Banking — Page 5 — My Money Blog

Best Interest Rates on Cash Roundup – August 2024

Posted on August 4, 2024 // 2 Comments

Here’s my monthly roundup of the best interest rates on cash as of August 2024, roughly sorted from shortest to longest maturities. There are lesser-known opportunities available to individual investors, often earning more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 8/4/2024.

TL;DR: Rates are dropping at all longer maturities, from 1-year out. Still 5%+ savings accounts and short-term CDs. Compare against Treasury bills and bonds at every maturity, taking into account state tax exemption. I no longer recommend fintech companies due to the possibility of loss due to poor recordkeeping and/or fraud.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, everyone should have a separate, no-fee online savings account to piggy-back onto 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 and solid user experience. 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.

The top rate at the moment is at Poppy at 5.50% APY (3-month rate guarantee). I have no personal experience with them, but they are the top rates at the moment. CIT Platinum Savings at 5.00% APY with $5,000+ balance.
SoFi Bank is at 4.60% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has historically competitive rates and full banking features. See details at $25 + $300 SoFi Money new account and deposit bonus.
Here is a limited survey of high-yield savings accounts. They aren’t the top rates, but a group that have historically kept it relatively competitive such that I like to track their history. Sad to see Ally Bank falling even further behind.

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. Marcus has a 7, 11, and 13-month No Penalty CD at 4.70% APY with a $500 minimum deposit. Consider opening multiple CDs in smaller increments for more flexibility.
EagleBank has a 1-year certificate at 5.40% APY ($1,000 min). I could not locate their early withdrawal penalty.
NexBank has a 1-year certificate at 5.35% APY ($10,000 min). There is a 180-day interest penalty if you withdraw your CD funds before maturity.

Money market mutual funds
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Note: Money market mutual funds are highly-regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms.

Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 5.28% (changes daily, but also works out to a compound yield of 5.41%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.

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 and are fully backed by the US government. 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, which can make a significant difference in your effective yield.

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 8/4/24, a new 4-week T-Bill had the equivalent of 5.37% annualized interest and a 52-week T-Bill had the equivalent of 4.37% annualized interest.
The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 5.24% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 5.20% SEC yield and effective duration of 0.08 years.

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 May 2024 and October 2024 will earn a 4.28% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
In mid-October 2024, 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.

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.

OnPath Federal Credit Union pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
Genisys Credit Union pays 6.75% APY on up to $7,500 if you make 10 debit card purchases of $5+ each per statement cycle, and opt into online statements. Anyone can join this credit union via $5 membership fee to join partner organization.
Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 12 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
Andrews Federal Credit Union pays 6.00% APY on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit or ACH transaction per statement cycle. Anyone can join this credit union via partner organization.
Pelican State Credit Union pays 6.05% APY on up to $20,000 if you make 15 debit card purchases, opt into online statements, log into your account at least once, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
Orion Federal Credit Union pays 6.00% APY on up to $10,000 if you make electronic deposits of $500+ each month (ACH transfers count) and spend $500+ on your Orion debit or credit card each month. Anyone can join this credit union via $10 membership fee to partner organization membership.
All America/Redneck Bank pays 5.00% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
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.

Grow Financial FCU has a 5-year CD at 4.75% APY. 4-year at 4.02% APY. 3-year at 4.02% APY. 2-year at 4.33% APY. 1-year at 4.75% APY. $500 minimum. The early withdrawal penalty (EWP) for CD maturities of 12 months or more is 180 days of interest. Membership to this credit union is open nationwide to members of Friends of U.S. Military Families ($5).
Credit Human has a 59-month CD at 4.60% APY. 48-month at 4.60% APY. 35-month at 4.70% APY. 23-month at 5.00% APY. 1-year at 4.90% APY. $500 minimum. The early withdrawal penalty (EWP) for CD maturities of 36 months or more is 365 days of interest. For CD maturity of 1 year, the EWP is 270 days of interest. This is actually a credit union, but is open nationwide with a American Consumer Council (ACC) membership. Try promo code “consumer” when signing up at ACC for a free membership.
First Internet Bank has a 5-year CD at 4.50% APY. 4-year at 4.45% APY. 3-year at 4.61% APY. 2-year at 4.76% APY. 1-year at 5.26% APY. $1,000 minimum. The early withdrawal penalty (EWP) for CD maturities of 2 years or more is 360 days of interest. For CD maturity of 1 year, the EWP is 180 days of interest.
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 non-callable CD at 3.95% APY (callable: no, call protection: yes). Be warned that now both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk (tbh, I don’t use them at all), 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 CDs at 4.05% (non-callable) vs. 3.80% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 8/4/2024.

Photo by Giorgio Trovato on Unsplash

Filed Under: Banking, Deals & Offers, Investing // Tagged: monthlyrateupdate

Last updated: October 3, 2024

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Sequence Money Map: Flowchart Your Income, Expenses, and Savings with Conditional Logic

Posted on July 23, 2024 // 4 Comments

Here’s a new idea that I haven’t seen yet: GetSequence.io lets you apply a flowchart system with simple If/Then conditional statements to your cashflow. Imagine a visual map connecting your financial accounts and being able to manage the flow of money between them using preset rules. They call it a “financial router”.

For example, you would first have your paycheck routed to Sequence. Then a rule says “If the balance at Chase Checking is at least $5,000 (perhaps enough to pay your monthly bills), then transfer 50% to savings and 50% to your Fidelity investment account”. But then add “If the savings already has $5,000 in it (maxed out your emergency fund), then transfer all of the funds to Fidelity account”. Or you could always have 10% taken off the top into your Fidelity account, no matter what.

This type of things sounds neat in theory, but I am concerned that reality is too messy to have all these fixed rules. It also seems to rely heavily on accurate aggregation of third-party providers like brokerage and credit card accounts. Some people really like having several “envelopes” or “buckets” for budgeting and savings, so perhaps this would work for them.

Unfortunately, this is all a non-starter for me because Sequence is a fintech. Their banking services are provided by Thread Bank, Member FDIC. But as the FDIC and every other US regulator has told us after ongoing Fintech/Synapse/Evolve debacle, if somehow Sequence or Thread Bank gets confused while routing all your money around and doesn’t keep proper records of all the balances on their ledger, then the consumer is out of luck. With no protection if this start-up fails, I am unwilling to try Sequence myself. I have no other affiliation with them, either. Anyone else out there try this new tool?

Filed Under: Banking //

Last updated: July 17, 2024

Fintechs Missing $100 Million of Deposits Gets More Mainstream Media Attention

Posted on July 22, 2024 // 7 Comments

Here’s an update on the Yotta/Juno/Synapse/Evolve Bank situation that I wrote about back in June. Unfortunately, nothing really new has happened to help the consumers affected, but perhaps because of that plus the fact that nearly $100 million is missing, there has been some additional coverage in the major financial media outlets about this problem. I’m glad there is finally more attention to this matter.

From the NY Times article What Happens When Your Bank Isn’t Really a Bank and Your Money Disappears? (gift link)

For close to a century, putting your savings into a federally insured bank has been a sure thing: If the institution fails, up to $250,000 of your money will be protected.

What if it isn’t anymore?

