Archives for 2018

Fundrise Starter Portfolio eREIT vs. Vanguard REIT ETF Review – Updated 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.”

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Updated December 2018. This post tracks my experiment comparing a Fundrise eREIT portfolio and the Vanguard REIT ETF. In Fundrise, we have a start-up that bought a concentrated basket of roughly 20 properties chosen from the private market. In Vanguard, we have a one of the largest real estate ETFs in the world that owns a passive slice of 184 public-traded REITs. I invested $1,000 into both in October 2017 and plan to let them run for 5 years.

Fundrise Starter Portfolio background. Despite the name, the Fundrise Starter Portfolio is actually a simple 50/50 mix of their two longest-running eREITs: the Fundrise Income eREIT and the Fundrise Growth eREIT. This private eREIT works within recent crowdfunding legislation that allows all investors to own a basket of individual real estate properties (not just accredited investors with high net worth). The minimum deposit is $500. You must buy shares directly from Fundrise, and there are liquidity restrictions as this is meant to be a long-term investment. Here’s a recent map of locations for the holdings. Most are apartment complexes, condominiums, and hotels.

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Vanguard REIT ETF background. The Vanguard REIT ETF (VNQ) is one of the largest index funds to invest in publicly-traded real estate investment trusts (REITs). You can purchase it via any brokerage account. You have the liquidity of being to sell on any day the stock market is open. A single share currently costs about $76, not including an trade commission. You are holding a tiny slice of (tens of?) thousands of office buildings, hotels, nursing homes, shopping centers, apartment complexes, and so on. Here are the recent top 10 holdings:

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Expenses. The Fundrise Starter Portfolio has an 0.85% annual asset management fee and a 0.15% annual investment advisory fee (waived during 2017). The Vanguard REIT ETF has an expense ratio of 0.12%, with each public REIT having their own internal costs to manage their properties. Due to scale, I would expect the net effect of fees to be significantly higher for the Fundrise assets than for the Vanguard ETF. We will see if Fundrise can provide higher net returns for this concentrated holding.

Five-year time horizon. Both Fundrise and VNQ usually announce dividend distributions on a quarterly basis. Vanguard updates the NAV daily, but Fundrise only updates their NAV quarterly. Fundrise NAVs are only estimates as there is no daily market value available (similar to your house). Therefore, I plan on holding onto this investment for 5 years at the minimum. This will allow the investments to “play out” and also avoid any early redemption fees. I will withhold final judgement until both investments are cashed out, but will provide quarterly updates.

Fundrise Portfolio performance updates. Screenshot of my most recent statement:

  • 10/20/17: $1,000 initial investment – 50 shares @ $10.00/share Income eREIT and 48.78 shares @ $10.25/share Growth eREIT.
  • 1/9/18: 2017 Q4 dividends of $17.98 received and reinvested.
  • 4/11/18: 2018 Q1 dividends of $16.13 received and reinvested.
  • 7/11/18: 2018 Q2 dividends of $17.60 received and reinvested.
  • 10/10/18: 2018 Q3 dividends of $19.10 received and reinvested.
  • 11/30/18: Total Fundrise value $1,112.85 (includes reinvested dividends).

Vanguard REIT ETF performance updates. I own VNQ and the mutual fund equivalent VGSLX (same underlying holdings) in my retirement portfolio, but will be using Morningstar tools to track the performance of a $1,000 investment bought on the same date of 10/20/17.

  • 10/20/17: $1,000 initial investment – 11.9545 shares at $83.65/share.
  • 12/27/17, VNQ distributed a gain of $0.012 per share, return of capital of $0.37 per share, and a dividend of $0.88 per share.
  • 3/26/18: VNQ dividend of $0.71 per share.
  • 6/18/18: VNQ dividend of $0.73 per share.
  • 9/24/18: VNQ dividend of $1.14 per share.
  • 11/30/18: Total VNQ value $1,023.15 (includes reinvested dividends).

Here is the historical chart with monthly data points. Again, I wouldn’t put too much stock into the short-term movements as the accuracy of the Fundrise NAV is inherently limited, but this is the best information that I have available.

Every month or so, Fundrise sends me an e-mail with an update on a new property that they have acquired, or a property where they have exited. Both Fundrise and the ETF are completely passive holdings.

