Higher Savings Rate vs. Higher Risk Portfolio

An article on the Vanguard Advisors Blog discussed the trade-offs involved in adjusting an investor’s savings rate and the risk level of their portfolio – Investor success: Measured in dollars, not (per)cents.

A portfolio’s value can grow through both capital contributions and return on capital, but only capital contributions can grow wealth reliably. Saving is our contribution to our own investment success and, importantly, unlike the investment returns we seek, its benefits are both more certain and within our control.

The chart below shows projected outcomes based on savings rate (4% or 6%) and portfolio risk level (conservative, moderate, or aggressive). You can see visually that the combination of 6% savings rate and moderate risk (50% stocks/50% bonds) has both a higher average outcome and fewer poor outcomes than the combination of 4% savings rate and aggressive risk (80% stocks/20% bonds)

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Part of this should be expected – you’re saving 50% more in dollars when going from a 4% to 6% savings rate. But on an absolute level, perhaps that amount of dollars is something you can swing.

Vanguard did a similar study called Penny saved, Penny earned back in 2011 that compared three levers: savings rate, portfolio asset allocation, and also starting to save earlier. Take the following baseline scenario:

  • Investor begins working at 25, but starts saving at age 35.
  • 12% savings rate
  • Moderate asset allocation (50% stocks and 50% bonds)
  • Salary starts at $30,000 but increases with age

Now, here are three ways in which a worker could increase their final savings balance at retirement (age 65).

  • Option #1. Invest more aggressively with an asset allocation of 80% stocks and 20% bonds, while keeping your 12% savings rate and starting age of 35.
  • Option #2. Raise your savings rate to 15%, while keeping your starting age of 35 and 50/50 asset allocation.
  • Option #3. Start saving at age 25 instead of 35. while keeping your 12% savings rate and and 50/50 asset allocation.

Which single option do you think has the most impact? The results are based the median balance found after running Monte Carlo computer simulations based on 10,000 possible future scenarios for each option.

Scenario Median Balance at age 65 % Increase vs. Baseline
Baseline $474,461
Option #1
(Aggressive asset allocation)
$577,133 22%
Option #2
(Raise savings rate)
$593,077 25%
Option #3
(Start saving earlier)
$718,437 51%

 

Between the three “levers” you could pull, starting to save earlier wins by a significant margin, which is an important truth but minus a time machine today is the earliest we can start saving more. After that, a higher savings rate is a more reliable path to improving your odds for success. Investing with significantly more risk performs somewhat similarly on a median basis, but actual results will vary the most widely.

I suppose my version of this is that an investor should keep working hard to maximize their savings rate, but only work hard to find a “good” asset allocation once and then let it be. My definition of “good” asset allocation is one that considers your financial needs, your knowledge, and as a result is something that you can keep forever. Don’t look for the “perfect” asset allocation, as these can only be known after the fact and are constantly changing. Too often, they are based on data mining and recent performance. Look at any asset allocation with growing popularity, and the asset classes that make it hot have probably done well in the past decade. You can quote “long-term” numbers from long periods like 1970 to 2015, but these numbers are still strongly influenced by recent past performance.

New JetBlue Card Review from Barclaycard

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JetBlue has announced two new consumer credit cards – the JetBlue Card (no annual fee) and the JetBlue Plus card ($99 annual fee). These are both issued by Barclaycard, as JetBlue recently ended its credit card relationship with American Express. Are they worth getting? Here’s my brief review of the card highlights and the value proposition breakdown.

Had the JetBlue Card from American Express? You do not need to apply again. Your AmEx card will automatically be replaced with the new JetBlue Rewards MasterCard, issued by Barclaycard, in late March 2016. The JetBlue Rewards MasterCard is slightly different that either card described below and is only available to grandfathered users. It has a $40 annual fee, but you can also request your card to be converted to one of the cards below.

Highlights of the new JetBlue card:

  • Limited-time offer: Earn 10,000 bonus points after you spend $1,000 on purchases in the first 90 days.
  • Earn 3 points per $1 spent on JetBlue purchases, 2 points per $1 spent at restaurants and grocery stores and 1 point per $1 spent on all other purchases.
  • 50% savings on eligible inflight purchases including cocktails, food and movies.
  • No foreign transaction fees.
  • No blackout dates on JetBlue-operated flights & redeem for any seat, any time on JetBlue flights.
  • Chip-card technology and $0 Fraud Liability protection.
  • 0% introductory APR for first 12 billing cycles on balance transfers made within 45 days of account opening. After that a variable APR will apply, 12.24%, 20.24% or 25.24%, based on your creditworthiness.
  • No annual fee.

Highlights of the new JetBlue Plus card:

  • Earn 30,000 bonus points after you spend $1,000 on purchases in the first 90 days.
  • Earn 6 points for every $1 spent on JetBlue purchases; 2 points for every $1 spent at restaurants and grocery stores; 1 point for every $1 spent on all other purchases.
  • Free first checked bag for you and up to 3 companions on JetBlue operated fights when you use your JetBlue Plus Card.
  • Mosaic benefits after spending $50,000 or more in purchases each year.
  • Get 10% of your points back every time you redeem to use toward your next redemption
  • Earn 5,000 bonus points every year after your account anniversary
  • Annual $100 Statement Credit after you purchase a JetBlue Getaways Vacation Package of $100 or more
  • No blackout dates on JetBlue-operated flights & redeem for any seat, any time on JetBlue flights.
  • Chip-card technology and $0 Fraud Liability protection.
  • $99 annual fee.

What are the TrueBlue points rewards worth? You earn JetBlue TrueBlue points on your purchases, which are best redeemed for JetBlue flights. There are some other options like newspaper or magazine subscriptions, but I won’t cover them here.

