Ally Bank Payback Time Promotion: 1% Additional Cash Bonus (~6% APY 3-month CD)

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Ally Bank has a new promotion called Ally Payback Time that is offering a 1% cash bonus (up to $1,000) on new deposits on top of their existing interest rates. Valid for both new and existing customers. Given the holding period, this roughly equates to the same total interest paid as a 3-month bank CD at 6% APY. Here’s how it works:

  • Enroll by 10/21/18 at ally.com/payback. You must enroll or you won’t get the bonus. Existing customers must enroll with the same e-mail as linked to their Ally bank account.
  • Fund account by 10/31/18. This means your account has to be approved, opened and funded by this date. Technically the terms state that the funds must arrive by 11/5/18, but that is likely just a grace period and you should initiate any fund transfers by 10/31/18.
  • Maintain funds through 1/15/19. You must keep your new funds there through 1/15/19. This is really only a 2.5 month period if you waited until the last moment. Withdrawals may lower your bonus.
  • Get cash bonus on 2/15/19. After another 30 days, they will deposit your cash bonus into your Ally account.

To be clear, the bonus applies to new funds added to an eligible Ally bank account, not your total balance. Eligible accounts include Ally Online Savings, Money Market, Interest Checking, and CD accounts.

Rough math. The current rate on the Ally Online Savings account is 1.90% APY, and the 11-month No Penalty CD is 2.10% APY on $25k+ balances (as of 10/15/18). Given that you can an additional 1% bonus in a bit under 3 months, the bonus itself works out to the equivalent of a 4% annualized yield. 2% plus 4% = 6%, so you’re looking at the equivalent of a 3-month CD at 6% APY for new money deposits between $1,000 and $100,000. At such a high yield, this promo is a “no-brainer” when compared to other liquid savings accounts for the next 3 months.

The promo page has a calculator to show you your total cash earned over a year. If you move over $10,000 at 1.90% APY, you’d get $190 of interest in a year plus a $100 bonus = $290 total. That would work out to a total of 2.9% APY if you were lazy and just kept it all there for a year. Still not too shabby.

Should I move money out of Ally and back in to qualify? No, it won’t make any difference as Ally has already thought of that. All new funds added after 10/8/18 will count as new money for this promotion. They’ve already set the start date in the past, so you gain nothing by delaying your enrollment.

Existing customers. As a longtime Ally accountholder, I’m happy to see that this offer includes existing customers, even if it has to be new money. The promotion should be called the “Ally Money Comeback Time” as lots of people are probably bringing back funds that in the past year or so.

Payback Time? This YouTube ad explains the meaning behind “Payback Time”, basically the megabanks pay you no interest and keep it for themselves:

Bottom line. Ally Bank has a new promotion to attract new money (or bring back old money). You get a 1% cash bonus (up to $1,000) on new deposits on top of their existing interest rates. For their savings account, this works out to a 3-month holding period paying roughly 6% annualized interest. You must enroll soon by 10/21 and your account must be opened and fully funded by 11/5/18 at the very latest.

Citi Simplicity Card Review: 0% for 21 Months (1.75 Years), No Late Fees, No Penalty Rates

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CitiSimplicityCard (1)

Interest rates are rising, and that applies to credit cards as well. Our partner Citi has updated the Citi Simplicity® Card with an extended 0% intro period for balance transfers while also offering some “accident forgiveness insurance”. Do you have a balance that you are finally ready to pay off? The highlights:

  • The ONLY card with No Late Fees, No Penalty Rate, and No Annual Fee… EVER
  • 0% Intro APR on balance transfers for 21 months from date of first transfer. All transfers must be completed in first 4 months. After that, the variable APR will be 15.99% – 25.99%, based on your creditworthiness
  • 0% Intro APR on purchases for 12 months from date of account opening. After that, the variable APR will be 15.99% – 25.99%, based on your creditworthiness
  • If you transfer a balance with this offer, after your 0% Intro purchase APR expires, both new purchases and unpaid purchase balances will automatically accrue interest until all balances, including your transferred balance, are paid in full
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
  • The same great rate for all balances, after the introductory period
  • Save time when you call with fast, personal help, 24 hours a day – just say “representative”
  • Enjoy the convenience of setting up your own bill payment schedule on any available due date throughout the month

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

Note that if you are 30 days late on this or any credit card, Citi will still report this activity to the credit bureaus. This card may be forgiving but you should still keep your credit score as high as possible.

The strongest part of this card is the long 21 month period, so you can spread out payments over 1.75 years and ideally pay it all off by the end. There is a 5% balance transfer fee ($5 min). However, 5% works out to just 3 months of interest at 20% APR. Transferring a balance to this card from a 20% APR card would be the equivalent of paying 3 months interest at 20% APR and then having 18 months with 0% interest. Once the intro period on all 0% cards expire, the rates will go right back up. You’ll either need to pay it off or transfer your balance again if you need more time. With this card, you’ll have a full 21 months to spread your payments out.

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

This card does not earn any cash back, points, or airline miles. I’d open a separate card for rewards after your balances are paid off and you join the “Paid in full every month” club.

