Merrill Edge + Preferred Rewards = Up to $600 Bonus For Moving Brokerage Assets, Improved Credit Card Rewards

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

Updated. Merrill Edge is the self-directed brokerage arm formed after Bank of America and Merrill Lynch merged together. They are currently offering an increased cash bonus of up to $600 for moving “new money” or assets over to them from another brokerage firm. This new bonus is linked to the Preferred Rewards program, which is another reason to consider using them as it gets you waived banking fees and extra credit card rewards. Here’s an overview along with my personal experience as I’ve had an account with them for a few years now.

Cash bonus. Brokerage firms love to collect assets. The good news is they don’t require cash that will be earning zero interest, and Edge has no management fees if you stick with DIY. If you are holding shares of stock, ETFs, or mutual funds elsewhere, you can simply perform an “in-kind” ACAT transfer over to Merrill Edge. Your 100 shares of AAPL will remain 100 shares of AAPL, so you don’t even have to worry about price changes, lost dividends, or tax consequences. Any cost basis should transfer over as well.

This specific offer is better than the standard offer:

  • $100 bonus with $20,000 to $49,999 in new assets
  • $150 bonus with $50,000 to $99,999 in new assets
  • $250 bonus with $100,000 to $199,999 in new assets
  • $600 bonus with $200,000 or more in new assets

Note that you must keep the assets there for 180 days.

This offer includes both IRAs and regular taxable (CMA) accounts:

Offer valid for new individual Merrill IRAs or Cash Management Accounts (CMAs). Cash bonus offers, in the aggregate, are limited to one CMA and one IRA per accountholder. Eligible Merrill IRAs limited to Rollover, Traditional, Roth and owner-only SEP IRA. The Merrill IRA or CMA may be a Merrill Edge Self-Directed account, Merrill Edge Advisory Account, Merrill Guided Investing or Merrill Guided Investing with an Advisor account. You may be eligible for a different or better offer. Please contact us for more information.

Note that last sentence! After I did this bonus once with a partial transfer (just enough to satisfy one of the tiers), a Merrill Edge rep contacted me and offered me a custom bonus to move even more assets over. (The bonus ratios were about the same, but higher limits.) Therefore, if you are considering this and happen to have more than $200,000 to transfer over, you may want to give them a call and see if they can offer even more money.

You can even transfer in Admiral Shares of Vanguard mutual funds – they won’t let you buy any additional shares, but you can only hold or sell them. You can, however, buy more shares of the corresponding Vanguard ETF if you wish. (Alternatively, you should consider having Vanguard convert your Admiral share into ETFs on a one-time basis that will preserve your original cost basis. After you have ETFs, you can move those over to Merrill Edge and trade them as you wish.)

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

At the Platinum and Platinum Plus levels, Merrill Edge used to offer 30 and 100 free online stock trades every month, respectively. These days, everyone gets unlimited $0 trades. Bank of America’s interest rates on cash accounts tend to be quite low, so moving cash over to qualify may result in earning less interest on your cash deposits. Merrill Lynch advisory accounts also usually come with management fees. The sweet spot is Edge with self-directed brokerage assets like stocks, mutual funds, and ETFs.

BofA checking accounts. With Gold status ($20k in assets) and above, you’ll get the monthly maintenance fee on up to 4 checking or savings accounts waived. That means you no longer have to worry about a minimum balance or maintaining direct deposit, depending on your account type. You’ll also get waived ATM fees at non-BofA ATMs at Platinum and above (12/year at $50k assets, unlimited at $100k). Free cashier’s checks.

Credit card rewards. With the Preferred Rewards boost, you can get up to 2.6% cash back on all your purchases with the Bank of America Unlimited Cash Rewards card, or 2.6% towards travel and no foreign transaction fees with the Bank of America Travel Rewards Card. You can also get 5.2% cash back on the first $2,500 in combined grocery/wholesale club/gas purchases each quarter with the Bank of America Customized Cash Rewards Card.

My personal experience. In terms of Merrill Edge, I’ve had an account with them for a few years now and my lightning review is that they have a “okay/good” user interface and solidly “good” customer service (i.e. real, informed humans available 24/7 on the phone, not email-only customer service that takes hours to days like Robinhood). I would add that I am not an active trader and only make about 10-15 trades a year. I have been quite satisfied with the account. I can also move money instantly between my Merrill Edge and Bank of America checking accounts, making it relatively easy to sweep out idle cash into an external savings account.

The biggest financial benefit to this BofA/Merrill Edge combo has probably been the 75% boost to their credit card rewards, allowing me to get a flat 2.625% cash back on virtually all my daily purchases. The second biggest benefit has probably been this cash bonus, and the third is the occasional waived checking or ATM fee. One negative is that the cash sweep options are not very good, but right now the interest difference is quite small.

Bottom line. Merrill Edge is currently offering up to $600 if you move over a significant amount of assets to their self-directed brokerage. This can simply be mutual fund or ETFs shares currently being held elsewhere. When you keep enough assets across Bank of America and Merrill Edge, their Preferred Rewards program can offer ongoing perks like waived bank account fees and boosted credit card rewards.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Bank of America Preferred Rewards: New Tiers for $1M+ Assets

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

If you like maximizing your credit card rewards, you probably know that you can earn a base rewards rate of 2.6% cash back on ALL your credit card purchases and up to 5.2% cash back on the first $2,500 in combined grocery/wholesale club/gas purchases each quarter by combined the right Bank of America credit card with their Preferred Rewards program. The catch is that you have to park at least $100,000 in assets inside qualifying Bank of America deposit and/or Merrill investment accounts. You can avoid any lost interest or management fees by transferring over some existing IRA or brokerage assets to a self-directed Merrill Edge account.

