Ally Bank 11-Month No Penalty CD Review: 2.20% 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 as of 11/15/18. 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 11/15/18):

  • 2.20% APY at $25,000 minimum opening deposit
  • 2.05% 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 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.

For comparison, the Ally Online Savings account is currently at 2.00% APY for all balances. The interest rate on the savings account can go up or down, although in this current rising rate environment that seems unlikely. The Ally 12-month CD is at 2.65% APY, which is fixed but if you withdraw early there is a penalty of 60 days of interest.

In addition, Marcus Bank has a 13-month No Penalty CD at 2.15% APY with a $500 minimum deposit. CIT Bank has a 11-Month No Penalty CD at 2.05% APY with a $1,000 minimum deposit. If you have lower balances, one of these may be a better fit.

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.

Ally is my primary “hub” bank, despite not being at the tippy-top of all rates. I like Ally because their rates are generally competitive across both savings and CD products and they offer an easy-to-use website, Live Chat customer service, easy bank account linking, and 1-day bank transfers in many cases. I then proceed to 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.

Garden Savings Federal Credit Union: 4-Year CD at 4.08% APY

“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: “Due to the tremendous success of our certificate promotion, we have concluded the special rates that were being offered as of the end of business on Friday, November 9th.” Reader Ryan adds that as long as you started the application process before the end of business on Friday, they will let you complete the process but you must fund by the next Friday.)

Garden Savings Federal Credit Union has a limited-time certificate special on their 4-Year Share Certificate at 4.08% APY. They also have a 2-Year certficiate at 3.04% APY. NCUA-insured. Here are the highlights:

  • $500 minimum deposit.
  • Interest paid monthly.
  • Penalty for early withdrawal is 180 days of dividends.
  • Membership with at least $5 deposited in a Share Savings account required.

According to a myFICO forum post from 2016, the membership application is a soft credit pull. This is not a guarantee, of course. Please share your own experience if you apply.

If you have the big bucks, Garden Savings FCU has the usual NCUA-insurance up to $250,000, but also another $250,000 in additional deposit insurance through Excess Share Insurance.

Credit union membership eligibility. You are eligible for membership if you live, work, worship, attend school, volunteer or regularly conduct business in Newark, Elizabeth, or Jersey City. Select employer groups are also eligible. In addition, anyone can join by being a member of the American Consumer Council (ACC), a non-profit organization dedicated to consumer education, advocacy and financial literacy. The cost is a one-time $8, although there is a promo code “consumer” that has worked to get the membership fee waived. You can make additional donations as you wish, but it is not required. They will send you an e-mail shortly with your ACC membership number. I’ve joined a couple of credit unions with my ACC membership.

Good deal? 4.08% APY is the best rate that I know of for a 4-year CD, with the current competitive range for a 4-year CD being around 3% to 3.35% APY. The closest deal from my Best Cash Rates November 2018 post was a 5-year CD at 3.63% APY that required a $60,000 deposit. A 5-year Treasury bond currently yields about 3.05% and is exempt from state and local income taxes. The 180-day early withdrawal penalty is on the reasonable side.

I think the deal is good enough that it won’t last very long. This credit union is not tiny, but it isn’t huge either. It is quite possible that there will be enough new applications to overwhelm their staff (and deposit needs). If you’re interested, I would act quickly as these deals can end abruptly. I’d be ready to send in additional paperwork (like a copy of your driver’s license) if requested to expedite things.

Best Interest Rates on Cash – November 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 November 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 11/5/18.

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.

  • MemoryBank and Redneck Bank offer 2.25% APY with no minimum balance (Redneck has $50k maximum balance). Northpointe Bank offers 2.30% APY with a higher $25,000+ minimum, guaranteed for 12 months. If you have existing accounts at CIT Bank, you may wish to move some money over to their new Savings Builder account at 2.15% APY. There was a bank (EBSB Direct) that offered 2.50% APY for a bit last month, but has since pulled the account information completely from their website. I hope they keep the rate high for existing accountholders. There are several other established high-yield savings accounts at 1.80% APY and up.
  • My primary “hub” bank account is the Ally Bank Savings + Checking combo due to their history of competitive rates, 1-day external bank transfers, and overall ease of use. The free overdraft transfers from savings allows to me to keep my checking balance at a minimum. Ally Savings is currently at 1.90% APY. From here, I open “spoke” accounts and CDs from other banks to lock in higher rates. (Ally Bank also recently had a good promotion that offered a 1% bonus on new deposits held for 3 months, but enrollment is now closed.)

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.