The promise of bank insurance — a tenet of U.S. consumer protection since the Great Depression — is now being tested by a crisis swirling around online-only lenders with hundreds of millions of dollars of deposits between them. Customer accounts have been frozen, preventing people from cashing out their life savings. Most depositors have little clue where their money has gone, and whether they will get any of it back.

The turmoil was set off this spring with the bankruptcy of Synapse Financial Technologies, the kind of company you’ve probably never heard of unless you suffered through all the fine print of your account statements. It operated banking software for fast-growing online lenders with names like Juno, Yieldstreet and Yotta.

Backed by some of Silicon Valley’s bigger venture capitalists, the start-ups offer accounts that charge lower fees and pay far higher interest rates than traditional brick-and-mortar banks. Their slick websites advertise insurance from the Federal Deposit Insurance Corporation, the U.S. agency that pledges to pay back lost funds.

[…] The bankruptcy court judge has said that he suspects that tens of millions of dollars will never be found, but is powerless to compel regulators to get involved. “This is a very, very unusual situation,” Judge Martin R. Barash said at a hearing last week.

From the WSJ article Why the Synapse Bankruptcy Has the Fintech World on Edge (archive)

For months now, thousands of consumers have been unable to access money they thought was safely deposited at banks.

They are victims of the bankruptcy of a little-known venture-backed startup called Synapse Financial Technologies, whose shutdown is harming not only consumers but also fintech startups that worked with it, as well as the broader fintech sector. […]

Starting in May, banks including Evolve Bank & Trust and Lineage Bank froze access to accounts associated with Synapse, citing discrepancies in ledgers kept by Synapse. […]

The banks said they don’t know who is owed what. There is a dispute between the banks and Sankaet Pathak, founder and former chief executive of Synapse, about who is responsible for ledger irregularities.
Accounting reconciliation is continuing in the Synapse case, according to a trustee managing the Synapse estate. However, more than $100 million hasn’t been distributed, as of early July, according to the trustee’s reports. Most of that is in pooled accounts held by Evolve and Lineage, where figuring out how much capital is owed to whom appears to be especially difficult.

There is also a shortfall of up to $96 million between cash held at partner bank accounts and Synapse’s ledger balance, according to the trustee.

From Bloomberg article A Fintech’s Collapse Raises Questions About a Hot Business Model (gift link):

Over the past decade, dozens of financial-technology companies have linked up with small and midsize banks across the country. The idea: The fintechs would create slick smartphone apps and offer useful new services to lure customers, and banks would hold on to the deposits, generating lucrative fees from transactions. Importantly, the arrangement allowed the fintechs to tout protection from the Federal Deposit Insurance Corp.

But now, as millions of dollars’ worth of deposits remain frozen months after the collapse of a company called Synapse Financial Technologies, that supposed FDIC protection has come into clearer focus. And those partnerships are facing tough questions.

The reason customer deposits are in limbo is because Synapse was bad at recordkeeping. The firm acted as an intermediary between fintech apps including Yotta and Juno and their banking partners. When Synapse went bankrupt in April, it left behind a tangled mess: The trustee put in charge of Synapse said it was difficult to make sense of its ledgers, as the trustee was trying to resolve a shortfall of as much as $96 million in its accounts.

There is also Techcrunch, this CNBC TV report and follow-up CNBC article.

This was a known hole in the bank regulatory system, but nobody was incentivized to close it. These fintechs have been using “FDIC-insured” in their marketing for years. The FDIC never stopped them. Meanwhile, the banks made money holding the funds. The fintech and BaaS founders made money and were showered with venture capital. Nobody complained while the music kept going. All they had to do was keep a clean ledger of transactions. But somehow they didn’t, whether by accident or on purpose. (Anyone remember the movie Office Space? Missing fractions of pennies can add up…)

As time drags on, Synapse is just trying to walk away quietly without anyone making a fuss out of tens of millions of dollars in missing money. “We’re bankrupt! Nobody’s home! Sorry! Definitely don’t bother the CEO Sankaet Pathak about those missing millions!” Yotta and Juno just appear helpless and incompetent. “We had no idea! Update: We still have no idea! Update 2: We still have no idea!” Evolve has polished up their version of the story, even though they don’t exactly have a spotless reputation either (inadequate compliance practices, huge data breach). Disruption brings about change, so here we are.

Filed Under: Banking //

Last updated: July 17, 2024

$7,000 IRA Contribution Bonus Challenge: $4,673 in Bonuses (2024 YTD Edition)

Posted on July 18, 2024 // 12 Comments

Each year, I challenge myself to earn the equivalent of the maximum annual IRA contribution limit ($7,000 for 2024 if under 50) using the profits from various finance promotions alone. I earned $5,592 in 2021, $6,259 in 2022, and $5,444 in 2023 (plus another $2,500 in stock special situations). Here’s a progress update after the end of the first quarter of 2024.

If you combined these hobby profits and steady investing, this CAN create enough for a house downpayment (unlike perhaps spare change roundups). If you had put $6,000 into your IRA every year for the recent 10 year period (2014-2023) and invested in a simple Target Date retirement fund, you would have turned small, weekly deals into a $95,000+ nest egg.

That’s worth repeating: An extra 100 grand has been the real-world result of playing this game and investing $500 a month in proceeds for the last 10 years! I have the brokerage statements to prove it. Not to mention, a couple could double these numbers. Focus + Long attention span = Surprising results.

Ground rules: Real-world results for one person only. 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 100+ bank accounts, credit cards, and brokerage accounts over the years). I will track my individual results only, although my partner does also participate on a more selective basis. Nearly all of them have been documented in real-time in the Deals and Offers category, Top 10 credit cards list, and brokerage bonus list.

2024 bonuses and promotions list. The 💵 symbol means I have received and/or cashed out the bonus successfully. The ⌛ symbol means that the promo is still in progress. “Still live” means the offer is still available but the values may have gone up or down.

Fidelity Bloom App $30 (expired) 💵
NASA FCU $300 Checking bonus (expired) 💵
NavyFed Flagship Rewards Card (up to $590 net first-year value, still live) 💵
iPhone Slowdown Settlement ($92.71, expired) 💵
Laurel Road $20/month Checking bonus (still live) ⌛
Bilt Rent Day trivia + easy credits ($35 so far, ongoing) 💵
Amazon Shop with Points #1 $10 credit (still live, targeted) 💵
Alaska Airlines Visa 75k + Companion Fare Savings + Free Bags (now 60k, still live) 💵
Hawaiian Airlines Mastercard 65k + Free Bags (now 70k, still live) 💵
Target $10 off $100 Apple GC #1 (expired, recurring) 💵
Pepper Rewards 10% off Amazon GCs + $20 (still live) 💵
Evergreen Money $250 Bonus (expired) 💵
Upside Gas Rewards app (expired) 💵
Lafayette FCU Mastercard ($500 bonus, still live) ⌛
Target $10 off $100 Apple GC #2 (expired, recurring) 💵
Pepper Rewards 10% off Amazon GCs #2 (expired) 💵
Kudos $20 bonus + 20% off Lowe’s ($20 bonus still live) 💵
Amazon Shop with Points #2 $40 credit (still live, targeted) 💵
Target Circle Week $15 credit (targeted, not sure?) 💵
Capital One Venture Rewards 75k+250 ($1,000 total value, still live) ⌛

I chose the Alaska and Hawaiian Airlines cards because I already had planned trips within the next 12 months and knew I could take advantage of the free checked bags, companion fare savings, and redeem the miles. I valued the miles at a simple and conservative $0.01/mile. The Alaska Companion fare on its own saved us nearly $700. The LFCU credit card was something out of the ordinary since I have gotten most of the mainstream cards already, and I was already an LFCU member from their checking account bonus and sometimes-competitive CD rates. They did give me a very low credit line ($2,000).