Bottom line. I’m doing a buy-and-hold-and-watch experiment where I compare investing in real estate via Fundrise direct investment and the largest REIT index ETF from Vanguard. I’ll provide occasional updates, but more important is what happens over 5+ years.

You can learn more about all Fundrise eREIT options here. This is the second time I have invested with Fundrise. Last time I decided to test out a withdrawal in my Fundrise Liquidity and Redemption review.

Hanscom Federal CU Thrive Review: 5.00% APY High Interest Starter Account

“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.”

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(Note: As of 12/10/18, HFCU also has a 19-month special certificate at 3.00% APY.)

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

This product is not meant for big balances. Instead, it is meant to encourage a modest savings habit. 5.00% APY is more than double what the top high-yield savings accounts offer right now.

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

At the end of the 12 months, all accrued savings earned dividends will be transferred into your primary savings account. Each member can only have one CU Thrive account open at one time, but after one 12-month period ends you can open up another one (assuming it is still offered). Full disclosure (PDF).

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

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

Account opening process. I started the online application and said I would join the Nashua River Watershed Association for a one-time $35 fee (the AFA option was not available at the time). I had to provide the usual personal information and then answer questions based on my credit report to verify my identity. Based on my free credit monitoring, they did not perform a hard pull on my credit report. You can fund with an online bank transfer but they also gave me the option to fund with credit card up to $2,000. They didn’t mention if this would be considered a cash advance or not, but it showed up as a purchase for me. Finally, you must print out, sign, and mail in a signature card. You can also open an account in-person. All of their physical branches appear to be located in Massachusetts.

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

I also discovered that Hanscom Federal has paid a Loyalty Dividend to its Credit Union members for over 15 consecutive years. In 2017, they paid a 2% bonus on dividends earned and consumer finance charges paid over the year. So on top my my $78.46 of interest earned, I earned another $1.57 in bonus loyalty dividends.

In addition to the CU Thrive and free checking options, HFCU also has a Kasasa Cash Checking account that offers up to 2.50% APY on balances up to $15,000 if you make at least 12 debit card or credit card purchases per month, complete at least 1 ACH Credit/Direct deposit per month, and enroll in online statements.

Bottom line. The CU Thrive account is a good option for people looking to build up a savings habit, with 5.00% APY for 12 months, $30 sign-up bonus, and easy membership eligibility. However, the system really works best if you use HFCU’s free checking as your primary checking account. Juggling it as an external savings account is perfectly possible, but you have to keep on top of your transfers to avoid idle cash earning zero interest. I received all of the interest promised, the customer service was nice and polite when ed, and any errors were my own.

Navy Federal CU Year End Specials: $100 IRA Bonus + 3.75% APY 40-Month IRA Certificate

“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.”

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Updated 2018. Navy Federal Credit Union (membership now limited primarily to those with military affiliation) announced their year-end specials.

  • 40-month IRA Certificate at 3.75% APY with add-ons. Open with $50 minimum. Make additional deposits anytime during those 40 months (up to $150,000 max).
  • $100 Bonus for first-time IRAs at NavyFed. Offer only available to members who open their first IRA (at NavyFed) and deposit a minimum of $100 in the new IRA account no later than 45 days after account opening.

Thanks to reader CA for the heads up. In case you were curious, the December 2017 specials were a 15-month at 2.25% APY and a 32-month at 2.75% APY. The December 2016 specials were a 17-month at 2.00% APY and a $150 bonus for new IRAs.

The “add-on” feature is useful for IRAs as it lets you deposit additional funds at any time and get the same rate. Since this is combined with a very low minimum of $50, there is very little risk. Open now while you can with $50. If the rate is good later on when you have more funds available (perhaps another CD matures or a new year allows more contributions), then add more money. Otherwise, just leave it alone and invest your money elsewhere.

Membership. The membership eligibility for NavyFed includes Active Duty members of the Army, Marine Corps, Navy, Air Force, and Coast Guard, members of the Army and Air National Guard, Delayed Entry Program (DEP), DoD Officer Candidate/ROTC, DoD Reservists, and Veterans, retirees and annuitants. There was previously a quiet way for the general public to join, but that window has since been closed. The good news is that NavyFed now accepts all military veterans.

Navy Federal Credit Union has solid bank and loan products, including checking accounts with ATM rebates, competitive mortgage rates, and limited-time 0% balance transfer promotions. Readers have commented on their excellent customer service and the fact that they often keep and service the mortgages and other loans they originate.

