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Earning Interest

Top Jumbo CD Rates for January 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Conservative savers generally consider certificates of deposits (CDs) as sanctuaries where their money is kept safe and they enjoy a decent yield without stomaching the risk of investing in the stock market.

You agree to deposit your money in a bank or credit union for a fixed amount of time (which can be as short as a few months or as long as several years) and get the satisfaction of knowing your money is likely earning a higher annual percentage yield (APY) than it would in a checking or savings account.

Jumbo CDs, which in most cases require a minimum deposit of $100,000, have traditionally promised even higher APYs for customers than regular CDs. But a combination of unsettled interest rates and fierce competition among banks — both online and traditional — for the deposits of customers have given rise to many normal CDs that offer a better return than jumbo CDs.

It’s not entirely clear why banks haven’t been similarly aggressive in offering higher-yield jumbo CDs, but one possibility is that they are interested in attracting more customers rather than big money deposits. In other words, banks would rather have the business of 100 customers each depositing $5,000 CDs than 10 customers depositing $500,000 jumbo CDs.

Regular 1-Year CD vs 1-Year Jumbo CD

Institution

Capital One

My eBanc

CD Term

1 year

1 year

APY

2.00%

2.05%

Minimum Deposit Amount

$0

$100,000

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on Capital One’s secure website

Member FDIC

Learn More

Regular 3-Year CD vs 3-Year Jumbo CD

Institution

MAC Federal Credit Union

Veridian Credit Union

CD Term

3 year

3 year

APY

2.50%

1.40%

Minimum Deposit Amount

$1,000

$100,000

LEARN MORE Secured

on MAC Federal Credit Union’s secure website

NCUA Insured

Learn more

Regular 5-Year CD vs 5-Year Jumbo CD

Institution

Goldman Sachs Bank USA

KS StateBank

CD Term

5 year

5 year

APY

2.15%

1.90%

Minimum Deposit Amount

$500

$100,000

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

Learn more

That said, if you feel the need to go big when it comes to your CD, then you likely won’t find better rates than the ones listed below.

The top jumbo CD rates of January 2020

To determine the best CDs for your jumbo-sized deposit, we turned to the database found on DepositAccounts.com, a website that like MagnifyMoney is also owned by LendingTree. For each common CD term, we assumed the customer was planning to deposit $100,000 in the account so as to include traditional jumbo CDs which typically have a higher minimum deposit needed to open. All the accounts included are also available nationwide.

You’ll notice as you read through the list of CDs we’ve selected, that some of them have minimum deposits of far less than $100,000. That’s because we’re focused on informing you of the best CD accounts for your money, and there are plenty of large minimum deposit CDs that still offer a great APY. You can rest assured we aren’t leaving out any good deals just because a financial institution’s marketing team decided not to call a CD “jumbo.”

Institution

CD Term

APY

Minimum Deposit Amount

Advancial3 months1.60%$20,000
Partner Colorado Credit Union6 months2.00%$100,000
Merrick Bank12 months2.10%$25,000
Merrick Bank18 months2.10%$25,000
Dover FCU2-year2.27%$100,000
Dover FCU3-year2.32%$100,000
Dover FCU4-year2.38%$100,000
Dover FCU5-year2.53%$100,000

As of January 9, 2020

Banks that offer the best jumbo CD rates

Advancial – 3-month CD, 1.60%APY

Advancial

Headquartered in Dallas, Advancial is a credit union that has roots dating back to 1937. While this credit union only has a handful of locations in Alaska, Texas, Oklahoma and Louisiana, membership is still open to anyone who joins Connex and pays a $5 fee.

Advancial offers a slew of CDs, including regular, IRA, business and jumbo iterations. Its 3-month junior jumbo CD is worth highlighting, with its 1.60% APY and minimum deposit of $25,000.

