Advertiser Disclosure

Banking

How to Beat Inflation

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

Written By

Inflation is the general upward movement of the price of goods and services in an economy. With inflation, everything from a gallon of milk to a gallon of gas costs more tomorrow than it does today — and it gradually erodes the purchasing power of your savings.

Beating inflation isn’t hard, but you need a strategy in place to do the job. Currently, the annual rate of inflation is 2.1%, according to the latest Consumer Price Index (CPI). At time of writing, the national rate for a savings account held at a deposit institution is 0.09% APY, while the average return on certificates of deposit (CDs) is around .13% to .98%, according to the FDIC. Let’s take a look at the tools you’ll need to beat inflation.

Strategies to beat inflation

“The best inflation hedges are actually buying assets which might increase in value with inflation,” said David J. Haas, a certified financial planner with Cereus Financial Advisors in Franklin Lakes, N.J. This means buying things today that will increase in value at a rate that is equal to or higher than the rate of inflation.

Invest in the stock market to beat inflation

The stock market is an excellent long-term inflation hedge, according to Haas. Investment products like individual stocks, exchange traded funds (ETFs), and mutual funds, have the potential to outearn inflation.

“When you own stock, you own part of a corporation which has price-setting power. That means corporate book-value as well as revenues rise with inflation,” said Haas.

The broad stock market over the long-term has provided average annual returns of 6% to 7% above the rate of inflation, said certified financial planner Randy Bruns, founder of Model Wealth in Naperville, Ill.

“Diversified portfolios of stocks and bonds have earned inflation-adjusted (or real) returns of between 3% and 6% over the long-term, depending on the makeup of the portfolio,” said Bruns.

What about stock market volatility?

Financial planners caution that investors must consider that market volatility can affect your return.

“In years like 2019, a portfolio of stocks beat inflation by double digits, but that won’t persist as a long-term average,” said Bruns. “Nor should major stock market losses ultimately change your ability to outpace inflation over many years. It’s reasonable to begin with an assumption that your portfolio might earn historical inflation-adjusted returns of 3% to 6%, but to then reduce those returns by a percentage point or two to be conservative.”

Beat inflation by investing in bonds

Another inflation-beating option is bonds, loans where you give a government or a corporation your money, in exchange for a promised return over time. But the type you purchase is vital — bond prices and interest rates typically move in opposite directions, and during high-inflation periods, interest rates rise which means bond rates decline.

“The entity pays you back over time, but inflation erodes the value of the currency being paid back,” said Haas. “So bonds are typically a poor investment in inflationary times. You are being paid back something which is less valuable than what you loaned out.”

Bonds diversify your investments

However, purchasing some types of bonds to diversify your investments can be a smart overall strategy. For example, short-term bonds, which mature in one to four years, can do well in an economy where the interest rate is rising.

Longer term bonds, however, offer a trickier scenario as investors can’t accurately predict the change in interest rates and inflation over a longer time period. Higher inflation can reduce the value of payments, causing bond prices to fall.

Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) are bonds that are designed to do well during inflationary periods. The government-backed bond was introduced in 1997, and offer an adjustable principal that’s linked to the CPI. As inflation rises or falls, the value of the investment adjusts with it.

Investors can also purchase bond funds, which are similar to mutual funds but are invested in bonds instead of stocks. Managers of bond funds often buy and sell according to market conditions, and investors receive monthly income payments, which may vary from month to month.

“Investing in high quality bonds — through a broad market bond index fund, for example — has historically provided average annualized returns of 2% to 3% over inflation,” said Bruns.

Buy annuities to beat inflation

Annuities are complex investment contracts typically offered by insurance companies to provide investors with an income stream for retirement. While they can be another answer on how to beat inflation, you have to choose wisely. Some annuity products pay the investor a fixed monthly income that isn’t adjusted for inflation, but others have features designed to address inflation head-on.

One tool is a cost-of-living adjustment (COLA) rider that will increase your annuity income payment by a percentage you choose. For example, if you choose 3%, which is higher than the current rate of inflation, your monthly payments will grow by 3% every year. The average inflation rate, tracked since 1913, is 3.1%.

Another feature is a CPI-rider that automatically adjusts your monthly payment based on the current rate of inflation. During times of high inflation, your income payment will go up and when inflation is stagnant, your payments will stay the same.

Build a CD ladder

While the average CD rate won’t help you beat inflation, building a CD ladder can help you meet or beat the inflation challenge. A CD ladder is a portfolio of CDs with staggered certificate terms to take advantage of higher APYs offered by some banks and credit unions.

You start by purchasing CDs once a month or every few months to lock in rising rates, with the newest CD likely earning the highest rate. With a CD ladder, each certificate will complete its term at regular intervals, giving you steady access to cash at higher rates than you would receive in a regular savings or checking account.

Once interest rates start to stabilize, you can consider holding CDs for longer terms. While owning CDs can be a safer approach than some of the market-tied investments, in higher inflationary periods, your CD may simply match the current rate of inflation instead of beating it.

“CD ladders are a great idea for those assets folks would like to keep FDIC insured,” said certified financial planner Dennis R. Nolte, vice president of Seacoast Investment Services in Oviedo, Fla.

