Advertiser Disclosure

Banking

Review of Xoom: The Money Transfer Service by PayPal

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.

Xoom, a PayPal company, is a money transfer service that allows you to make international digital payments that are quick, easy and secure. If your loved ones are scattered across the globe, Xoom lets you send money, pay bills and reload minutes on mobile phones from afar. Xoom services are available in 132 countries, meaning there’s a pretty solid chance that the location you’ll need falls under its umbrella.

In this review, we’ll walk you through the basics of sending money through the platform and help you decide if it meets your needs.

A brief history of Xoom

Xoom was founded in 2001, and PayPal acquired the company in 2015 for roughly $1.1 billion. In 2016, Xoom upgraded its features to allow recipients to request funds and by 2017, the company expanded its presence from 40 receive markets to 67 markets.

Xoom’s international money transfer services have also been integrated into PayPal, making it easier for you to send money outside the U.S. on the PayPal platform as well.

According to its website, Xoom and PayPal have a “shared vision” of making the international payment platform accessible to millions more people throughout the world, so expect it to grow in the future.

Xoom key features

  • High transfer limits: Xoom allows U.S. residents to send up to $100,000 USD within a 180-day period — do note that sending limits are set at three different levels, with different amounts requiring different sets of identification documents. Providing additional information and documents allows for your account to be upgraded.
  • Several ways to pay: Any Xoom service — i.e., sending money, reloading phones and paying bills — can be funded with a bank account, debit card or credit card, as well as a PayPal account.
  • Fees vary: The transaction fee you’re charged for using Xoom’s services fluctuates according to payment method, amount of money sent, where the money is sent and currency selected for disbursement.
  • Fast money transfers: In most cases, money is available to recipients in a matter of minutes, but transfers can take up to a few days. However, if you send more than $10,000 USD within 24 hours, the funds won’t be received for two to three business days, plus the standard processing time.
  • Instant bill pay: Enjoy the ability to pay a variety of utility bills on a loved one’s behalf in Mexico, Colombia, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Costa Rica and Vietnam. Bills are paid instantly, with the exception of Telmex bills in Mexico, which take two business days.
  • Xoom app: You can send money, reload phones and pay bills from the app. Available for iPhones and Android devices, the app lets users check the status of all transactions.

Sending a money transfer with Xoom

How long does a transfer take? Most transfers are completed in minutes, but the process can take up to a few days.
Where can you send money? Xoom allows you to send money to recipients in 132 countries.
How much can you send?Sending limits are set at three different levels (for more detail, see the chart below). Top tier senders in the U.S. — Level 3 — can send up to $100,000 USD within a 180-day period.

To send money via Xoom, you’ll need to create a free account or log in with your PayPal account. If you create an account, you’ll be asked to create a password and provide basic information, including your name, email address, phone number and country of residence. Afterwards, you’ll receive a verification email to activate your account. To connect a payment source to your account, add a bank account, credit card or debit card, and use it in a transaction. Payment sources can be updated or deleted from your “My Account” page.

Senders are categorized into three different levels. Each level has a limit on the amount of money you’re allowed to send during a certain time period. Different information and documents are required to reach each level. During your transaction, Xoom may ask questions, and if you need to provide more information, the company will email you with instructions.

Here’s a look at the sending limits and requirements for U.S. residents, as per the provider’s website.

Level 24-hour limit30-day limit180-day limitRequired information and documents
1$2,999 USD$6,000 USD$9,999 USDSender profile information
2$10,000 USD$20,000 USD$30,000 USDSocial Security Number or passport
3$50,000 USD$60,000 USD$100,000 USD
  • Driver’s license, passport or green card

  • Bank statement or pay stub

  • Answer security questions Xoom sends via email


In most cases, the recipient will receive the funds minutes after they’re sent, but it can take a few days. Several factors can affect transfer times, including the country where your money is headed, the method in which funds are received — either bank deposit, cash pick up or home delivery — and the payment type — from a bank account, debit card or credit card.

In addition to sending limits, this provider also caps the amount of money recipients can receive, based on the sending level of the person(s) transferring the funds — do note that the receiving limits apply across senders. Any transaction that exceeds a recipient’s designated maximum will be canceled.

Here’s a look at the receiving limits from U.S. senders, as per the provider’s website.