LEARN MORE Secured

on Advancial’s secure website

NCUA Insured

Partner Colorado Credit Union – 6-month CD, 2.00% APY

Partner Colorado Credit Union
Despite its name, Partner Colorado Credit Union extends its membership to anyone who makes a $5 donation to the Partner Colorado Foundation. It offers an array of financial products and services, including regular, baby jumbo and jumbo certificates of deposit with varying term lengths.

Partner Colorado Credit Union’s standout product is its jumbo, 6-month CD. This CD boasts an APY of 2.00% and a minimum required balance of $100,000. It also has a baby jumbo 6-month CD offering, with a minimum required deposit of $25,000 and an APY of 1.85%.

LEARN MORE Secured

on Partner Colorado Credit Union’s secure website

NCUA Insured

Merrick Bank — 12-month CD, 2.10% APY, 18-month CD, 2.10% APY

Merrick Bank

Based in Utah, Merrick Bank is an internet bank that was established in 1997. Merrick has carved out a business offering credit cards, personal loans and certificates of deposit.

You’ll need $25,000 to open the bank’s 12-month CD, which will earn you a generous APY of 2.10%. Additionally, Merrick Bank currently has the best 18-month CD rate, also with an APY of 2.10% and a minimum deposit of $25,000.

LEARN MORE Secured

on Merrick Bank’s secure website

Member FDIC

Dover FCU – 2-year Term Share, 2.27% APY, 3-year Term Share, 2.32%,4-year Term Share, 2.38% APY,5-year Term Share 2.53% APY

Dover Federal Credit Union
Dover Federal Credit Union is an online credit union, headquartered in Delaware. Its 2-year, 3-year, 4-year and 5-year Share Certificates of $100,000 or higher currently have has the highest rates for a 2-year, 3-year, 4-year and 5-year CD, with APYs of 2.27%, 2.32%, 2.38% and 2.53% respectively. Dividends are paid monthly on Dover’s Share Certificates. If a withdrawal is made within one year of maturity or less, Dover will charge a penalty equal to 90 days dividends.

Membership to Dover FCU is open to anyone who joins the Friends of Bombay Hook. Membership is also open to military personnel of the U.S. government with duty location in Delaware, employees of Dover Air Force Base, Bayhealth, Dover Downs and over 400 of its business partners.

LEARN MORE Secured

on Dover Federal Credit Union’s secure website

NCUA Insured

Go jumbo or stick to regular CDs?

To be considered “jumbo,” a CD needs to require a large minimum deposit, usually $100,000, as opposed to a normal CD which may not even require a minimum deposit. The deal banks made with well-off depositors boiled down to ‘if you leave lots of your money with us in this jumbo CD, we’ll give you a higher yield than if you deposited it in a normal CD.’

It’s important to note the differences between a jumbo CD and regular CD aren’t set in stone and have more to do with how the bank or credit union markets their savings products than any hard and fast rule, says Ken Tumin, founder of DepositAccounts.com, another LendingTree-owned site.

“I’ve seen banks and credit unions with jumbo CD minimums as low as $10,000 and as high as $250,000,” Tumin told MagnifyMoney. “Even if a bank doesn’t offer jumbo CDs with high minimums, someone could still deposit a large balance into a regular CD. They just wouldn’t be earning any higher interest than someone depositing a small balance.”

As the difference in earnings from a jumbo CD and traditional CD has diminished (or disappeared completely), the drawbacks of parking so much money in a CD become more apparent. For example, the jumbo CDs with the highest APY usually require a longer period of time to mature, which means you have at least $100,000 exposed to inflation—which means you possibly end up earning less than you expected.

Withdrawal penalties on jumbo CDs

According to a recent survey, the penalties for withdrawing your money from your CD early could be serious. Some banks will even take part of your principal as a penalty.

Below are the most common penalties, according to the survey:

  • 3 month CD: Three months of interest
  • 6 month CD: Three months of interest
  • 1 year CD: Six months of interest
  • 2 year CD: Six months of interest
  • 5 year CD: A year’s worth of interest

So, it’s important to be confident that you want to put your money in a CD. When you do this, you’re making an agreement with the bank to leave it there for a set period of time. If you’re unsure if you want to tie up your money for a long period of time, consider a high-yield savings account instead.