Bank of America recently updated the tiers for their Preferred Rewards program, and thankfully the benefits for the three existing tiers did not change. You can still earn the 75% bonus with $100,000 (Platinum Honors) in qualifying assets and 50% bonus with $50,000 (Platinum) in qualifying assets. Specifically, they track your average daily balance for the trailing three calendar months for qualifying accounts:

  • Bank of America deposit accounts (including checking, savings, certificate of deposit)
  • Merrill investment accounts (including brokerage “Cash Management Accounts”, IRAs, 529 Plans)

BofA added two brand-new tiers for those with $1 million+ (Diamond) and $10 million+ (Diamond) in qualifying assets. Here is an edited comparison table that includes the new Diamond and Diamond Honors benefits with the most potential value (mortgage and HELOC interest rate deductions). Of course, I would compare rates to make sure that BofA’s loan rates are initially competitive. Click to enlarge:

In addition, they added new lifestyle benefits to the Diamond and Diamond Honors tiers. These include “access” and “discounts” to travel experiences, luxury merchandise, special events, and concierge-type services. You can also gain Avis Preferred Plus status (Diamond) or Avis President’s Club (Diamond Honors).

My take. I personally don’t see anything special that would encourage me to aspire to Diamond or Diamond Honors status, but you may feel differently. I’m glad that they are keeping the 75% boost for $100,000 in assets, and it has worked as I would not otherwise have much of a “relationship” with BofA. I would not have an active Merrill Edge account, and I wouldn’t have any active BofA credit cards without the boosts.

This “2.6% back on everything” has been my catch-all system for a long time, used whenever I couldn’t earn more while trying out a new credit card promo or 5% bonus category.

(hat tip Doctor of Credit)

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

MMB Free IRA Contribution 2021 Challenge: $5,327 (So Far)

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

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With about six weeks left in 2021, I wanted to check in on my claim that I could max out the annual IRA contribution limit of $6,000 using the profits from various promotions alone. If you had put $6,000 into your IRA every year for the last 10 years (2011-2020) and invested in a simple Target Date retirement fund, you would have turned small deals into a $100,000+ nest egg.

Example. I was just approved for the new Capital One Venture X card, and I was hoping the $1,000+ value would put me over the $6,000 threshold. I’m very confident that I’ll get at least $1,000 out of this card, as (1) we have multiple upcoming trips planned, (2) are renewing Global Entry for $100, and (2) this is the rare card that lets us gain lounge access for a family of 5. Each cardholder is free plus 2 guests, but additional cardholders are free 😉. I will offset $1,000 in travel expenses I would have incurred anyway, and invest it instead.

The ground rules: Real-world results for one person only. As following with My Money Blog tradition, this will track my personal, real-world results. It would be quite easy to list a bunch of promotions that add up to $6,000, but these will be promotions that I personally sign up for and complete the requirements (even though I’ve already opened so many bank accounts, credit cards, and brokerage accounts over the years). I will track my individual results only (no spouse/partner). I quickly ran through all posts in the Deals and Offers category:

One-time bonuses for 2021 so far.

Total from one-time bonuses: $5,327

I’m pretty close to $6,000 without counting the money from higher bank interest or other credit card rewards like 5% cash back categories. Hopefully the holiday season has a few more gifts for me in that regard! 🤑 I did multiple US Mint coin deals this year, but also much fewer credit card applications than in a normal year. My wife and I were thinking of trying to get dual Southwest Companion passes, but we decided not to go for it yet.

Bank interest accounts. With a simple direct deposit change, I am earning 3.5% APY on $100,000 at HM Bradley, FDIC-insured and with no interest rate risk. (I have the HM Bradley credit card as well.) This is money that could be earning 0% at BofA/Chase/Wells Fargo, 0.50% at a “high yield” savings account, or about 0.40%-1% in short-term US Treasury bonds as part of an investment portfolio. Even calling it only 2.5% APY above what 99% of people earn on the same thing, that works out to a difference of $2,500 in interest per year.

I could hold even more cash at high interest rates via other fintech like One Finance and Porte. US Savings bonds are paying 7.12% interest for the next six months. I track these in my monthly best interest rate updates. I view this is a legitimate form of “profit”, but the value is dependent on the size your cash/bond holdings. Thus, I’ve kept it separate.

Total from higher bank interest: $2,500

These are all deals with minimal downside risk, but they also tend to be both sporadic and temporary. Some months had zero lucrative deals, and some months had several. I try to only share the ones that will last at least a few days, but it’s a bit like value investing where you have to be ready to jump on an opportunity when it shows up, because it usually won’t last long. For example, HM Bradley now requires a referral to join, and each person can only refer three people.

Total for 2021 so far: $7,827

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – November 2021 Update

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

via GIPHY

Here’s my monthly roundup of the best interest rates on cash as of November 2021, roughly sorted from shortest to longest maturities. I look for lesser-known opportunities earning more than most “high-yield” savings accounts and money market funds while still keeping your principal FDIC-insured or equivalent. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 11/3/2021.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer using a different bank’s FDIC insurance. These do NOT require a certain number debit card purchases per month. Read about the types of due diligences you should do whenever opening a new bank account.

  • 3% APY on up to $100,000. The top rate is still 3% APY for October through December 2021 (can be 3.5% APY with their credit card), and they have not indicated any upcoming rate drop. HM Bradley requires a recurring direct deposit every month and a savings rate of at least 20%. Due to high demand, you must currently use a referral link to join. If you have any available to share (you get 3), please drop it in the comments of my HM Bradley review.
  • 3% APY on 10% of direct deposits + 1% APY on $25,000. One Finance lets you earn 3% APY on “auto-save” deposits (up to 10% of your direct deposit, up to $1,000 per month). Separately, they also pay 1% APY on up to another $25,000 with direct deposit. New customer $50 bonus via referral. See my One Finance review.
  • 3% APY on up to $15,000. Porte requires a one-time direct deposit of $1,000+ to open a savings account. New customer $50 bonus via referral. Important note: Porte is adding additional restrictions in January 2022. See my Porte review.
  • 1.20% APY on up to $50,000. You must maintain a $500 direct deposit each month for this balance cap, otherwise you’ll still earn 1.20% on up to $5,000. See my OnJuno review.