Real estate can help you beat inflation

As inflation rises, investing in real estate can become an attractive option for beating inflation. When interest rates are low, the cost of getting a mortgage is often lower, as well. Low inflation generally brings down mortgage rates, which will reduce your payment, making it more affordable to buy a home.

Inflation can reduce the value of your debt because it reduces the value of money. Purchasing real estate by incurring debt allows you to realize the benefit of the money when it could go farther. As long as your wages keep up with the pace of inflation, you will pay back the loan with an interest rate that is effectively lower thanks to inflation.

“Real estate can be a good inflation hedge because it has value which may increase with inflation,” said Haas.

However, inflation can negatively affect housing prices, causing them to fall in the short term. Real estate should be considered a long-term investment, added certified financial planner Jon L. Ten Haagen with Ten Haagen Financial Group in Huntington, N.Y.

“Real estate, if it is an open-ended position, could be a good investment if you have the time horizon,” he said. “Time is your friend when investing.”

Delay claiming social security benefits

If you’re nearing the age of retirement, delaying your Social Security retirement benefits can help you beat inflation. You earn an 8% increase in your benefit amount each year you wait to collect, up to age 70. If you retire at 65, for example, you have the potential of increasing your monthly benefit check by as much as 40%.

“Social Security provides at least some ability to offset inflation, though increases in Medicare-related costs often chip into annual increases,” said Sean M. Pearson, certified financial planner with Ameriprise Financial Services in Conshohocken, Pa. “The longer you can wait to collect Social Security, the more protection you will have against inflation during retirement.”

If you collect Social Security before age 70, your future cost-of-living increases will be based on a lower monthly amount. For most people, the difference in collecting Social Security at age 62 means earning less than half as much than if that same person waits until age 70.

If you’re married, you can adopt strategies to make the most of your benefits. For example, the higher-earning spouse might delay benefits until age 70, while the younger spouse could collect payments sooner to create income.

“Beating inflation is typically a long-term mindset, as in saving for retirement,” said Bruns. “An inflation-beating investment matters because the more you can outpace the rising cost of your retirement, the less you’ll have to contribute out of pocket.”

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

List of Banks and Credit Unions Offering COVID-19 Relief

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.

Written By

Millions of Americans are struggling with changes to their work hours and incomes. In response, many banks and credit unions are offering relief packages, often waiving certain fees or granting expedited services. Although not listed below, community banks may offer an even stronger support system to those financially impacted.

We will continue to update this page regularly.

List of banks and credit unions offering relief to customers affected by COVID-19

Alliant Credit Union

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Alliant Credit Union does not currently have a COVID-related information page available on its website. However, according to an Alliant representative, the credit union is working with members on a case-by-case basis to remove deposit-related account fees.

Ally Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Online-only Ally Bank currently has an expansive COVID-19 relief plan, especially in comparison to other banks. The bank has outlined measures to help customers, employees and communities.

Until July 18, 2020, Ally Bank deposits customers can benefit from waived overdraft fees; free expedited checks and debit cards; and refunded excessive transaction fees on your savings or money market accounts.

Transfers and online payments remain uninterrupted. Plus, Ally Bank has made it faster to deposit checks of $50,000 or less online with Ally eCheck deposit. You can still use mobile deposit via the Ally Mobile app.

American Express

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

American Express has not released any specific COVID-19 relief plans to help its Personal Savings banking customers at this time.

Customers of the online-only bank can continue to access their accounts online. They can also call customer service at 1-800-446-6307 — just beware that wait times may be longer than usual.

Bank of America

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Bank of America’s COVID-19 response is to urge customers who are facing financial hardship to contact a representative to request refunds for fees on overdrafts, non-sufficient funds and monthly maintenance. Customers may also use the bank’s virtual assistant, Erica, to get answers to any questions, including those that are coronavirus-related.

Bank of America also encourages its customers to turn to mobile and online banking first, both of which allow you to check your account status, pay bills and deposit checks.

Bank of America financial centers remain open. The bank’s locations are open Monday through Friday, 10 a.m. to 4 p.m. local time, while Saturdays maintain regular hours, which vary from branch to branch. Branches that remain open undergo “enhanced, daily cleanings” and “other measures to limit the risk of exposure, based on guidelines from the Centers for Disease Control and Prevention (CDC).”

BBVA

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

In response to COVID-19 difficulties, BBVA banking customers can request waived and refunded ATM fees, penalty-free CD withdrawals (for CDs opened before March 1) and overdraft fee refunds. You can make these requests by calling 1-844-228-1872.

BBVA locations have transitioned to primarily drive-thru service only. Branches that do not have a drive-thru are open on a limited basis. ATMs remain open 24/7 and banking center lobbies are open by appointment, which you can schedule by calling your banker or banking center. BBVA Online Banking and the BBVA Mobile Banking App are also available to you 24/7.

BMO Harris

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Under its financial relief program, BMO Harris asks deposit account customers with questions about account fees to send them a message. Customers can expect a response within 10 business days.

You can also call the bank’s Customer Contact Center at 1-888-340-2265, which operates seven days a week from 8 a.m. to 8 p.m. CST. If you need assistance with your credit card account — whether to report a lost or stolen debit card, activate a debit card or reset your BMO Digital Banking password — bankers are available 24/7.