Total for 2024 YTD: If I assume that all bonuses for which I have completed the required activity will eventually post, the total tally so far is $4,673, which is 67% of the $7,000 annual IRA contribution limit for 2024.

Honorable mention #1: Cummins / Atmus Odd Lot Tender Offer. I did make a $4,819 profit over only 23 calendar days from the expired Cummins / Atmus Filtration odd lot tender offer. This did require a $26,000 commitment to buy 99 shares (the max allowed as an individual small investor) before the odd lot tender, but the lockup time was short with an annualized rate of return of 1,528%.

Honorable mention #2: Robinhood 3% IRA Transfer / 401k Rollover Bonus. After some hesitation, I went for this expired 3% of assets transfer offer using my largest Roth IRA account from Vanguard. The size of this bonus will depend on the size of your assets, and there is a 5-year hold period, so I won’t include this bonus in my annual sums. My bonus was roughly $8,000.

Honorable mention #3: Webull 2% Taxable ACAT Transfer Bonus. I am in the middle of this 2% of assets transfer offer with a portion of my buy-and-hold stocks. Again, the size of this bonus will depend on the size of your assets, so I won’t include this bonus in my annual sums. My expected bonus value is $4,000 on $200,000 of assets transferred.

This is a personal challenge/game that I like to play (and have played for a long time now). It’s not for everyone. I happen to enjoy trying out new apps and services. I also like my hobbies to be profitable – not gonna lie – but I don’t like to waste my time either. I look for a solid return based on the time commitment required. I try to avoid speculative bets, bonuses that are hard to convert to real cash-equivalent value, and anything that requires driving to stores where things may or may not be in stock. The deals that I post often last only a few days, but it’s a bit like value investing where you have to be ready to get off your butt and take decisive action when an opportunity shows up, because they won’t last forever.

Many things I have to skip simply because I’ve already done them. For those new to this hobby, I would first grab the best overall cards like the Chase Sapphire Preferred or the Chase Sapphire Reserve and build up a nice stash of flexible Ultimate Rewards points. After that, I would recommend looking at the Citi Premier (ThankYou points), Capital Venture X (Capital One Miles), and American Express Gold (AmEx Membership Rewards points) to jumpstart your points stashes.

This list also ignores the additional interest earned from otherwise optimizing my existing cash balances, as well as everyday credit card rewards like 2% to 2.6% cash back on all purchases and 5% cash back on specific categories or 1% or better cash back on rent.

Finally, I am also excluding small-business deals like huge $1,000+ value business card bonuses, big business checking bonuses, and so on. Even you can apply as a sole proprietorship using your name and Social Security number, without having to file for any special ID numbers or licenses…

Photo was generated by Adobe’s Firefly tool (AI).

Filed Under: Banking, Credit Cards, Deals & Offers, Goals //

Last updated: December 12, 2024

Laurel Road Loyalty Checking: $20/Month Perks

Posted on July 14, 2024 // 18 Comments

Update January 2025: The offer below has expired. Laurel Road has discontinued the upfront bonus for their Loyalty Checking account at this time.

EXPIRED and outdated post:

Laurel Road is a digital brand of KeyBank (not a fintech) that reminds me of SoFi in that they are building a relationship that starts with student loan refinances when you are young, and then expands as you grow older and need new services. They have special products targeted at doctors and nurses including student loan refinances, personal loans, mortgages, bank accounts, and other products like a credit card that earns 2% cashback towards student loans.

The Laurel Road Loyalty Checking Account is available to the general public and has a few interesting features:

$300 welcome bonus when you open a Laurel Road Loyalty Checking account and make one or more qualifying direct deposits via an Automated Clearing House (ACH) transaction into the Laurel Road Loyalty Checking account totaling at least $2,500 within the first 60 days after account opening.
$20 cash reward for every month you make qualifying ACH direct deposits of $2,500+ each statement period during the first 12 months ($240 total), and $10 for every month after that – for as long as your account is open.
No minimum to open. No minimum balance. No monthly fees.

Here is the fine print on the $20 monthly bonus:

Primary account holder is eligible to earn monthly rewards of $20/month from the second through thirteenth statement periods, which is considered your “first year.” From the fourteenth statement period onward, the eligible reward will be $10/month for as long as the Laurel Road Loyalty Checking account (“Account”) is open. To earn monthly rewards, you must make qualifying Automated Clearing House (ACH) direct deposits into the Account totaling at least $2,500 during the statement period. Qualifying ACH direct deposit transactions include most payroll, Social Security, pension and government benefits deposits. Rewards will be deposited into your Account in the statement period after they are earned. Only one Loyalty Checking account per primary account holder. Cannot be combined with other checking bonus, reward, or rate discount offers, excluding any promotional offer for opening the Account. The value of the monthly rewards will be reported to the IRS on Form 1099-INT. Accounts closed within first 180 days will be charged a $25 early closure fee. Accounts closed at the time of monthly rewards payment are not eligible. Offer is subject to change without notice.

I appreciate the simple bonus structure, and it works great if you can easily adjust your work direct deposit through your payroll provider. “Alternative” methods have also worked in the past, but they might be more picky as to what counts as direct deposit than in the past. Note that this checking account pays essentially zero interest, but you don’t have to keep your $2,500+ direct deposit there after it arrives in your checking account.

Qualifying Direct Deposits – A pre-arranged electronic direct deposit through the Automated Clearing House (“ACH”) Network from most employer payrolls, payroll provider (excluding third-party advance payroll service providers), benefits payer such as Social Security or Military Pay, or pension. Non-Qualifying Deposits – Including but not limited to: Point-of-sale (POS) and internet-initiated mobile entry (WEB) ACH transactions; incoming Person-to-Person (P2P) payments made via the ACH Network such as Zelle, PayPal, Cash App, or Venmo (including payroll-related transactions made via P2P providers); mobile check deposits; wire transfers; cash deposits; one-time direct deposits such as tax refunds and corporate reimbursements; internal transfers between Laurel Road or KeyBank accounts; external transfers from another financial institution; and insurance payments and other similar transactions.

In fact, you should actually first consider the Laurel Road High Yield Savings Account $200 Bonus first, as that offer says that the “Referred cannot be an existing or prior Laurel Road member in the last twelve (12) months.”. Therefore, I would do the High Yield Savings bonus first, and then this checking bonus offer second, as it does not includes such language (it only excludes prior *checking* account holders).

You are not eligible for the bonus if you were the primary owner on any Laurel Road checking account within the prior 24 months before opening the new checking account.

Filed Under: Banking, Deals & Offers //

Last updated: January 21, 2025

Best Interest Rates on Cash Roundup – July 2024

Posted on July 10, 2024 // 2 Comments

Here’s my monthly roundup of the best interest rates on cash as of July 2024, roughly sorted from shortest to longest maturities. There are lesser-known opportunities available to individual investors, often earning more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 7/9/2024.

