Cash Reserves Update: Best Available Interest Rates – March 2013

Posted on March 27, 2013 // 25 Comments

Our family keeps a full year of expenses put aside in cash reserves; it provides us with financial stability with the additional side benefits of lower stress and less concern about stock market gyrations. Emergency funds can actually have a better return on investment than what you see on your bank statement.

I’ve been slacking in terms of updates on this topic. While I still like to maximize my interest, there just hasn’t been many new developments that make me want to jump from one bank from another. However, if you haven’t optimized your cash recently, you may be stuck in a money market fund or megabank saving account paying 0.05% or less. You can definitely still do better than that! Here are what I consider the highlights of the best currently available interest rates.

Certificates of Deposit

If you have a large cushion, it’s quite likely to just sit there for years or more. Therefore, you may wish to put some of it in longer-term investments where you can take the money out in a true emergency and paid an early withdrawal penalty.

  • Everbank’s Yield Pledge Money Market and Interest Checking account both offer 1.10% APY guaranteed for the first 6 months for new accounts. Since it is fixed, this is essentially a 6-month CD with a higher rate than any other 6-month CD rate out there and with no early withdrawal penalty to worry about.
  • Ally Bank Raise Your Rate CDs have a rate bump feature; the 2-year term pays 1.05% APY and the 4-year term pays 1.30% APY (as of 11/1/13). You can change your rate after your account is opened — if their rate on this CD goes up, yours can bump up to match it (one interest rate increase with the 2 year term, two interest rate increases with the 4 year term).They also offer traditional Ally Bank High-Yield CDs with 3-year CDs at 1.20% APY and 5-year CDs at 1.60% APY (as of 11/1/13) currently. Early withdrawal penalty is only 60 days.
  • Discover Bank CDs are currently offering 3-year CDs at 1.25% APY, 5-year CDs at 1.65% APY, 7-year CDs at 1.80% APY, and a 10-year CD at 1.90% APY. Early withdrawal penalty varies from 6 months for the 3-year to 15 months on the 7 and 10-year CD.
  • PenFed Credit Union CDs are currently offering 3-year CDs at 1.60% APY, 5-Year CDs at 1.65% APY, and a 7-Year CD at 1.75% APY. Early withdrawal penalty varies from 6 months for the 3-year CD to 12 months on the 5 and 7-year CD.

Ally Bank’s Flexible Certificates of Deposit

Ally Bank LogoLet’s focus on the Ally Bank certificates of deposit, where you can still access your money as long as you pay a early withdrawal penalty of 60 days interest – significantly less than at other banks. Why is this good?

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Filed Under: Banking, Monthly Updates //

Best Value for Citi ThankYou Points Redemptions

Posted on March 21, 2013 // 21 Comments

If you have a Citi credit card or a Citibank account from our partner Citi, with the ThankYou points rewards system, you have a wide array of options to redeem your points at ThankYou.com. But while that fancy coffeemaker may look nice, chances are the cash equivalent value for your points is quite poor. I’ve covered this in bits and pieces before, but here’s a complete guide to getting the most value out of your points.

Eligible ThankYou accounts (* are the ones I have linked to my account):

Option #1: Limited Time Offers

If you have either patience or luck, Citi does offer “sales” on gift card redemptions which can reduce the cost of a reward by up to 25%. For example, last month you could have gotten a $50 Home Depot gift card for 4,500 points. Normally, you’d need 5,000-6,000 points. That equates 1.11 cents in gift card value per point. Previous ThankYou point sales have involved gift card to other popular retailers like Wal-mart, Lowe’s, Kohl’s, Best Buy, Gap, and Macy’s. The regular price is usually 1 cent in gift card value per point.

Option #2: Student Loan & Mortgage Rebate Checks

You can redeem your points towards a “rebate” check towards either a student loan or mortgage. You can redeem in increments of $25 for 2,500 points, which equates to a full 1 cent cash per point. You must call them and provide them the name of your lending institution, and they will mail you a physical check written out directly to that lending institution (i.e. Chase Student Loans). You are then supposed to add in your account number or whatever else is necessary, and then send it on to your lender. Reader Chris shared that he has a workaround if your lender doesn’t take third-party checks:

I just have the check written out to my bank, Chase, and then write my checking account number in the memo space. I drop it in an ATM and they have always deposited it into my checking account just fine. I’ve been doing this for years with no problem. I would just apply the money myself to my auto-payments and keep my 0.25% rate reduction.