  • JetBlue TrueBlue works on a revenue-based system. You can book any flight without blackout dates, but the points required depends on the current cash cost of the flight. This is different than a chart-based system, for example might require 25,000 points for any flight within the 48 contiguous states (subject to blackout dates and availability).
  • A reasonable estimate of value is 1 points = 1.4 cents towards a Blue, Blue Plus, or Blue Flex fare. The exact value may vary, but that is the average that I found and the variance is low. Ex. 10,000 points would cover $140 in airfare. See calculation example below.
  • The value of a free checked bag is $15 to $25 one-way, per person. Depending on fare level, JetBlue now charges for checked bags. If you buy it separately on a base fare, a checked bag will cost $20 one-way upfront or $25 one-way at the ticket counter. If you buy the Blue Plus fare which includes one checked bag, that usually costs $15 more one-way. At $30 to $50 roundtrip, the value of the free checked bag feature can add up quickly if you travel as a family or group.
  • Families can share and pool points together, with no transfer fees.
  • TrueBlue points don’t expire.

Every 10,000 points can be redeemed for $140 in airfare. This means 2X points back on restaurants and groceries can be redeemed for 2.8% back in the form of TrueBlue airfare. The 3X points back on Jetlue-operated flights can be redeemed for 4.2% back in the form of TrueBlue airfare. The 6X points back with the Plus card on Jetlue-operated flights can be redeemed for 8.4% back in the form of TrueBlue airfare.

This is in addition to the existing 3X points for TrueBlue members buying Blue airfare, and the 3X points for anyone booking JetBlue flights online. If you have Mosaic elite status, you also get another 3X points.

Calculating the value of a JetBlue TrueBlue points. You can test for yourself quite easily. Here is a randomly chosen, roundtrip San Francisco (SFO) to New York City (JFK) flight. Screenshots are below. It would have either cost $423.30 in cash, or 29,400 points + $11.20 in taxes. The value of a point comes out almost exactly to 1.4 cents per point:

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Recap. The new JetBlue card from Barclaycard can be a good value for regular customers of JetBlue and their free DirecTV. You get extra savings when purchasing JetBlue airfare on the card, and the rewards are free JetBlue airfare. The standard version offers a limited-time sign-up bonus as well as perks with no annual fee. The Plus version with $99 annual fee is best for frequent fliers who can take advantage of the free checked bag feature and also the 5,000 point anniversary bonus. However, if you don’t fly JetBlue enough to have the opportunity to either earn or spend the points, then you should just stick with a more general travel rewards card like the Chase Sapphire Preferred or a top cash back card like the Citi Double Cash.

TurboTax vs. TaxACT vs. H&R Block Online 2016 Lightning Review

1040clipFor the last few years, I’ve completed my personal returns top-to-bottom using each of the three most popular online tax prep providers – TurboTax, H&R Block, and TaxACT. I started my 2015 tax year returns this weekend, but each one was close enough to last year’s experience that I couldn’t bring myself to do all that repetitive data entry again. I did run through the major categories, explored the import features, and tried contacting their customer support.

The major differentiating factors remain price, time-saving features, audit support, and ability to answer specific tax questions. All three offer a “Maximum Refund Guarantee” (relative to competing software) as well as an “Accuracy Guarantee” (relative to your tax bill or refund amount) that says that they will pay any penalty and interest assessed by the IRS or your state due to calculation errors on their part (though H&R Block limits this to $10,000). Actual cost can vary widely with sales and discounts, listed here are just the everyday prices. My condensed review:

TurboTax Onlinett180

  • Most expensive. Federal Deluxe regular price is $34.99 w/ e-file and supports itemized deductions. However, you need Premier at $54.99 if you have an investment gains or rental property. State return price is $36.99.
  • Best import features. Imports a lot of information from last year’s return. Automatically imports W-2s from many payroll providers and (by far the most) 1099 forms directly from financial institutions, both saving time and improving accuracy. Works with free “ItsDeductible” program to help with recording charitable donations.
  • Moderate audit support. You get help, but no in-person representation.
  • Moderate tax advice – You can request a phone call-back, wait time given upfront (10 minutes for me). Good online question database.
  • Annoying upsells. Intuit always feels like they are trying to extract the most money out of you.

Bottom line: The time-saving choice if you have a lot of brokerage transactions, W-2s, or other 1099 forms to electronically import this year. Also if you have a lot of details to import from last year’s return with TurboTax. It may be worth the extra cost to avoid tedious data entry.

ta200TaxACT Online

  • Least expensive. Federal Plus regular price is $19.99 w/ e-file and supports itemized deductions, capital gains, and rental income. Federal + State return combined including e-file at $19.99.
  • Limited import support (worst of the three). Free Donation Assistant® feature to track charitable donations.
  • Limited audit support (worst of the three).
  • Limited tax advice quality (worst of the three). The hardest to find real person help. You can get phone support, but only if you pay first. Online question & answer database is available.

Bottom line: The value choice if you just want accurate DIY tax return software and don’t need any extra assistance.

hr160H&R Block at Home Online

  • Middle-of-road pricing. Federal Deluxe regular price is $34.99, which supports itemized deductions and capital gains. You need Premium at $49.99 for rental property. State return price is $36.99.
  • Moderate import support for 1099s and W-2 (not as broad at TurboTax, better than TaxACT).
  • Best free audit support. Only product that includes an H&R Block Enrolled Agent actually attending your audit in-person. However, consider whether you would hire your own representative in the actual event of an IRS audit.
  • Easiest to get in-person tax advice. Free Live Chat included, wait time given upfront (4 minutes for me). Good online question database.