Bottom line. The Citi Simplicity® Card is best for folks that are serious about paying off their balances. You get a long 0% introductory period of 21 months on balance transfers, with a one-time 5% balance transfer fee ($5 min). The card includes consumer-friendly features that help ensure your low rates don’t get hiked with a single late payment. If you do the math and can make adequate payments to pay down your balance over a 1.75 year span, this card may help get you debt-free with minimal gotchas. No annual fee.

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

American Express Pink Gold Card: New 50,000 Point Offer + $100 Dining Credit

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American Express is trying to shake off its stodgy image – with a new Pink card! They prefer Rose Gold. The new American Express Pink Gold Card has a 50,000 bonus point offer if you apply via a referral link (that’s mine). Here are the highlights:

  • 50,000 Membership Rewards points when you make $2,000 in purchases within the first 3 months.
  • Up to $100 dining credit. 20% back (up to $100) on dining purchases at U.S. restaurants within the first 3 months. They are “picking up the tip”. That means spending $500 over 3 months will max out the $100 dining credit.
  • Up to another $120 in Grubhub and Seamless credit. Up to $10 in statement credits each month when you pay with The Gold Card at participating partners – Grubhub, Seamless, The Cheesecake Factory, Ruth’s Chris Steak House and participating Shake Shack locations.
  • $100 airline fee credit. Select one qualifying airline and then receive up to $100 per calendar year in statement credits when incidental fees are charged by the airline to your AmEx Gold card. Examples are checked baggage fees and inflight meals.
  • 4X points at US restaurants.
  • 4X points at US supermarkets, on up to $25,000 per year.
  • 3X points on flights booked directly with airlines or on amextravel.com.
  • $250 annual fee. Additional cards (authorized users) are free.

The Pink card color and limited-time welcome offer is available through January 9th, 2019. They are treating this as a rebrand of the Premier Rewards Gold Card, so you can’t have gotten that bonus already:

Welcome Offer not available to applicants who have or have had this card or the Premier Reward Gold Card. We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.

Membership Rewards points can be converted to the following airline and hotel programs (there are more, this is just a selection):

  • Delta SkyMiles
  • Hawaiian Airlines
  • JetBlue
  • ANA Mileage Club (partner of United Airlines)
  • Air Canada (partner of United Airlines)
  • British Airways (partner of American Airlines)
  • FlyingBlue (Air France/KLM)
  • Singapore Airlines
  • Virgin Atlantic
  • Choice Privileges
  • Hilton Honors
  • Marriott Rewards (Starwood)

The bonus math depends on a few factors. I’m going to be conservative and value the 50,000 Membership Rewards points at $500. (There are a lot of mileage transfer bonuses so you could value them much higher.) If you spend $500 in any US restaurant over 3 months, you’ll be able to get the full $100 statement credit. Spending $10 a month at Grubhub and Seamless will depend on if you’ve become addicted to these hyper-convenient food delivery apps. The airline fee credit will depend on how much you travel, but checked bag fees are everywhere (and rising). Minus the $250 annual fee. If you max out all the perks, the first year value is $570 without taking into account the 4X and 3X bonus categories. I don’t think it’s a perfect fit for me, but worth a look.

Bottom line. The new American Express Pink Gold Card has a bunch of new features more targeted at the young, urban traveler. There is also a limited-time 50,000 point + dining credits offer if you apply via a referral link.

Free National Emerald Club Executive ELITE Upgrade Sign-Up Link

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Improved offer. Here’s an even better link for Emerald Executive Elite, which is the higher tier – one above Emerald Executive and two tiers above plain Emerald Club. I was able to click on the link, sign in to my existing Emerald club account, and get upgraded to Elite through February 2020. If I rent a car and pay with AmEx, I also get 5 credits, enough for 1 free rental day on any car class. They will change your Contract ID, but you can change it back if you want.

Original post:

The loyalty program for National Car Rental is called Emerald Club, which has a unique feature in that they maintain an “Emerald Aisle” where you can show and pick any car in that aisle based on your tier. The base Emerald tier (anyone can sign up and join this for free) may only mean picking between a Nissan Altima or a Hyundai Elantra, but it’s still a bit of fun as I like cars. When spending my own money, my preferred car company is National. As a member, you’ll also be able to book a full-size car at the mid-size price (“free upgrade”).

American Express has a promotion with a free upgrade to Emerald Executive status until February 28, 2020, which includes additional perks like access to nicer cars like SUVs and large sedans. You have to sign up for a fresh new account. The form doesn’t appear to ask for an American Express number. Obtaining this status usually requires 12 paid rentals or 40 paid rental days in a calendar year.

In addition, if you enroll through the promotion and also pay for your first rental with any American Express, they will credit you with six Emerald Club Credits. This is a good deal, as 6 credits is enough for a free car rental already with Executive status. You’d usually have to make 6 short rentals to get 6 credits.

*Offer valid for new members only enrolled via this promotion between 9/16/18-1/31/19. Get six Emerald Club Credits you can use toward a future rental day after you enroll in the Emerald Club at nationalcar.com/axec between 9/16/18-1/31/19, rent one time from National and pay with any American Express Card.

If that link doesn’t work, you can also try this similar link for Visa Infinite cardholders. I don’t believe this link asks for a Visa Infinite card number either.

nationalex

Status match. Once you obtain your status and/or membership kit, you can also ask for a status match with Hertz, Avis (request via email), or Enterprise. For example, based on the qualification criteria, it appears at Emerald Club Executive lines up with Hertz Five Star, while Emerald Club Executive Elite lines up with Hertz President’s Circle.

