate). The free overdraft transfers from savings allows to me to keep my checking balance at a minimum. Ally Savings is now lagging a bit at 1.35% APY.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, you should know that money market and short-term Treasury rates have been rising. The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 1.45% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.29%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 1.88% SEC Yield ($3,000 min) and 1.98% SEC Yield ($50,000 min). The average duration is ~1 year.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 1.75% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 1.86% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months. More info here.

Short-term guaranteed rates (1 year and under)
I am often asked what to do with a big wad of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple. If not a savings account, then put it in a short-term CD under the FDIC limits until you have a plan.

  • CIT Bank 11-Month No-Penalty CD is at 1.55% APY with a $1,000 minimum deposit and no withdrawal penalty seven days or later after funds have been received. The lack of early withdrawal penalty means that your interest rate can never go down for 11 months, but you can always jump ship if rates rise. Full review. You can open multiple CDs in smaller increments if you want more flexibility.
  • Live Oak Bank has a 12-month CD is at 2.10% APY with a $2,500 minimum deposit. Early withdrawal penalty is 90 days of interest. Ally Bank has a 12-month CD at 2.00% APY again, but with $25,000 minimum deposit. Early withdrawal penalty is 60 days of interest.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2017 and April 2018 will earn a 2.58% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. At the very minimum, the total yield after 12 months will be 1.29% with additional upside potential. More info here.
  • In mid-April 2018, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). The offers also tend to disappear with little notice. Some folks don’t mind the extra work and attention required, while others do.

  • 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. Earning 4% extra interest on $5,000 is $200 a year.

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. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop quickly, leaving a “bait-and-switch” feeling. For example, Northpointe Bank was mentioned for several months here but recently stopped accepting new applications. Unclear how long existing accountholders will be grandfathered. That’s just how it goes with these types of accounts.

  • Consumers Credit Union offers up to 4.59% APY on up to a $20k balance, although getting 3.09% APY on a $10k balance has a much shorter list of requirements. The 4.59% APY requires you to apply for a 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 after-tax). Find a local rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
You might have larger balances, either because you are using CDs instead of bonds or you simply want a large cash reserves. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider a custom CD ladder of different maturity lengths such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account.

  • Live Oak Bank has an 18-month CD at 2.30% APY ($2,500 min) and a 24-month CD at 2.35% APY ($2,500 min). The early withdrawal penalty is the equivalent of 90 days of interest on the principal amount withdrawn for CD terms less than 24 months or 180 days of interest on the principal amount withdrawn for CD terms of 24 months or longer.
  • Ally Bank has a 5-year CD at 2.50% APY ($25,000 minimum) with a relatively short 150-day early withdrawal penalty and no credit union membership hoops. For example, if you closed this CD after 2 years you’d still get an 1.99% effective APY even after accounting for the penalty.
  • Connexus Credit Union has a 5-year Share Certificate at 3.00% APY ($5,000 minimum deposit) with a 365-day early withdrawal penalty $5,000 minimum deposit. Anyone can join this credit union via partner organization Connexus Association for a one-time $5 fee. I ran a Ally vs. Connexus 5-year CD comparison to show the effect of a larger early withdrawal penalty. Note that Ally rates have risen a bit since that post was published.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer the same FDIC-insurance. As of this writing, Vanguard is showing a 10-year non-callable CD at 2.85% APY (Watch out for higher rates from callable CDs from Fidelity.) Unfortunately, currently CD rates do not rise much higher even as you extend beyond a 5-year maturity.
  • 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). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years.

All rates were checked as of 2/4/18.


Premier High Yield Savings

Citi Simplicity Card Review: 0% for 18 Months (1.5 Years), No Late Fees, No Penalty Rates

CitiSimplicityCard (1)One of the most common New Year’s resolutions is to pay down debt. Rewards-earning credit cards may not be optimal for those carrying balances and thus more impacted by 18% interest rates than a relatively puny 2% back on purchases.

Our partner Citi offers the Citi Simplicity® Card, which is uniquely suited for those that want to transfer higher rate balances to a long 0% intro period while also offering some “accident forgiveness insurance”. The highlights:

  • The ONLY card with No Late Fees, No Penalty Rate, and No Annual Fee…EVER
  • 0% Intro APR on Balance Transfers and Purchases for 18 months. After that, the variable APR will be 15.49% – 25.49% based on your creditworthiness*
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
  • The same great rate for all balances, after the introductory period
  • Save time when you call with fast, personal help, 24 hours a day – just say “representative”
  • Enjoy the convenience of setting up your own bill payment schedule on any available due date throughout the month

No late fees, no penalty rate details. On most other credit cards, if you make a late payment, you’ll first be charged a late payment fee of about $35. On top of that, your super-low interest rate disappears and instead gets jacked up to something called their “default rate” or “penalty rate”. This is often close to 30% APR! The Citi Simplicity card adds a bit of flex in that they do not charge penalty rates or late fees.

Note that if you are 30 days late on this or any credit card, Citi will still report this activity to the credit bureaus. This card may be forgiving but you’re still trying to pay down debt and keep your credit score as high as possible. (Before the Credit CARD Act of 2009, there was something called “universal default” where you could be subject this penalty if you were late on another credit card. This is not longer allowed.)

The strong part of this card is the long 18 month period, so you can spread out payments over 1.50 years and ideally pay it all off by the end. There is a 5% balance transfer fee ($5 min). However, if you’re currently paying 18% APR, then 5% works out to 3 months of interest over a 18 month period. Once the intro period on all 0% cards expire, the rates will go right back up. You’ll either need to pay it off or transfer your balance again if you need more time. This card lets you spread your payments out over 18 months instead of 6 or 12.

If you know you will pay it off within a shorter time period, look for a card with no balance transfer fee. Compare with other low fee 0% APR balance transfer offers.

In terms of rewards structure… this is not that type of card. The Citi Simplicity does not earn any cash back, points, miles, or free toasters. I’d open a separate card for rewards after your balances are paid off and you join the “Paid in full every month” club. It does include certain purchase benefits such as Citi Price Protection (price drop protection on brick and mortar purchases) and free Extended Warranty (extends manufacturer’s warranty for up to 12 months).

Bottom line. The Citi Simplicity® Card is a card targeted that for those serious about paying down their balances. You get a 0% introductory period of 1.5 years on both purchases and balance transfers, with a one-time 5% balance transfer fee ($5 min). The card includes consumer-friendly features that help ensure your low rates don’t get hiked. If you do the math and can make adequate payments to pay down your balance over a span 1.5 years, this card may help get you debt-free with minimal gotchas. No annual fee.

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.”

Khan Academy: Free Educational App of The Day

khanapp0Khan Academy is a non-profit with a goal of offering a free, world-class education to anyone, anywhere. I noticed that Khan Academy was the iTunes App of the Day yesterday (Android link), and I found that they have definitely made a lot of improvements since the last time I used it. There seem to be more interactive questions and the app interface is much cleaner. I remember when it was just a bunch of videos. The iPad app now includes handwriting recognition.

I would say the content focus is still on the K-12 level and college prep. Khan Academy covers everything from counting to alegbra to computer science to world history. In fact, they are now the official practice partner for Advanced Placement (AP) tests. They also offer free SAT test prep (MCAT, GMAT too + LSAT coming soon) along with college admissions assistance. Yes, they even have a section on personal finance! All free with no ads. Check it out if you haven’t recently.