All BMO branch lobbies are currently closed, while drive-up service remains available at most branches. Those located near the bank’s main Chicago branch at 111 West Monroe can visit the branch, open for limited access, Monday through Friday from 9:30 a.m. to 4 p.m. The branch is open exclusively to elderly and vulnerable customers between the hours of 9 a.m. and 9:30 a.m.

Capital One

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

In response to the coronavirus pandemic, Capital One is waiving its out-of-network ATM fee. It won’t reimburse you for a third-party surcharge, though.

If you are facing financial difficulties, you can contact Capital One and a representative can help to find a solution for you. Note that customer service wait times are likely longer than usual right now.

Capital One has temporarily closed select branches that do not have drive-thru tellers or protective glass at teller counters. Branches that do have those features will remain open via those outlets and are being disinfected per CDC guidelines. Tellers may still assist customers in the lobby in special circumstances. Capital One ATMs remain open 24/7. Capital One also strongly encourages its customers to use the Capital One mobile app or online banking to make payments, check balances and deposit checks.

Charles Schwab

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Charles Schwab has no specific measures in place to provide relief aid to its banking customers amid the coronavirus outbreak.

Schwab branches are temporarily closed and will remain so until local, state and federal government recommendations indicate it is safe to reopen. Still, you can contact a branch directly by phone to reach a representative. Schwab also encourages customers to go digital by completing tasks online or via its mobile app, which includes check-depositing capabilities.

Chase

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

In light of the pandemic, Chase Bank customers are encouraged to use the Chase Mobile app and online banking to complete their account-related tasks. Chase asks that those who need help because of COVID-19 reach out to a representative, though you may experience wait times that are longer than usual.

Several Chase branches are temporarily closed, while other branches’ hours and services have been adjusted. You can check the status of your branch on the Chase Mobile app or online. Chase branches and ATMs are being cleaned with EPA-approved disinfectants.

On a wider scale, JPMorgan Chase has pledged $50 million to nonprofit organizations to help support “healthcare, food and other humanitarian relief” efforts globally; community partners; and small businesses in the U.S., China and Europe.

Citibank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Citibank is waiving monthly service fees and early withdrawal penalties through May 31, 2020. Fees are also temporarily waived on safe deposit boxes and non-Citi ATM usage.

Citibank also asks that those affected by COVID-19 contact the bank for assistance, although wait times may be longer than usual. If you already work with a personal banker or financial advisor through Citibank, you can contact them directly during their regular business hours. You can also text “App” to 692-484 to avoid call wait times and Citi will direct you to its digital tools or automated response system or send you a link to message a representative in the Citi Mobile App.

Select Citibank branches are closed and those that are open are operating under temporarily limited hours and undergoing “daily cleaning procedures … on high-touch surfaces,” providing hand sanitizer and practicing CDC recommendations like social distancing. You can also access your accounts and funds via the Citi Mobile app, the Citibank website and Citi ATMs on a 24/7 basis.

Citizens Access

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Citizens Access encourages customers to contact its Customer Care team through a a secure message through your online account or by calling a representative at 1-888-201-6505, available Monday through Friday from 8 a.m. to 10 p.m.; Saturday from 9 a.m. to 3 p.m.; and Sunday from 10 a.m. to 3 p.m. EST. You can expect a secure message response within one to three days; wait times on the phone will also be longer.

As Citizens Access has no physical branches, you can always access your account online, both on desktop and your mobile browser. The bank does not have a mobile app.

Citizens Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Citizens Bank deposit account customers can expect overdraft fee waivers, service charge reversal and penalty-free early CD withdrawals, as part of the bank’s COVID-19 relief response. Customers with checking, savings and CD accounts can call customer service at 1-800-922-9999 Monday through Friday from 7:00 a.m. to 10:00 p.m. and Saturday and Sunday from 9:00 a.m. to 6:00 p.m. local time. If you want to open a new account over the phone, you can call 1-877-360-2472.

Citizens Bank branches remain open. Hours are reduced to Monday through Friday from 10 a.m. to 3 p.m. and on Saturday from 9 a.m. to 12 p.m. (unless the branch is typically closed). All drive-ups remain open, while branch lobbies are open by appointment only and limited to two customers at a time. Teller counters, also available by appointment only, now have plexiglass windows installed and serve one customer at a time “while adhering to social distancing protocols.” You can contact or check the status of a Citizens Bank branch here.

Digital Federal Credit Union (DCU)

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Digital Federal Credit Union offers an extensive financial relief program, which is available to its members in any financial rut, not just during this pandemic. Until further notice, DCU is offering unlimited ATM fee reimbursements and forgoing all overdraft and nonsufficient funds fees. Those who need to borrow money during this time may take out a personal loan from DCU, which won’t require payments for 60 days on loans opened after March 25, 2020.

All DCU branch lobbies are closed, though some branches remain open through their drive-up teller windows, which can help you with normal transactions. You can check your branch status here.

Otherwise, you can access your account 24/7 via online banking and the DCU mobile app. You can also send an email for non-urgent requests, which are typically answered in two business days, or you can call customer service, though it is currently experiencing extremely high call volumes that may result in much longer wait times.