TL;DR: Very minor changes since last month. Still 5%+ savings accounts and short-term CDs, with long-term CD rates holding roughly steady since last month. Compare against Treasury bills and bonds at every maturity, taking into account state tax exemption. I no longer recommend fintech companies due to the possibility of loss of permanent capital loss, or at the minimum access to cash for months in the event of a company or middleman failure.

The top rate at the moment is at My Banking Direct at 5.55% APY . Poppy at 5.50% APY (3-month rate guarantee). I have no personal experience with them, but they are the top rates at the moment. CIT Platinum Savings at 5.00% APY with $5,000+ balance.
SoFi Bank is at 4.60% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has historically competitive rates and full banking features. See details at $25 + $300 SoFi Money new account and deposit bonus.
Here is a limited survey of high-yield savings accounts. They aren’t the top rates, but a group that have historically kept it relatively competitive such that I like to track their history. Sad to see Ally Bank falling even further behind.

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. Marcus has a 13-month No Penalty CD at 4.70% APY with a $500 minimum deposit. Also available at 7- and 11-months. Consider opening multiple CDs in smaller increments for more flexibility.
NexBank has a 1-year certificate at 5.40% APY ($25,000 min). There is a 180-day interest penalty if you withdraw your CD funds before maturity.
CFG Bank has a 12-month CD at 5.36% APY ($500 min). 90-day interest penalty if you withdraw your CD funds before maturity.

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). Note: Money market mutual funds are highly-regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience losses.

Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 5.27% (changes daily, but also works out to a compound yield of 5.40%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 5.33% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 5.09% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

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 7/9/24, a new 4-week T-Bill had the equivalent of 5.37% annualized interest and a 52-week T-Bill had the equivalent of 5.02% annualized interest.
The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 5.27% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 5.22% SEC yield and effective duration of 0.08 years.

“I Bonds” bought between May 2024 and October 2024 will earn a 4.28% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
In mid-October 2024, 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.

OnPath Federal Credit Union pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
Genisys Credit Union pays 6.75% APY on up to $7,500 if you make 10 debit card purchases of $5+ each per statement cycle, and opt into online statements. Anyone can join this credit union via $5 membership fee to join partner organization.
Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 12 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
Andrews Federal Credit Union pays 6.00% APY on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit or ACH transaction per statement cycle. Anyone can join this credit union via partner organization.
Pelican State Credit Union pays 6.05% APY on up to $20,000 if you make 15 debit card purchases, opt into online statements, log into your account at least once, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
Orion Federal Credit Union pays 6.00% APY on up to $10,000 if you make electronic deposits of $500+ each month (ACH transfers count) and spend $500+ on your Orion debit or credit card each month. Anyone can join this credit union via $10 membership fee to partner organization membership.
All America/Redneck Bank pays 5.00% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
Find a locally-restricted rewards checking account at DepositAccounts.

Grow Financial FCU has a 5-year CD at 4.75% APY. 4-year at 4.02% APY. 3-year at 4.02% APY. 2-year at 4.33% APY. 1-year at 4.75% APY. $500 minimum. The early withdrawal penalty (EWP) for CD maturities of 12 months or more is 180 days of interest. Membership to this credit union is open to members of Friends of U.S. Military Families ($5).
Credit Human has a 59-month CD at 4.65% APY. 48-month at 4.65% APY. 35-month at 4.75% APY. 23-month at 5.10% APY. 1-year at 4.95% APY. $500 minimum. The early withdrawal penalty (EWP) for CD maturities of 36 months or more is 365 days of interest. For CD maturity of 1 year, the EWP is 270 days of interest. This is actually a credit union, but is open nationwide with a American Consumer Council (ACC) membership. Try promo code “consumer” when signing up at ACC for a free membership.
First Internet Bank has a 5-year CD at 4.50% APY. 4-year at 4.45% APY. 3-year at 4.61% APY. 2-year at 4.76% APY. 1-year at 5.26% APY. $1,000 minimum. The early withdrawal penalty (EWP) for CD maturities of 2 years or more is 360 days of interest. For CD maturity of 1 year, the EWP is 180 days of interest.
BMO Alto has a 5-year CD at 4.80% APY. 4-year at 4.70% APY. 3-year at 4.60% APY. 2-year at 4.65% APY. 1-year at 5.05% APY. No minimum. The early withdrawal penalty (EWP) for CD maturities of 1 year or more is 180 days of interest. For CD maturities of 11 months or less, the EWP is 90 days of interest. Note that they reserve the right to prohibit early withdrawals entirely (!). Online-only subsidiary of BMO Bank.
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 non-callable CD at 4.45% APY (callable: no, call protection: yes). Be warned that now both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk (tbh, I don’t use them at all), 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 CDs at [n/a] (callable: no, call protection: yes) vs. 4.30% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 7/9/2024.

Photo by micheile henderson on Unsplash

Filed Under: Banking, Deals & Offers, Investing // Tagged: monthlyrateupdate

Last updated: October 3, 2024

Fidelity ATM Debit Card Warning: Fraudulent Transactions May Not Be Reimbursed

Posted on June 19, 2024 // 15 Comments

In the world of fintechs, we recently experienced this possible damage from multiple parties not working with each other. Right now, there is still ~$85 million of user deposits unaccounted for (and much more frozen) while both the BaaS provider Synapse and Evolve Bank & Trust are still pointing fingers at each other. Successfully reconciling the two different versions of the “true” ledger may or may not ever happen.

However, it appears that having multiple parties involved can also impact the big players like Fidelity Investments, not just the tiny ones. Per this Reddit post, a CPA and former bank auditor had both their Chase and Fidelity ATM cards stolen and charged debit card purchases totaling $6,000 each. The theft was reported promptly. Chase Bank refunded the $6,000 immediately. But Fidelity is not a bank and has PNC Bank issue their debit cards. In turn, apparently PNC Bank contracts out to BNY Mellon Investment Servicing Trust Company to service the transactions.

Since the theft, Fidelity, PNC Bank, and BNY Mellon have been pointing fingers at each other, and nobody has stepped up to refund the $6,000. As of the most recent comment, this situation is still not resolved after 3 weeks. The official Fidelity rep(s) that actively monitor the r/Fidelity Subreddit have gone quiet as well. Thanks to reader Larry C for bringing this to my attention. I honestly thought this would be resolved quickly, but again I am wrong and disappointed.

This experience also syncs up with a 2015 incident reported by Bogleheads Forum member madbrain. They had 3 credit cards and 2 debit cards stolen, and also reported that every financial institution refunded the fraudulent charges except Fidelity. Again, Fidelity wants you to call BNY Mellon and won’t help you themselves, and BNY Mellon was not responsive. More passing the buck until you hopefully give up.

The one institution that gave me trouble has been Fidelity with the debit card on the cash account. I called Fidelity about it several times at night to inquire about the status, and they kept saying that they had 10 days to complete their investigation, so I just waited. But I checked my balance daily, and the credit did not post.

The 10 days have now passed, and no credit was issued. I received a letter yesterday that they closed my claim because they were unable to reach me by phone !