Health Care Flexible Spending Accounts: Last-Minute FSA Eligible Ideas

“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 annual reminder to get back all the money you put into your Healthcare Flexible Spending Accounts (HC FSA) before the end of the year. The maximum salary deduction limits were $2,650 (2018) and $2,700 (2019).

Quick ideas. If you didn’t exhaust your funds with insurance copays or deductibles, here are eligible items that you can still buy over-the-counter without a prescription. Just order things online and then submit the receipt. Amazon even has a special FSA-eligible page with an “under $25” and “little-known eligible item” section.

Certain over-the-counter (OTC) items such as cough medicines, pain relievers, acid controllers, and diaper rash ointment require a prescription for reimbursement. (No, I don’t understand why sunscreen and lens solution don’t require a prescription but cough medicine and ibuprofen does. Why would I buy it if I didn’t need it? Shrug.)

When getting a receipt, make sure it clearly includes the following:

  • Date of service or purchase
  • Name or description of the item
  • Amount of purchase

Deadline extensions. Starting in 2013, employers have had the option of adding one of the following:

  • Some plans allow a grace period until March 15th of the following year as opposed to a December 31st deadline to use your 2017 funds, but it may only apply to claims and not late purchases. Check with your employer.
  • Some plans allow participants to carry over up to $500 in unused FSA funds into next year. Check with your employer.

Big, exhaustive lists.

Finally, only your FSA administrator can provide you with the exact guidelines for reimbursement according to your plan. I learned this the hard way when our FSA administrator switched one year from in-house to Conexis (now since acquired by WageWorks). Wow, Conexis was a pain. I had to submit some claims three times before finally getting approved. If you count the time wasted, I probably lost money by participating in the FSA at all. The other employees in the company must have also complained so much that the very next year, FSA reimbursement was again managed in-house.

If you have an HSA, look for a “limited-purpose FSA” option that is restricted to dental and vision care services. These have the same max annual salary deduction.

Top 10 Best Small Business Credit Card Bonus Offers – 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.”

Do you have small business income or work as an independent contractor? Uber/Lyft, Amazon, eBay, Etsy, Airbnb? You are eligible to open a small business credit card, which keeps your personal and business expenses separate. If you are not a corporation or LLC, you can apply as a sole proprietorship, with your name as the business name and your Social Security number as the Tax ID number. I did this for years successfully before incorporating my business.

Small business credit cards are offering strong perks and $500+ value for a single card during the first year to try out a new card. Below are the top 10 credit card offers that I would apply for (or have applied for already) as of December 2018. Recent changes:

  • Updated Alaska Air card offer.
  • Updated Capital One Spark for Business – New limited-time bonus up to $2,000 bonus cash back or 200,000 bonus miles.
  • Updated Hawaiian Airlines Business card – Bonus increased to 60,000 miles.
  • Removed American Express Business Gold card 50k offer.

This is a companion post to my Top 10 Best Credit Card Bonus Offers for personal cards. Notice that small business bonuses are on average even higher than those on consumer cards.

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 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 Ink Business Preferred Card

  • 80,000 Ultimate Rewards points (worth $1,000 towards travel!) after $5,000 in purchases in the first 3 months. See link for details.
  • 3X points on the first $150,000 spent on travel, shipping purchases, internet/cable/phone services, and advertising purchases with social media sites and search engines.
  • Primary rental car coverage when renting for business purposes.
  • $95 annual fee.
  • Subject to 5/24 rule.

Chase Ink Business Unlimited Card

  • $500 bonus cash back after $3,000 on purchases in the first 3 months. See link for details.
  • Flat 1.5% cash back on all purchases with no limit.
  • No annual fee.
  • Subject to 5/24 rule.

Chase Ink Business Cash Card

  • $500 bonus cash back after $3,000 on purchases in the first 3 months. See link for details.
  • 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year.
  • No annual fee.
  • Subject to 5/24 rule.

Capital One Spark Cash for Business Card

  • Up to $2,000 cash bonus. Earn a $500 cash bonus when you spend $5,000 on purchases within the first 3 months. In addition, you can earn an additional $1,500 cash bonus if you spend $50,000 in the first 6 months. See link for details.
  • Flat 2% cash back on all purchases with no limit.
  • $0 annual fee for the first year, then $95.