I didn’t want to send in a $100 check towards my mortgage, so I tried this method with my local bank as well and the ATM deposit worked for me without any issues. I did indeed use the money from that check to pay extra towards my mortgage. (Note: You can also make a donation to the Red Cross at the same ratio.)

Option #3: Book Travel and Pay with Points

You can also use your ThankYou points to book any flight and car rental through their Book Travel portal. It’s basically the same flights that are available at Expedia.com, but sometimes at a slight markup. For example, the exact same flight from Los Angeles to Las Vegas cost $101.42 at ThankYou.com and $97.80 at Expedia.
However, another flight on American Airlines from LAX-JFK was exactly the same price on both down to the penny. So while the official redemption rate is a full 1 cent per point, a potential slight markup may ding the conversion rate a bit. However, this is also a good way to use up all your points as you can split the payment exactly between cash and points. For example, a $100 ticket could be paid with 5,000 points + $50 or 1,234 points + $87.66.

Note: If you have the Citi PremierSM Card which does have an annual fee, you have the added option of redeeming your points directly towards travel with the special rate of 1 ThankYou point = 1.25 cents towards travel redeemed on the Citi Travel Center. For example, 10,000 ThankYou points could be redeemed for $125 towards travel. That tilts things in favor of the travel option.

Why Everything Else Is Worse. Here’s a quick rundown of the other redemptions that you might think is a good deal but doesn’t work out when you do the math.

  • Pay with points at Amazon.com: 0.80 cents per point
  • Citi Prepaid Visa card: 0.63-0.67 cents per point
  • Cash reward: 0.5 cents per point
  • Statement credit: 0.5 cents per point

Note: Citi ThankYou Point Tiered System. I should point out that Citi does a confusing thing where they don’t offer the same redemption options to everyone. It is my understanding that they separate credit cards into “standard” and “premium” cards. As long as you have one premium card as a “Sponsor account” linked to your pooled ThankYou point account, then you will get the preferred set of available options even if the rest of your cards are standard and all your points come from them. I don’t have enough data points to figure out the exact breakdown of which card is premium and which is not. For example, I believe the Citi ThankYou Preferred card is premium, but the Citi ThankYou card and Citi Forward cards are standard. But all three have no annual fee?! I’ve never had a problem with this, but if you only have the Citi Forward card you may have come across it.

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

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

Capital One Consumer Bank Savings Account Review

Posted on March 11, 2013 // 20 Comments

Capital One bought ING Direct USA back in early 2012, and has finally completed their transition and re-branding. Their new savings account product is called Capital One Consumer Bank Savings. Since I’ve had an account with them for over a decade (September 2001, as they remind me every time I log in), here’s an updated review of my 2nd oldest bank account meant for both new and existing customers.

User Interface

At first glance, the only thing that really changed was that the primary colors went from orange and blue to Capital One’s red and blue. However, there are a few other tweaks that I noticed were different from the ole’ ING Direct days.

Login. This is still a little unique amongst online savings accounts. You login with either a username/account number and a PIN number (not an alphanumeric pA$sW0rd). If you have an old 4-digit PIN, they’ll ask you to change the PIN to a 6-digit number for better security. In addition, while the default entry method is via mouse clicks to avoid keystroke loggers stealing your password, you can also use a keyboard to enter the PIN with a creative key-to-number conversion that changes each time. See screenshot below:

Main account screen. The home screen is simple and straightforward, as always. There is better integration with their brokerage arm, Sharebuilder, with your balance automatically showing and the ability to perform same-day transfers between accounts. So if you have a Sharebuilder account, you essentially have a high-interest sweep option instead of a money market fund paying zero interest. Screenshot:
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Filed Under: Banking, Reviews //

ING Direct’s New Name: Capital One 360

Posted on November 15, 2012 // 23 Comments

ING Direct announced to customers last week that they would soon change their name to Capital One 360, effective February 2013. Goodbye big orange ball, you were the first no-frills savings account that paid high interest by piggybacking on regular checking accounts (no branches, no ATM access, no checks) and it worked brilliantly, creating an entire new banking niche. But the financial crisis happened, ING Group got a big Euro-bailout, and as part of the restructuring terms they agreed to sell their ING Direct unit for $9 billion dollars.