How jumbo CDs are taxed

It’s important to know that the interest you earn on your jumbo CD will be taxed as interest income, not as capital gains income.

This means that your bank or credit union will send you a 1099-INT form at the end of the year to show how much interest you earned in your jumbo CD and you will be taxed on that.

Are jumbo CDs safe?

According to the U.S. Securities and Exchange Commission: “Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000.”

Some people prefer investing in the stock market over CDs because you can often get higher rates of returns; however, the stock market is a riskier bet, and returns are not guaranteed like those associated with CDs.

CDs are not affected by the whims of the stock market. The interest rate you agree on with your bank is the rate you will get. That interest rate, however, may not outpace inflation, meaning you may not really earn much, if anything, over time.

Final thoughts

If you have over $100,000 and want to invest it in a jumbo CD, you have several options. Like the chart above shows, you can choose many different terms and durations for your jumbo CD. Just be sure to research the bank you invest with so you know you’re putting your money with a top-rated institution. Also, be sure that you’re comfortable with putting your money in a CD long-term because there are often penalties for withdrawing your money early.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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College Students and Recent Grads

Top Checking Accounts for College Grads

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

For many college students, their default banking option while in school is a student checking account, which is typically free. Unfortunately, when you graduate you lose those benefits. Many student checking accounts will begin to charge you monthly maintenance fees unless you meet certain requirements.

So, where do you go from there?

Few young adults would turn to their parents for fashion or dating advice and, yet, one of the most common ways we’ve found young people choose their bank account is by going with whichever bank their parents already use. This could be a bigger faux pas than stealing your dad’s old pair of parachute pants.

The bank your parents use may carry fees or have requirements that don’t meet your lifestyle or budget, and make accounts expensive to use.

But where do you even begin to choose the right checking account?

When you’re nearing graduation, start planning your bank transition.

Many banks send a letter in the mail a few months prior to your expected graduation date informing you that your student checking account is going transition to a non-student account. If you’re not careful and you disregard the letter, you may be transitioned into an account that charges a fee if you don’t meet certain requirements.

You can always call the bank and ask to switch to a different account or you can choose a new account that offers more benefits, like interest and ATM fee refunds.

Account Name

Minimum Monthly Balance

Amount to Open

ATM Fee Refunds

APY

Simple$0$0None1.75% - 1.90% depending on balance
Aspiration Spend and Save Account$0$50Unlimited1.00% APY
Discover Bank$0$0NoneNone, but 1% cash back on up to $3,000 debit card purchases per month
Ally Bank$0$0Up to $10 per statement cycle 0.10% to 0.50% APY depending on balance
Consumers Credit Union (IL) Free Rewards Checking$0$0Unlimited ATM reimbursements5.09% on balances up to $10,000,
0.20% APY on balances between $10,000 and $25,000 and 0.10% APY on balances over $25,000
La Capitol Federal Credit Union Choice Plus Checking$0(if less than $1,000, there is a $8 fee)$50Up to $25 per month4.25% APY on balances up to $3,000 2.00% APY on balances $3,000-$10,000 and 0.10% on balances over $10,000
TAB Bank Kasasa Cash Rewards Checking$0$0Up to $15 in ATM fees reimbursed4.00% APY (applies to balances up to $50,000)
T-Mobile Money$0$0None4.00% APY (applies to balances up to $3,000)

The 5 key things you should look for in a checking account

When you’re shopping around for a new checking account, there are several things you should look for to ensure you’re getting the most value from your account:

  1. A $0 monthly fee: Sometimes banks may say they don’t charge a monthly fee but read the fine print — they may require a minimum monthly balance in order to avoid it. There are plenty of free checking accounts available for you to open, so there’s no reason to stay stuck with an account that charges a monthly fee. Take note, as some accounts may require you to meet certain criteria to maintain a free account like using a debit card, enrolling in eStatements or maintaining a minimum daily balance.
  2. No minimum daily balance: Accounts without minimum daily balances mean you can have a $0 balance at any given time. This may allow you to have a free account without meeting balance requirements — although other terms may apply to maintain a free account.
  3. Annual Percentage Yield: APY is the total amount of interest you will earn on balances in your account. Opening an account that earns you interest on your balance is an easy way to be rewarded for money that would typically sit without earning anything. You should definitely aim to earn a decent APY on your savings account.
  4. ATM fee refunds: You may not be able to access an in-network ATM at all times, so accounts providing ATM fee refunds can reimburse you for ATM fees you may incur while using out-of-network ATMs. Those $3 or $5 charges add up!
  5. No or low overdraft fees: Most banks charge you an overdraft fee of around $35 if you spend more money than you have available in your account. Therefore, it’s a good idea to choose an account that has no or low overdraft fees.

Top overall checking accounts for college grads

For the top overall checking accounts, we chose accounts that have no monthly service fees, no ATM fees, refunds for ATM fees from other banks, interest earned on your deposited balances and with strong mobile banking apps. While there is no all-inclusive account that contains every benefit, the accounts below are sure to provide value whether you want a high interest rate, unlimited ATM fee refunds or 24/7 live customer support.

1. Simple

Cash management app Simple acts as a hybrid checking and savings account with a generous APY and no fees. It features unlimited transfers between your checking account and Protected Goals account, as well as high APYs ranging from 1.75% on balances under $10,000 to 1.90% on balances over $10,000. Simple also provides fee-free access to 40,000 ATMs – although it doesn’t rebate ATM fees you might incur from machines outside its vast network. With built-in budgeting tools integrated into its app, Simple is a strong contender for the best checking account for college grads.

LEARN MORE Secured

on Simple’s secure website

2. Aspiration Spend and Save Account

The Aspiration Spend and Save Account offers a wide range of benefits for account holders and has few fees. The $50 amount to open is fairly low, and once you open your account there is no minimum monthly balance to maintain. Aspiration gives you up to five free ATM withdrawals per month.

As the account name suggests, there are two sides to the account: a spending sub-account and a savings sub-account. The spending side yields no interest, while the savings side earns 1.00% APY. To earn this APY, you must deposit at least $1,000 in the combined account monthly, or maintain a balance of $10,000.

LEARN MORE Secured

on Aspiration’s secure website

3. Discover Cashback Debit

Cracking our list for the best checking accounts for college graduates is Discover Bank, which takes a unique approach to checking account rewards. Instead of offering an APY on deposit balances, Discover opts for cash back as an incentive to get consumers to sign up for its checking product. The Discover Cashback Debit account offers up to 1% cash back on $3,000 of debit card transactions per month. That coupled with its zero fees and free access to 60,000 ATMs nationwide make it one of the best checking accounts for college graduates.

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Discover Bank's website is secure

Member FDIC

4. Ally Bank

Online bank Ally Bank offers a solid checking account with minimal fees, decent APYs and other attractive perks. Its Interest Checking account charges no monthly maintenance fees and provides free access to Allpoint ATMs nationwide, as well as a $10 reimbursement per statement cycle for any other ATMs fees incurred. Ally Bank’s APY isn’t too shabby, either: You can earn an APY of 0.50% with a $15,000 minimum balance. Other cool features include its Ally Skill for Amazon Alexa, which enables you to transfer money with just your voice.

LEARN MORE 

Member FDIC

Top high-yield checking accounts for college grads

Since most checking accounts offer little to no interest, high-yield checking accounts are a great way for you to maximize the money that typically would just sit in your account without earning interest. These accounts often offer interest rates that fluctuate depending on how much money you have in the account. However, in order to earn interest, there are some requirements that you may have to meet such as making a certain number of debit card transactions and enrolling in eStatements.