High-yield savings accounts
While the huge megabanks pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • T-Mobile Money is still at 1.00% APY with no minimum balance requirements. The main focus is on the 4% APY on your first $3,000 of balances as a qualifying T-mobile customer plus other hoops, but the lesser-known fact is that the 1% APY is available for everyone. Thanks to the readers who helped me understand this. Unfortunately, some readers have reported their applications being denied.
  • Evangelical Christian Credit Union (ECCU) is offering new members 1.01% APY on up to $25,000 when you bundle a High-Yield Money Market Account & Basic Checking. (Existing members can get 0.75% APY.) To join this credit union, you must attest to their statement of faith.
  • There are several other established high-yield savings accounts at closer to 0.50% APY. Marcus by Goldman Sachs is on that list, and if you open a new account with a Marcus referral link (that’s mine), they will give you and the referrer a 0.50% boost on top of the current interest rate for 3 months. You can then extend this by referring others to the same offer. Right now, Marcus is paying 0.50% APY, so with the offer you’d get 1.00% APY currently for your first 3 months.

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

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CFG Bank has a 13-month No Penalty CD at 0.62% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 0.50% APY for all balance tiers. Marcus has a 7-month No Penalty CD at 0.45% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • USALLIANCE Financial Credit Union has a 12-month CD at 0.85% APY ($500 minimum new money) with an early withdrawal penalty of 6 months interest. You must join the credit union first, but anyone can join via American Consumer Council (ACC).

Money market mutual funds + Ultra-short bond ETFs
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Unfortunately, money market fund rates are very low across the board right now. Ultra-short bond funds are another possible alternative, but they are NOT FDIC-insured and may experience short-term losses at times. These numbers are just for reference, not a recommendation.

  • The default sweep option is the Vanguard Federal Money Market Fund which has an SEC yield of 0.01%. Vanguard Cash Reserves Federal Money Market Fund (formerly Prime Money Market) currently pays 0.01% SEC yield.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 0.33% SEC yield ($3,000 min) and 0.43% SEC Yield ($50,000 min). The average duration is ~1 year, so your principal may vary a little bit.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 0.26% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 0.40% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes. Right now, this section isn’t very interesting as T-Bills are yielding close to zero!

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 11/3/2021, a new 4-week T-Bill had the equivalent of 0.05% annualized interest and a 52-week T-Bill had the equivalent of 0.17% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a -0.07% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a -0.09% (!) SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2021 and April 2022 will earn a 7.12% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. Details here.
  • In mid-April 2022, 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.
  • See below about EE Bonds as a potential long-term bond alternative.

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 severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and risk of messing up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • Quontic Bank is offering 1.01% APY on balances up to $150,000. This is best for people who have high balances, as the rate is not as high as other rewards checking accounts. You need to make 10 debit card point of sale transactions of $10 or more per statement cycle required to earn this rate.
  • (Balance caps will drop as of 11/17/2021) The Bank of Denver pays 2.00% APY on up to $10,000 (down from $25,000 as of 11/17/21) if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. The rate recently dropped. If you meet those qualifications, you can also link a Kasasa savings account that pays 1.00% APY on up to $25k (down from $50k as of 11/17/21). Thanks to reader Bill for the updated info.
  • Presidential Bank pays 2.25% APY on balances up to $25,000, if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Evansville Teachers Federal Credit Union pays 3.30% APY on up to $20,000. You’ll need at least 15 debit transactions and other requirements every month.
  • Lake Michigan Credit Union pays 3.00% APY on up to $15,000. You’ll need at least 10 debit transactions and other requirements every month.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. 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 building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Abound Credit Union has a 59-month Share Certificate at 1.35% APY ($500 min). Early withdrawal penalty is 1 year of interest (and only with the consent of the credit union, so be aware). Anyone can join this credit union via partner organization ($10 one-time fee).
  • NASA Federal Credit Union has a special 49-month Share Certificate at 1.60% APY ($10,000 min of new funds). Early withdrawal penalty is 1 year of interest. Anyone can join this credit union by joining the National Space Society (free). However, NASA FCU will perform a hard credit check as part of new member application.
  • Lafayette Federal Credit Union has a 5-year CD at 1.26% APY ($500 min). Early withdrawal penalty is 6 months of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year CD at 1.15% APY. Be wary of higher rates from callable CDs listed by Fidelity.

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 long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CD at 2.00% APY vs. 1.53% for a 10-year Treasury. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique 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 0.10%). I view this as a huge early withdrawal penalty. But if holding for 20 years isn’t an issue, it can also serve as a hedge against prolonged deflation during that time. Purchase limit is $10,000 each calendar year for each Social Security Number. As of 11/3/2021, the 20-year Treasury Bond rate was 2.01%.

All rates were checked as of 11/3/2021.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Savings I Bonds November 2021 Interest Rate: 7.12% Inflation Rate

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

November 2021 rate confirmed at 7.12%. The variable inflation-indexed rate for I bonds bought from November 1, 2021 through April 30th, 2021 will indeed be 7.12% as predicted. Every single I bond will earn this rate eventually for 6 months, depending on the initial purchase month.

The fixed rate (real yield) is also 0% as predicted, but realize that the real yield on a 5-year TIPS right now is about negative 1.7%. There is significant demand for inflation protection right now. See you again in mid-April for the next early prediction for May 2022. Don’t forget that the purchase limits are based on calendar year, if you still wish to max out for 2021.