Bottom line: The most helpful choice if you don’t quite want to pay to person to do it all for you, but you are worried you might need some assistance. Based on overall experiences, H&R Block uses their brick-and-mortar experience to provide the best answers if you have tax questions. You also get the assurance that a federally-authorized enrolled agent will guide you for free through a potential albeit unlikely audit.

Tim Gray did his annual NY Times comparison as well, with very similar experiences to my own. As he puts it:

Each program’s maker has staked out a place in the market where it excels. TurboTax’s technology is the smoothest to use — the program rarely frustrates and offers a few features each year the competitors don’t match. Block’s tax help is the easiest to understand and get access to. TaxAct’s offerings are the cheapest.

I would add that although each product still has their strengths, this year the margins are getting closer. All three offer guidance throughout the filing process. In terms of price, TaxACT is still the cheapest but the total cost is higher than in previous years. In terms of online interface, all three are pretty similar, with TaxACT modernizing parts of their interview process. H&R Block remains best at one-on-one tax advice, but all three offer tax question databases (and really, there’s always Google for everything else). As the feature leader, TurboTax added a few more incremental things like a slick smartphone and iPad apps which you can use simultaneously with the traditional web browser version. Overall, the competition has made for slightly better products across the board.

All of these sites work on a “start for free” basis, so you can also try them out yourself before having to commit and pay anything.

Starwood Preferred Guest American Express – 35,000 Points Limited-Time Offer

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Limited-time offer. The sign-up bonus for this SPG American Express is now 35,000 Starpoints with the annual fee waived for the first year. Ends March 30th, 2016. This is the highest level the bonus has been, which is good to know since you can only get it once – “Welcome bonus offer not available to applicants who have or have had this product.”

The travel rewards card that has been in my wallet the longest is the Starwood Preferred Guest® Credit Card from American Express. It is quite famous in the travel junkie circles, but not very well known otherwise. Once you understand the combination of flexibility and value, you will better understand why this is my favorite hotel rewards card and also the only annual fee card that I’ve kept consistently over the last 7+ years.

Highlights:

  • Limited-time offer: Earn 35,000 bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months.
  • New: No Foreign Transaction Fees on international purchases.
  • New: Receive free in-room, premium internet access. Booking requirements apply.
  • New: Enjoy complimentary, unlimited Boingo Wi-Fi on up to four devices at more than 1,000,000 Boingo hotspots worldwide. Enrollment required.
  • Earn free nights at over 1,200 hotels and resorts in nearly 100 countries with no blackout dates.
  • Some hotels may have mandatory service and resort charges.
  • $0 introductory annual fee for the first year, then $95.

My personal review:

  • When redeeming towards hotel stays, I regularly get 2-6 cents of value per point, more than often the value you’d get from airline miles. Get free stays in hotels that otherwise charge $300+ a night.
  • Rather have miles? You can convert 20,000 points to 25,000 miles, which is 1.25 miles per dollar spent, 25% more miles than most other airline-specific cards.
  • Easy transfers mean you can “top off” a frequent flier account to get to that coveted reward ticket level. Your miles aren’t worth anything until you actually use them!
  • You can convert just a few miles to keep your other miles from expiring.

Either I’ve had one, or my wife has had one, or I’ve had the business card version of this card for the last 5+ years. Transferring points within between household members is quite easy and free.

Starwood Points transfer to Frequent Flier Miles

The first reason why this card is so useful is that Starwood points (or Starpoints) can be converted to miles to major domestic airlines and several international ones. This includes Alaska, American, Delta, Hawaiian, and United. Most transfer at a 1:1 ratio (1 Starwood point = 1 frequent flier mile), unless otherwise noted. For example, the ratio is lower for United (2:1 means 2 Starpoints = 1 United mile.

Imagine that you’re only a thousand miles short of a free ticket, but you need to buy a ticket and would really like to make it free. Although there may be other options that involve spending money, you can simply “top off” your balance by transferring as little as 1,500 miles to the specific airline programs that you want. You can even convert a specific number of points. Just need 2,854 miles here and 1,567 somewhere else? No problem.

With most airlines, your miles expire after a period of inactivity. But since any activity counts (not only flying), I could quickly transfer 1,500 miles over in order to save 20,000 hard-earned miles from expiring.

  • Aeromexico Club Premier
  • Aeroplan/Air Canada
  • Air Berlin
  • Air China Companion
  • Air New Zealand Air Points (65:1)
  • Alaska Airlines Mileage Plan
  • Alitalia MileMiglia
  • All Nippon Airways (ANA) Mileage Club
  • American Airlines AAdvantage
  • Asia Miles
  • Asiana Airlines
  • British Airways Executive Club
  • China Eastern Airlines
  • China Southern Airlines’ Sky Pearl Club
  • Delta Airlines SkyMiles
  • Emirates Skywards
  • Etihad Airways
  • Flying Blue
  • Gol Smiles (2:1)
  • Hainan Airlines
  • Hawaiian Airlines
  • Japan Airline (JAL) Mileage Bank
  • Jet Airways
  • LAN Airlines LANPASS Kms (1:1.5)
  • Miles and More
  • Qatar Airways
  • Saudi Arabian Airlines Alfursan
  • Singapore Airlines KrisFlyer
  • Thai Airways International Royal Orchid Plus
  • United Mileage Plus (2:1)
  • US Airways Dividend Miles
  • Velocity Frequent Flier
  • Virgin Atlantic Flying Club

For every 20,000 points you convert, you get an additional 5,000 point bonus. So 20,000 Starwood points = 25,000 miles on the airlines listed above. That’s 25% more miles per dollar than those airline-specific credit cards (although the waived baggage fees are appealing).