It was a fun ride, ING Direct. For a while, you paid me nearly 5% APY interest as I borrowed money for free using 0% APR balance transfers. Your website was unapologetically simple, but everything worked as promised. You created handy sub-accounts for savers to stash their money for specific needs. Good times. Of course, I can’t forget that you also had a nervous brainfart and bullied my webhosting company into shutting down my entire website without any warning. In the end, your interest rates also started to fade a little from the top while staying somewhat competitive, and being a rate-chaser I moved my money elsewhere. No hard feelings?

As is always the case, the new company promises to keep everything you loved about the old company, while also making additional improvements. I still keep about $100 with ING Direct to keep them from closing my account, mostly out of nostalgia I suppose. I’ll continue to wait and see how they integrate the site with the other recently-improved Capital One products like their 1.5% cash back personal cards and 2% cash back business cards. CapOne wants to join the big boys Chase/Citi/AmEx as a broad financial services company.

What are you planning to do with your ING Direct account?

Filed Under: Banking //

Chase Total Checking Account Promotion – $150 Bonus

Posted on July 24, 2012 // 12 Comments

Chase Bank is offering a $150 bonus for new customers when you open a Chase Total Checking account plus deposit $100 and set up direct deposit within 60 days of account opening. You can avoid monthly service fees if you make a $500+ direct deposit each month or maintain a $1,500 minimum daily balance. Must keep account open for 6 months to keep the bonus. Expires 8/15/12.

At least in the past, you could simulate direct deposit using an ACH transfer from an online savings bank. Fine print quoted below.
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Filed Under: Banking, Deals & Offers //

FNBO Direct Returning Customer Promo 1.35% APY

Posted on July 20, 2012 // 12 Comments

If you have a dormant FNBO Direct account, you may be interested to know that they are offering a promotional rate of 1.35% APY beginning July 1, 2012 on all the money above what your balance was on June 29th, 2012. (Only available to existing FNBO Direct customers as of June 29, 2012.) Even better, the rate is guaranteed until December 31, 2012, making it better than 6-month CDs from other banks. All rates above have expired and FNBO is now offering a standard rate of 0.85% APY.

I should probably move a little money over… see my June 2012 Emergency Fund update for where else I stash my cash. Also see my rate chaser calculator for some real-world estimates of how much extra interest you’d get.

FNBO Direct has become just another commodity online-savings account these days, so it’s good to see they’re trying to keep things at least a little interesting. I’d be a little annoyed if I kept a lot of money in there this whole time, though! The fine print from the e-mail I received is quoted below.

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Filed Under: Banking, Deals & Offers //

CIT Bank CDs With Rising Rate Protection

Posted on May 21, 2012 // 12 Comments

Update: CIT Bank has closed its RampUp CDs to new customers. Please visit this page for current CIT Bank products and rates.

Previously, CIT Bank offered CDs with some unique features including a “rate bump” option that allows to you raise your rate in the future if the interest rate increases. The second unique feature was that you could add more money to your CD one time at any point you choose throughout the term.

Filed Under: Banking, Deals & Offers //

Prosper vs. LendingClub: Credit Card Debt Consolidation Loan Comparison

Posted on May 17, 2012 // 8 Comments

What is the best place to lower your interest rates and consolidate credit card debt in order to pay it all off? The first thing to try is to call up your credit card company and negotiate your existing rate down. If that isn’t satisfactory, you could switch issuers and do a balance transfer to a new card with a low introductory rate. If you have qualifying credit, you can take advantage of no fee 0% APR balance transfer offers for up to 15 months.