  • 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. The Marcus 13-month No Penalty CD is at 2.15% APY with a $500 minimum deposit. 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 ($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.
  • VirtualBank has a 1-year CD at 2.75% APY ($10,000 minimum) with an early withdrawal penalty of 1% of principal.

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 2.21% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.10%. 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 2.58% SEC Yield ($3,000 min) and 2.68% 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 2.55% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.64% 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 buy individual Treasury Bills at certain brokerage accounts with a bond desk like Vanguard and Fidelity, or individuals can buy them directly at TreasuryDirect.gov. Here is my post on building your own T-Bill ladder. Here are the current Treasury Bill rates. As of 11/2/18, a 4-week T-Bill had the equivalent of 2.18% 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 2.05% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.97% 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 2018 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.

  • 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 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). 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.
  • 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 3.05% 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 11/2/18, the 20-year Treasury Bond rate is now 3.37%, so this EE bond is no longer offering a huge premium.

All rates were checked as of 11/5/18.

Savings I Bonds November 2018 Interest Rate: 2.32% Inflation Rate, 0.50% Fixed Rate

“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.”

sb_poster

Update 11/1/18. The fixed rate will be 0.50% for I bonds issued from November 1, 2018 through April 30, 2019. The variable inflation-indexed rate for this 6-month period will be 2.32% (as was predicted). The total rate on any specific bond is the sum of the fixed and variable rates, changing every 6 months. If you buy a new bond in November 2018, you’ll get 2.82% for the first 6 months. See you again in mid-April 2019 for the next early prediction.

Original post 10/14/18:

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

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2018 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a October 2018 savings bond purchase will yield over the next 12 months, instead of just 6 months.

New inflation rate prediction. March 2018 CPI-U was 249.554. September 2018 CPI-U was 252.439, for a semi-annual increase of 1.16%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 2.32%. You add the fixed and variable rates to get the total interest rate. If you have an older savings bond, your fixed rate may be very different than one from recent years.

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

Buying in October 2018. If you buy before the end of October, the fixed rate portion of I-Bonds will be 0.30%. You will be guaranteed a total interest rate of 2.52% for the next 6 months (0.30 + 2.22). For the 6 months after that, the total rate will be 0.30 + 2.32 = 2.62%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on October 31st, 2018 and sell on October 1, 2019, you’ll earn a ~2.09% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you held for three months longer, you’d be looking at a ~2.20% annualized return for a 14-month holding period (assuming my math is correct). Compare with the best interest rates as of October 2018.

Buying in November 2018. If you buy in November 2018, you will get 2.32% a newly-set fixed rate for the first 6 months. The new fixed rate is unknown, but is loosely linked to the real yield of short-term TIPS, which has been rising a bit. The current real yield of 5-year TIPS now about ~1.00%. My best guess is that it will be 0.50% or 0.60%. Every six months, your rate will adjust to your fixed rate (set at purchase) a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (set at purchase) + variable rate (minimum floor of 0%).

Buy now or wait? In the short-term, these I bond rates will not beat a top 12-month CD rate if bought in October, and probably won’t if bought in November unless inflation skyrockets. Thus, I probably wouldn’t buy in October. I haven’t bought any savings bonds yet this year, and will wait until November to see what the new fixed rate will be. If it greatly lags the real yield on short-term TIPS, then I will probably just buy TIPS instead. However, if it is close, I will probably buy some savings bonds as a long-term investment given the unique benefits below.

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

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

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

For more background, see the rest of my posts on savings bonds.

[Image: 1946 Savings Bond poster from US Treasury – source]

Chase Bank Bonus: $600 Total Checking + Savings, 60,000 Point Upgrade to Sapphire Banking

“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.”

Chase Bank has updated banking promotions for new customers without a Chase Bank account (closed more than 90 days ago and haven’t gotten a bonus in the last 2 years). The first bonus is for their Total Checking and Savings accounts, and if you satisfy that and have a Sapphire credit card, you can upgrade to the Sapphire Banking with higher requirements.

  • Up to $600 for opening a new Total Checking + Savings account. You must move over a direct deposit on the new checking account ($300 bonus), and/or deposit and maintain $15,000 in the savings account for 90 days ($200). Do both, and get another $100, for $600 total. The easiest way to avoid monthly fee is to keep $1,500 in Total Checking and $300 in Savings.
  • 60,000 Ultimate Rewards points for upgrading to a Chase Sapphire bank account. Got a Chase bank account and a Sapphire credit card? They want your business, so take a look at their upgrade offer to Sapphire Banking. You must move over $75,000 in assets (bank deposits or securities) to Chase Bank or Chase You Invest brokerage. You can simply move over some existing stocks, ETFs, or mutual funds via ACAT transfer and your tax cost basis should transfer. Alternatively, you could buy US Treasury bills in the brokerage account as an alternative to Chase Bank’s sad interest rates. You need to also have the Chase Sapphire Preferred or Chase Sapphire Reserve credit card.