Great Hotel Rewards Card

Starwood is a growing collection of over 1,000 mid-scale to very-upscale hotels in nearly 100 countries, from the business-oriented Four Points and Sheratons to the upscale W and Westin hotels. This card has come in very handy for travel to international and bigger US cities.

Short-notice and emergency stays. All room taxes are included when you use points, and there are no blackout dates unlike other hotel programs. I’ve used them in a pinch, burning just 3,000 points for a last-minute $120 a night room at the Vancouver Airport Four Points (now Category 3).

Luxury international hotels. I’m usually happy with a Holiday Inn Express by the airport for a business trip, but when traveling for leisure it can be very convenient to stay downtown near the action and sights. In a city like Paris or Rome, this can mean big bucks. With this card, I’ve stayed at $300 a night hotels like the W New York, Westin Madrid, and Westin Venice. Being able to stay up late into the night in Venice instead of having to leave was amazing. If you redeem for 4 nights in a row in a Category 3 or higher hotel, the 5th night is free.

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Cash and points option. Don’t miss “cash and points” opportunities. For example, I found a $400 room at the Westin Rome in Italy or W Hotel New York Times Square for 8,000 points + $150 a night. Run the numbers yourself using the booking engine at SPG.com and look for the “SPG Cash & Points” option. The value of 30,000 points can be easily greater than $500.

This last option is not the best value, but for the purposes of setting a last resort and baseline value, 9,500 Starpoints = $100 gift card at Amazon.com.

“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 is compensated through the issuer’s Affiliate Program.  “The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.”

Netspend Card 5% APY Savings Account Review

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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.)

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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.

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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.

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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).

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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.

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:

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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.

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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!

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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.

Stash App Review: Simplified Investing on Your Smartphone

stash1Got five bucks, a smartphone, and a bank account? You’re just a few taps from investing and owning a piece of hundreds of businesses.

Stash is a new smartphone app with a real brokerage account underneath that lets you invest in a curated selection of roughly 30 different ETFs. You can start with as little as $5 and add more in any increment via fractional share ownership. The app interface is nice and shiny, but I finally took some time to look under the hood a bit.

What do you need to sign up?

  • Download the app. Stash is currently iOS only, but Android is “coming soon”.
  • Your personal information (name, address, SSN) because this is still a real SIPC-insured brokerage account underneath.
  • Fill out a short risk questionnaire, and you will be identified as either a Conservative, Moderate or Aggressive investor.
  • Pick your investment, which you can change later. See below for details.
  • Fund with any bank account. Verification can be done via two small test deposits. For selected banks, you can expedite the linking process by using your bank login credentials instead.

Portfolio details. You can choose from about 30 different “investments”, which are really just re-labelled exchange-traded funds (ETFs) that anyone can buy with any brokerage account. The idea is to make things more approachable and not to scare you away with things like ticker symbols, limit orders, and so on. Here are some example pairings of their investment names and the underlying ETF.

  • Aggressive Mix – iShares Core Growth Allocation ETF (ticker AOR)
  • Moderate Mix – iShares Core Moderate Allocation (AOM)
  • Blue Chips – Vanguard Mega Cap ETF (MGC)
  • Park my Cash – PIMCO Enhanced Short Maturity Active ETF (MINT)
  • Roll with Buffett – Berkshire Hathaway Inc. Class B Shares (BRK.B)
  • Slow & Steady – PowerShares S&P 500 Low Volatility ETF (SPLV)
  • Home Sweet Home – SPDR S&P Homebuilders ETF (XHB)
  • Clean & Green – iShares Global Clean Energy ETFm (ICLN)
  • Global Citizen – Vanguard Total World Stock ETF (VT)
stash4   stash3

Based on a risk questionnaire, you will be identified as either a Conservative, Moderate or Aggressive investor. Some of the options, like the Aggressive Mix / iShares Core Growth Allocation ETF are essentially a old-fashioned balanced fund with 60% stocks and 40% bonds. (Moderate Mix is only 40% stocks and 60% bonds.) Others, like just buying shares of Berkshire Hathaway (BRK), are more focused and potentially volatile. You will only be shown options that are below or at your designated risk level.

Fractional shares are used. That means you can invest odd numbers like $7 or $217 and still have it fully invested in something that costs $100 a share. Based on their FAQ, dividends are not automatically reinvested. Dividends are deposited as cash and will stay there until you decided to invest it.

You cannot invest in individual stocks (unless they happen to be listed an investment).

Fees. Free for the first 3 months. After that, $1 per month for balances below $5,000. Once you reach $5,000, it switches over to 0.25% of your balance per year. (Example. $10,000 x 0.25% = $25 per year.) Fees are taken from your bank account, not from your Stash investment portfolio. Stash does not charge monthly subscription fees if your account balance is $0.

Each underlying ETF has their own embedded expense ratio. No commission fee for stock trades. No fee for deposits or withdrawals via electronic bank transfer.

I installed the app and started the account opening process, but didn’t actually open account. I usually would, but with all these new robo-brokers I’ve been getting a flood of 1099-B forms with lots of tiny little tax lots. It gets tiresome at tax filing time.

This and that. After reading through their FAQs and disclosures, here are other notable items:

  • You can only link one bank account at a time to Stash. If you wish to make a change, you must e-mail them at support@stashinvest.com.
  • Online statements are free. Paper statements are $5 each.
  • You may only deposit up to $10,000 per day via online bank transfer. You cannot deposit physical checks.
  • you may only withdraw up to $10,000 per day via online bank transfer. You cannot request a withdrawals via physical check.
  • Stash uses Apex Clearing as their custodian firm. Many other similar brokerage sites use Apex.