From 24-hours 30-days180-days
Level 1 senders$15,000 USD$25,000 USD$55,000USD
Level 2 senders$15,000 USD$25,000 USD$55,000 USD
Level 3 senders$75,000 USD$90,000 USD$120,000 USD

Additionally, Xoom’s partners — these include banks, cash pick up locations and home delivery services — have restrictions that vary by country. These could include the amount of money that can be paid in a single transaction or to a recipient in a certain time period.

Fees and fine print

Fees and Penalties
Transfer feesXoom charges a transaction fee to send money internationally. Fees can vary according to several factors:
  • your payment method

  • the amount of money sent

  • where the money is sent from

  • the currency selected for disbursement


For certain destination countries, you can avoid fees by paying with a bank account, but not every country.

Xoom’s variable fee schedule is on par with other money transfer companies. It’s very common for fees to be calculated based on the criteria used by Xoom. For example, to send $1,000 to the United Kingdom, there are no fees to send from a bank account, but a $30.49 fee to send funds from a debit or a credit card.

Is Xoom a good money transfer service to use?

Pros Cons
  • Xoom app: You can send money, reload phones and pay bills from the app. Available for iPhone and Android, the app lets users check the status of all transactions.
  • Funding options: Users may pay with a bank account, debit card or credit card.
  • Fast cash: Most money transfers are available to the recipient within minutes, but can take a maximum of a few days. When sending more than $10,000 USD within a 24-hour period, it can take between two to three business days, in addition to standard processing time.

  • Variable fees: Xoom charges a transaction fee that can vary according to several factors, including payment method, amount of money sent, where the money is sent and currency selected for disbursement.
  • Limited availability: Money transfer services are available in 132 countries, fewer than competing services.
  • Receiving Limits: The amount of money recipients can receive is determined by the sending level of the sender(s). Receiving limits are also cumulative across senders.




Alternative money transfer options

WorldRemit and MoneyGram are international money transfer companies providing similar services to Xoom.

WorldRemit

  • Where can you send money? Send money to recipients in more than 145 countries, a broader reach than Xoom’s 132 countries.
  • How long does a transfer take? In most cases, funds are immediately transferred to the recipient; however, some transfers may take longer, depending on the mode of receipt. WorldRemit displays the expected delivery time before you make a payment.
  • How much can you send? The maximum amount you may send is determined by the country where you live, and can also vary according to your method of payment.
  • Fee to send money: The cost to send money is based on each individual transaction. All fees and exchange rates are displayed outright.

WorldRemit is based in London, with regional offices in the U.S., Canada, Australia and New Zealand. Since it serves more countries than Xoom, it could be a good alternative if your destination country isn’t on Xoom’s list.

MoneyGram

  • Where can you send money? MoneyGram’s global network of nearly 350,000 locations, along with retailers and businesses, in more than 200 countries and territories. In addition, you can transfer money within the U.S.
  • How long does a transfer take? In many cases, funds are available within a few hours. However, factors including destination country and banking hours can affect the amount of time a transfer takes.
  • How much can you send? When sending money to most countries, there is a maximum of $10,000 per online transfer and up to $10,000 every 30 calendar days. You can send additional funds from a MoneyGram agent location.
  • Fee to send money: The cost to transfer funds varies according to where the money is going, the total amount sent and the method of payment. Fees are generally lower when paid with a bank account than a credit or debit card.

MoneyGram could be a good alternative to Xoom if you need to make both domestic and international transfers. Since its services are available in more than 200 countries and territories, it could also be an option if your destination country isn’t part of the Xoom network.

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.

Advertiser Disclosure

Banking

Ally Bank vs Capital One 360 Accounts: Which Products Are Better?

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.

You can’t really go wrong with Ally Bank or Capital One, as they both offer competitive rates and have been among the top online banks for quite some time. However, it’s worth noting that Ally Bank was selected as the top online bank of 2019 by MagnifyMoney for a reason — it offers consistently high rates on the majority of its products. And while Capital One offers solid rates and products compared to most banks, Ally Bank clearly outshines it on about every front, as you can see from our match up below.

Founded in 1919 and rebranded as Ally Financial in 2010, Ally Bank is an entirely online bank. Choose from products in a variety of categories, including banking, credit cards, auto loans, home loans and investment opportunities.

Capital One, the largest direct bank in the U.S. The bank rebranded its online products as Capital One 360 in 2013, after Capital One acquired ING Direct’s U.S. business. Enjoy a variety of product offerings, including several savings and checking account options.