Capital One Spark Miles for Business Card

  • Up to 200,000 bonus miles. Earn 50,000 bonus miles when you spend $5,000 on purchases within the first 3 months. In addition, you can earn an additional 150,000 bonus miles if you spend $50,000 in the first 6 months. 200,000 miles is redeemable for $2,000 towards travel. See link for details.
  • Flat 2X miles per dollar on all purchases with no limit.
  • $0 annual fee for the first year, then $95.

Southwest Rapid Rewards Premier Business Card

  • 60,000 Rapid Rewards points (redeemable for $900+ in Wanna Getaway airfare) after $3,000 in purchases in the first 3 months. See link for details.
  • $99 annual fee.
  • Combine with the Southwest Rapid Rewards Premier Consumer Card to earn the Southwest Companion Pass.
  • Subject to 5/24 rule.

American Express Plum Card

  • $600 cash back. Earn a $200 statement credit after each $10,000 you spend in purchases, up to $30,000, within the first 3 months. See link for details.
  • 1.5% early pay discount on all purchases which stacks on top of the bonus above.
  • $0 annual fee for the first year, then $250.

Starwood Preferred Guest Business Card

  • 75,000 bonus points after $3,000 in purchases in the first 3 months. See link for details.
  • Points can be used towards Starwood and Marriott hotel stays, or converted to select airlines miles.
  • $0 annual fee for the first year, then $95. Receive free night award (up to 35,000 points) upon card anniversary.

CitiBusiness® / AAdvantage® Platinum Select® World Mastercard

  • 70,000 American Airlines miles after $4,000 in purchases in the first 4 months. See link for details.
  • First checked bag free on domestic flights perk ($60 value per roundtrip, per person).
  • $0 annual fee for the first year, then $99.

Hawaiian Airlines Business Mastercard (Barclaycard)

  • 60,000 Hawaiian miles after $1,000 in purchases with the first 90 days. See link for details.
  • One-time 50% off companion discount for roundtrip coach travel between Hawaii and the Mainland on Hawaiian Airlines.
  • $99 annual fee.

Alaska Airlines Visa Business Card (Bank of America)

  • 30,000 Alaska miles + BOGO Companion Fare Voucher after $1,000 in purchase within 90 days. See link for details.
  • Companion fare voucher is “Buy one ticket, get one for just taxes and fees” ($0 fare taxes and fees from just $22).
  • Free checked bag on Alaska flights for you and up to six other passengers on the same reservation.
  • $50 annual fee for company, $25 per card.

Amazon Coupon Code: $5 off $20+ of Print Books

“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.”

Amazon has a $5 off $20+ of print book purchases with promo code GIFTBOOK18. Can be one book or multiple. Offer expires at 11:59pm Pacific on December 21, 2018. Must be sold by Amazon.com. Here are some newer books that are on my to-read list. I’m on somewhat of a memoir kick.

Here are my standard suggestions for those looking to gift a financially-related book:

Big List of Kids Ski Free Passport Programs (3rd-6th Grade)

“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.”

A friend of ours told us about the Colorado Ski Passport that lets 5th and graders from any state ski for free at several Colorado resorts, and I thought that was a great concept to promote this fun outdoor activity. If you can get even a single free lift ticket (and possibly even a free lesson with rentals), that can be a big savings these days. This led me to more digging and I found that several other states have similar programs.

I tried to find all of the state-wide programs and listed them below. I am excluding single-resort promotions, but many resorts do have family or kid specials where you get discounts if you stay for a certain number of hotel nights, etc.

Canada

Colorado

Idaho

Maine

  • Winterkids App (Annual membership is $35 for a family of 5 and includes “generous discounts” to kids 18 and under” in Maine and New Hampshire)

Michigan

Minnesota

New Hampshire

New York

Pennsylvania

Utah

Vermont

Washington

Some programs do have capacity limitations and/or strict deadlines. If you know of any that I have missed, please let me know in the comments.

Expedia Activities: $30 off $40+ Coupon Code

“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.”

Update: This offer has expired.

Expedia has a new coupon code THANKYOU which will get you $30 off $40+ in experiences booked through Expedia Activities. Officially it expires 12/31/18, but it will probably end early, and your activity has to occur by 12/31/18 anyway.