Discover

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Discover has “support in place for qualified Discover customers who experience hardship” due to the coronavirus pandemic. Although it is unclear what qualifies customers to receive this support, a Discover representative adds that “Discover customers may receive assistance related to payments, fees and interest.”

Discover Online Banking customers can call 1-800-347-7000 (TTY/TDD 1-800-347-7454) any time to reach a Discover representative for assistance. You also can continue to access your accounts online or via the Discover mobile app.

Fifth and Third Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Fifth Third Bank deposit account customers can benefit from fee waivers for up to 90 days on a range of consumer products and services. Customers can also call 1-800-972-3030 from 8 a.m. to 6 p.m. EST Monday through Friday and 10 a.m. to 4 p.m. EST Saturday (closed on Sundays) for assistance.

All Fifth Third Bank branches are available via drive-thru service or by appointment only. You can use the bank’s branch and ATM locator to check your local branch’s status or find the nearest ATM. For most other services, like checking balances or ACH transfers, you can use the bank’s website or mobile app.

Goldman Sachs Bank USA

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Customers of Marcus by Goldman Sachs can make penalty-free withdrawals from regular CDs at this time, as a direct response to COVID-19. You can do so by calling 1-855-730-7283. Marcus contact centers are operating virtually, with temporary hours of 9 a.m. to 6 p.m. ET Monday through Friday and 9 a.m. to 6 p.m. ET on Saturday and Sunday.

You can still access your Marcus accounts online. Apple device users can also benefit from the Marcus mobile app.

KeyBank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Select KeyBank customers “may be eligible for immediate help,”which can include “waiving certain service charges on KeyBank checking and savings accounts.”

KeyBank has closed all branch lobbies and select branches altogether. Those that remain open are operating via their drive-thru services. If you need to meet with a banker for select services or to access your safe deposit box, you can schedule an appointment to do so. Of course, you can always access your accounts online and through KeyBank’s mobile app. You can also call KeyBank’s 24/7 customer service line at 1-800-539-2968, though be aware that there are currently longer hold times than usual.

The KeyBank Foundation has also made an initial $1 million commitment to “support vulnerable individuals, small businesses and neighborhoods.”

Navy Federal Credit Union

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

During this time, Navy Federal Credit Union members can withdraw from certificates before maturity without penalty; get free overnight shipping on cashier’s checks and debit cards; deposit up to $50,000 per day via mobile deposit; and withdraw up to $1,000 per day from non-Navy Federal ATMs (the $1,000 daily limit on Navy Federal ATMs remains).

Members can also take advantage of the credit union’s OOPS overdraft protection for all checking accounts, which offers no fee on overdraft transactions of less than $5 and caps overdraft charges at three per day. Members with OOPS can request a refund for the $20 overdraft fee charged and for non-sufficient fund (NSF) fees by sending a secure message through your account.

Several Navy Federal branches have temporarily closed, while others currently have reduced hours. You can check the status of your local branch here or on the Navy Federal Mobile app, where you can also find accessible ATMs.

PenFed Credit Union

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

PenFed Credit Union is not offering specific relief measures for its deposit account members in response to the COVID-19 crisis.

Select PenFed financial centers are temporarily closed, while others are operating on adjusted hours. Saturday drive-thru service at open financial centers only includes everyday financial transactions like cash withdrawals and loan payments.

PenFed encourages customers to contact their local branch for information about updated hours and services, which you can also check online on the bank’s locations page and COVID-19 information page. You also can access your accounts for several services online and on the PenFed mobile app.

PNC Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

PNC Bankcustomers who are experiencing financial hardship as a result of COVID-19 should call 1-888-762-2265, which is available 7 a.m. to 5 p.m. ET Monday through Friday and 8 a.m. to 5 p.m. ET on Saturday and Sunday. Virtual Wallet customers may call 1-800-352-2255, available during the same hours.

If you are eligible for assistance, a PNC representative will discuss your options with you, which include waiving or refunding fees on deposit accounts (and other products). Qualified customers can also take out an emergency hardship loan “at a low rate.” PNC did not make it clear how it determines eligibility for assistance, but it stressed that customers should call for help.

Select PNC branches are closed, while others remain open with limited hours and access, with some are operating via drive-up window only. You can use PNC’s branch locator to check the status of a branch and to find a branch that offers essential appointments, made available for safe deposit box access, loan closings or other banking services that you cannot make otherwise. PNC is also still widely accessible via online, mobile and voice banking.

State Employees’ Credit Union

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

State Employees’ Credit Uniondoes not have specific relief plans in place for its deposit account customers, although its loan customers can seek assistance in light of the coronavirus pandemic. Members can contact a representative through a secure message when logged into their account, by calling your local branch or by calling 24/7 Member Services at 888-732-8562 to “discuss how they can help.” Note that Member Services is experiencing high call volumes between 10 a.m. and 8 p.m. every day.

SECU branches have pivoted to drive-thru service only for most banking services. You can call to schedule an in-person appointment if you need to access a safe deposit box, submit tax return information or discuss loans. Otherwise, you can use the credit union’s website, mobile app, CashPoints ATMs, automated voice response service and 24/7 Member Services Support Center.

TD Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

TD Bank encourages customers affected by COVID-19 to call 1-888-751-9000 to see how the bank can support you as it says it “may be able to provide some financial relief.” Of course, wait times are uncharacteristically long at this time.