Original post 10/13/2021:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2021 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a October 2021 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a November 2021 purchase.

New inflation rate prediction. March 2021 CPI-U was 264.877. September 2021 CPI-U was 274.310, for a semi-annual increase of 3.56%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 7.12%. You add the fixed and variable rates to get the total interest rate. If you have an older savings bond, your fixed rate may be up to 3.60%.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in October 2021. If you buy before the end of October, the fixed rate portion of I-Bonds will be 0%. You will be guaranteed a total interest rate of 0.00 + 3.54 = 3.54% for the next 6 months. For the 6 months after that, the total rate will be 0.00 + 7.12 = 7.12%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on October 31st, 2021 and sell on October 1st, 2022, you’ll earn a ~3.87% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you theoretically buy on October 31st, 2021 and sell on January 1, 2023, you’ll earn a ~4.57% annualized return for an 14-month holding period. Comparing with the best interest rates as of October 2021, you can see that this is much higher than a current top savings account rate or 12-month CD.

Buying in November 2021. If you buy in November 2021, you will get 7.12% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS, and is thus very, very, very likely to be 0%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (set at purchase) + variable rate (total bond rate has a minimum floor of 0%). So if your fixed rate was 1%, you’ll be earning a 1.00 + 7.12 = 8.12% rate for six months.

Buy now or wait? Given that the current I bond rate is already much higher than the equivalent alternatives, I would personally buy in October to lock in the high rate for the longest possible time. Who knows what will happen on the next reset? Either way, it seems worthwhile to use up the purchase limit for 2021 either in October or November. You are also getting a much better “deal” than with TIPS, as the fixed rate is currently negative with short-term TIPS.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. You can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number.

Note: Opening a TreasuryDirect account can sometimes be a hassle as they may ask for a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. Don’t expect to be able to open an account in 5 minutes on your phone.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. Right now, they promise to pay out a higher fixed rate above inflation than TIPS. You can only purchase them online at TreasuryDirect.gov, with the exception of paper bonds via tax refund. For more background, see the rest of my posts on savings bonds.

[Image: 1950 Savings Bond poster from US Treasury – source]

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

BlockFi Promos: 9% APY Interest on Stablecoins, BTC Bonus, Bitcoin Rewards Credit Card

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

(Updates: BlockFi announced that they will pay 9% APY on stablecoin balances up to $40,000 as of 11/1/21, up from 8.25% APY for October. BlockFi credit card now has no annual fee and offers 3.5% back in Bitcoin for first 3 months and a rebate on BTC trades. The credit card also adds another 2% APY to your stablecoin interest earned. Also, earn 0.5% back on recurring crypto purchases set up by 10/31/21.)

BlockFi is a cryptocurrency platform that both pays high interest on crypto deposits (including stablecoins) and lets you gain liquidity by borrowing cash backed by your cryptocurrency. They also a have a new credit card that pays Bitcoin rewards.

BlockFi Interest Account bonus. Receive up to $250 in bonus Bitcoin for new clients that sign up and fund a new BlockFi Interest Account. Here are the updated bonus tiers:

  • Deposit $25 to $1,499 Get $15 in BTC.
  • Deposit $1,500 to $19,999, Get $20 in BTC.
  • Deposit $20,000 to $39,999, Get $40 in BTC.
  • Deposit $40,000 to $74,999, Get $75 in BTC.
  • Deposit $75,000 to $99,999, Get $150 in BTC.
  • Deposit $100,000+, Get $250 in BTC.

This must be your first deposit, and you must make the qualifying deposits within 30 days of account opening. The required holding period is roughly 3 months. This one is an affiliate offer and you should see the promo code partner250 auto-filled on your application.

BlockFi now supports instant ACH transfers from your bank account. You can start earning interest on your funds or start trading immediately. Note that BlockFi may requires your deposits to stay there for at least 60 days:

BlockFi credits this bank transfer instantly (so you have the ability to trade and earn interest on those funds), however it generally takes 2-3 business days for the funds to be removed from your bank account. We require that you keep enough funds in your bank account to cover any bank transfers we have credited in our platform.

While we do not have a policy to hold these funds for 60 days, if we see certain behaviors such as attempting to withdraw all funds from the platform including value added via bank transfer we may put a hold on the value of the bank transferred funds for up to 60 days.

BIA interest rates. As of 10/1/2021, the BlockFi Interest Account (BIA) currently pays 4% APY on up to 0.1 Bitcoin (BTC) and 8.25% APY on up to $40,000 of USDC/GUSD stablecoins (subject to change on a monthly basis). There are no trade requirements, but when you deposit USD it will be converted to the GUSD (Gemini stablecoin) by default. (You can then use it to buy USDC or something else if you wish.)

Blockfi has announced the following new rates effective 11/1/2021, notably 9% APY on the first $40,000 of GUSD and USDC:

Their overall business model is to earn a spread on the difference between lending out money and paying interest.

To earn interest on crypto, we lend assets to highly vetted and audited institutional counterparties. The interest we are able to pay is based on the yield that we are able to generate from lending, which directly correlates to the market demand in the space (I.e. what rate institutions are willing to pay to borrow specific crypto assets, as it varies from asset to asset).

One free crypto withdrawal per calendar month and one free stablecoin withdrawal per month. After that, additional stablecoin withdrawals are $0.25 each.

Earn 0.5% back on recurring crypto purchases. Another current promo is that if you set up recurring purchases of crypto, they will give you 0.5% back in stablecoin. Note that you can’t buy stablecoins, but you can buy other crypto like BTC and ETH.

*Clients who set up qualifying repeat trades during the promotion period (09/30/21 00:00:00 – 10/31/21 23:59:59 UTC) are eligible to get 0.50% back in stablecoin on all qualified trades. Note: stablecoin to stablecoin trades do not qualify.