This is not true, obviously, since I talked to the Fidelity Cash account/debit card department so many times about it. The letter says that I need to call a number at BNY Mellon, which is the bank that Fidelity contracted for the debit card. I did get one voice mail on my home phone, from what I now realize was from a BNY Mellon employee, rather than a Fidelity employee. I had returned that call and left a voice mail, but I never got a followup.

Know your rights! When it comes to fraudulent transactions on your ATM debit card, the speed at which you notify your bank is very important. Federal Reserve Regulation E clearly lays out your potential liability based on your notification timeline. Here is a good explanation.

Access devices include ATM or debit cards, codes, or any devices used to access an account (even your mobile phone!). There are three tiers of liability when one is used:

– First Tier — The customer’s maximum liability is $50 when they notify your bank within two-business days of learning about the theft. The two-day period only begins when the customer becomes aware that their card has been lost or stolen, which could be days after the actual incident.

– Second Tier — The customer’s maximum liability is $500 when they give notification after the two-business day period above, but within 60 calendar days after the first statement showing the unauthorized EFT in question.

– Third Tier — The customer’s maximum liability is $500 plus all unauthorized EFTs after the 60-day period detailed in the second tier. It is important to note that the 60-day period begins when your bank sends out the statement either by mail or electronically, with some exceptions.

The Fidelity customer notified promptly and should be covered by Reg E. Many banks even provide additional customer protection and waive the $50 limit completely (you’ll see “zero fraud liability” advertised). What’s the problem here, Fidelity?! Does Reg E not apply because of this third-party situation?

In my recent international trip, I took advantage of the worldwide ATM rebates from my Fidelity Cash Management Account multiple times. Everything went smoothly. The ATM fees were credited automatically, and there was no foreign transaction fee charged so my exchange rate was basically as good as it gets (the 1% fee only applies to signature purchases right now*).

But still, this event concerns me. In practical terms, the value of this perk was worth maybe $20 in total. I’m sure the customer above would have gladly just paid the $20 in ATM fees to deal solely with Chase as opposed to the Fidelity/BNY Mellon mess. I certainly don’t use ATMs enough to justify the risk of such a headache.

A best practice appears to be to “lock” the ATM card on the Fidelity website until you need to use it, and “unlock” only when needed.

In order to lock your card, you’ll need to log in to Fidelity.com and follow the steps below:

Under “Accounts & Trade,” select “Cash Management”
Choose the “Debit Card” drop-down, then “Manage Debit Card”
Next to the appropriate debit card, click “Lock Card”

In addition, I also purposefully do not set up my Fidelity taxable brokerage account as an automatic backup funding source for my Fidelity CMA. If someone somehow gets access to my CMA, I don’t want them to be able to drain my larger account as well. I transfer over a limited cash balance in my CMA, and that’s it. With a debit card, thieves can only take what’s in the account. Everything else should bounce.

The larger lesson is that whenever you add additional parties, the buck starts to get passed around and things get messy. Even with a usually reputable firm like Fidelity Investments.

* Regarding that foreign transaction fee, I did some additional research and found that while officially, the Fidelity fine print states that there is a 1% foreign transaction fee that “may” apply, in practice, that 1% fee is only charged on signature-based purchases, not PIN-based transactions like ATM withdrawals. This was confirmed in this article by Robert Beauregard, Director of External Communications at Fidelity. This has also been confirmed by multiple anecdotal data points. You can check for yourself on a sample transaction using a calculator like this. Rather confusing!

Filed Under: Banking //

Last updated: June 21, 2024

Fidelity Cash Management Account Adds New Core Sweep Option (SPAXX @ ~5% APY)

Posted on June 18, 2024 // 20 Comments

Update 6/18/24: This new option is now live, at least for me. Fidelity says it should be available to everyone by the end of this week. Worth a check (directions at the bottom below). Screenshots from my account below.

Original post from 4/21/24:

A flexible alternative to a traditional bank account is getting better. The Fidelity Cash Management Account (CMA) is a brokerage account that also includes traditional bank features like ACH routing and account numbers, Billpay, mobile check deposit, physical checks, and ATM/debit cards.

Perhaps a lesser-known fact is that the standard “Fidelity Account” is a brokerage account that also offers ACH routing/account numbers, Billpay, mobile check deposit, checkwriting, and an ATM/debit card. One of the major additions to the CMA (and missing from the standard Fidelity Account) is that you get unlimited ATM fee rebates, worldwide:

Your account will automatically be reimbursed for all ATM fees charged by other institutions while using a Fidelity® Debit Card linked to your Fidelity Cash Management Account at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited from the account. Please note that there may be a foreign transaction fee of 1% that is not waived, which will be included in the amount charged to your account.

Regarding that foreign transaction fee, I did some additional research and found that while officially, the Fidelity fine print states that there is a 1% foreign transaction fee that “may” apply, in practice, that 1% fee is only charged on signature-based purchases, not PIN-based transactions like ATM withdrawals. This was confirmed in this article by Robert Beauregard, Director of External Communications at Fidelity. This has also been confirmed by multiple anecdotal data points. You can check for yourself on a sample transaction using a calculator like this. Rather confusing!

One of the major drawbacks to the CMA was that the only option for the core position was their “FDIC-insured Deposit Sweep”, currently paying 2.72% APY (as of 4/21/24). While better than the 0.01% many other brokers offer on cash sweeps, this yield is much lower than that of the money market fund options available in the standard Fidelity account. To get around this, many people used the auto-draft feature that lets you set the standard Fidelity brokerage account as the backup funding source, and then kept a minimal or zero balance inside the CMA.

Perhaps Fidelity noticed this activity as well, or perhaps they noticed certain 5% APY cash offerings from competitors, because in less than two months (June 15, 2024), the CMA is adding the Fidelity Government Money Market Fund (SPAXX) an a core position option. If you have a Fidelity Cash Management Account and look at the “Additional Information and Endnotes” section of your March 2024 statement, you should find the following notice. This has also been confirmed by an official Fidelity representative on the r/Fidelity Subreddit. From my statement:

Please note that on or around June 15, 2024, you’ll have the option to elect Fidelity(R) Government Money Market Fund (SPAXX) as your core sweep investment vehicle. You will not need to take any action if you wish to retain the Bank Sweep as your core position. For additional information on your core position options, including the current yields on the Bank Sweep and money market funds, please visit Fidelity.com/spend-save/fidelity-cash-management-account/overview and FundResearch.Fidelity.com/mutual-funds/summary/31617H102.

The 7-day yield of SPAXX is 4.95% as of 4/19/24, significantly higher than the 2.72% FDIC-insured sweep. Money market mutual funds are unable to offer FDIC insurance, but they are still heavily-regulated by the SEC to hold very conservative and liquid investments. “Government” money markets have even stricter requirements, and that is why they are used as cash sweep funds. I personally lose zero sleep over holding cash in a money market fund run by a reputable firm like Fidelity, Vanguard, or Schwab.

This is a positive development for those that use the Fidelity CMA, especially if your state doesn’t have income taxes on investment interest that create an incentive to hold money market funds with mostly interest from Treasury bonds. If you do live in such a state, you should know that in 2023 neither Fidelity Government Money Market Fund (SPAXX) nor Fidelity® Treasury Money Market Fund (FZFXX) met the minimum investment in U.S. government securities required to exempt the distribution from tax in California, Connecticut, and New York. (Despite having Treasury in the name, FZFXX only had about 20% in eligible Treasury interest.) These are the core positions available in the standard Fidelity Account.