Assistance options offered by TD Bank will depend on your situation and request but may include fee refunds, early, penalty-free access to CDs and payment extensions. The bank’s customer assistance offers continue to evolve as well, according to a bank representative.

Most TD Bank branches are temporarily closed or operating via drive-thru only. At TD Bank drive-thrus, you can make deposits, withdrawals and payments; cash checks; get a bank check or money order; and make business deposits or coin orders. Branches with open lobbies are available by appointment only. TD Bank branch reduced hours are 9:30 a.m. to 4 p.m. Monday through Friday via drive-thru, 9:30 a.m. to 1 p.m. Saturdays unless normally closed and closed on Sundays (all times are local). You can check the status of branches by state on TD Bank’s COVID-19 updates page.

TD Bank ATMs are still accessible, as is its website and banking app.

TIAA Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

As part of the bank’s coronavirus relief response, TIAA Bank deposit account customers can benefit from waived fees for wire transfers, ATM transactions and insufficient funds through the month of May.TIAA has also increased debit and cash withdrawal limits.

TIAA Bank financial centers have all moved to drive-thru tellers only. Those that don’t have a drive-thru window will see clients through appointment only. You can set up an appointment by calling your local financial center.

You may also easily manage your TIAA Bank accounts online and through the TIAA mobile app. To speak with a representative, banking customers may call 1-888-882-3837 from 8 a.m. to 11 p.m. EST, although wait times are abnormally long.

Truist (formerly BB&T and SunTrust)

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Truist, the result of a recent merger between BB&T and SunTrust, does not offer any relief related to its deposit accounts.

For further assistance, Truist encourages heritage BB&T clients to call 1-800-226-5228 and heritage SunTrust clients to call 1-877-820-2103. Watch out for long wait times, however, which customers have reported on social media.

Local BB&T and SunTrust branch hours and services are temporarily moving to drive-thru teller services only, appointment-only in-person visits and select branch closures. Customers still have 24/7 access to ATMs as well as online, mobile and telephone banking.

Truist has also established a $25 million Truist Cares initiative, which will provide funding to the CDC Foundation and Johns Hopkins Medicine; local United Way organizations; and grants to Truist’s community partners.

U.S. Bank

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

U.S. Bank has suspended fees related to excessive withdrawals. Deposits customers who have been financially affected by COVID-19 should call the bank at 1-888-287-7817 for assistance.

U.S. Bank branch operations are temporarily reduced, and the bank encourages customers to use drive-up windows instead of going inside a branch. You can check your local branch’s hours and status online. Otherwise, you can still access your U.S. Bank accounts on the bank’s mobile app, by phone or on its website.

Wells Fargo

  • Waives ATM fees
  • Waives overdraft/NSF fees
  • Waives excessive transaction fees
  • Waives early CD withdrawal penalty

Wells Fargo has said it will offer fee waivers for customers who contact the company. On a larger scale, the Wells Fargo Foundation has pledged up to $6.25 million in donations “to support domestic and global response to the COVID-19 and to aid public health relief efforts.” This includes funding “at the local level,” as well as for the national CDC and the International Medical Corps.

Select Wells Fargo locations are temporarily closed, while the branches that remain open have temporarily reduced hours. You can check the status of a Wells Fargo branch here. If you need a service that can only be completed in a branch, you can make an appointment. Wells Fargo call centers still remain open, though they are experiencing higher-than-normal call volume and longer wait times.

You can also access your accounts online and on the Wells Fargo Mobile app, where you can deposit checks, move money and more. Wells Fargo also reminds customers that they can use contactless cards or digital wallets for payments.

Additional bank and federal advisories for customers

The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA) have temporarily extended unlimited insurance. Thanks to the CARES Act, your bank and credit union deposits are wholly insured through Dec. 31, 2020. Typically, an individual is covered up to $250,000 per account type, with increased FDIC insurance for joint ownership or beneficiaries. This temporary extension means you don’t have to worry about losing any of your money in a checking, savings, CD or money market account in the event of a bank or credit union failure.

The Federal Reserve has temporarily amended Regulation D to allow for more than six withdrawals from savings accounts. One way that Regulation D differentiates savings accounts from checking accounts is by limiting savings accounts to six “convenient” transfers per month. This includes pre-authorized and automatic transfers; telephone transfers; and withdrawals and transfers made by check, debit card or a similar method. For now, you don’t have to worry about this limitation.

Less “convenient” transfers which are not included in that otherwise limited category are those made in person at the bank, by mail, at an ATM or over the phone when you receive the withdrawal via a check in the mail.

Typically, going over the “convenient” transfers limit would result in an excessive transaction fee charged by the bank. With the Fed’s latest change, your bank may also waive their excessive transaction fees as further COVID-19 relief.

Many institutions are warning customers about keeping their information and money safe from fraudsters. Unfortunately, scams and phishing attempts are cropping up to take advantage of this crisis. Be wary of phone calls, emails and texts from suspicious senders who ask for personal or account information, and avoid clicking on links in emails and texts. When in doubt, head to your institution’s official website to verify your bank’s contact information, or log into your account to access its secure messaging system.