I would say the next option to consider is P2P lending, which in my experience has lower rates than personal unsecured loans from banks. P2P is gradually becoming an accepted source of loans as shown by announcements of new institutional money coming in from hedge funds. Prosper has been around since 2006 and has done over $300 million in loan volume since inception, and LendingClub has been around since 2007 with over $500 million in loans. Both are now registered with the SEC.

Prosper vs. LendingClub Similarities

  1. Unsecured loans. Such loans are backed only by the borrower’s promise. If there is a default, the lender can’t repossess any property or garnish wages. The primary deterrent to defaults is a poor credit score that will increase future borrowing costs and potentially other side effects including affecting employment.

    Alternatively, you may be considering paying off your credit card debt with a home equity loan. This would change your unsecured debt into a secured debt. The danger is now if you don’t pay off that loan, you could lose your house. If that added risk doesn’t make a difference to you, then a home equity loan or line of credit will probably offer you a lower rate.

  2. Flexible amounts. You can borrow more or less than your actual outstanding credit card balance, and you’re usually given a choice of amounts for the same interest rate. But remember, the purpose of consolidation is to help speed up the process of getting rid of that debt.
  3. Fixed rates over the entire term. The problem with credit cards is that the rates are often unpredictable. “Variable” rates are linked to a benchmark rate, but even “fixed” rates that aren’t guaranteed for X months can just mean they’re fixed until you get a notice that they are now “fixed” at a new, higher number. Given the current low interest rate environment, you should be wary of rising rates.
  4. No prepayment penalties. You can pay off your loan early at any time, with no fees.
  5. No application fee. There is no fee to apply for a loan. If your loan successfully funds and you get the cash, then you will be subject to an origination fee that is rolled into your monthly payments.

Prosper vs. LendingClub Differences

  1. Minimum credit scores. Prosper minimum stated credit score is 640, LendingClub minimum FICO score is 660.
  2. Maximum loan amounts. Prosper maximum loan amount is $25,000, LendingClub maximum loan amount is now $35,000. Both lower the limits depending on credit profile.
  3. Slightly different fee structures. Both companies charge an origination (closing) fee once you successfully get your loan. If you don’t get the loan, no fees. They have slightly different fee schedules, but both have origination fees ranging from about 1% to 5% for the majority of loans. Both charge $15 fees for late payments or failed payments.
  4. Different loan term lengths. Depending on your requested loan amount and other factors, each lender may offer different terms. For example, LendingClub told me that loan amounts from $1,000 to $15,975 are only available with a 36-month term, even though they do offer 1-year and 5-year loans in other cases. However, with a $10,000 loan at Prosper I was given the choice of 1, 3, or 5-year terms. In general, the longer the term, the higher the interest rate at both places.
  5. Check processing fees. LendingClub charges a $15 processing fee per payment made by check. Prosper does not. Both companies allow you to make payments via automatic ACH withdrawal from a checking account with no fees.

Prosper vs. LendingClub Interest Rates?

Their full criteria for determining what rate you’ll pay is not disclosed but is based on a number of factors. Really, the best way to see which one will give you the best deal is to ask each one for a free quote. In both cases, getting a rate quote will involve looking at your credit report, but it will not result in a credit inquiry and will not hurt your credit score. If you do decide to move forward and get the loan, only then it will show up on your credit report.

My experience. I applied for a $10,000 debt consolidation loan at both places. I was offered a 1-year loan at 8.17%, a 3-year loan at 7.49%, or a 5-year loan at 10.85% annual interest rates at Prosper. I was offered a 3-year loan at LendingClub at 6.62% interest rate. For a $10,000 loan over 3-years and including all fees, my LendingClub payment was $307 per month and Prosper payment was $311 per month. So even though the interest rates seem rather different, the final monthly payments ended up closer than expected (though still a $150 difference in total payments over the whole 3 years).