CIT Bank Savings Builder Account: 2.15% APY w/ Monthly $100 Deposit

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CIT Bank has a new high-yield savings account called the Savings Builder Account. This is a unique savings account with two ways to qualify for their highest interest rate tier of 2.15% APY (as of 10/8/18). You need ONE of the following in each Evaluation Period:

  • Maintain at least one single monthly deposit of $100+, OR
  • Maintain a balance of $25,000+.

I noticed that this rate is currently higher than that of their 11-month No Penalty CD, although that rate can never go down during that 11 months.

There is a $100 minimum to open the account, and everyone earns the top tier rate for the first “Evaluation Period” (see below). Then, if you meet one of the requirements listed above during the first Evaluation Period, you’ll earn the top rate (2.15% APY as of 10/8/18) for the next Evaluation Period. If you don’t meet a least one of the requirements, you will receive the base interest rate during the next Evaluation Period (1.14% APY as of 10/8/18). They will send you an e-mail reminder if you haven’t made the $100 deposit requirement by mid-month.

There are no minimum balance fees or no monthly service fees, even with no activity. You just get the lower rate. Interest is compounded daily.

Evaluation Period vs. Calendar Month. I guess they aren’t using calendar months since banks don’t like to do anything on the weekends, so instead it’s called an “Evaluation Period”. The first Evaluation Day will occur at the end of the first full month after account opening. Your monthly “Evaluation Day” is the fourth business day prior to the end of a month. The “Evaluation Period” begins the day after an Evaluation Day and ends at 4pm PT on the next month’s Evaluation Day.

You can set up an automatic monthly transfer from your checking account to this account for $100 and satisfy the requirement on auto-pilot. I don’t like having to jump through hoops like debit card purchases, but at least this one I could automate instead of having to remember to do something every month. Log into your account, click on “External Transfer” and then “set up recurring transfers”. You can then pick your external account (you may need to add it) and choose a “Monthly” frequency:

I would pick a day that is not near the end of the month. (I picked the 10th.) Deposits can be made via online funds transfer (ACH), mobile check deposit via app, incoming wire (no fee), or by mailing a check.

I also noticed that outgoing wires are free with an average daily balance of $25,000+. Otherwise, the fee is $10 per wire. This may be helpful for people who have high balances but like the ability to instantly deploy their money elsewhere as needed.

Existing CIT Bank customers can quickly open a new account by clicking on “Open an account” here, then “I have a CIT Bank account”, and then logging in with your password. The entire opening process can be done online, and you can fund with another CIT Bank account or an external account.

Bottom line. The new CIT Bank Savings Builder Account has two different ways to qualify for the top rate. If you either make a $100+ single deposit every month, OR maintain a $25,000 balance every month, you get 2.15% APY as of 10/8/18.

Top 10 Best Credit Card Bonus Offers – October 2018

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Are you fully aware of how valuable that space in your wallet or purse is? Credit card companies are in heated competition right now, offering strong perks and $500+ value a pop during the first year to try out a new card. These are the top 10 credit card offers that I would apply for in October 2018, if I didn’t already have most of them. Please see links provided for full details. Recent changes:

If you pay off your balances every month, then you can join me and many others in funding a huge chunk of your annual travel with cash credits, points, and miles. You don’t need to be a “I only fly business class” world traveler. I mostly use my rewards points on domestic economy flights, mid-class hotels like Staybridge Suites and Courtyard Marriott, and cheap car rentals. If you have credit card debt, you should focus on paying that off first as the interest charges could offset most of the perks.

Note: Certain Chase cards have a “5/24 rule” which is an unofficial rule that they will automatically deny approval on new credit cards if you have 5 or more new credit cards from any issuer on your credit report within the past 2 years. This rule applies on a per-person basis, so if you are new, you might want to start with those Chase cards.

Chase Sapphire Preferred Card

  • 50,000 Ultimate Rewards points (worth $625 towards travel) after $4,000 in purchases within the first 3 months. See link for details.
  • $0 annual fee for the first year, then $95.
  • Subject to 5/24 rule.
  • Alternative: Chase Sapphire Reserve Card. More rewards, more perks including lounge access, $450 annual fee, $300 annual travel credit.

Barclaycard Arrival Plus Card

  • 60,000 points (worth $600 towards travel) after $5,000 in purchases in the first 90 days and paying the annual fee. See link for details.
  • Unlimited 2X miles on every purchase.
  • $0 annual fee for the first year, then $89.

American Express Pink Gold Card

  • 50,000 Membership Rewards points (flexible, worth 50,000 miles at various airlines) after $2,000 in purchases in the first 3 months. See link for details.
  • $100 dining credit. 20% back (up to $100) on dining purchases at U.S. restaurants within the first 3 months.
  • $120 in Grubhub and Seamless credit. $10 in statement credits each month when you pay with this card at participating partners – Grubhub, Seamless, The Cheesecake Factory, Ruth’s Chris Steak House and participating Shake Shack locations.
  • $100 airline fee credit. Select one qualifying airline and then receive up to $100 per calendar year in statement credits towards checked baggage fees and inflight meals.
  • $250 annual fee.