Qualified repeat trades must be established within the promotion period, and be maintained without cancelling or changing until 11/30/21. Traded value will be tracked as the sum of all qualifying trades executed during the promotion period (09/30/21 00:00:00 – 11/30/21 23:59:59 UTC). Bonuses will be credited on or before the second Friday of the month in December, 12/10/21. This offer cannot be combined with other trading offers. Any recurring trades changed or cancelled by BlockFi on behalf of the client may still be eligible to receive 0.50% back in stablecoin for the time the trade was active at the discretion of BlockFi. Trading qualifications are dependent upon geographical or regulatory restrictions. Terms subject to change.

Blockfi credit card. The new Blockfi Rewards Visa Signature card has is a new rewards credit card that earns BTC instead of cash back. They’ve been adding a few new perks and removed the annual fee, so that altogether it can be a good compliment for BlockFi users. Here are the highlights:

  • Earn 3.5% back in bitcoin on all purchases in the first 90 days of card ownership after activation, up to $100 in bitcoin.
  • 2% extra APY on your stablecoin holdings. 2% extra APY on your average daily USD-backed stablecoin balance, paid in bitcoin, up to $200 per year.
  • Earn 0.25% back on all eligible trades, up to $500 in BTC each month.
  • Earn 1.5% back in bitcoin on every purchase.
  • Earn 2% back in bitcoin on every purchase over $50,000 of annual spend.
  • No annual fee.

BlockFi is definitely one of the more well-established crypto sites, but you should do your own due diligence as it is not an FDIC-insured bank account nor a SIPC-insured brokerage account. I found that they were backed by some reputable firms including Fidelity Investments and Coinbase, with over $500 million raised so far. They use Gemini as their primary custodian, which is a licensed custodian and regulated by the New York State Department of Financial Services. As such, they will still require your name, address, and Social Security Number to verify the identity of all accountholders.

I hold some GUSD/USDC stablecoins and some crypto, but I consider them both forms of speculative investments. I’ve written about stablecoins in the past, but I like the analogy from Matt Levine of Bloomberg that stablecoins are like the casino chips of the crypto world since traditional banks won’t interact with them. Stablecoins are like casino chips. They said $1 on them, but you have to trust the casino to convert them back to cash. Thus, I would only hold casino chips from a stable casino where I am confident that I can cash them out again for US dollars. I find it both intriguing and wary that my cash is earning 9% APY here, but I also know I would much prefer holding them at BlockFi which has been valued as a $3 billion company than a DeFi-style app where millions can be lost with a typo. I also am of the opinion that GUSD and USDC are safer stablecoins than USDT. I don’t own any USDT (aka Tether).

Bottom line. BlockFi is offering a sign-up deposit bonus, over 8% APY on stablecoin deposits, also offer credit card that earns Bitcoin rewards along with a rebate on crypto trades.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Spiral Banking App Review: $50 + $200 Bonus Details, Donations Required, iOS Only

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

Spiral is a new fintech banking app (iOS only currently) with a unique mandate on social responsibility through charitable giving. If you maintain an account with them, you must agree to set aside some portion of every deposit towards a charitable donation (Giving Account). The minimum amount is 0.25% ($2.50 for every $1,000 deposited). In turn, Spiral will match your donations up to $150 per year. Spiral is a fintech, with banking services provided by nbkc bank, Member FDIC. Hat tip to DoC.

Sign-up bonuses. Spiral is also offering some good sign-up bonuses to encourage you to try them out. There are currently two separate bonuses:

  • $50 bonus when you fund your new Spiral checking account with at least $200 by November 30, 2021.
  • $200 bonus after recurring direct deposits of at least $1000 each month for two consecutive months.

Inactivity fee warning. They promise the usual no minimum balance and no monthly fees, but there is an inactivity fee that is relatively punitive:

Spiral will charge your account $7 per month (up to 6 months) if you do not make a deposit or withdrawal for 90 days. Interest posting is not considered a deposit for purposes of this fee.

Giving Account details. Here’s an excerpt from the terms of their Giving Account:

As a condition to opening and maintaining a Spiral Account and receiving the Spiral Services, you must open an account designated as your donation or giving account (the “Giving Account”). Upon establishing your Spiral Account, you must deposit an amount equal to no less than 0.25% of your initial and future deposits to your Checking or Savings Accounts in the Giving Account. You may select (and periodically adjust on the Spiral App and Spiral Website) by indicating the percentage (between 0.25% and 20%) of each deposit (rounded down to the nearest penny). You agree to direct the distribution of funds in the Giving Account to a charitable organization of your choice that is an organization that qualifies as an exempt organization under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, through the Spiral App and Spiral Website.

They have a very large directory of millions of eligible nonprofits.

Application details. I found this app interesting and decided to try it out. The application was straightforward, 100% online, and took a few minutes. My free credit monitoring suite detected no hard credit checks. I connected an external checking account via Plaid, made a $250 deposit, and quickly received in-app confirmation that I qualified for the $50 bonus.

My $250 deposit is pending, but I was reminded that $0.62 will be set aside for my giving account (see screenshots below). It appears that Spiral also seeded my giving account with a $5 “Giving Cash Bonus” as well. I discovered that the savings account only pays 0.07% APY, so I did not open one. I intend to go for the direct deposit bonus as well.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Discover Bank Bonus: $150/$200 ($15,000/$25,000 Deposit)

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

disc_osaDiscover Bank has brought back this bonus for their online savings account. If you open a new account through either this link with promo code NW21 or this link with promo code CY21 (note the two different promo codes) by 12/15/21, you can receive one of the following bonuses:

  • Deposit at least $15,000 within 30 days of opening to earn a $150 bonus, or
  • Deposit at least $25,000 within 30 days of opening to earn a $200 bonus.