In this review, we’ll compare and contrast Ally Bank and Capital One 360 products to help you decide which bank is the best fit for you.

Ally Bank vs Capital One: How their rates compare

One of the most important things to look for when opening a new account, is the rate it’s attached to. Even a few percentage points can make a big difference in the amount of interest you’ll earn, so make sure your money is hard at work for you.

Both Ally Bank and Capital One offer select rates that surpass national and online bank averages, but neither beats every mark. Generally speaking, Ally Bank’s savings account rates more than double that of Capital One. As for checking, Capital One offers better rates for two different types of customers — those with a minimum account balance less than $15,000 and those with more than $100,000 — but Ally Bank comes out on top for the rest. For one year CDs, Ally Bank has a slightly better rate, but the two banks offer the same above-average rate on five year CDs

Overall, Ally Bank is the better choice, because most of its rates just can’t be beat.

 AllyCapital OneNational average*
Online bank average*
Savings1.50% APY


1.00% APY
0.270% APY
1.52% APY
Checking0.10% APY, less than $15,000 minimum daily balance

0.50% APY, minimum daily balance of $15,000 or more
0.20% APY, minimum account balance of $0.01 to $49,999.99

0.20% APY, minimum account balance of $50,000 to $99,999.99

0.20% APY, minimum account balance of $100,000
0.189% APY0.41% APY
1 year CD
1.50% APY1.50% APY
1.356% APY
2.09% APY
5 year CD
1.60% APY1.40% APY
2.255% APY
2.70% APY

Ally Bank vs Capital One: Which has better account options?

Since both banks have similar account options, it really comes down to choosing the bank that offers the best rates. In that case, Ally Bank is the better choice, because its rates are more competitive. Putting your money in an account with a higher rate will maximize your earning power.

Ally's Top Deposit Accounts
APY
Minimum Balance to Earn APY
Online Savings Account
1.50%$0.01

SEE DETAILS Secured

on Ally Bank’s secure website

Member FDIC

High Yield 12-Month CD
1.50%$0.01

SEE DETAILS Secured

on Ally Bank’s secure website

Member FDIC

Both banks offer one standard checking account, but Capital One also has a Money teen checking account. Available only online, you’ll have full access to your child’s account — log in with your own username and password.

When it comes to savings accounts, both Ally Bank and Capital One offer standard savings, money market, IRA and CD options. Similar to checking, Capital One also has a Kids Savings Account. You’ll have full access to your child’s savings account, including the added ability to transfer money, set up automatic savings and manage account details.

Both banks offer several different types of CDs, including high-yield CDs and IRA CDs. However, Ally Bank takes it up a notch with its Raise Your Rate CD and No Penalty CD. The former gives you the chance to raise your rate once over a two-year term or twice over a four-year term, if Ally Bank’s rate increases for your term and balance tier. The latter allows you to withdraw all your money after the first six days of funding and keep the interest earned with no penalty.

Ally Bank vs Capital One: How they compare on fees

 AllyCapital One
Standard savings account
No monthly maintenance fees
No monthly maintenance fees
Standard checking account
No fee for everyday services and transactions
No fee for everyday services and transactions
ATM feeUse any Allpoint ATM in the U.S. for free and enjoy an up to $10 reimbursement per statement for ATM fees outside the network.
Enjoy complimentary access to 39,000 Capital One and Allpoint ATMs. Some banking products come with an up to $15 monthly reimbursement for ATM use beyond the network and outside the country.
Overdraft feeOverdraft transfer service is free, but you’ll be charged $25 — maximum one fee per day — for overdraft items paid or returned.

Fees vary according to your overdraft settings. Those with a fee include the Overdraft Line of Credit — you pay interest on the overdrawn amount for the entire borrowing period — and Next Day Grace — you have one business day to repay the overdrawn amount or you’re charged a $35 fee.

Ally Bank and Capital One both offer savings and checking accounts without monthly maintenance fees, but overall, Ally Bank is the better choice. This call is made on the fact that Ally Bank clearly lists all possible fees, whereas Capital One is a bit more elusive about potential charges you could incur.

When you read the fine print, Capital One notes there could be charges for overdraft on credit — as highlighted in the table above — as well as overnight check delivery, overnight delivery of a replacement card, a stop payment, or if you write a rejected check.