As such, residents of California, Connecticut, and New York may want to hold the Fidelity Treasury Only Money Market Fund (FDLXX), as it did meet those requirements in 2023 with roughly 90% of interest eligible for exemption. This is not a core option so you do have to buy this mutual fund manually, although the CMA account will sell it automatically to meet any cash demands that come up later. But still, if you forget for a few days, the interest difference is much smaller between SPAXX and FDLXX.

I am definitely switching over my core position as soon as I can. June 15th, 2024 is a Saturday, so I’ll check on Friday the 14th and then Monday the 17th. You can switch over manually by logging into Fidelity.com, going to “Accounts & Trade”,” Account Positions”, and then “Cash”. You should then see the button to “Change Core Position”.

Filed Under: Banking, Deals & Offers //

Last updated: June 20, 2024

Upgrade Rewards Checking: $300 Referral Bonus (Improved) + 5.21% APY Savings

Posted on June 16, 2024 // 19 Comments

Update: This exact offer has expired, the bonus is down to $200 and APY has been reduced.

Upgrade has increased the bonus from $150 to a $300 bonus via referral link on their Rewards Checking Plus account (referred gets $50). Must set up direct deposits totaling at least $1,000 within 45 days. Note: This promo usually scheduled to end at the end of the current month, but has been getting extended a month at a time.

Good news is the account opening process was very quick and easy, literally under 5 minutes. I did not have to upload any extra documentation and I did not experience any hard credit checks. The account was open and ready the day after application. FDIC insurance on deposits held at Cross River Bank. (NOTE: This is a good bonus, but Upgrade is a fintech and therefore has a nonzero risk that your funds may be not tracked correctly and FDIC insurance does not cover the failure of a non-bank fintech. FDIC insurance only covers an event when a bank fails. I would not keep this as your primary day-to-day account, nor maintain significant funds there.)

Here are the highlights of the Rewards Checking account, if you maintain that $1,000+ in monthly direct deposits:

Debit card earning 2% cash back at restaurants, gas stations, utilities, convenience stores, drugstores, select monthly subscriptions (including Netflix, SiriusXM, Spotify, Disney Plus), and cell phone providers (including AT&T, T-Mobile, Verizon Wireless, Cricket Wireless). Maximum of $500 in 2% rewards per calendar year.
Debit card earns 1% cash back on everything else. (unlimited)
No minimum balance, no monthly fees (even without direct deposit).
ATM fees rebated when charged by another institution for debit card withdrawals in the United States, up to five times per calendar month.
Can fund up to $500 instantly via debit card. Some of you may have other debit cards that earn rewards.

An “Eligible Direct Deposit” is a recurring deposit to your Account by Automated Clearing House (“ACH”) from your employer, payroll, or benefits provider, or gig economy payer OR a deposit by Original Credit Transaction (“OCT”) from your gig economy payer. One-time direct deposits, including tax refunds, bank ACH transfers, bank verification or trial deposits, peer-to-peer transfers from services, such as PayPal or Venmo, merchant transactions, mobile check deposits, and cash loads or deposits are not Eligible Direct Deposits.

You can also add on their Performance Savings account with the following features, again with $1,000+ in monthly direct deposits into the Rewards Checking Plus:

5.21% APY as of 2/27/24 (lower APY without direct deposits)
No minimum balance, no monthly fees (with or without direct deposits).

They also offer a Premier Savings account also at 5.21% APY which is currently offering an up to $200 deposit bonus if you deposit enough new money with them.

A straightforward checking direct deposit promotion that doesn’t incur a hard credit check, nor a large number of debit card transactions, nor require joining any partner organizations. Perfect if you can switch over and/or split direct deposits easily. Gig economy payments count.

Filed Under: Banking, Deals & Offers //

Last updated: October 3, 2024

Best Interest Rates on Cash Roundup – June 2024

Posted on June 13, 2024 // 2 Comments

Here’s my monthly roundup of the best interest rates on cash as of June 2024, roughly sorted from shortest to longest maturities. There are lesser-known opportunities available to individual investors, often earning you a lot more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 6/12/2024.

TL;DR: Very minor changes since last month. Still 5%+ savings accounts and short-term CDs, with long-term CD rates holding roughly steady since last month. Compare against Treasury bills and bonds at every maturity, taking into account state tax exemption. I no longer recommend fintech companies due to the possibility of loss of cash access for months in the event of a company or middleman failure.

The top rate at the moment is at My Banking Direct at 5.55% APY . Poppy at 5.50% APY (3-month rate guarantee). I have no personal experience with them, but they are the top rates at the moment. CIT Platinum Savings at 5.00% APY with $5,000+ balance.
SoFi Bank is at 4.60% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has historically competitive rates and full banking features. See details at $25 + $300 SoFi Money new account and deposit bonus.
Here is a limited survey of high-yield savings accounts. They aren’t the top rates, but a group that have historically kept it relatively competitive such that I like to track their history. Sad to see Ally Bank falling even further behind.

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. Marcus has a 13-month No Penalty CD at 4.70% APY with a $500 minimum deposit. Also available at 7- and 11-months. Consider opening multiple CDs in smaller increments for more flexibility.
NexBank has a 1-year certificate at 5.40% APY ($25,000 min). There is a 180-day interest penalty if you withdraw your CD funds before maturity.
CIBC Agility Online has a 12- and 13-month CD at 5.36% APY ($1,000 min). Reasonable 30-day penalty if you withdraw your CD funds before maturity.

Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 5.27% (changes daily, but also works out to a compound yield of 5.40%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 5.34% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 5.16% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

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 6/11/24, a new 4-week T-Bill had the equivalent of 5.35% annualized interest and a 52-week T-Bill had the equivalent of 5.16% annualized interest.
The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 5.26% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 5.21% SEC yield and effective duration of 0.08 years.

“I Bonds” bought between May 2024 and October 2024 will earn a 4.28% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
In mid-October 2024, 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.

OnPath Federal Credit Union pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
Genisys Credit Union pays 6.75% APY on up to $7,500 if you make 10 debit card purchases of $5+ each per statement cycle, and opt into online statements. Anyone can join this credit union via $5 membership fee to join partner organization.
Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 12 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
Andrews Federal Credit Union pays 6.00% APY on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit or ACH transaction per statement cycle. Anyone can join this credit union via partner organization.
Pelican State Credit Union pays 6.05% APY on up to $20,000 if you make 15 debit card purchases, opt into online statements, log into your account at least once, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
Orion Federal Credit Union pays 6.00% APY on up to $10,000 if you make electronic deposits of $500+ each month (ACH transfers count) and spend $500+ on your Orion debit or credit card each month. Anyone can join this credit union via $10 membership fee to partner organization membership.
All America/Redneck Bank pays 5.15% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
Find a locally-restricted rewards checking account at DepositAccounts.