Together, this could be up to $1,500 total value. If you have the Chase Sapphire Reserve card, the 60,000 points are worth $900 towards travel (or 60,000 airline miles). $900 airfare/hotel/car rental value + $600 cash = $1,500. If you have the Chase Sapphire Preferred card, the 60,000 points are worth $750 towards travel (or 60,000 airline miles).

Here are previous posts on the Chase Total Checking bonus and Chase Sapphire Banking bonus with more details.

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

“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.”

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% 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 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.

EBSB Direct High Yield Savings Account 2.50% APY ($5,000 minimum)

“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: Looks like this one got pulled early as well. As of 11/4/18, I only see the Money Market 3 at 1.80% APY.

EBSB Direct has a new High Yield Statement Savings Account that pays 2.50% APY on balances between $5,000 and $1 million. No interest is paid if your balance is below $5,000.

$50 minimum to open. If you are an existing EBSB Direct customer, to open this account you must deposit new money from another financial institution. Interest is compounded monthly and credited monthly. There is a $25 fee if you close the account within 180 days of opening.

EBSBDirect.com appears to be the nationally-available, online division of East Boston Savings Bank. However, be careful not to apply at the main bank website EBSB.com unless you are a resident of MA, RI, or NH as they will reject your application. I guess the checking accounts and branches are only for locals.

This account is notable as it is the first nationally-available savings account to reach 2.50% APY. Unfortunately, there is no rate guarantee period. I’m hesitant to open yet another bank account without a rate guarantee or a locked-in CD, but hopefully the other banks will catch up soon. 2.25% APY was the previous top savings rate as of the beginning of October. 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.

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

“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.”

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.

Citibank $500 Checking Account Bonus 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.”

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.

Chase Sapphire Banking: 60,000 Bonus Points For New Customers

“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 October 2018. Here is the 60,000 point application link. Open by 1/11/19. Within 45 calendar days, transfer a total of $75,000 or more in qualifying new money or securities to a combination of eligible checking, savings and/or investment accounts, and maintain that balance for at least 90 days. Within 45 business days of doing that, they will give you the 60,000 bonus points to your Chase Sapphire card with Ultimate Rewards.

Original post:

Chase Bank has a new premium checking account tier called Sapphire Banking. To qualify, you will need to maintain at least $75,000 in deposits or investments in qualifying Chase accounts. Otherwise, a $25 monthly fee applies. Sapphire Banking perks include:

  • No ATM fees, including rebates on fees charged by non-Chase ATMs.
  • No fees for foreign exchange (ATM/debit), outgoing wire transfers, or stop payments.
  • No fees on the first four overdrafts within 12 months.
  • Free online stock and ETF trades with You Invest by JP Morgan.
  • Access to Sapphire lounges at concerts, sports and special events, early ticket sales and premium seats
  • $0 monthly service fee on a linked Chase Total Business Checking account.

Everyone wants assets under management now, even the banks. Since investments count towards the $75,000 requirement, if you have that much in ETFs, mutual funds, or stocks at another broker, you could perform an in-kind ACAT transfer over to Chase You Invest. This would let you avoid parking $75,000 at Chase earning nearly zero interest. (2% interest on $75k is $1,500 per year.) I’ve previously moved over some Vanguard funds to Bank of America / Merrill Edge in order get their asset-based perks. Alternatively, you could move over some cash and then invest in US Treasury bills via their brokerage and earn some competitive interest on safe cash equivalents.

Here’s the fine print:

There is a $25 Monthly Service Fee for Chase SapphireSM Checking OR $0 when you have an average beginning day balance of $75,000 or more in any combination of this account and linked qualifying deposits/investments. Qualifying personal deposits include this checking account and up to nine personal Chase checking accounts (excluding Chase Private Client CheckingSM ), personal Chase savings accounts (excluding Chase Private Client SavingsSM), Chase Liquid® Cards, CDs, certain Chase Retirement CDs, or certain Chase Retirement Money Market Accounts (balances in Chase Money Purchase Pension and Profit Sharing Plans do not qualify). Qualifying personal investments include prior end of month balances for investment and annuity products offered by JPMorgan Chase & Co. or its affiliates and agencies. Balances in certain retirement plan investment accounts, such as Money Purchase Pension and Profit Sharing Plans, do not qualify. Investment products and related services are only available in English.