“Buy experiences, not things!” Well, you can book a lot of experiences on travel portals these days. Disney and Universal are excluded, but there are a lot of options in nearly every city. Here are some examples:

  • Zoo tickets
  • Escape Rooms
  • Legoland
  • Six Flags
  • Seaworld
  • Hop on Hop off Bus Tours
  • Fishing, Boat, Segway, or Helicopter Tours
  • Dinner Shows

How to use your coupon code:

During the booking process, on the payment page you will see the link ”Enter coupon code” where you can enter the coupon code.
Enter the coupon code in the relevant field and then click the “Apply Coupon” button. If your booking is eligible, the applicable discount will be subtracted from the price of the travel reservation before the application of any taxes, applicable fees or additional costs.

Giving Flowchart: How To Donate Wisely

“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.”

If you are looking for some direction about donating your time and/or money, here is a nice infographic from the Bloomberg article These 27 Strategies Will Make Philanthropy an Effective Pursuit (click to enlarge):

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It’s from last year, but everything still looks applicable. Also available as PDF.

Dependent Care FSA: Save on Daycare, Preschool, Summer Camps, After-School, and Elder Care

“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.”

One of the newer work perks that we took advantage of this year was the Dependent Care Flexible Spending Account (DCFSA). This is separate from the Health Care Flexible Spending Account (HCFSA) and the Health Savings Account (HSA). However, they do work in a similar way in that you can pay for eligible expenses with pre-tax money and thus save money by being exempt from income taxes on that amount. For example, we were able to pay for $5,000 in preschool expenses using your DCFSA in 2018. At a a 30% marginal total tax rate (see below), that was a $1,500 savings.

Eligible expenses for children (under age 13)
The overall idea is to cover childcare while you are working:

  • Nannies, Au pairs, and babysitters
  • Daycare and Nurseries
  • Preschool
  • Before and After School Care Programs. (Non employer-sponsored.)
  • Summer Day Camps

Eligible expenses for adults
The overall idea is to cover care for an adult dependent (spouse, relative) who is physically or mentally incapable of caring for themselves and lives in your home for more than half the year:

  • Adult or Senior day care center
  • In-home custodial caregiver (Non-medical, like eating and bathing assistance)
  • Transportation to/from eligible care (by your care provider)

You should keep detailed supporting documentation and itemized receipts for your HR department and potentially the IRS.

Maximum contribution amounts
The annual contribution limits for 2018 and 2019 are below. (They are not adjusted automatically for inflation.) Note that you can’t exceed your earned income.

  • $5,000 per year if you are married and file a joint tax return or if you file as single or head of household. (If MFJ, one person can get $5,000 when the other does not participate at all.)
  • $2,500 per year if you are married and file a separate tax return. (If MFS, both of you can get $2,500 individually.)

Similar to the Healthcare FSA, these funds must be claimed during the year deducted ( any grace period) or you will lose the funds. “Use it or lose it”.

Total tax benefit
When you are able to pay with pre-tax money, you are avoiding taxes on:

  • Federal income tax
  • State income tax
  • FICA (Social Security tax)
  • Medicare tax

For 2018, the Social Security tax rate is 6.2% on the first $128,400 wages paid. The Medicare tax rate is 1.45% on the first $200,000 and 2.35% above $200,000. For us in the 22% federal marginal tax rate, that’s a total of 22 + 6.2 + 1.45 = 29.65%. So we’re nearly at a 30% savings even ignoring state income taxes. A 30% total tax savings on $5,000 in childcare expenses is $1,500. This is definitely worth enrolling and submitting a few receipts, even if our claim submission system is a bit slow and clunky.

This is also separate from the Child and Dependent Care Tax Credit. You are not allowed to “double-dip” and claim the same specific expense for both this DCFSA and the tax credit. But if you have enough total expenses, you can get both.

Bottom line. If you pay for childcare or care for a disabled adult dependent, you should check if your employer now offers a Dependent Care Flexible Spending Account (DCFSA). The times to check are when you get a new job, have a new child, change marital status, your spouse loses benefits, or during Open Enrollment. If you pay for full-time care, it is quite likely you can max this out and save some serious money. Just be sure to file those claims on time!

Best Interest Rates on Cash – 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.”

Here’s my monthly roundup of the best interest rates on cash for December 2018, 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 12/3/18.

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.