Chase Marriott Rewards Premier Plus Card

  • 100,000 Marriott Rewards points after $5,000 in purchases within the first 3 months. See link for details and rough valuation of points.
  • $95 annual fee, free night award upon card anniversary.
  • Subject to 5/24 rule.

Chase Southwest Rapid Rewards Premier Card

  • 40,000 Rapid Rewards points (redeemable for $600+ in Wanna Getaway airfare) after $1,000 in purchases in the first 3 months. See link for details.
  • $99 annual fee.
  • Combine with the Southwest Rapid Rewards Premier Business Card to earn the Southwest Companion Pass.
  • Subject to 5/24 rule.

Citi® / AAdvantage® Platinum Select Card

  • 50,000 American Airlines miles after $2,500 in purchases within the first 3 months. See link for details.
  • First checked bag free on domestic flights perk.
  • $0 annual fee for the first year, then $99.

Chase World of Hyatt Card

  • 60,000 Hyatt points (enough for two nights at any Hyatt). 40,000 Bonus Points after $3,000 in purchases in the first 3 months. Plus an additional 20,000 Bonus Points after a total of $6,000 in purchases within the first 6 months. See link for details and rough valuation of points.
  • $95 annual fee, free night award upon card anniversary.
  • NOT subject to 5/24 rule.

British Airways Visa Signature Card

  • Up to 100,000 Avios points. 50,000 Avios after $3,000 in purchases within first 3 months. Additional 25,000 Avios for $10,000 in purchases within first year. Additional 25,000 Avios for $20,000 in purchases within first year. See link for details and redemption tips.
  • Free Travel Together companion ticket when you spend $30,000 in calendar year.
  • $95 annual fee.
  • NOT subject to 5/24 rule.

Hilton Honors Ascend Card from American Express

  • 125,000 Hilton Honors points after $2,000 in purchases within the first 3 months.. See link for details and rough valuation of points.
  • Free Weekend Night Reward certificate after you spend $15,000 on purchases in a calendar year.
  • $95 annual fee.

Bank of America Premium Rewards Card

  • 50,000 points (worth $500 towards travel) after $3,000 in purchases within the first 90 days. See link for details.
  • 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases.
  • $100 annual Airline Incidental Statement Credit.
  • Up to $100 credit towards TSA PreCheck or Global Entry application fee.
  • $95 annual fee.

Capital One Savor Cash Rewards Card

  • $500 cash bonus after $3000 in purchases within the first 3 months. See link for details.
  • 4% cash back on dining and entertainment.
  • $0 annual fee for the first year, then $95.

Citibank $500 Checking Account Bonus 2018

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Citibank has $500 bonus offer when you open a new eligible Citi checking account 10/1/18 through 12/31/18 and complete qualifying activities. This offer is restricted to those who have not had a Citibank checking account within the last 180 calendar days.

Here are the bonus requirements, condensed from their full terms and conditions:

  • You must first enroll at citi.com/checkingrewards (or in-branch).
  • You must open a new Citibank Checking and Citi Savings Account in “The Citibank Account Package”.
  • You must make a deposit of $15,000 or more (multiple deposits okay) in “new-to-Citibank” funds within 30 days of account opening.
  • For the $400 bonus, you must maintain a minimum balance of $15,000 for 60 consecutive calendar days after deposit. The $15,000 can be spread between checking and savings.
  • For an additional $100 bonus, you must also complete a “Qualifying Direct Deposit” into the Checking Account for two consecutive months within 60 days of account opening. Payroll works but any ACH transfer accounts (i.e. interbank ACH counts).
  • The $400 or $500 bonus which will be credited within 90 calendar days from the date you complete all required activities.
  • Note that accounts with a zero balance for 90 days are subject to automatic closure and closed accounts can’t get the bonus. Therefore, always keep at least $5 in each account until you see the bonus.

Here’s how to avoid monthly account fees. You must maintain a combined average monthly balance of $10,000+ in eligible linked deposit, retirement and investment accounts. A monthly service fee of $25 and a $2.50 non-Citibank ATM fee applies to the checking account in The Citibank Account Package if a combined average monthly balance of $10,000 or more is not maintained. You can view your state-specific fee schedule at citi.com/compareaccounts. Scroll down to “The Citibank Account package”.

Bonus net value calculations. I like this bonus because it doesn’t require too much attention. You open the accounts and deposit $15,000, which you can spread between checking and savings (be sure to maintain a non-zero amount in both). Simply leave it there for 60 days. The direct deposit requirement is easy because there is no minimum amount and you can simply initiate an ACH transfer from another bank:

A “Qualifying Direct Deposit” is an Automated Clearing House (ACH) credit, which may include payroll, pension or government payments (such as Social Security) by your employer, or an outside agency.

However, there are a few noteworthy wrinkles! The main “catch” is that even though you “qualify” for the bonus after 60 days, you may have to wait another 90 days to actually get the bonus. Meanwhile, you need to keep both Citibank accounts open and in good standing, which either requires a minimum monthly balance of $10,000 or a $25 monthly fee. If you moved the $15,000 to a 2% APY savings account after 60 days, you would earn $25 in interest each month but also have to pay a $25 monthly fee.