Final thoughts. I may be too old to be a Millennial, but I can still appreciate the power of a good smartphone app. I will even counter the people that point out that $1 a month on even a $600 balance is a 2% management fee. Yes, 2% would be a lot of money a $500,000 portfolio. But $1 is also how much people pay for a song or silly game. The more important question is – will this app start a habit of saving and investing? I don’t know, but this BuzzFeed article describes how Stash used focus groups to suggest their “make-things-not-so-scary” approach will get newbie investors over the hump.

Perhaps nearly as important – Stash already has some serious competition. The Robinhood app also has a nice user interface on top of a traditional brokerage account (no fractional shares) that lets you trade any stock with no commissions (i.e. no training wheels or investment guidance). The “invest in your interests” idea and fractional share ownership is also available at Motif Investing. The Acorns app adds a behavioral trick where it rounds up your daily purchases and sweeps the “spare change” over automatically.

The Big Short: Movie Notes and Real World Follow-Up

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I managed to catch the movie The Big Short (trailer) before it left the theaters. Having read the book with great interest back in 2011, I wondered how it would remade for the big screen. Isn’t it hard to believe that the events described started roughly an entire decade ago? There are plenty of reviews at all the big media sites, but here are my notes:

  • The original book The Big Short by Michael Lewis was classified as non-fiction.* The movie, however, is only “based on a true story”. As such, many of the individual names were changed. Steve Eisman (real person) became Mark Baum (movie character). Ben Hockett became Ben Rickert. Charles Ledley & James Mai became Charlie Geller & Jamie Shipley. Cornwall Capital became Brownfield Capital. For some reason, the names of Dr. Michael Burry and his firm Scion Capital went unchanged.
  • The director, Adam McKay, is probably best known for his comedies with Will Ferrell in Anchorman and Talladega Nights. Oh, and the classic short The Landlord (censored version). I suppose The Big Short could be called a dark comedy.
  • In retrospect, it might seem like betting against the housing market was an easy and obvious bet. While the movie might dramatize things, it did take courage and conviction. They had to put up millions of dollars to place the bet, and then more millions to keep the derivative bets running. Most other investors thought they were stupid, and tried to get them to reverse the bets. The banks also tried to make them sell their positions before they could realize profits. They were risking their own money, their family and friends’ money, and their entire careers.
  • The movie does a good job showing you how the bubble persisted for so long because everyone was incentivized to keep it going. Wall Street workers made money by packaging and selling the bonds. The pension funds and large institutions got to buy “safe” high-interest bonds. The money managers got to collect their fees. The mortgage brokers and real estate agents collected commissions. Homeowners saw their equity grow. Everyone was happy.
  • In contrast, the people who did the contrarian bet were all on the margins, outsiders, even a little weird. Hedge funds run by a guy who avoided human contact and wore cargo shorts and a free t-shirt everyday. (Christian Bale actually asked the real Michael Burry to take off his cloths and give them to him.) Another one based out of their parent’s garage.
  • The revolving door between the regulators and the industry that they regulate remains open. People go from big paychecks on Wall Street, to smaller paychecks at the SEC and other government roles, and then go back to big paychecks on Wall Street. People usually don’t like to burn bridges with future employers. See this Michael Lewis interview.
  • * As the book was non-fiction, CDO manager Wing Chau actually sued Michael Lewis for libel. Chau’s defamation lawsuit was dismissed and his appeal was denied. The SEC actually investigated him and his firm, found them both liable for fraud, banned him personally from the industry, and fined them $3 million in total. He probably didn’t like how he was portrayed in the movie, either.
  • Where are they investing now? In a January 2012 post, I wrote about the current investments of Michael Burry and Steve Eisman. Burry’s water investments seem like a long-term play, but Eisman’s bet against for-profit education is already starting to unfold. In May 2015, Corinthian College and twenty four of its subsidiaries (i.e. Heald College, WyoTech) filed for bankruptcy after challenges by both US and Canadian governments.

If you can’t watch some great acting performances by Christian Bale, Ryan Gosling, and Steve Carell, you could always get a refresher course via cartoon stick figures instead. :)

New Fidelity Rewards Visa Credit Card Review: 2% Flat Cash Back

new_usbank_fido_visa_200Ending some speculation, Fidelity has officially announced changes to their credit card line-up as of January 2016. Previously, there were three versions of the card issued by FIA Cardservices (subsidiary of Bank of America) – a grandfathered 2% MasterCard, a 1.5% base-tier Visa, and a 2% American Express.

Fidelity has consolidated their offering to a single card – a Visa Signature offering a flat 2% cash back when directed to a Fidelity Investment account, issued by Elan Financial Services (subsidiary of US Bank). All existing credit card links now redirect to this new Fidelity® Rewards Visa Signature® Card. Let’s take a look.

Highlights:

  • Unlimited 2% cash-back, when redeemed into an active Fidelity account.
  • No annual fee.
  • No sign-up bonus at this time.
  • Visa Signature benefits, like Concierge service.
  • Chip-enabled and works with Apple, Android, and Samsung Pay.

2% cash back details. The 2% rewards value applies only to points redeemed for a deposit into an eligible Fidelity account:

  • Fidelity Cash Management Account
  • Fidelity Brokerage account
  • Fidelity-managed 529 account
  • Fidelity Retirement account (IRA, Roth IRA, SEP-IRA, Rollover IRA)

The redemption value is different (read: worse) if you choose to redeem your points for their other available options, including travel, merchandise, gift cards, or statement credit. I can’t seem to find any publicly-available details yet on these alternative options.