Government relief and the Coronavirus Aid, Relief, and Economic Security (CARES) Act

American taxpayers and business owners may also get some relief from the U.S. government’s $2 trillion financial relief package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in late March.
Find out how you can benefit from the relief package below.

One-time stimulus checks

Taxpayers’ long-awaited direct payments, or recovery rebates, will be determined by their most recent tax return. For many, this will be your 2019 tax return, since we have yet to file taxes for 2020. If you have not yet filed your 2019 tax return, the government will turn to your 2018 return instead.

How much you’ll get: For individuals, the plan will provide one-time direct payments of $1,200 ($2,400 for joint returns) to those with an annual income of $75,000 or less. Payments will decrease incrementally for those who made more than $75,000 and will stop altogether for individuals who earned more than $99,000. Individuals will also receive an additional $500 per child. You can use our stimulus check calculator to determine your payment amount.

What to do to get your stimulus check: For most taxpayers, there’s no need to sign up. All you need is a valid Social Security number to receive these relief rebates. Depending on what you requested on your tax return, the IRS will send the payment either via direct deposit or a paper check.

  • If you receive Social Security retirement, Social Security Disability Insurance or Railroad Retirement benefits, the IRS will use the information on your 1099 Social Security forms (Form SSA-1099 or Form RRB-1099) to determine your payments. Individuals who qualify with these forms will only receive additional payments for dependents at this time if they registered their dependents via the IRS’ Non-Filers: Enter Payment Info tool by April 22, 2020. Otherwise, the additional $500 payment per eligible dependent will be paid in association with your tax filing for tax year 2020.
  • Other eligible U.S. citizens or permanent residents may use the IRS’ Non-Filers: Enter Payment Info tool. You can use this tool to submit your most recent banking information to the IRS for faster payment. You are eligible to use this tool if you had a gross income of $12,200 or less ($24,400 for married couples) for 2019 and were not required to file, nor planned to file, a federal income tax return for 2019. You will have to submit your current mailing address, an email address and valid Social Security number, in addition to other personal and identifying information.
  • Supplemental Security Income (SSI) recipients and veterans who receive veterans disability compensation, pension or survivor benefits from the Department of Veterans Affairs, and who did not file a tax return for either 2018 or 2019, may also use the Non-Filers: Enter Payment Info tool, as these groups are not yet automatically eligible for economic impact payments.

When the stimulus checks will arrive: The IRS began sending out payments the week of April 13, 2020. You can expect your payment to come sooner if you have direct deposit set up on your tax return or submitted your bank account information via the Non-Filers: Enter Payment Info tool.

You can track your payment with the IRS Get My Payment tool. This tool indicates the status of your payment, including the date your payment is scheduled to be direct deposited or mailed. Get My Payment will also provide eligible individuals a chance to submit their bank account information for direct deposit. If your check has already been scheduled for delivery, this feature will not work, so it’s best to take advantage of it as soon as possible

Fastest ways to get your stimulus check: The fastest way to get your stimulus check is via direct deposit to your bank account from the IRS. If your address or bank account information has changed since 2018, file your 2019 tax return as soon as possible, if you haven’t already.

Taxpayers with prepaid accounts can also receive the government COVID-19 stimulus checks, thanks to the Consumer Financial Protection Bureau (CFPB) relaxing rules around the Electronic Fund Transfer Act (EFTA), which typically prohibits individuals from opening new accounts to receive government benefits. So if you have a prepaid account, you may want to provide the IRS with your account information via the Non-Filers: Enter Payment Info tool as soon as possible so you can receive your stimulus payment faster.

What to know about taxes and stimulus checks: These recovery rebates are considered advanced tax credits for 2020 and should not be taxed for most. Since the payment amounts are determined based on your previous tax returns, however, the payments could be subject to adjustment if you earned more or less this year compared to prior years.

For example, if you received too large of a rebate proportionate to your most recent income, you could end up owing back the excess. However, it is so far expected that taxpayers will not have to return or pay tax on any portion of these rebates, regardless of income changes. If you receive a payment that is too low, you also may be able to receive a tax credit from your 2020 taxes to make up the difference.

Expanded unemployment benefits

For starters, individuals who have found themselves unable to work as a result of COVID-19, including those who are sick, quarantined or taking care of family members, will be able to collect unemployment, extending those benefits beyond those who were fired or laid off.

The CARES Act has also included self-employed individuals under this provision, meaning freelancers, gig workers and contractors may also collect unemployment during this time. Also included are people seeking part-time work; workers whose unemployment benefits have run out already; clergy and employees of religious organizations; and individuals whose work history would not typically be sufficient.

The stimulus bill will also add $600 on top of existing unemployment benefits (currently averaging about $300 a week) for four months and extend unemployment insurance by 13 weeks. The bill will also ensure that workers maintain their full salaries if they lose their job due to the coronavirus pandemic.

This additional funding will come from the federal government rather than from states and employers, who typically fund unemployment benefits. Unemployment benefits are still taxable under current law, which the stimulus bill does not account for. So if you are able, you may want to elect for tax withholding now, so you don’t get hit with a big bill at tax time.

How to file for unemployment: Unemployment insurance is done by state, so you will file for unemployment in the state where you last worked. If you worked in multiple states, you can apply in any one of those states. You can check your state’s benefits and eligibility requirements here.