Earning $500 of interest on $15,000 in 60 days works out to the equivalent of about 20% APY. However, earning $500 of interest on $15,000 in 150 days is a less impressive 8% APY. You could take out $5,000 after 60 days (maintaining only the $10k minimum) to boost your effective rate back up 10% APY. Even after you account for this, you still net $375 over a 2% APY savings account over 5 months. Bonus will be reported on 1099-INT (as should be expected).

If you were interested in a Citibank checking account anyway, you can always do the bonus now and downgrade to their “Account Account Package” which has no monthly fee if you make one direct deposit, one bill pay, or a $1,500 minimum balance each month ($10 otherwise).

ThankYou points. It’s not a lot, but The Citibank Account Package also earns ThankYou points for certain activities. For just having a savings and checking together, you can earn 150 points per month. For adding more things like an auto-save transaction or a linked Citi mortgage, you can get up to 450 points per month. Details here. Combine with the Citi ThankYou Premier Card which lets you redeem points for travel at a 25% bonus (1 ThankYou point = 1.25 cents towards travel).

Finally, I have done Citibank bank bonuses in the past and haven’t had any issues. However, others have reported having to call them up and ask for the bonus. I would simply be sure to keep track of your promotion details and transaction dates in a Google Doc or other spreadsheet, which you should always do anyway.

Bottom line. Citibank has a $500 bonus for opening a new checking + savings account and keeping $15,000 in there for 2-5 months, along with a few other requirements like making two ACH deposits. The bonus works out to roughly 10% APY when you keep the minimum required cash there. As compared to a 2% APY savings account, the net gain is about $375.

Best Interest Rates on Cash – October 2018

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Here’s my monthly roundup of the best interest rates on cash, roughly sorted from shortest to longest maturities. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 10/1/18.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, getting higher rates is as easy as transferring money electronically from your checking account to an online savings account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

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

  • Vanguard Prime Money Market Fund currently pays an 2.13% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.00%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.46% SEC Yield ($3,000 min) and 2.56% SEC Yield ($50,000 min). The average duration is ~1 year.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.44% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.56% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

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

  • Customers Bank has a liquid savings account at 2.25% APY guaranteed until 6/30/19, but with a minimum balance of $25k.
  • The Ally Bank 11-month No Penalty CD is at 2.10% APY ($25k minimum) and the CIT Bank 11-Month No-Penalty CD is at 2.05% APY with a lower $1,000 minimum. The lack of early withdrawal penalty means that your interest rate can never go down for 11 months, but you keep full liquidity. You can open multiple CDs in smaller $1,000 increments to get even more flexibility.
  • USALLIANCE Financial Credit Union has a 1-year CD at 2.75% 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).

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

  • “I Bonds” bought between May 2018 and October 2018 will earn a 2.52% 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 2018, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

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

  • The only notable card left in this category is Mango Money at 6% APY on up to $5,000, but there are many hoops to jump through. There is a $3 monthly fee and you need to maintain a minimum $800 net direct deposit each month. This means you can’t direct deposit $800 and also take out $800 via online transfer. Checks and ATM withdrawals have additional fees. This means you have to spend the money via the Visa debit card (and miss out on flat 2% cash back on all purchases).

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. That’s just how it goes with these types of accounts.

  • Consumers Credit Union recently announced changes starting 10/1/18, including lower balance limits ($10k down from $20k) and more restrictive requirements, but also higher interest rates in some tiers. Free Rewards Checking now offers 3.09% to 5.09% APY on up to a $10k balance depending on your qualifying activity. The highest tier requires their credit card in addition to their debit card (other credit cards offer $500+ in sign-up bonuses). Keep your 12 debit purchases just above the $100 requirement, as for every $500 in monthly purchases you may be losing out on 2% cash back elsewhere (or $10 a month after-tax). Thanks to reader Jonathan for the heads up. Find a local rewards checking account at DepositAccounts.
  • If you’re looking for a non-rewards high-yield checking account, MemoryBank has a checking account with no debit card requirements at 1.60% APY.

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

  • Luther Burbank Savings has an 18-month Step Up CD that pays a blended 2.83% APY ($1,000 min). 6 month early withdrawal penalty.
  • Ally Bank has a 5-year CD at 3.00% APY ($25k min) with a relatively short 150-day early withdrawal penalty. For example, if you closed this CD after 2 years you’d still get a 2.39% effective APY even after accounting for the penalty. 2.61% at 3 years.
  • United States Senate Federal Credit Union has a 5-year Share Certificate at 3.63% APY ($60k min), 3.51% APY ($20k min), or 3.45% APY ($1k min). Note that the early withdrawal penalty is a full year of interest. Anyone can join this credit union via American Consumer Council.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is showing a 3-year non-callable CD at 3.10% APY and a 5-year non-callable CD at 3.40% APY. Watch out for 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 fixed early withdrawal penalties. As of this writing, Vanguard is showing a 10-year non-callable CD at 3.50% APY. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years.

All rates were checked as of 10/1/18.

5% Cash Back Cards: Amazon, Wholesale Clubs (Costco) and Chase Pay – October to December 2018

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

5percentback4th Quarter 2018 registration is now open. The credit cards below offer up to 5% cash back on specific categories that rotate each quarter. It takes a little extra attention, but it can add up to $100+ in additional rewards per year without changing your spending habits. You can also buy gift cards with the 5% back now but spend the gift cards later. New cardmembers may also get an upfront sign-up bonus.