Filed Under: Banking, Credit Cards //

SunTrust Bank & Delta Check Card – 30,000 Bonus Miles Promotion

Posted on May 9, 2012 // 2 Comments

SunTrust Bank is offering 30,000 Delta Skymiles for opening a new checking account by 6/30 with qualifying direct deposit and choosing the Delta SkyMiles World Check Card. Available in AL, AR, FL, GA, MD, MS, NC, SC, TN, WV, VA and Washington, D.C. The debit card does have a $75 annual fee but do you get 1 mile per $1 spent (for those that avoid credit cards). However, you don’t get the free checked bags or Priority Boarding of the Delta American Express credit card.

Still it’s not a bad deal, $75 for 30k miles if you live near a SunTrust branch. Some of the text suggests that you can get 15k of those miles with just the new checking account and no debit card, but it’s not entirely clear. Direct deposit must be $100 or more. The “Balanced Banking” checking account option has a $12 monthly fee, waived with a $3,000 minimum balance across Suntrust accounts. Selected fine print below:

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Filed Under: Banking, Deals & Offers //

Chase Exclusives: 10% Extra Cash Back on Chase Freedom, 1% Cash Back on Chase Mortgage Payments

Posted on May 2, 2012 // 15 Comments

Chase Freedom VisaChase Exclusives is a program that encourages you to open a Chase checking account whenever you have any other relationship with Chase. I closed my Chase (formerly WaMu) account a while back after they slowly started making it harder to keep as a secondary account, but some of these perks actually seem pretty good. I remember hearing something about them, but never actually took a good look at the details until now.

10% Extra Cash Back on Chase Freedom
The Chase Freedom® – $150 Bonus is a popular cash back card that features 5% cash back on rotating categories and 1% back on everything else. This quarter you’ll get 5% back on all purchases at gas stations and on local commuter transportation. (up to $75 cash back a quarter based on $1,500 in purchases). Check out my page on 5% cash back credit cards for more info.

However, if you have a Chase checking account, they will add an additional 10 points. Since 100 points is worth $1, that’s basically saying every purchase on the Chase Freedom earns 1.10% cash back and every 5% category purchase earns 5.1% cash back. For someone like me that puts everything on their credit card for easy expense tracking, that can add up especially with smaller purchases.  Currently, the Chase Freedom has a promotion offering a $150 Bonus after you make $500 in purchases in your first 3 months from account opening and an additional $25 Bonus after you add your first authorized user and make a purchase within this same 3-month period.

1% Mortgage Cash Back program
If you have both a Chase checking account and a Chase mortgage, you can earn 1% cash back on your mortgage payments (principal + interest). You have to have the checking account open before the mortgage closing, and enroll in automatic payments from said account within 60 days of closing. If you take the option of having your 1% cash back applied towards your loan principal, that works out to shortening a 30-year fixed mortgage by 9 months if you stick with it. (They really should make this an option on other mortgages, paying just 1% extra instead.)

I don’t know how good Chase mortgage rates are, but I’d probably get a quote now from Chase just to see if they are competitive. Overall though, it would probably be better to just get a better interest rate and pay extra towards your principal as if you had a higher mortgage (takes discipline).

$150 New account opening bonus
Thinking about opening a new account? You can also get a $150 bonus through this link if you open a Chase Total Checking account with $100 and set up direct deposit (new customers only). To avoid monthly service fees, you must do any one of the following each statement period:

  1. Have monthly direct deposits totaling $500 or more made to this account, or
  2. Keep the daily balance in your checking account at or above $1,500, or
  3. Keep an average balance of $5,000 or more in your checking and other types of qualifying Chase accounts.

Chase Freedom 150 Banner

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

“The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.”

 

Filed Under: Banking, Credit Cards //

New Checking Account Promotions: Citibank, Chase, M&T Bank

Posted on January 30, 2012 // 14 Comments

Interest rates looks to remain tiny for a long time, so if you want to boost your interest earned while keeping your money safe in banks, taking advantage of sign-up bonuses is one way to do it. Earning 1% APY on $10,000 is just $100 a year, and it’s even hard to get 1% APY now! Why not double or triple that with some new accounts.

Citibank $50 bonus if you open a Citibank account with $1,000 and complete 1 direct deposit and 1 electronic bill payment for 2 consecutive months. New checking account customers only. There’s no monthly service fee if you maintain a $15,000 combined average monthly balance requirement in eligible products; otherwise $20.00 monthly service fee is applied. Eligible products are linked deposits, loans, mortgages, and investment accounts. $100 bonus available with Citigold account.