This offer has been available in the past and is only for new Discover customers, but if you haven’t grabbed it yet it’s a solid bonus. DoC comments report that cumulative deposits have worked, so something to consider.

Offer not valid for existing or prior Discover savings customers or existing or prior customers with savings accounts that are co-branded or affinity accounts provided by Discover. Account must be open when bonus is credited.

The Discover Online Savings Account has a current interest rate of 0.40% APY as of 10/24/21, which is a competitive rate although not the highest available. There are no minimum balance requirements and no monthly fees. Interest is compounded daily and paid monthly.

If you deposit the minimum amount of $15k, the $150 bonus is effectively another 1% of your initial deposit. The $200 bonus on $25,000 deposited is a lower percentage, but if you have the extra cash then it may still be a good rate. There is no fixed minimum time period where you have to keep the money there after getting the bonus, so your effective ROI can be quite high since the bonus should post shortly after you complete the required deposits. Keep in mind that you must still have an open account for the bonus to post.

I did not experience a hard credit pull when opening my Discover bank account on a previous bonus. Historically, their rates are competitive but not the rate leaders. Their overall feature set is not exceptional (average speed transfers), so it is not my primary savings account at this time. Maybe it is convenient if your primary card is the Discover It card?

Bottom line. The Discover Savings account is a simple, barebones piggy-back savings account with no minimum balance and no monthly fees. The rates are historically competitive but rarely the highest. With no monthly fees, this is a solid low-risk bonus if you have the funds available and have never had a Discover bank account before.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Hanscom Federal CU Thrive Review: 5.00% APY Saving Habit Builder and Maintainer

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

savebuttonbankHanscom Federal Credit Union (HFCU) has hiked back up the rate on their CU Thrive account to 5.00% APY, which is a capped certificate of deposit that rewards consistent saving. The rate is set for 12 months, and during those 12 months you can transfer up to $500 every month from a HFCU checking account. No monthly fees. However, you cannot make any withdrawals during those 12 months, or you will be subject to an early withdrawal penalty of 90 days interest.

This product is not meant for big balances. Instead, it is meant to encourage the creation AND maintenance of a modest savings habit. 5.00% APY is more than 10 times what the top “high-yield” savings accounts offer right now.

How much interest can I earn? At 5% APY, if you maxed out this account and set aside the full $500 a month for 12 months, at the end you’d have put in $6,000 and earned about $150 in interest by the end of the year (~$162 if you made every transfer on the 1st of the each month by my quick calculations). $6,000 also happens to be just about the same amount as a full Roth IRA contribution (hint hint) or the foundation of a solid emergency fund.

At the end of the 12 months, all accrued savings plus earned dividends will be transferred into your primary savings account. It will NOT automatically renew at maturity. Each member can only have one CU Thrive account open at one time, but after one 12-month period ends you can open up another one to keep up the savings habit (assuming it is still offered). Full disclosure (PDF).

Eligibility details. To open a CU Thrive account, you must first open an HFCU checking account in addition to the savings account required for all members. HFCU offers a free checking account with no direct deposit and no minimum balance requirement. HFCU membership is open to active duty or retired military along with many other groups (see application), but anyone can also join the Air Force Association, Paul Revere Chapter for a one-time $20 fee and be eligible. On the application, choose the option “I am a member of or will be joining a sponsoring member organization.” You must also keep $25 in the share savings account as long as you are a member.

New refer-a-friend program. HFCU has a referral program which offers an additional $30 cash bonus after your new savings and checking accounts are open and in good standing for 90 days. The referring member gets $30 as well. If you would like a referral from me, please me send your full name, e-mail address, the text “HFCU referral” via my contact form. I will use this information only to fill out their referral form.

Account opening process (from a few years ago). I started the online application and had to provide the usual personal information and then answer questions based on my credit report to verify my identity. Based on my free credit monitoring, they did not perform a hard pull on my credit report. You can fund with an online bank transfer but they also gave me the option to fund with credit card up to $2,000 (not sure if this is still an option today). They didn’t mention if this would be considered a cash advance or not, but it showed up as a purchase for me. Finally, you must print out, sign, and mail in a signature card. You can also open an account in-person. All of their physical branches appear to be located in Massachusetts.

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

I also discovered that Hanscom Federal has paid a Loyalty Dividend to its Credit Union members for over 20 consecutive years. When I had this account, I earned another $1.57 in bonus loyalty dividends on top of my $78.46 of interest earned.

In addition to the CU Thrive and free checking options, HFCU also has a Kasasa Cash Checking account that offers up to 1.00% APY on balances up to $15,000 if you make at least 12 debit card or credit card purchases per month, complete at least 1 ACH Credit/Direct deposit per month, and enroll in online statements. This isn’t the highest Kasasa rate available nationwide, but if you’re already a member, it may be convenient.

Bottom line. The CU Thrive account is a good option for people looking to build up a savings habit, with 5.00% APY for 12 months. However, the system really works best if you use HFCU’s free checking as your primary checking account. (You may also consider their Kasasa Cash checking account with higher interest but debit card activity requirements.) Juggling it as an external savings account is perfectly possible, but you have to keep on top of your transfers to avoid idle cash earning zero interest. I received all of the interest promised, the customer service was nice and polite when contacted, and any errors were my own.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Quontic Bank High Interest Checking Review: 1.01% APY on the Portion of Daily Balances up to $150,000

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

The Quontic Bank High Interest Checking account has recently increased their eligible balance amount, with the result being the rare combination of a competitive interest rate with a high balance limit. Here are the highlights:

  • Earn 1.01% APY* on the portion of the daily balances up to $150,000.
  • Additional tiers apply. APY earned is based on the portion of the daily balance within the specified tiers.
  • No minimum balance requirement.
  • No monthly fees.
  • $100 minimum deposit required to open an account.