On the other hand, Ally Bank charges a fee for cross border/currency conversion transactions, returned deposit items, overdraft items paid or returned — as noted in table above — stop payment items, rush delivery of debit cards or other items, overnight bill pay — delivery by mail — same-day bill pay — electronic delivery when available — outgoing wires — domestic only, international isn’t available — and account research.

Who should bank with Ally Bank?

Ally Bank is the best choice for independent customers who want an entirely online banking experience. Live customer service is available on a 24/7 basis, but the bank has no brick-and-mortar locations. This means features like face-to-face conversations with a bank teller and the ability to deposit cash are not available, so take this into consideration before opening an account.

If you plan to maintain a $15,000 minimum daily balance in your checking account, the bank’s 0.50% APY is highly competitive. However, its 0.10% APY for checking accounts with less than a $15,000 minimum daily balance falls short of both the national average and the online bank average.

Ally Bank’s competitive rates also make it an excellent choice to park your money in a traditional savings account or CD. The bank’s 1.50% APY for savings accounts, 1.50% APY for one year CDs and 1.60% APY for five year CDs surpass both the national average and the online bank average, allowing you to maximize interest profits.

Who should bank with Capital One?

Capital One offers the convenience of online banking, with the ability to stop by a Capital One cafe. If you want to do most of your banking online, but want the peace of mind in knowing you can visit your bank in person, this could be a good choice for you.

If you plan to maintain a high checking account balance, a 360 Checking account can be a great option. Both the 0.20% APY attached to a minimum account balance of $50,000 to $99,999.99 and the 0.20% APY offered with minimum account balance of $100,000 seriously exceed both the national average and the online bank average.

Based on rates alone, Ally Bank is the better choice for both a savings account and a one year CD, but the two banks currently tie for a five year CD. There’s no minimum deposit required to open a CD at either bank. However, Capital One charges an early withdrawal penalty of six months’ worth of interest for CD terms greater than 12 months, while Ally Bank charges a slightly less 150 days’ worth of interest for CDs with terms of five years or more.

Alternatives

Before opening a new savings or checking account, it’s important to shop around to find the best fit for your needs. MagnifyMoney offers free comparison tools that allow you to find the best rates on banking products.

*National and Online bank averages and any fees mentioned in this article were compiled and are accurate as of the date of publishing.

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.

Advertiser Disclosure

News

5 Things You Shouldn’t Do With Your Tax Refund

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.

iStock

Tax season is upon us, meaning a refund might be headed your way. No doubt you’re excited by the idea of a cash influx, but this isn’t free money. “Most people think their tax return is a gift from the government,” said Paula A. Norby Krueger, owner of Norby Krueger Tax & Bookkeeping Services in Wahpeton, N.D.

Of course, this isn’t true—tax refunds are granted because too much money was withheld from your paycheck, meaning you paid more in taxes than you actually owed. Getting some of this money back is a unique opportunity to further some of your financial goals. Here’s a look at good and bad ways to spend your refund check.

5 Things You Shouldn’t Do With Your Tax Refund

1. Make big purchases that require payments. Norby Krueger said it’s unwise to purchase anything with a payment because you’re just incurring new debt. The money from your tax refund might cover the first few payments, and you’ll be on the hook for the rest.

This category is broad, but could include furniture, electronics or even installing a swimming pool in your backyard. One of the most common offenders? Cars. According to Kelly Blue Book, the estimated average of a new car is $36,978, so while your tax refund may make a nice dent, it would be a mistake to ignore your future payments.

2. Splurge. “You’re starting to see retailers push promotions with online tax preparation companies that allow consumers to roll their refunds into gift cards,” said Chris Jackson, CFP and founder of Lionshare Partners, a Los Angeles-based, fee-only financial planning firm.

It can be tempting to spend your tax refund on an expensive handbag or a big-screen TV, but think twice about that. The government is essentially returning money you earned, so don’t waste your hard-earned cash.

3. Take a carryforward. A tax carryforward allows you to save your tax refund to pay any taxes you’d owe the following year. If you pay quarterly taxes, this may be a good idea. But for most Americans, it’s not the best use of the funds.

“Unless you are incapable of not spending your money, do not carryforward the tax refund into the new year,” Jackson said. “That is an interest-free loan to the government.”

“Instead, you should pay down debt, max out retirement plans or increase emergency funds,” he said.

4. Nothing. Allowing your tax refund to sit in your checking account might seem like a responsible move, but it’s actually unwise. If it’s just sitting there, you’ll likely be tempted to use it.