You can either choose automatic or manual redemption. With automatic redemption, once you reach $50 of rewards (5,000 points from net spending of $2,500), your balance will be automatically swept into your designated Fidelity account. With manual redemption, you must call Cardmember Services at 888-551-5144 after you reach the same 5,000 point minimum balance.

Already have the previous FIA Cardservices-issued card? For now, just use your card as usual. US Bank/Elan did agree to acquire the existing credit card business, which means sooner or later everyone will be forced to move over to this new card. You will not have to re-apply, your points will move over, and the card will be transitioned automatically. You will be notified around mid-2016 with further details. This is all from Fidelity’s existing cardmember FAQ.

If you have a Fidelity Rewards Credit Card, you can continue to enjoy the features and benefits associated with that card. If you would like information about rates, fees, other costs and benefits, please call an FIA Card Services® representative at 877-811-7088. Information will be sent to you in mid-2016 regarding your new Fidelity® Visa Signature® card.

I am curious how this would affect credit history, as this card is one of my older credit lines (10+ years). I am guessing the old line will be closed. Update: Good news! I just received a note directly from Fidelity that for current credit cardholders that when we are eventually converted to a new Visa card number, our credit reports will still reflect the original opening dates of our current credit cards.

Commentary. This move makes complete business sense. First, now they can offer a Visa card with 2% cash back without any tiers. Second, Fidelity uses this card to encourage customers to keep all their assets within Fidelity-branded accounts. You could theoretically now have your checking account, credit card, brokerage account, IRA, 401(k), all with Fidelity.

Their previous issuer, FIA Cardservices was owned by Bank of America, which is essentially a direct competitor. You could also have a Bank of America checking account, BofA credit card, Merrill Edge brokerage account, and Merrill Lynch wealth management account under their umbrella. In fact, I recently opened up a Merrill Edge account and moved over $100,000 of assets and received (1) 100 free stock trades a month and (2) a 75% bonus on my credit card rewards with the Bank of America Travel Rewards card (my review).

Elan Financial Services is a subsidiary of US Bank, but they are less of a direct competitor. You won’t see “US Bank” mentioned anywhere on this card. Elan quietly co-brands with many other financial institutions (over 1,400) who want a credit card but don’t want to handle the back-end details.

My personal choices. As a self-directed investor, I like to keep my options open. This new card remains a solid cash back card for existing Fidelity customers (or those willing to open a Fidelity account). I have the Bank of America card mentioned above, excellent rewards for those with over $100k in assets and it has no annual fee. I also have the Citi Double Cash card (my review) because it is a similarly solid card with no annual fee (and doesn’t require any companion account).

Why do I have all three? My experience is that good credit cards may stop taking new applicants with no prior notice, but as an existing customer you can often continue to receive grandfathered benefits for a long time.

OBi200 Adapter + Google Voice Installation Review + Current Deals

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Updated, new limited-time Black Friday deals for under $30. Want the features of landline phone service at a drastically reduced price? How about under $50 upfront and then $0 a month? Perhaps you want to drop your landline bill, or you already have but also want to cut back on cellular minutes. Obihai boxes are now officially supported by Google Voice to provide unlimited free USA to USA calls and free USA to Canada calls. Low international per-minute rates as well.

As a result, I bought myself a Obi200 in order to try out their free calls, and also compare the voice quality with my Ooma device. Obihai adapters have been around since 2011, but this is the first Obi product I have purchased. I don’t know that the installation procedure was in the past, but I believe the official integration has made the installation even easier than before. Supposedly the authentication method is also more secure and your Google password is no longer stored. I thought about making a video, but it turned out to be unnecessary.

  1. Open the box and plug in the cables. AC adapter, telephone line, and ethernet cable to router. All ports are clearly marked. All the cables are included except the phone cable which you should already have. The image below says it all:

    obi200a

    Here is the back of the box, showing the ports:

    obi200_ports

  2. Write down your unique Obi number. This is clearly printed on the bottom of the Obi200 box. Mine was 9 digits like “123 456 789”.
  3. Go to your computer and visit ObiTalk.com. Click on the link that says “Register” in the top right corner. Then just follow the directions. Dial a test phone number when it asks. It is easiest to use the “Sign in with Google Account” button since you already have one if you use Google Voice. I didn’t even have to type in my password (as I was already logged in by cookie). They didn’t require name, address, or credit card number. A few confirmation clicks, and that was it.

    obi200b

  4. Use your phone. I turned on my phone, listened to the dial tone, and called my cell phone. Success! Traditional phone service with unlimited calls within the US and Canada for the great price of $0 a month. The voice quality was fine, and continued to be quite good for the few months that I was using it before giving it away. (I already have the grandfathered fully-free version of Ooma. The voice quality between the two was comparable.)

Total set-up time was under 10 minutes. If for some reason my directions don’t work, check out the official Obi200 Starter Guide [pdf] or their extensive set of tutorials. You can also add e911 service for $15 a year.

Which Obi box model should I buy? I think the sweet spot for most people will be the Obi200, which supports T.38 faxing and has a USB port which can be used to connect to your router over WiFi using an OBiWiFi adapter. (It is the #1 selling VoiP adapter on Amazon.)

The Obi202 offers two independent phone ports so you can use two different VoIP providers simultaneously (or you can have two Google Voice phone numbers). But if you can find one on the cheap, the older OBi100 still works too. Here is a handy comparison chart of the OBi100, OBi110, OBi200, and OBi202.

obi200compare2

Current deals, updated November 2015. The manufacturer often subsidizes some limited-time deals, and I’ll try to keep this section updated with the most recent offer.