New account bonus. According to this press release, “Sapphire cardholders will be able to earn 60,000 Ultimate Rewards points when they bring in $75,000 in new qualifying deposits and investments and open or upgrade to a Sapphire Banking account”. The exact date is to be announce “shortly”, but it will be sometime in October. This language suggests you’ll need to also have either the Chase Sapphire Preferred or Chase Sapphire Reserve credit cards. Offer is available online and in-branch.

Now, 60,000 Ultimate Rewards points can be redeemed for $600 cash. With the Sapphire Preferred card, 60,000 UR points can be redeem for $750 in travel booked through Chase’s Ultimate Rewards portal (think Expedia). With the Sapphire Reserve card, 60,000 UR points can be redeem for $900 in travel booked through Chase’s Ultimate Rewards portal (think Expedia). You could also transfer those points to airline miles. That’s a pretty good bonus, although I wonder if Chase will issue a 1099-INT and with what value amount.

Cost-benefit analysis. I don’t know of Chase savings accounts with high interest rates. That means if you’re bringing over cash, again you might be giving up bank interest of 2% or higher. $75,000 would earn $125 interest per month at 2% APR. If they require you to keep it there for 90 days and it’s in an account that doesn’t earn any interest, that’s $375 in foregone interest already. Then you have to wait up to another 45 days to get the bonus, during which you’ll need to keep the account open. If you take out all your money, you’ll still need to pay the $25 monthly fee, which means another $50 to keep it open two more months. I don’t like having to give up hundreds of dollars upfront in the hopes of an eventual bonus. I would consider moving over some index funds instead, especially if they agree to rebate the account transfer fee ($25 to $75), as many other brokers do. I’ll wait until all the details come out.

Bottom line. Chase Bank has a new premium checking account tier called Sapphire Banking, targeted at the “mass affluent”. There is a new account bonus of 60,000 Ultimate Rewards points for existing Sapphire credit cardholders if you move over $75,000 in cash and/or investment assets, but the full details have not yet been confirmed.

How To Enable Auto Sweep on Paypal Accounts (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.”

If you use PayPal to accept credit cards for your small business (eBay, Etsy, e-store, freelance, etc), you may not want to keep your money sitting at PayPal (especially if you are earning higher interest in your bank account). There is a feature called Auto Sweep that checks daily and automatically “sweeps” any money that arrives in your PayPal account into your bank account overnight.

The Auto Sweep feature used to be easily found in their settings. Then they moved it into a dim corner of their website that was harder to find. Last week, I couldn’t find it at all. After digging through several outdated articles, it turns out that as of 2018 you can’t access the feature at all unless you call in and ask for it explicitly. Not exactly customer-friendly behavior, but PayPal makes money off your idle balances… (The PayPal Money Market fund that offered higher interest shut down in July 2011.)

Here’s how to enable Auto Sweep on your PayPal account as of 2018. This is another post for the benefit for others searching online. First, make sure you meet these requirements:

  • You must have a Business PayPal account in good standing.
  • You must have a bank account linked to your PayPal account.
  • You must have lifted your withdrawal limit and verified your PayPal Account.

Next, you must call PayPal directly via phone.

  • Once logged into your PayPal account click Contact at the bottom of the page.
  • Choose the Call Us option and call the number listed for your account. Use the unique code to quickly identify yourself to them.
  • When you reach a human, explicitly ask for “Auto Sweep” to be enabled on your account.

After that, they will flip a switch on their end, and you should finally be able to see the option enabled on your online account. Log back into your PayPal account and follow these instructions:

  • Click Profile beside “Log Out” and select Profile and settings.
  • Click My money.
  • Click Set near “Automatic transfers.”
  • Click Edit.
  • Click Yes, select the bank you want your money transferred to, and click Save.

Here’s what you should see after Auto Sweep has successfully been turned on:

There you go. Note that if you ever manually request a cash transfer from a bank account to your PayPal balance, that this would automatically turn off Auto Sweep. I guess the money running around in circles causes a tear in the time-space continuum or something. (You can go back an turn Auto Sweep back on manually.)

If you activate this feature, it may also change your how you use the PayPal Business Debit card, as there will no longer be any cash balance in your account to draw from. For non-PIN signature purchases, these will still work if you first link a bank account as a backup source, and then the debit card charges will pull from your designated backup source. You can also link up certain PayPal credit cards (source), but not just any credit card as backup. For ATM withdrawals, you will not be able to make ATM withdrawals with a zero PayPal balance (source).

I wouldn’t really recommend using the debit card anyway, there are much better small business card options with no annual fee.