Even if you have seriously impressive self-restraint, Jackson said that cash is an asset class that can and should be managed. Take advantage of high-interest savings accounts or consider a short-term bond ladder — i.e., a bond portfolio composed of different maturities.

5. Make hasty investment decisions.“Investors have to first identify what their goals are in order to select appropriate investments that make up their overall asset allocation,” said Levi Sanchez, CFP and founder of Millennial Wealth, a Seattle-based fee-only virtual financial planning firm.

Whatever you do, don’t just get caught up in investment hype, especially if you’re just entering the market. Take the time to learn about strategies that are the best for your financial situation, and consider reaching out to a financial advisor for guidance. Sanchez advises investors who don’t want to actively manage their portfolios on a weekly or monthly basis to consider passive investment vehicles, like index funds and ETFs,  i.e., electronically traded funds.

10 Things You Should Do With Your Tax Refund

“If you receive a nice windfall of cash from your tax return, consider how it can impact your financial situation if you put it to good use,” Sanchez said. “Whether that’s paying down high-interest debt, saving for a home down payment or putting [it] toward long-term investments.”

Improve your financial situation by using your tax return for one of these good causes.

1. Save for retirement. If you’re not saving as much for retirement as you’d like — or aren’t at all — take this opportunity to pad your account. In an ideal world, you’ll have 25x your annual expenses in your retirement account when you retire.

“If you are maxing out your tax-deferred vehicles — 401k and HSA — then use those tax savings to invest in a Roth IRA,” Jackson said.

2. Contribute to a 529 plan. “A lot of consumers are ignoring their retirement in lieu of college funding when they can do both,” Jackson said. “They can fund their 401k and use the tax refund to fund a 529 plan.”

If you’re not familiar with 529 plans, these tax-advantaged educational savings tools allow you to put money aside for educational expenses. Two types of plans are available — prepaid tuition plans and education savings plans — and all fifty states and the District of Columbia sponsor at least one of these options, according to the U.S. Securities and Exchange Commission.

3. Start an emergency fund. According to a report from the Federal Reserve, 40% of Americans do not have enough cash on hand to cover a $400 unexpected expense. If you’re lacking an emergency fund, or if it isn’t equipped to handle six to 24 months of expenses, Jackson recommended using your tax refund to pad your savings. Being prepared for unexpected costs will bring you peace of mind and can keep you from going into debt.

4. Invest in yourself. “Your ability to convert human capital into financial capital is the key to economic freedom,” Jackson said.

He advised boosting your human capital by improving or acquiring new skill sets. For example, you might take an online course that will give you the credentials required for a promotion at work.

5. Pay off credit card debt. In 2018, Americans paid $110 billion in credit card interest and fees, according to a MagnifyMoney analysis of FDIC data through September 2018. If you’re in debt, this is an opportunity to pay it down or maybe even eliminate it.

And once you do, stick with it. “Make a commitment to yourself not to go back to using the credit card,” Norby Krueger said. “Get out of debt and stay there.”

6. Make home improvements. Fixing up your home in a manner that adds equity can be a sound investment, Norby Krueger advised. A few projects that add value to a home include updating the kitchen, finishing the basement and making the house more energy efficient, according to Consumer Reports.

7. Save for a down payment on a home. As recommended by Sanchez, putting your tax return toward a down payment on a home can be a wise investment in your future. If you’re buying your first home, your down payment can be as low as 3.5% of the purchase price with an FHA loan. Most lenders offer conventional loans starting at 5% of the purchase price, but private mortgage insurance is required when you put down less than 20%.

8. Opt for experiences over things. If you want to use your tax refund for something fun and your finances are in good shape (well-funded emergency fund, no credit card debt, on track for retirement) consider traveling instead of shopping. Experiences create memories that last a lifetime, while most objects have a shelf life. Just make sure your vacation doesn’t exceed your budget.

9. Make charitable donations. If you truly don’t need the money, consider donating all or part of your tax refund to a charitable cause close to your heart. As an added bonus, if your contribution meets IRS requirements and you can itemize your taxes, you might even be able to write it off as a deduction.

10. Make an extra mortgage payment. Own your home outright faster than planned by using your tax refund for an additional mortgage payment. Make sure the second payment is put toward your loan principal.

Receiving a check from the IRS is exciting, but don’t forget this is money you worked hard for. Wasting money never feels good, so think long and hard about the best possible use for your tax refund.

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.