Chase Freedom VisaChase Freedom – $150 Bonus

From October 1st through December 31st, 2018 you can earn 5% cash back on up to $1,500 spent in the following categories:

  • Wholesale Clubs (Costco/Visa, Sams Club, BJ’s in-store and online)
  • Department Stores
  • Chase Pay – Try at Shell gas stations, Walmart.com.

Enroll each quarter at ChaseBonus.com. As long as you activate by the end of the quarter the rewards are retroactive. All other purchases earn 1% back, with no tiers or expiration of rewards. Technically, you earn Ultimate Rewards points which can also be converted to frequent flier miles instead of cash. Currently, the Chase Freedom card is offering $150 bonus cash back if you sign up and make $500 in purchases in your first three months. No annual fee.

Discover it 14 ImageDiscover it Card

From October 1st through December 31st, 2018 you can earn 5% cash back on up to $1,500 spent in the following categories:

  • Amazon.com
  • Wholesale Clubs (Sam’s Club, BJ’s in-store. You can also buy Costco gift cards online with a Discover card.)

disc_2018q1

Enroll after logging into your online account (look on the right-hand side). 5% rewards won’t apply until after you activate your rewards, so it is best to activate now before you forget. No annual fee.

New cardmember bonus details. If you are a new applicant and sign up via my Discover Card referral link, you will get a $50 Cashback Bonus after your first purchase within 3 months of being approved. You will also get Cashback Match for an entire year – a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically. During those 12 months, your $50 Cashback Bonus becomes $100, your 5% cash back rewards becomes 10% cash back, and your 1% cash back rewards become 2% cash back. You can verify this on the application by clicking on “See rates, rewards and other info” and searching for this text:

Cashback MatchTM: : No purchase minimums. After the first 12 consecutive billing periods that your new account is open, we will match all of the cash back rewards you’ve earned and apply them to your account in the following one or two billing periods. If your account is closed or no longer in the cash back reward program at the time we calculate your potential award, your cash back will not be matched. You’ve earned cash back rewards when they have posted to your account by the end of the 12th consecutive billing period. This promotional offer may not be offered in the future. This exclusive offer is available only to new cardmembers.

TERMS OF CASHBACK BONUS OFFER: Get a $50 Cashback Bonus after you make your first purchase within 3 months of being approved. Promotional award will be applied within 8 weeks. The promotional award is in addition to the Cashback Bonus earned on all purchases.

American Express Blue Cash Preferred Card. This card earns 6% cash back at US supermarkets all year long (on up to $6,000 per year) and 3% cash back at US gas stations. I use this card all year long for groceries, and then in December use up the $6k annual limit on gift cards bought in the supermarket aisle. New cardholders are also eligible for a $200 statement credit after $1,000 in purchases within the first 3 months. $95 annual fee. See details in link.

Amazon Prime Rewards Card. Earn 5% back at Amazon.com and Whole Foods all year long. Prime membership required. 2% cash back at restaurants, gas stations, and drugstores (yawn… see below). New cardholder bonus varies by person. No annual fee.

U.S. Bank Cash+ Visa Signature Card. You get to choose the two 5% cash back categories every quarter, out of a preset selection of niche categories like “Fast Food” or “Department Stores”. Unfortunately, you can’t pick a broad category like gas stations, restaurants, or grocery stores. You have to manually choose your categories each quarter, even if you want it to stay the same. If you do not choose your categories, all purchases revert to only earning 1% cash back for that quarter. No annual fee.

Citi Dividend Card. This card is no longer available to new applicants, but if you still have the grandfathered card you can activate to get 5% cash back at Best Buy and Department Stores from 10/1 to 12/31. You are capped at $300 cash back for the calendar year. No annual fee.

Don’t settle for the “1% on everything else” that these cards offer. Get 2% cash back or higher. The following cards currently have the ability to offer cash back rewards as high as 2% or even greater. Please read my card-specific reviews for details.

Does Robinhood Brokerage Make Money in Shady or Questionable Ways?

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Robinhood has gotten a lot of buzz as the smartphone app that offers free stock trades. From the very beginning, the most common question was “How Will They Make Money?” Here’s what Robinhood says in their Help Center:

Robinhood Financial makes money from its margin trading service, Robinhood Gold, which starts at $6 a month. Additionally, Robinhood earns revenue by collecting interest on the cash and stocks in customer accounts, much like a bank collects interest on cash deposits.

However, there is another source of revenue that they don’t mention in their FAQ, but they do disclose in SEC filings (since it is legally required).

Selling order flow. When you make an order to buy or sell stock at a retail broker, the broker usually decides which market-maker can fulfill your request. In turn, market makers are allows to pay brokers like Robinhood, E*Trade, or TD Ameritrade for this “order flow”. This is common practice in the industry. If you have a sophisticated brokerage account, you can choose to direct exactly where your order will go. (Being able to direct your orders isn’t necessarily better unless you know what to look for, i.e. tracking Level 2 quotes.)