Chase Bank $150 bonus when you open a Chase Total Checking account and set up direct deposit (new Chase checking customers only). This account is free if you make a $500+ direct deposit each month, or have $1,500 minimum daily balance.

M&T Bank $100 bonus when you open a MyChoice checking account and set up direct deposit within 90 days. This account is free if you maintain a direct deposit each month or have $500 minimum daily balance. $125 and $150 bonuses also available with upgraded accounts (and higher requirements).

Capital One $100 bonus when you open a Interest Online Checking account by 1/31/2012 using offer code CHEC168DF and make a direct deposit of $250 or more within 90 days. No monthly service fee, and pays 0.75% APY on balances less than $100k.

Filed Under: Banking, Deals & Offers //

Treasury Direct Review: Electronic Savings Bond Security Concerns

Posted on December 28, 2011 // 33 Comments

Despite the Treasury’s obvious dislike for the small investor, Series I Savings Bonds still offer a relatively good interest rate. As of January 1st, 2012, you will no longer be able to buy paper savings bonds other than a small window using your tax refund. The only option left is buying electronic savings bonds via TreasuryDirect.gov. This brings me to the following reader question:

Was just reading Mel Lindauer’s comments in the Bogleheads forum about I-Bonds and the trouble with Treasury Direct. Seems a great many folks hate the system to the point that they would rather not use it. 2012 is/was to be the year that I first began purchased I-Bonds, having finally got to the point of maxing out all other tax deferred and tax free methods. Now I am not so sure…what is your experience with TD?

First, let’s get to what I see as the main reason why most people choose not to use the online service at TreasuryDirect (TD). TD is not a bank and does not fall under Regulation E and the Electronic Fund Transfer Act that establishes consumer protections for loss or theft of money from your account.

If your paper savings bonds are stolen or lost, the Treasury has a process in place to reclaim your bonds. However, if somehow your electronic savings bonds were stolen, you would stuck with the loss with no liability from TD. It doesn’t seem to make sense, but it’s true.

So what do you do? The easiest thing to do is not use TreasuryDirect. But it remains a good investment, so in my case I looked into what security measures were in place to prevent such theft. In November 2011, TD instituted some security changes to their login process. What would a thief have to do in order to cash in your savings bonds?

  1. They need your account number, which is more like Z-12345678 as opposed to johnsmith.
  2. When you login with a new computer, a one-time passcode will be sent to your e-mail address. So, they would need to have access to your e-mail address as well. You can choose to register your computer for future visits if you like, but it would seem safer not to do so. I don’t log into TD very often so my cookie expires anyway by the time I log in again. This means a unique code is sent every single time I log in.
  3. They would also need your account password. I would hope your e-mail password and your TreasuryDirect password are different. In any case, it’s harder for viruses or keylogger programs to record your password because you must enter it using a virtual keyboard (unless you circumvent it by disabling Javascript).
  4. Now, at this point they have online access to your account and can see your balances. But to cash out a bond, first you must answer a security question (mom’s maiden name, etc.). More importantly, you can only cash out a bond to a linked bank account. So the thief would need access to your bank account (…which is protected by Regulation E mentioned above!)
  5. Alternately, they would need to send in a paper form adding an alternate bank account under their control. However, the name on the bank account must match the name on the TD account, and the form requires a Medallion Signature Guarantee where a third party checks official ID for identity verification. The TD website itself has improved over the years so that any small change (bank addition, profile change) results in a e-mail notice.

Personally, I deemed it exceedingly unlikely for an actual theft to occur and made the decision to go ahead and use the website. My holdings there are significant, but under 5% of total net worth. I know that others have also had technical issues with accessing their account, but I have not experienced anything like that. In the end, TreasuryDirect definitely has its flaws, and I would not fault someone for not using it as a result. You have to weight the risks and benefits for yourself.

Filed Under: Banking, Savings Bonds, Treasury Bills and Bonds //
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