The fastest and safest way to apply for unemployment at this time is via your state’s unemployment website or over the phone. However, given that millions of Americans have recently found themselves unemployed, you may face unusually long wait times when contacting unemployment offices. Perhaps visit your state’s website during off hours.

When you file for unemployment, you’ll have to provide your personal information, including your name, contact information, Social Security number and bank account information, if you have one, for direct deposits. You will also have to provide information about your last place of employment, including your past employer’s name and contact information, the last date you worked, the reason you’re not working anymore and your previous earnings.

Some states may require you to “certify for benefits” on a weekly or bi-weekly basis, which requires you to prove your continued eligibility for unemployment benefits. This often includes showing that you are willing and able to work and that you are actively looking for employment. Some states may waive this requirement during this time.

Eased penalties around retirement account withdrawals

The bill also allows those affected by COVID-19 to withdraw up to $100,000 from qualified retirement accounts, including your 401(k) and IRAs, without facing the 10% early withdrawal penalty that typically applies when you make withdrawals when you are under the age of 59 ½. You will still have to pay income taxes on your withdrawals, though these taxes will now be due over the course of three years instead of immediately. Additionally, the bill waives required minimum distributions (RMDs) for select retirement plans for this year.

Qualified individuals include those who are diagnosed with COVID-19 or have a spouse or dependent who has been diagnosed with COVID-19, as well as those who have been laid off, quarantined, furloughed or faced reduced hours due to the pandemic. This applies through Dec. 31, 2020.

Even though the bill allows it, withdrawing from your retirement accounts before you’ve actually hit retirement is generally not the best plan — especially if you’re already close to retiring. By doing so, you run the high risk of hurting the nest egg that you’ve worked hard to build for retirement. Still, this may be the only source of money available to many right now.

Small business relief

The stimulus plan includes $425 billion for the Federal Reserve to leverage for emergency loans to distressed companies and $75 billion for industry-specific loans. Despite previous claims from President Trump that he alone would choose which businesses received aid, this lending system will fall under oversight by an inspector general and a congressionally-appointed panel.

The spending package also provides $350 billion that will go toward lending programs for small businesses, but only those that keep their payrolls steady through the crisis. There is also a reward for small businesses that keep their workers in the form of federally-guaranteed loans that will be forgiven if the employer continues to pay its workers throughout this time of crisis.

Additionally, the plan allocates $130 billion for hospitals and $150 billion for state and local governments.

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

What Is a Cash Management Account?

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.

Written By

Actions have consequences. Staying up too late will turn you into a zombie at work the next morning, eating ice cream for breakfast will force you to buy new jeans — and placing your money in a conventional checking or savings account could yield a piddling amount of interest.

The internet hasn’t found a way to circumvent the biological necessities of sleep and a healthy diet — yet — but it can empower banks and financial institutions to offer accounts with APYs climbing well above 2.00% in some cases, all while providing the ease-of-access and convenience of a checking account. In the evolving world of online banking, these are usually called cash management accounts, and you need to know more about them.

You may have read about cash management accounts. They go by a variety of names: hybrid checking, hybrid accounts, cash management vehicles. Like many consumer financial products, readers may be a bit unclear about how these accounts actually work — and to start, note that they are very different than the “cash management accounts” offered by certain online stock brokerages.

“We’re trying not to think like traditional bankers, with the usual boundaries of how an account should be used,” said David Hijirida, CEO of Simple, which offers its own cash management account. “What we’ve found is that most customers use our accounts in a way that combines both checking and savings behaviors.”

Let’s get to the heart of the matter by defining what these new accounts are and whether they’re right for you and your money.

What is a cash management account?

Whatever the name, a cash management account combines the high interest rates of a savings account or certificate of deposit with the accessibility of a checking account.

With some of the accounts reviewed below — like Aspiration’s Spend and Save and Simple’s Checking and Protected Goals Accounts — the product actually consists of a checking account (which typically earns little to no interest) linked with a savings account (which earns a pretty decent APY) and features instantaneous, unlimited transactions between the two. Others — like Radius’ Hybrid Checking — comprise a single checking account earning a high APY, minus all the usual requirements typical of a traditional high-yield checking account.

While cash management accounts consisting of both a checking and savings account earn some of the highest APYs, you need to watch out that you don’t keep the majority of your funds in the checking or spending portion — where it earns minimal interest. Because transferring funds between the checking and saving portions happens instantly and doesn’t come with any limits, this is an easy mistake to avoid.

The boundary between “cash management account” and “high-yield checking” account can be hazy, but they share the following characteristics that place them in the “cash management” category.

  • Zero fees: One of the more attractive facets of cash management accounts is that most have no monthly maintenance fees (or only charge a small amount). This helps differentiate them from high-yield checking accounts, many of which require users to meet multiple specific requirements each month or pay maintenance fees in order to earn the high APY.
  • A higher APY than your typical checking account: According to DepositAccounts.com (like MagnifyMoney, it too is owned by LendingTree), the average APY a checking account earns is 0.147%. Traditionally that’s been seen as the trade off depositors make with banks in order to have easy, everyday access to their funds. The cash management accounts we review here represent true hybrid accounts that combine the liquidity of checking accounts with the high interest rates of savings accounts. All of them offer a much higher APY than the average checking account and, in many cases, higher than the interest earned in many savings accounts.
  • They’re online accounts, mostly: The institutions offering cash management accounts mostly exist as ones and zeros on the web. Some of these companies, like Aspiration, aren’t even banks themselves, but have partnered with traditional banks to provide customers with their services.