Healthywage Review: Final Results, Tips, Diet Bet Comparison

hw_logoAfter reading academic studies which found that financial incentives were effective in helping people lose weight, I joined both DietBet* and HealthWage in early 2015. This week, I received my winnings from my individual “Healthy Wager” bet at HealthyWage.com. You tell them your body details, how much you want to bet, how much you want to lose, and they’ll calculate what prize to offer you. This is my final review of the entire process, including some helpful tips and a comparison with similar site DietBet.

(* See my separate DietBet Review.)

My original HealthyWage offer was for $100 a month times 9 months = $900 total, for a potential win of $100 (11.1% payout). This was based on losing 10% of my initial weight (~20 lbs) over 9 months (2/2 to 11/3/15). However, Healthywage issues 1099-MISC forms for your total gross winnings (initial bet + profit) when at or over $600. After learning about this, I asked them to adjust my bet so I would remain under this amount. I had already made my first $100 monthly bet, but all future bets were then set to $50. I had already started the bet, so I appreciated this courtesy. Now my total bets would add up to $100 x 1 month plus $50 x 8 months = $500. Times the same 11.1% payout, my total winnings would be $555.56.

Honestly, risking $500 to win $50 didn’t feel like a very good risk/reward ratio, but I wanted both the extra motivation and the ability to compare the two services. Back in 2011, Healthwage used to have a “double down” bet where participants put $150 on the line and won $300 if they lost 10% of their weight over 6 months. I guess they found that to be too generous, as I no longer see it as available.

Initial weigh-in verification. There are three ways to verify your weight:

  1. Video Verification. Smartphone video using your personal scale. The most popular option, and the one that I chose.
  2. Verification by a Fitness or Health Professional – Bring a form to your “local gym, pharmacies, corporate wellness clinics, walk-in clinics, HR reps, nurses, your personal doctor, your personal trainer or your chiropractor.”
  3. Verification at a Weight Watchers Meeting.

I followed their directions carefully, uploaded my video, and both my initial and final videos were accepted with no issues or additional requests.

Very little ongoing support during the challenge. Every month since February, I would see a $50 charge on my credit card bill from Healthwage. However, that was about it. There were no regular e-mail updates. No interim weigh-ins. No fun tokens or prize giveaways. No smartphone app. No encouraging quotes or success stories. No interaction at all.

Upon initial sign-up, I was given my 2-week window for final weigh-in (October 20th to November 3rd, 2015). HealthyWage’s two-week window is definitely more generous than DietBet’s 48-hour window, with the important difference that I was never sent any reminders by HealthyWage when the time actually came. In comparison, Dietbet sent me multiple reminders beforehand. Now, I had the date marked on my digital calendar with several alerts, so I completed my weigh-in by the second day of the window. It is quite possible that if I waited until closer to the final deadline, I would have gotten a reminder. But I wouldn’t rely on it. I got the feeling that they wouldn’t mind if you forgot about that final weigh-in.

This brings me to the important structural difference between HealthyWage and DietBet. DietBet collects participants into groups and then takes a cut from the pooled bets. The winners of each group then split the money from the losers, so that Dietbet makes the same commission amount, no matter how many people win or lose. HealthyWage, on the other hand, makes one-on-one bets with individuals. So whether you win or lose does affect their bottom line. HealthWage is more strict in its final verification requirements (see below), and in my humble opinion this structural difference is the cause.

Extra final verification hoops. Upon final weight verification, you’ll have to submit the verification video again (see above). But that’s not all. I also had to locate and upload a “before photo” and an “after photo”, which could be any photo from “around the time” of the start and end of the challenge. I also had to upload a scan of my driver’s license. Here’s a screenshot of their page asking for additional information. Note the final line in red letters:

Please note, this is you last chance to avoid scrutiny of your account. If you have cheated, do not proceed.

Not exactly giving off the warm fuzzies, are we?

Finally, despite my desire to avoid receiving a 1099-MISC, I successfully referred a few people to Healthwage and received $240 of extra money added my “pot”. (I had to win the challenge in order to get this money.) Since I did win and my final amount was now above $600, I had to provide them with my Social Security number in order for them to fill out the 1099.

Final payout options. There are two options to receive your winnings. A mailed check takes 3-4 weeks to process, with no fee. The other “fast” option is PayPal, which charges a 3% fee. I picked the PayPal option because I didn’t want to wait around for a check. However, they later clarified that it would still take 3-5 business days for Paypal transfer. The 3% fee is actually taken out by PayPal, so HealthyWage actually sends the full amount (they just choose not to subsidize the fee). In retrospect, maybe I should have just waited for the check. Here’s a screenshot:

hw_finalpay

Summary and recommendations. I committed to a Healthywage bet to lose 10% of my initial weight over 9 months. I completed my initial and final weight verifications without hassle, won the bet, and was paid my winnings. However, the process felt rather sterile and business-like. I put $500 at risk and won $55, for a payout ratio of 11%. I also won a bit extra due to referring others.

In comparison, DietBet had a much more online interaction, regular e-mail communication, and a useful smartphone app. It felt more like a friendly, supportive game. I was only able to bet $150 total, but I won $129. That’s a payout ratio of 93% (variable, not guaranteed). This was for a 10% weight loss bet over a shorter period of 6 months.

Both Healthywage and DietBet paid out and fulfilled all of their promises and obligations. My recommendation is that for more fun and most likely better payout odds, I would join DietBet first. If you want extra motivation and the ability to risk more money and thus possibly win more money, add a concurrent HealthyWage bet as well. If I had kept my initial $100 a month bet commitment, my total winnings from both sites would have been nearly $250.