Credit Human has a 59-month CD at 4.65% APY. 48-month at 4.65% APY. 35-month at 4.75% APY. 23-month at 5.03% APY. 1-year at 4.95% APY. $500 minimum. The early withdrawal penalty (EWP) for CD maturities of 36 months or more is 365 days of interest. For CD maturity of 1 year, the EWP is 270 days of interest. This is actually a credit union, but is open nationwide with a American Consumer Council (ACC) membership. Try promo code “consumer” when signing up at ACC for a free membership.
First Internet Bank has a 5-year CD at 4.50% APY. 4-year at 4.45% APY. 3-year at 4.61% APY. 2-year at 4.76% APY. 1-year at 5.26% APY. $1,000 minimum. The early withdrawal penalty (EWP) for CD maturities of 2 years or more is 360 days of interest. For CD maturity of 1 year, the EWP is 180 days of interest.
BMO Alto has a 5-year CD at 4.80% APY. 4-year at 4.70% APY. 3-year at 4.60% APY. 2-year at 4.65% APY. 1-year at 5.05% APY. No minimum. The early withdrawal penalty (EWP) for CD maturities of 1 year or more is 180 days of interest. For CD maturities of 11 months or less, the EWP is 90 days of interest. Note that they reserve the right to prohibit early withdrawals entirely (!). Online-only subsidiary of BMO Bank.
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 non-callable CD at 4.70% APY (callable: no, call protection: yes). Be warned that now both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk (tbh, I don’t use them at all), 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 CDs at n/a (callable: no, call protection: yes) vs. 4.33% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 6/12/2024.

Photo by micheile henderson on Unsplash

Filed Under: Banking, Deals & Offers, Investing // Tagged: monthlyrateupdate

Last updated: October 3, 2024

FDIC Leaves All Fintech Users Unprotected in Regulatory Blindspot! (Too Small to Care?)

Posted on June 12, 2024 // 40 Comments

I’ve been traveling internationally for the last couple of weeks, and with all the chaos of trying not to lose any of the kids on whatever multi-transfer subway ride or hiking trail is on the agenda every day, I felt quite relieved that my finances were so low-maintenance. Buy-and-hold means I don’t need to check stock market quotes, I pay all my bills online once a month for 10 minutes, and I have enough cash cushion so I don’t stress about daily cashflow (matching up payday timing with expenses).

Unfortunately, for the folks that put their day-to-day cash in the “checking accounts” of fintechs like Juno and Yotta, the past few weeks have been the opposite. Their cash is frozen in limbo, with a bankrupt Synapse (Banking-as-a-Service provider) rapidly winding down and shedding all of their employees while pointing the fingers at everyone else.

Roughly $85 million in user deposits is unaccounted for. The ledger of transactions and balances does not match up between Synapse and Evolve. The bankruptcy judge apparently has very little power (and no money) and has resorted to asking for a private forensic accounting firm to help out “pro bono”. Given the possibility of theft there, I think potential jail time should be on the table, personally. Jason Mikula of Fintech Business Weekly is still the best source track new developments.

To be clear, the users of Yotta and Juno had ABA routing numbers and account numbers from Evolve Trust & Bank. Users could very well be forgiven for assuming that they had “direct” or demand deposit accounts (DDA) accounts at Evolve Trust & Bank.

The FDIC has maintained their stance that this is not a bank failure, and thus not their responsibility to help. Instead, they just quietly updated their website with some “helpful” Consumer News:

Increasingly, some consumers are choosing to open accounts through nonbank companies (typically online or through mobile apps), such as technology companies providing financial services (often referred to as fintech companies), that may or may not have business relationships with banks. If and how a bank is involved is key to understanding whether or not your money is protected by deposit insurance. However, in some cases, it is not always clear to consumers if they are dealing directly with an FDIC-insured bank or with a nonbank company.

[…] However, FDIC deposit insurance does not protect against the insolvency or bankruptcy of a nonbank company. In such cases, while consumers may be able to recover some or all of their funds through an insolvency or bankruptcy proceeding, often handled by a court, such recovery may take some time. As a result, you may want to be particularly careful about where you place your funds, especially money that you rely on to meet your regular day-to-day living expenses.

This is clearly a huge regulatory blind spot. The FDIC (along with other regulators) has publicly allowed millions of individuals to open up accounts at this companies which promote “banking” services, “savings accounts”, “checking accounts”, and most importantly ‘FDIC-insurance”. The FDIC has allowed this advertising to happen for years and years. Everyday consumers clearly believed that their money is “safe” and FDIC-insured. Why wouldn’t they? The system benefited from the addition of billions of dollars in deposits into partner banks. Many of these customers are the previously “unbanked” and “underbanked”.

Chime has over 20 million customers and over $6 billion in deposits. You think all those people know that they could instantly lose access to their money for months? You think they know they could experience permanent financial loss if Chime doesn’t track everything perfectly?

I truly believed that some regulatory agency, perhaps the Consumer Financial Protection Bureau (CFPB) in collaboration with the FDIC, would step in to close up this blind spot. The Federal Trade Commission. The Federal Reserve. But instead, everyone has backed away. In my opinion, this is a case of many small individual consumers being ignored. If this was a bigger story, if there was more political pressure from a single powerful person or company, I believe some positive action would have occurred.

Instead, fintechs are essentially sent back to the age of the Great Depression, before there was FDIC insurance and you never knew if your bank would fail and your money would disappear. How is the individual consumer supposed to know if their fintech is properly reconciling every single transaction? If a company can simply lose $85 million of user deposits that were marketed as “checking accounts” with “FDIC insurance” and not have any repercussions because they declared bankruptcy, then this is the Wild West again. What does it matter if pass-through FDIC insurance exists, if a simple addition or subtraction reconciliation error from the company can negate it?

The following quote is credited to John Maynard Keynes when questioned about changing his stance (long backstory):

When the facts change, I change my mind – what do you do, sir?

Well, I’ve changed my mind. The FDIC has allowed misleading marketing for years, all while the member banks have profited from fintech deposits. Yet it won’t protect the affected everyday consumer. I will no longer trust any fintech with my money for longer than it takes to grab a quick sign-up bonus. I’ll probably avoid any sort of deposit bonus that requires a longer hold period. In my opinion, even the silence from other fintechs has been disappointing. This event stains them all. I will no longer maintain any significant balance at a fintech.

Dig deeper into the weeds here, here, and here.

Photo by Jeremy Bishop on Unsplash

Filed Under: Banking //

Last updated: June 19, 2024

When Fintech Apps Break: Lessons From Juno, Yotta, Copper, Yieldstreet Wallet, Synapse, Evolve Bank Lawsuits

Posted on May 20, 2024 // 31 Comments

What happens when the technology behind a Fintech app breaks down? We found out last week, when unfortunately millions of users lost access to their funds (and still haven’t gotten it back as far as I can tell, as of this writing 5pm ET 5/20/24). That’s a week and counting! Spoiler alert: My understanding is it was really the relationships between humans arguing about money that broke down.