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 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 locked-in rate with no early withdrawal penalty. That means your interest rate can never go down, but you can still take out your money (once) if you want to use it elsewhere. Ally Bank 11-month No Penalty CD is at 2.25% APY for $25k+ balance, Marcus Bank 13-month No Penalty CD at 2.15% APY with a $500 minimum deposit, and the CIT Bank 11-Month No Penalty CD at 2.05% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Live Oak Bank has a 1-year CD at 2.85% APY ($2,500 minimum) with an early withdrawal penalty of 90 days of interest.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the money for themselves). 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 2.30% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.19%. 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 2.64% SEC Yield ($3,000 min) and 2.74% SEC Yield ($50,000 min). The average duration is ~1 year, so there is a little more interest rate sensitivity.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.66% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.75% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-Bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 11/30/18, a 4-week T-Bill had the equivalent of 2.30% annualized interest and a 52-week T-Bill had the equivalent of 2.69% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.18% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.07% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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

  • “I Bonds” bought between November 2018 and April 2019 will earn a 2.82% 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-April 2019, 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. I don’t use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Signature purchases of $1,500 or more and a minimum balance of $25.00 at the end of the month is needed to qualify for the 6.00%.

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. I don’t use any of these anymore, either.

  • The best one left is Consumers Credit Union, which 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 cash back rewards elsewhere. 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 (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.

  • Mutual One Bank has a 19-month CD at 3.04% APY ($500 min). 6 month early withdrawal penalty.
  • Greenwood Credit Union has a 5-year certificate at 3.75% APY ($1,000 min). Early withdrawal penalty is 6 months interest. United States Senate Federal Credit Union has a 5-year Share Certificate at 3.63% APY ($60k min), 3.57% APY ($20k min), or 3.51% 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 2-year non-callable CD at 3.10% APY and a 5-year non-callable CD at 3.55% 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 3.60% 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. As of 11/30/18, the 20-year Treasury Bond rate was 3.19%, so this EE bond is no longer offering a huge premium.

All rates were checked as of 12/3/18.



Top 10 Best Credit Card Bonus Offers – 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.”

Updated December 2018. That space in your wallet or purse is more valuable than you think. Credit card companies are fighting it out, offering strong perks and $500+ value for a single card during the first year to encourage you to apply and try it out. These are the top 10 credit card offers that I would apply for in November 2018, if I didn’t already them. Recent changes:

  • Barclaycard Arrival Plus – new limited-offer bump to 70,000 miles (worth $700 towards travel).
  • Chase United Explorer – new limited-offer bump to 65,000 United miles.
  • Chase Southwest Rapid Rewards- now to up 60,000 Rapid Rewards points.

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 budget 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, 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.

This is a companion post to my Top 10 Best Business Card Offers. Small business bonuses are on average even higher than those on consumer cards.

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.

Barclaycard Arrival Plus Card

  • 70,000 points (worth $700 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.

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.
  • 2X points on Travel and Dining at restaurants worldwide.
  • $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.

Chase Southwest Rapid Rewards Plus Card

  • Up to 60,000 Southwest points. 40,000 Rapid Rewards points (redeemable for $600+ in Wanna Getaway airfare) after $1,000 in purchases in the first 3 months. Plus, another 20,000 points after you spend $12,000 within your first year. See link for details.
  • $69 annual fee.
  • Combine with the Southwest Rapid Rewards Premier Business Card to earn the Southwest Companion Pass.
  • Subject to 5/24 rule.

Chase United Explorer Card

  • Up to 65,000 United miles. 40,000 bonus United miles after spending $2,000 within the first 3 months. Plus, earn an additional 25,000 bonus miles
    after spending $10,000 total in the first 6 months. See link for details.
  • Free first checked bag for both you and a companion (a savings of up to $120 per roundtrip) when you use your Card to purchase your United ticket.
  • $0 annual fee for the first year, then $95.
  • Subject to 5/24 rule.

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.

Citi Premier Card

  • 50,000 ThankYou points (worth $625 towards travel) after $4,000 in purchases within the first 3 months. See link for details.
  • 3X points on Travel, including Gas Stations
  • $0 annual fee for the first year, then $95.

Citi AAdvantage Platinum Select Card

  • Up to 50,000 American Airlines miles. 40,000 miles after $2,000 in purchases in first 3 months, another 10,000 after making a total of $6,000 in purchases in first 12 months of account opening. See link for details.
  • First checked bag free on domestic flights perk ($60 value per roundtrip, per person).
  • $0 annual fee for the first year, then $99.

Chase World of Hyatt Card

  • Up to 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.
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