1. Consumers Credit Union (IL) Free Rewards Checking

The Consumers Credit Union (IL) Free Rewards Checking account is just that: Rewarding. It offers a tier-based APY, which includes a 5.09% APY on balances up to $10,000, 0.20% APY on balances between $10,000 and $25,000 and 0.10% APY on balances over $25,000. In order to earn the highest APY, you must complete at least 12 signature-based debit purchases, receive at least one direct deposit, ACH debit, or pay one bill through their free bill payment system, log into your online banking account and be signed up for eStatements and spend $1,000 or more with a Consumers Credit Union Visa credit card each month. This account has no fees and offers unlimited ATM reimbursements if requirements are met.

LEARN MORE Secured

on Consumers Credit Union (IL)’s secure website

NCUA Insured

2. La Capitol Federal Credit Union Choice Plus Checking

This checking account has a $2 monthly service fee, which can easily be waived if you enroll in eStatements.

While the terms state a minimum balance requirement of $1,000 and a low balance fee of $8, the fee can be waived if you make 15 or more posted non-ATM debit card transactions per month.

To earn the top interest rate on your checking balance, you just need to make at least 15 or more posted non-ATM debit card transactions per month. There are numerous surcharge-free La Capitol ATMs for you to use, and after signing up for eStatements you can receive up to $25 per month in ATM fee refunds when you use out-of-network ATMs.

LEARN MORE Secured

on La Capitol Federal Credit Union’s secure website

NCUA Insured

3. TAB Bank Kasasa Cash Rewards Checking Account

Based in Ogden, UT, TAB Bank’s Kasasa Cash Checking account is a great choice for recent graduates. You can earn a very competitive 4.00% APY by meeting a few simple requirements: Have at least one direct deposit, ACH payment, or bill pay transaction posted to the account during each billing cycle and make at least 15 debit card purchases of $5 or more. Even better, the bank will reimburse up to $15 in ATM fees per month from making withdrawals outside their ATM network.

LEARN MORE Secured

on TAB Bank’s secure website

Member FDIC

4. T-Mobile Money Checking Account

Wireless carrier T-Mobile has forayed into finance with a checking account, T-Mobile Money. The account offers a generous APY of 4.00% on balances up to $3,000, with balances over that threshold earning 1.00% APY. In order to receive the higher APY, you must meet the following requirements: Be enrolled in a qualifying T-Mobile wireless plan, be registered for perks with your T-Mobile ID and have deposited at least $200 in qualifying deposits to your checking account within that current calendar month. T-Mobile Money does not reimburse for out-of-network ATM fees, but it does not charge any maintenance fees.

LEARN MORE Secured

on T-Mobile Money’s secure website

Member FDIC

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Retirement

Maximize Your Retirement Savings with IRAs

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Americans don’t like to think about retirement. According to a recent report by the Federal Reserve, 6 in 10 respondents who aren’t retired yet and have a self-directed retirement plan, such as an individual retirement account (IRA) or a 401(k), don’t feel comfortable making investing decisions.

This discomfort with key retirement decisions can be blamed in part on the fact that many Americans don’t have the right savings strategy for retirement. Let’s take a look at some scenarios of hypothetical savers that could provide you with novel IRA saving strategies.

Picking the right IRA for your retirement savings

401(k) accounts provide millions of Americans with a retirement savings account. Still, not everybody has a 401(k) — and even those who do have one should complement it with an individual retirement account (IRA).

Given you have a limited amount of income at your disposal to sock away for retirement, what kind of IRA would work best for you depends on your individual situation. Here’s a few scenarios for different kinds of savers, providing a combination of accounts that play to the strengths of their financial situations.

IRA retirement saving strategy: Entry-level office worker

What you need to do: You may have to endure endless status meetings and office birthday parties for coworkers you barely know, but at least you have a 401(k) with an employer match. You should set your contribution to maximize your employer’s 401(k) match and open a Roth IRA in order to take advantage of your biggest asset: your potential future earnings. Check out our review of the best Roth IRA providers on the market to help you find the right broker for your retirement savings.

Why you need to do it: Employers who match your contributions to your 401(k) are essentially giving you free money. Even if you’re working for a modern day Mr. Scrooge who doesn’t give you a match, a regular 401(k) account still allows you to make contributions directly from your paycheck before any tax is applied, and those contributions will remain safe from the IRS until you begin taking your withdrawals decades later.