In order to qualify for the higher rate, you must complete the following qualifying debit card transactions each statement cycle:

10 debit card point of sale transactions of $10 or more per statement cycle required to earn the maximum APY on the portion of the account daily balance tier.

If you meet those requirements, here is the exact interest rate breakdown:

– the portion of the daily balance $150,000 or less will earn 1.01% APY
– the portion of your daily balance above $150,000 and up to and including $1,000,000.00 earns from 1.01% APY to 0.45% APY, depending on the balance
– the portion of your daily balance above $1,000,000 will earn from 0.45% APY to 0.00% APY, depending on the balance in the account.
– If the qualifying activity requirement is NOT fulfilled, the interest rate paid on the entire balance will be 0.01% APY

Note the following details about qualifying point-of-sale (POS) transactions:

The following activities are not considered qualifying POS debit card transactions and do not count toward earning rewards: ATM- processed transactions; transfers between accounts; purchases made with debit cards not issued by our bank; cash over portions of point-of-sale transactions; Peer-to-Peer (P2P) payments (such as Apple Pay Cash*); loan payments or account funding made with your debit card and purchases made using third-party payment accounts.

I’ve shared other checking accounts with debit card requirements, but the main difference here is the rare combination of competitive interest rate and very high eligible balance. 1.01% APY on a $150,000 balance would result in earning $1,515 of interest in a year. The difference between that and an account paying 0.50% APY is $765 more interest over a year. There is also no monthly direct deposit requirement with this account.

Note: Earnings of $1,500 with 1.01% APY and $765 with 0.50% APY is calculated based on only those respective balances being maintained in the High Interest Checking account for an entire year, with nothing debited to or credited from the account during its duration.

* APY means Annual Percentage Yield

Updated as of 11/16/2021.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – October 2021 Update

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

via GIPHY

Here’s my monthly roundup of the best interest rates on cash as of October 2021, roughly sorted from shortest to longest maturities. I look for lesser-known opportunities earning at least double what most savings accounts and money market funds are earning while still keeping your principal FDIC-insured or equivalent. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 10/6/2021.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). I define “fintech” as a software layer on top of a different bank’s FDIC insurance. These do NOT require a certain number debit card purchases per month. Read about the types of due diligences you should do whenever opening a new bank account.

  • 3% APY on up to $100,000. The top rate is still 3% APY for October through December 2021 (can be 3.5% APY with their credit card), and they have not indicated any upcoming rate drop. HM Bradley requires a recurring direct deposit every month and a savings rate of at least 20%. Due to high demand, you must currently use a referral link to join. If you have any available to share (you get 3), please drop it in the comments of my HM Bradley review.
  • 3% APY on 10% of direct deposits + 1% APY on $25,000. One Finance lets you earn 3% APY on “auto-save” deposits (up to 10% of your direct deposit, up to $1,000 per month). Separately, they also pay 1% APY on up to another $25,000 with direct deposit. New customer $50 bonus via referral. See my One Finance review.
  • 3% APY on up to $15,000. Porte requires a one-time direct deposit of $1,000+ to open a savings account. New customer $50 bonus via referral. Important note: Porte is adding additional restrictions in January 2022. See my Porte review.
  • 1.20% APY on up to $50,000. OnJuno recently updated their rate tiers, while keeping existing customers on the grandfathered 2.15% APY rate. If you don’t maintain a $500 direct deposit each month, you’ll still earn 1.20% on up to $5k. See my updated OnJuno review.

High-yield savings accounts
While the huge megabanks pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • T-Mobile Money is still at 1.00% APY with no minimum balance requirements. The main focus is on the 4% APY on your first $3,000 of balances as a qualifying T-mobile customer plus other hoops, but the lesser-known fact is that the 1% APY is available for everyone. Thanks to the readers who helped me understand this. Unfortunately, some readers have reported their applications being denied.
  • Evangelical Christian Credit Union (ECCU) is offering new members 1.01% APY on up to $25,000 when you bundle a High-Yield Money Market Account & Basic Checking. (Existing members can get 0.75% APY.) To join this credit union, you must attest to their statement of faith.
  • There are several other established high-yield savings accounts at closer to 0.50% APY. Marcus by Goldman Sachs is on that list, and if you open a new account with a Marcus referral link (that’s mine), they will give you and the referrer a 0.50% boost on top of the current interest rate for 3 months. You can then extend this by referring others to the same offer. Right now, Marcus is paying 0.50% APY, so with the offer you’d get 1.00% APY currently for your first 3 months.

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

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CFG Bank has a 13-month No Penalty CD at 0.62% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 0.50% APY for all balance tiers. Marcus has a 7-month No Penalty CD at 0.45% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Lafayette Federal Credit Union has a 12-month CD at 0.80% APY ($500 min). Early withdrawal penalty is 6 months of interest. Anyone can join this credit union via partner organization ($10 one-time fee).

Money market mutual funds + Ultra-short bond ETFs
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Unfortunately, money market fund rates are very low across the board right now. Ultra-short bond funds are another possible alternative, but they are NOT FDIC-insured and may experience short-term losses at times. These numbers are just for reference, not a recommendation.

  • The default sweep option is the Vanguard Federal Money Market Fund which has an SEC yield of 0.01%. Vanguard Cash Reserves Federal Money Market Fund (formerly Prime Money Market) currently pays 0.01% SEC yield.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 0.27% SEC yield ($3,000 min) and 0.37% SEC Yield ($50,000 min). The average duration is ~1 year, so your principal may vary a little bit.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 0.22% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 0.34% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes. Right now, this section isn’t very interesting as T-Bills are yielding close to zero!