Robinhood gets paid 10 times the rate of TD Ameritrade and E*Trade for their order flow? Then came an article Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders where the author Logan Kane made the following observations (via @JBrown6109):

  • These days, the people paying for order flow are often high-frequency trading (HFT) firms.
  • TD Ameritrade made $119 million last quarter from selling order flow. Payments were about a 1/10th of a cent per share.
  • E*Trade made $47 million last quarter from selling order flow. Payments were about a 1/10th of a cent per share.
  • Robinhood does not have to disclose their revenue from order flow as they are private company. (And they don’t.) Payments averaged about $0.00026 per dollar of executed trade value. At $50 average share price, this equates to about a cent per share.
  • This means that Robinhood is getting paid roughly 10x that of E*Trade and TD Ameritrade for the same amount of order flow.

Why? Here are some possibilities:

Theory #1: Robinhood is letting HFT “front-run” their customers, resulting is worse trade execution. If an HFT could give you 2 cents less per share, it would be worth paying 1 cent per share for that order. (Evil laugh.) However, this is countered by the SEC rule of National Best Bid and Offer (NBBO), which says that brokers must trade at the best available bid and ask prices when buying and selling securities for customers. This law may be hard to enforce by the millisecond, but would Robinhood or the HFT really blatantly break the law in this manner? Is it worth the risk to their business?

Honestly, I doubt it. Here’s the SEC Rule 606 Disclosure for Robinhood that shows where the orders are routed (source):

Yes, the names like Citadel and Virtu are well-known HFT firms. But Vanguard Brokerage doesn’t sell any order flow at all, yet most of their orders still go through Citadel (source):

Theory #2: Robinhood customers are broke and cheap, so they mostly trade a lot of stocks with low share prices. A lot of this argument is based on the amounts reported on the 606 disclosures. If you change the estimate for average share price traded to $4 a share, then Robinhood would get paid the same amount as the other firms. With zero commissions, anyone can afford to trade a few bucks of stock back and forth.

Theory #3: Robinhood’s order flow is somehow inherently more valuable than that of TD Ameritrade. Big brokers can fill some orders internally (one person is buying at the same time another is selling on the same platform) and they get to keep the market-maker profit. This rebuttal article says that Robinhood internalizes nothing and sells 100% of their orders. Maybe this “unfiltered” order flow is more valuable? Maybe the fact that their customers are younger and mostly non-professional traders make the order flow more valuable? More odd lots? More trades of single shares? More market orders instead of limit? Maybe Robinhood packages the data in some way that makes it more palatable to HFT firms?

HFT firms are using the data to build complex algorithms for their own trading, so they want to understand market behavior. Getting unlimited access to raw order data would certainly be key to understanding the behavior of “dumb money”.

Personally, I think it’s maybe a little #2, but more #3. Robinhood was founded by former HFT software engineers. They know exactly what type of information would be valuable to HFT firms. In fact, I think selling customer data (in aggregate) was a big part of their business model to pull off free trades from the very beginning. So they optimize the selling of your data quietly, while also making money on idle cash and margin subscriptions. It’s also a big money saver when they only answer customer service questions via e-mail and don’t have a phone number.

The bigger question: Do you care? Okay, so Robinhood gets paid by selling your order data. They get paid a penny per share. Some firm will know you bought 10 shares of Nvidia and sold 10 shares of AAPL exactly 54 minutes and 12 seconds after the new iPhone announcement. In some indirect way, this arrangement might give the HFT firms a greater trading edge in the future. In exchange, you get free stock trades today. Is this a bad deal?

They’ve also helped inspire more free trade competition:

Bottom line. I view Robinhood as “free” in the same way that Gmail is “free” and Facebook is “free”. They make money via traditional means, but your personal data and behavior patterns are also part of the true price. The theme of this entire decade is that our personal data is the most undervalued asset (by us). Google, Facebook, Amazon, Visa, every major corporation – they are perfectly aware of the value of data. As the saying goes, “If you’re not paying for the product, you are the product.”

Barclaycard Arrival Plus World Elite Review: 60,000 Bonus Miles + Annual Fee Now Waived First Year

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

AFB_ARF_card_rRGB_ArrivalPlus_Fee_WE (1)

(Updated September 2018. The sign-up bonus is still 60,000 points (worth $600 towards travel), but now the $89 annual fee is also waived for the first year. This is the highest total incentive ever offered to try out this card. Looks like Barclaycard is back to trying hard to get your attention. Details below.)

The Barclaycard Arrival Plus(TM) World Elite MasterCard® is a travel rewards card with 60,000 miles sign-up bonus (worth $600 toward travel statement credits) and 2X miles on every purchase. Note that this card is different from the Barclays Arrival Premier World Elite Mastercard. Here are the card highlights:

  • Enjoy 60,000 bonus miles after spending $5,000 on purchases in the first 90 days and paying the annual fee
  • Earn unlimited 2X miles on every purchase
  • Book travel your way—no airline, seat or hotel restrictions—and redeem your miles for travel statement credits
  • Get 5% miles back to use toward your next redemption, every time you redeem
  • No foreign transaction fees
  • International Chip and PIN for use at self-service chip terminals around the world
  • Miles don’t expire as long as your account is open, active and in good standing
  • $89 annual fee (waived first year)

Rewards program details. With this card, you earn 2 miles per $1 spent on all purchases. There are no special categories. These miles (easier to think of them as points, really) are then redeemable towards travel booked from any merchant or retailer classified as Airlines, Travel Agencies & Tour Operators, Hotels, Motels & Resorts, Cruise Lines, Passenger Railways and Car Rental Agencies. You can redeem towards any airline on any date.