Ally Bank Savings Account Review

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Update. Ally Bank sent out an e-mail to customers in early October 2015 notifying them that they will introduce balance tiers on November 7, 2015. All existing CDs will not have their rates affected, and any features like Raise Your Rate will be retained. No actual rates or rate changes were announced. For the Savings Account and Certificates of Deposit, the new tiers will be:

  • Less than $5,000
  • $5,000-$24,999.99
  • $25,000 or more

Commentary… I’ve felt that tiers would come to their CDs for a while now. With no minimum opening balance and no interest tiers, you could open up a bunch of $500 or even $5 CDs to avoid penalties on small early withdrawals. Lots of small accounts create more paperwork and increase costs. However, if the rates on their Online Savings Account drop significantly for the lowest tier, I will seriously consider moving accounts. Sometimes my Ally account has a lot of money, sometimes it doesn’t. I need this account to provide a reliable floor of 1% APY (as of 10/7/15) on my idle cash, regardless of balance. I’ll have to wait to see if/how they utilize these tiers for the savings account.

Original post:

I’ve done a significant amount of my banking with Ally for years (checking, savings, and multiple CDs), but the “gateway drug” for me and probably most people will be their Ally Online Savings Account. This is a review specific to using the savings account as a companion account to your existing checking account. Check out my Ally Interest Checking Account Review for more about using their checking and savings products together.

The Ally Online Savings Account has no minimum balance, no monthly fees, and currently pays 1.00% APY (as of 10/7/15). Their interest rates may not be the absolute highest, but they have consistently been within 0.10% of the temporarily top banks, making it not worthwhile to move my money. (See my rate chaser calculator). Let’s go through the important factors.

User Interface. Below is a screenshot of the main page after logging in (click to enlarge). I can see all of my accounts and their balances at a glance. The overall design is clean and minimalist, and it was recently updated to be more mobile-friendly.

allyosa1

Customer Service. Ally Bank differentiates itself with their customer service. First of all, they are available 24/7 at 1-877-247-ALLY (2559). When you use their smartphone app or log into their website, you can see the wait time beforehand. Even better, if you don’t want to call them you can just use their Live Chat feature.

Security. Ally Bank supports two-factor authentication with security codes sent via either e-mail or text message. They ask for a security code when you log in from a computer they don’t recognize. However, if you’ve logged into that computer before with a security code, they may not ask you again and you can’t choose to have two-factor authentication to always be in effect.

Awards. Ally Bank has won “Best Online Bank” from Kiplinger’s Personal Finance magazine in 2014 and “Best Online Bank” from Money Magazine from 2011-2014.

FDIC Insurance. Ally Bank is a member of the Federal Deposit Insurance Corporation, FDIC Certificate #57803. As with other FDIC-insured banks, this means your Ally deposits are insured by the FDIC up to $250,000 per depositor, for each account ownership category.

Funds Transfers. With no physical branches, online savings accounts should have maximum flexibility as they are often secondary accounts (given most megabank checking accounts pay either no interest or a sad 0.01% APY). Ally Bank allows you to link any other external bank account using the standard routing number and account numbers. As long as you initiate the transfer before 7:30 pm Eastern Time, the transfer will take 2 business days. You can link up to 20 different accounts (it used to be unlimited; but other banks limit to 3; I have 7 myself).

So if I initiate a transfer on Monday afternoon by 7:30pm ET, the money will be debited first thing on Tuesday, and credited to the destination account first thing Wednesday. But know that if you initiate on a Saturday, you’ll get the same result. Even bank computers really don’t like working weekends, it seems. Overall, free transfers within 2 business days during the week is about as good as it gets for online banks.

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The transfer limits are also relatively high. On my accounts, I see that I have a $150,000 daily limit outbound and $250,000 daily limit inbound, with a total monthly limit of $600,000 outbound and $1,000,000 inbound. Keeping in mind that all savings accounts from any bank are limited to six withdrawals per month.

ATM Debit Card. You don’t get a debit card with their Online Savings Account. You can get a debit card with either their Checking or Money Market accounts, but note that those have lower interest rates.

Mobile check deposit. You can use the Ally smartphone app to deposit checks using your smartphone camera. (This is in addition to using your computer scanner and/or free postage-paid deposit envelopes.) I’m not sure if this is the same for everyone, but my deposit limit is $50,000 which is higher than many other electronic deposit programs. I’ve used the app to deposit multiple checks without issue. Screenshot below.

allyreview_echeck1  allyreview_echeck2

Mobile app. Available for iOS and Android… you can do all the important stuff – see transactions, transfer funds, deposit checks, pay bills. It can remember your username, but you must type in your password every time. I usually just use my Mint app for checking balances, as that only requires a 4-digit PIN. The overall design is acceptable, and the ATM locator is helpful if you have the Ally Checking account with free AllPoint ATMs and $10 in fee rebates each statement cycle for any ATM.

Details

  • Interest Compounding: accrued daily, compounded daily, credited monthly
  • Minimum to open: $0
  • Minimum requirements to avoid monthly service charge: None
  • Number of external bank account links allowed: 20
  • Routing Number: 124003116

Bottom line. The Ally Online Savings Account is a solid offering with with no monthly fees, no minimum balance requirement, and a historically competitive interest rate. Additional features like a flexible funds transfer system and solid 24/7 customer service help differentiate themselves from the competition. It works fine on its own as a “piggyback” or companion account to your existing checking account.

You can also combine it with the Ally Interest Checking Account (my review) which offers ATM fee rebates (up to $10 per statement cycle), free online billpay, and the ability to use the savings account as a free overdraft source. Ally also has certificates of deposit which offer competitive rates at times.