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 10/6/2021, a new 4-week T-Bill had the equivalent of 0.04% annualized interest and a 52-week T-Bill had the equivalent of 0.10% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a -0.06% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a -0.09% (!) SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between May 2021 and October 2021 will earn a 3.54% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2021, 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, although we already know that it will be likely higher than 5%!
  • See below about EE Bonds as a potential long-term bond alternative.

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 severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and risk of messing up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • The Bank of Denver pays 2.00% APY on up to $25,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. The rate recently dropped. If you meet those qualifications, you can also link a Kasasa savings account that pays 1.00% APY on up to $50k. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 2.25% APY on balances up to $25,000, if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Evansville Teachers Federal Credit Union pays 3.30% APY on up to $20,000. You’ll need at least 15 debit transactions and other requirements every month.
  • Lake Michigan Credit Union pays 3.00% APY on up to $15,000. You’ll need at least 10 debit transactions and other requirements every month.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. 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 building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Abound Credit Union has a 59-month Share Certificate at 1.35% APY ($500 min). Early withdrawal penalty is 1 year of interest (and only with the consent of the credit union, so be aware). Anyone can join this credit union via partner organization ($10 one-time fee).
  • NASA Federal Credit Union has a special 49-month Share Certificate at 1.35% APY ($10,000 min of new funds). Early withdrawal penalty is 1 year of interest. Anyone can join this credit union by joining the National Space Society (free). However, NASA FCU will perform a hard credit check as part of new member application.
  • Lafayette Federal Credit Union has a 5-year CD at 1.26% APY ($500 min). Early withdrawal penalty is 6 months of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year CD at 1.10% APY. Be wary of higher rates from callable CDs listed by Fidelity.

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 long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CD at 1.65% APY vs. 1.54% for a 10-year Treasury. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique 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 0.10%). I view this as a huge early withdrawal penalty. But if holding for 20 years isn’t an issue, it can also serve as a hedge against prolonged deflation during that time. Purchase limit is $10,000 each calendar year for each Social Security Number. As of 10/6/2021, the 20-year Treasury Bond rate was 2.02%.

All rates were checked as of 9/7/2021.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Lili Banking App For Freelancers: $70-$100 Drop Bonus + $100 Referral Bonus

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

Update October 2021: The Lili referral bonus is now up to $100, although the Drop bonus is back to 70,000 points. Still, the total value is still $30 higher and this account doesn’t require any business docs. I charged $250 onto the debit card and the $100 bonus posted quickly (screenshot below). I am still waiting on the Drop bonus which it says takes up to 45 days to post.

Original full review:

Lili is a new banking app that has the core features of popular consumer fintech apps like Chime, but adds features focused on freelancers and independent contractors (sell on Etsy, find projects on Upwork, etc). Highlights:

  • Banking. No minimum balance and no monthly fees. Access your direct deposit up to 2 days early. No ATM fees within the 38,000+ ATM MoneyPass network. Free debit card.
  • Free freelancer features. App helps you easily mark business expenses, find tax deductions, set aside tax withholding. Deposit cash at 90,000 retail locations including Walmart, CVS, Walgreens, and 7-11.
  • Paid freelancer features with Lily Pro at $5/month. This premium paid tier includes $200 in fee-free overdrafts, 1% APY interest on savings, cashback rewards on the debit card, and the ability to create and send unlimited invoices.
  • $70-$100 Drop promo + $100 referral bonus for new users. Details below.

My experience. Thankfully, this account doesn’t hassle you for a bunch of uploaded business verification documents, as it is focused on freelancers. After opening an account, my most important tip is to double-check your SSN on the application before submitting. If you mistype it, they won’t give you a chance to try again and you’ll have to reach them by phone to correct the situation, which wastes a lot of time. Otherwise, it would have been quite fast. This app does offer special appeal to solo-entrepreneurs (I prefer that term to “side-hustlers”) looking for some help marking business expenses and tracking them to minimize taxes.

After you make a purchase on the debit card, the app will almost instantly ask you if it is a work or “life” expense. You can easily attach a photo receipt if it is a work expense for your records. Incoming deposits can be marked so that you put aside some money for taxes.

I was also interested in the 1% APY savings account, but it requires the Lily Pro subscription at $5 a month. If you maintain high cash balances, this still might be a good trade-off since most other online banks are only at 0.50% APY or so currently. In addition, invoice software can cost $5 a month on its own, so if you can use both features, this can be a good combo.

$70-$100 Drop promo + $50 $100 referral bonus details. The Drop app is a rewards app that is mostly a “shop to earn” app but also includes a few good non-shopping promos from time to time. If you open via my Drop referral link and use referral code cg5no, you’ll get a $5 bonus (5,000 points) after earning your first 1,000 points. You’ll also get 2,000 points (worth $2) for linking a bank account.

After opening your account, download the app and search for “Lili”. The promo varies between 70,000 and $100,000 Drop points (worth $70 and $100) if you open a new account through the Drop app and deposit $200 within 45 days. There is no direct deposit requirement. See screenshot below:

In addition, you should be able to stack this with the referral offer. To accomplish this, do NOT use my Lili referral link and instead use the Drop app above to initiate. Instead, during the Lili application process, look for the place (blue text at bottom) to enter a referral code. This separate $50 $100 bonus is triggered when you enter JenPing as the referral code and spend $250 on the Lili debit card within 45 days. Excludes P2P payments and ATM withdrawals. See screenshot below:

Altogether, that’s hopefully $170 without requiring moving your direct deposit or much upfront capital. As noted in my Turning Small Deals into a $100,000 Nest Egg post, you can motivate yourself by treating these bonuses as a way to max out your annual IRA contribution. $6,000 annual limit = $500 per month = $125 per week. I’m trying to think of a catchy name, something like “Project Maxed-Out IRA 2021”.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.