To redeem, visit any booking site (Delta.com, Expedia.com, Hilton.com, Hotels.com, etc) and buy a ticket with this credit card. You don’t need to use any specific portal. Let’s say you buy an airplane ticket for $250. Then, you visit your Barclaycard account website and you’ll offset your purchase. You’ll redeem 25,000 “miles” and see a $250 statement credit on your statement. I’ve done this multiple times, and it always went smoothly with no issues.

Travel statement credit redemptions start at 10,000 miles for $100 toward a qualifying travel purchase of $100 or more made within the last 120 days. For example, you could use 10,000 points for a $100 credit towards a $200 plane ticket, if you wished.

On top of that, the card gives you a 5% miles rebate when you redeem for any travel. So if you redeemed 50,000 miles, you would get 2,500 back in your account after about a week. Although this is more complicated than just spending less points, you can calculate that getting $500 of value out of 47,500 miles at 2X miles/$ spent works out to 2.11% cash back towards any travel. Everything else (gift cards, merchandise) offers a worse redemption ratio, so I wouldn’t bother.

Comparison with alternatives. 2X miles is nice and the rebate adds a bit extra. The competition offers multiple cards earning 2% cash back with no annual fee. A few examples:

During the first year, the $89 annual fee is waived. However, in future years it comes back. So I would take the first year and see how you like it. You would have to put over $80,000 in purchases on this card annually in order to get the 0.11% advantage to offset the $89 annual fee (after the 1st-year waiver). That’s a big number. Now, you could also use 8,900 miles out of the 60,000 point bonus to offset the $89 annual fee. You can also ask them to downgrade your card into the “plain” Arrival card with no annual fee (and no 2X miles).

Bottom line. The Barclaycard Arrival Plus(TM) World Elite MasterCard® is a travel rewards card that earns double miles on all purchases (even more with the 5% rebate). The sign-up bonus has been raised to 60,000 points – worth $600 in travel statement credits – the highest ever for this card. The $89 annual fee is waived for the first year, but applies in subsequent years. This is strong offer as there is a $600 net value over the first year to get me to try out a new card.

Ally Bank 11-Month No Penalty CD Review: 2.10% APY for $25k+

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Rates updated 9/24/18. Ally Bank raised the rate on their 11-month No Penalty CD. These have been an interesting new product in this rising rate environment. If you have older No-Penalty CDs, you may want to take advantage of this higher rate. Here are the new interest rates for the No Penalty CD under their tiered structure (as of 9/24/18):

  • 2.10% APY at $25,000 minimum opening deposit
  • 2.00% APY at $5,000 minimum deposit
  • 1.75% APY at no minimum deposit.

The 11-month No Penalty CD is unique in that while the 2.10% APY rate is locked in at deposit, you can still withdraw your principal and interest without penalty at any time (well, you must wait at least 6 days from the deposit date). In other words, your interest rate can never go down, but you can still jump ship if rates rise or if there is a better promo elsewhere.

If you recently opened one of these, remember that Ally Bank offers a “Ten Day Best Rate Guarantee”:

When you fund your CD within 10 days of your open date, you’ll get the best rate we offer for your term and balance tier if our rate goes up within that time. The Ally Ten Day Best Rate Guarantee also applies at renewal.

If you have an existing No Penalty CD past the 10-day rate guarantee, this means you may consider closing it and then opening up a new one at a higher rate. You will have to withdraw everything at once – there are no partial withdrawals allowed on this type of CD. If you have an Ally savings or checking account, you can close the old CD, see the deposit in your savings/checking, and open up a new CD all in minutes online. (Note that savings accounts are limited to 6 withdrawals per month, so use your checking if possible.) You will be extending the term out another 11 months, but since you can always close it at any time it isn’t much of a concern.

Here’s a screenshot of my withdrawal showing no penalty and instant availability when withdrawn directly into an Ally account:

ally_np_withd

You can use my Ultimate Rate-Chaser Calculator to get an idea of how much additional interest you’d earn if you switched over.

Close alternatives.

  • Ally Savings is now at 1.85% APY, while other online savings accounts rates are even higher. You gain liquidity, but rates can also change on you.
  • Ally 12-month CD is now at 2.50% APY with no minimum deposit, and the 2-Year “Raise Your Rate” CD is at 2.50% APY with no minimum deposit. Both of these do have early withdrawal penalties..
  • CIT Bank 11-Month No Penalty CD is a similar product, currently at 2.05% APY but with a lower $1,000 minimum deposit. This means you could open multiple, smaller CDs and only break out what you need later. These two banks both offer 11-month No-Penalty CDs, and I’ve opened (and closed early) CDs from both places.

Ally is my primary bank, due to various factors like user interface, Live Chat, you can link tons of accounts, 1-day bank transfers are available, and their innovative CD products. I use Ally Bank Online Savings, Interest Checking, and No Penalty CD accounts as my “hub” and then open additional bank CDs as temporary “spokes” when external rates are significantly higher.

Bottom line. The Ally No Penalty CD is unique in that you are always able to move out to a higher rate, but you’ll never get a lower one. This means you can even break the No Penalty CD simply to get another No Penalty CD if/when the rate rises again.