As an entry-level office worker, you’re probably not making a lot of money, and that likely puts you in a lower tax bracket. By the time you’re ready to take your withdrawals, you may discover the money you saved by avoiding taxes isn’t worth the bigger bite Uncle Sam takes now that you’re a member of the country club crowd.

To see this in action, take a look at the income tax brackets for tax year 2020. Even if we make a generous assumption regarding your salary as an entry level office worker and say you earn more than $40,125 (but less than $85,525) a year, you still would only be taxed 22% on this income. That means the money you contributed to your 401(k) was sheltered from this 22% tax, and you face tax payments when you withdraw it in retirement, decades later. If you were a retiree taking withdrawals this year and making, for example, more than $163,300 (but less than $207,450) you could be paying up to 32% on money you withdraw from a 401(k).

Contributions to a Roth IRA are not sheltered from taxes, meaning you pay taxes on all your income and then make your Roth contribution, while the interest earned in the Roth is tax-free. Because you’ve already paid income tax on Roth IRA contributions, you aren’t taxed again when you take your withdrawals from the account. Anyone who expects to find themselves in a higher tax bracket when they’re ready to retire should open a Roth IRA now, as you can reap extra tax benefits from your current status as a lowly office drone.

IRA retirement saving strategy: Self-employed freelance worker


What you need to do: Whether you’re making enough money from your Etsy shop to avoid the 9-to-5 office grind or you hop between projects as a freelancer, the freedom of self-employment comes with non-trivial costs. But you don’t have to sacrifice your retirement savings just because you don’t have a 401(k). On the contrary, you need to look into opening a Simplified Employee Pension (SEP) IRA and a Roth IRA. We’ve taken a close look at the best IRA providers on the market to help you choose the right provider, so go check out our round-up.

Why you need to do it: A SEP IRA is a retirement account that’s easy to set up and has low, or often zero administrative fees, which are big advantages for the busy freelancer. It also allows you to contribute up to 25% of the gross annual salary you make from the business (which as a self-employed freelancer usually works out to about 20% of your adjusted net income), up to a limit of $57,000 in 2020. That far outstrips the $6,000 contribution limit on traditional and Roth IRAs for those under 50 years of age, making it a powerful saving tool for your retirement.

However there’s no Roth version of a SEP IRA, meaning all of the contributions you make to it will be taxed when you start making your withdrawals — at whatever tax bracket you happen to find yourself in. That’s why you may also want to open a Roth IRA so you have a source of money you can withdraw tax-free.

IRA retirement saving strategy: Bold market expert with money to burn


What you need to do: When it comes to saving for your retirement, we generally advocate for a slow and steady approach. However, if you don’t have confidence in traditional investment assets such as stocks and bonds but are brimming with self-assurance about your ability to judge non-traditional investments such as real estate, you can open a self-directed IRA.

Why you need to do it: Because you’re convinced you need more flexibility in your investments than a gold medal gymnast, you want a tax-advantaged account for your holdings in peacock farms, marshmallow factories, and yacht fleets. In short, you want to make sure you’ve diversified your investments to such a degree that even if the unthinkable happens and the market permanently implodes you’ll have a safe haven of funds.

If you go down this route, pay attention to the additional pitfalls that come with a self-directed IRA, such as the fact that you won’t have a team of financial experts vetting the quality of your investments and that you can inadvertently disqualify your IRA of its tax advantages if you gain a direct financial benefit from one of the IRAs investments (beyond the money it earns for your IRA).

The bottom line on IRAs

None of the three scenarios outlined above will likely fit your unique financial situation to a T, but it should prove a good starting point for you to think about how an IRA can work into your overall retirement savings strategy. Putting away any money at all is better than nothing, but when it comes to the savings that will fund your golden years, “better than nothing” may not be good enough. Make sure you’re doing everything you can to make sure your IRA is A-OK.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.