A little Fintech background. When you open an account with a Fintech App (financial technology company), you are often presented with some fine print: “*[Fintech App] is not a bank. Banking services provided by [Real Bank], Member FDIC.” What does that mean? It means that the Fintech is charge of managing the customer-facing interactions – a software layer if you will – and the bank provides access to FDIC insurance and the banking transaction infrastructure. The bank usually opens up an “FBO account” for the fintech. Here is a good definition from Treasury Prime:

An FBO Account (For-Benefit-Of Account) is an umbrella fiduciary account that pools various funds “for the benefit of” a number of beneficiaries, such as end-users, without the fintech assuming ownership interest in the accounts. For fintechs that want to control more of the user experience and not leverage pre-defined bank processes, a fintech may choose to open an FBO account instead. […]

The fintech company can open up the FBO account that sits on their partner bank’s core for the benefit of all of its customers, and use it to establish virtual accounts. In this scenario, the fintech’s end customer would have a sub-account (or “ledger” account) that sits within the umbrella FBO account. The fintech can then track these virtual accounts on a ledger with the support of its BaaS provider.

Deposits held by the customer as a beneficiary to the FBO account are FDIC-insured on a pass-through basis to the same extent as if the deposits were made directly, assuming specific requirements are met.

Significantly, the fintech has no ownership interest in the FBO account and has no control over the funds. The bank maintains control over the funds at all times.

In some cases, the bank itself provides and markets this “Banking as a Service” to external fintech companies. In other cases, there are standalone “Banking as a Service” (BaaS) companies that are essentially the middlemen between fintechs and banks. This was the case with Juno, Yotta, and Copper. (I would not open an account with any of these places right now. Read on for the drama.)

I’m not an expert on these matters, but this is my best understanding of what happened:

Synapse, a BaaS provider, had a dispute over millions in unpaid fees and misappropriated user funds with another fintech, Mercury, and the same Evolve Trust & Bank. (Mercury later went to partner directly with Evolve.) Synapse filed for bankruptcy in 2023. Another company, Tabapay, was in talks to acquire Synapse, but that was announced as cancelled on May 9th, 2024. Synapse blamed Evolve Bank & Trust for not resolving existing issues so that the acquisition could move forward. Another player, Lineage Bank, did payment processing for Synapse and also cut off Synapse on May 9th, 2024. They also still holds millions of user funds in an FBO account.
On May 11th, 2024, Synapse blocked Evolve from accessing to their “Dashboard” which had the transaction ledger data of every fintech user from Juno, Yotta, and Copper. Since this meant that Evolve Bank & Trust couldn’t verify the reason for money coming in and out of the FBO accounts held at their bank, they completely froze access to those FBO accounts.¹ This meant that ACH transfers in and out no longer worked, and debit card transactions also failed.
Synapse says that they restored this Dashboard access on May 13, 2024.² Evolve disputes this and says that they have not received adequate settlement and ledger reports.³ Evolve and Synapse continue to argue inside a US bankruptcy court.
Jason Mikula (Fintech Business Weekly, @mikulaja) has been providing some of the most direct and timely insight on this situation.
Right now, things are still a dumpster fire. 🗑🔥 The FDIC apparently is not getting involved because this is not a bank failure. The bankruptcy judge is basically looking down at two fighting children and yelling “You two! Sort it out!” Meanwhile, more than entire week has passed and the end customers still haven’t been able to access their funds as this writing 5pm ET 5/20/24.

In the previously-mentioned Treasury Prime article, it goes on to mention the heightened risk of an “intermingled FBO model” setup. I don’t know if this is what Synapse offered, but it does ring several alarms 🚨:

Some BaaS providers offer an intermingled FBO model through bank partnerships. In this particular model, the BaaS provider opens one FBO account for the benefit of all of its fintech end-users across various companies, rather than have each fintech open an FBO account with the partner bank directly.

The level of risk in this arrangement could be profoundly greater than the risk of a traditional FBO account.

[…] Even more concerning to the fintech in this arrangement is the significant ledgering precision and reconciliation required in this model. Any slight ledgering error or calculation gap could require rebalancing and re-ledgering all ledger accounts or sub-accounts in the entire FBO account. This could potentially create a domino effect and impact the records and corresponding funds of a large number of accounts.

The takeaway? Fintechs are still a new form of banking that isn’t well-regulated and things can break. Even though pass-through FDIC insurance applies, I would still never make any fintech my primary day-to-day checking account due to the possibility of short-term loss of access. Now, I’d bet that I am in the top 0.1% of people with the most fintech accounts opened. I’m probably nearing triple digits. I still plan to open new accounts, try out new features, and earn sign-up bonuses and perks. Even if I try to perform due diligence, I know that these folks learned from the school of “ask for forgiveness, not permission”. If startups choose to “move fast and break things”, it may take a while to fix them. Not all fintechs are the same, but never put all your eggs in one basket.

I still expect all customer funds to be released eventually, but I know that the lack of access to funds can be very painful for people and that is very unfortunate. It bugs me that you know that the rich CEOs aren’t being forced to negotiate with landlords, credit card companies, medical providers, and so on. Here is a link to file a CFPB complaint.

I don’t plan to do any future business with any of the parties involved. The biggest fintechs involved seem to have stuck with a bankrupt BaaS provider for several months because they didn’t find a better option (or nobody else wanted to deal with them). Yotta did lottery-type games. Juno did crypto. Per an email from Juno:

Over the last 6 months we have attempted several times to diversify our banking stack and even spent 3 months of engineering resources to integrate with a new partner. Given that our platform offers crypto adjacent services, it has been incredibly difficult to get a final approval from a bank partner to onboard customers. This is a broader problem specific to the crypto industry due to the current regulatory climate not being favourable to crypto or crypto adjacent companies.

Copper, Juno, and Yotta all neglect to mention this crisis on their front pages. They should be more transparent with their issues. With the public anger growing, Yotta instead went and completely deleted their X/Twitter account. Wow.

¹ From TechCrunch:

An Evolve spokesperson confirmed to TechCrunch that on May 11, “Evolve Bank & Trust faced an unexpected challenge when Synapse abruptly and without prior notice disabled our access to an account and transaction information dashboard controlled by Synapse and needed by Evolve. This sudden disruption significantly impacted our ability to maintain the visibility and transparency that Evolve needs to have into accounts and transactions. In response to this situation, Evolve took swift and decisive action to safeguard the security of end user funds and ensure compliance with applicable laws. As a precautionary measure, we made the difficult decision to freeze payment and card activity until we could successfully re-establish access to the dashboard as well as receive necessary account and transaction data and reports. While we understand the inconvenience this may have caused, this step was taken with the utmost consideration for the security and integrity of end user accounts. Evolve continues to work diligently to obtain necessary information from Synapse.”

² From Medium written by the Synapse founder:

The continuation of the account freeze by Evolve, despite the restoration of Dashboard access on Monday, May 13, 2024, is unsupportable. Freezing the funds has been unnecessary and punitive, causing significant harm to depositors who rely on access to their funds for essential needs.

³ From Forbes:

The hearing brought no end to the dispute that led Evolve to block customer access to funds, after, it says, Synapse cut off its access to a dashboard necessary for the bank to run compliance screens and determine how much money each individual fintech customer actually has in pooled accounts maintained for their benefit. Synapse says that access was restored this past Monday, but Evolve insists it still doesn’t have what it needs.

Barash did what he could to force a resolution. He ordered Synapse to provide settlement and ledger reports that Evolve Chief Technology Officer Christopher Staab testified the bank had not received. He also ordered executive and technical team members from Evolve and Synapse to meet and confer by Monday to discuss how to restore consumers’ access to their funds.

Filed Under: Banking //

Last updated: May 26, 2024

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