How do cash management accounts earn so much interest?

While the particulars vary from account to account, the principal underlying cash management account combines a traditional checking and savings account in one instrument — you deposit money with a bank or institution, where it earns interest. The financial institution then takes a cut of that interest in order to make money, and passes the rest on to you (which is reflected in the interest that particular account earns).

Because banks prefer customers to deposit as much money as possible for an extended period, they usually give accounts and products that limit customers’ ability to withdraw their cash higher interest rates in order to incentivize depositors into using those products.

Average Checking Account APYAverage Savings Account APYAverage 1 Year CD
APY
Average 5 Year CD
APY
0.147%0.214%0.734%1.237%

As you can see from the chart above — this data comes from DepositAccounts.com — the more liquid your account, the less interest it earns for you. Checking accounts, which provide almost unlimited access to your money, earn the lowest APY on average. Certificates of deposit with a five-year term, which usually come with a steep financial penalty if you withdraw the money before the term is up, provide the highest interest, on average.

So how do the companies offering cash management accounts bypass this norm to offer customers high interest rates on accounts with little to no restrictions on withdrawals? A big part of the answer is their low overhead, thanks to their online-only operations.

Megabanks like Chase employ thousands and maintain a sprawling network of physical locations, while an online-only institution like Aspiration, offering the Spend and Save cash management account, might have only a few dozen employees on its payroll.

“Because we’re online-only, it helps us pass on those kinds of savings to our customers,” said Andrei Cherny, CEO of Aspiration.

Where does my money go when I deposit it into a cash management account?

Since many of the institutions offering cash management accounts lack the extensive infrastructure of traditional banks, you may be wondering where your money is actually deposited with these accounts.

The answer is that they partner with a bank (or a series of banks) to manage your funds. At the end of the business day, the money in your cash management account is swept into one of these participating bank’s accounts, where it enjoys the normal protections provided by FDIC accounts.

This information should all be disclosed to you when you open a cash management account, and if it’s not you should hesitate before placing a large amount of money in the account.

“As with anything, read the fine print,” said Jonathan Chapman, CFP at WJ Interests based in Sugar Land, Texas. “Look under the hood to see what banks they partner with to ensure they are working with quality institutions.”

Customers should also keep an eye on the individual FDIC-insured accounts where your money is swept at the end of the day. Make sure none of the balances exceed the insurance’s limit ($250,000) — otherwise, the portion of your balance that’s greater than $250,000 is at risk of being uninsured.

The potential pitfalls of cash management accounts

The high interest rates offered by these accounts make them attractive to customers who want their money to grow at a decent rate while still remaining accessible, but they’re not for everyone. Because most of these hybrid accounts are offered by online-only banks or institutions, customers have to feel comfortable banking with a company that may lack decades of history — especially if they’re already accustomed to doing business with another bank.

“As an advisor, my most difficult work is to get people to follow through on my recommendations,” said Jayson Owens, CFP at Bright Road Wealth Management based out of Anchorage, Alaska. “To accomplish this, I rarely recommend changes to a primary checking account. The cost in time typically outweighs the benefit of the change.”

Another related concern customers may have about these cash management accounts is if the companies offering them will stick around for the long haul. “Clients may not lose money but the company may get acquired or shuts down which would cause unnecessary hardship,” said
Deva Panambur, CFA and CFP at Sarsi, a wealth management company based in West New York, N.J.

While you’re not going to be able to waltz into the CEO’s office and demand a look at his five-year plan, you should take into account your gut reaction to how a company offering a cash management account presents itself and whether it has a viable shot at longevity.

The best cash management accounts

Account nameAPY earnedMinimum balanceMonthly Maintenance Fee
Simple Account1.40%$0.01$0
Betterment Cash Reserve and Checking0.40%$0$0
Wealthfront Cash Account*0.35% APY on the entire balance$1$0
SoFi Money0.20% APY on the entire balance$1$0
Radius Rewards Checking Account0.15% APY on balances of $100,000 and greater; 0.10% APY on balances between $2,500 and $99,999.99$100,000 to earn the highest APY; $2,500 to earn 0.10% APY$0
Aspiration Spend and Save1.00% APY on the entire balance$1,000 monthly deposit to earn 1.00% APY or $10,000 Save account balance
$0

*These cash management accounts currently don’t have a way for you to spend money directly from the account (such as a debit card or check) and require you to transfer money from the cash account to a third-party account before spending.

Simple Account

Simple was created out of frustration with the banking industry. According to the founders, they were confounded by the complexities of certain bank accounts; their solution was to offer a no fee bank account that earns interest and helps you budget your money “in one simple app.”

What makes this bank account stand apart from other online checking accounts? Well, for starters, it’s a checking account that doesn’t have any fees, not even if you use an international ATM (however, a fee may still be charged by the ATM owner). With this cash management account, you can earn 1.40% APY on all balances in your Protected Goals account, which is basically a savings account that lives within your larger Simple account, where you can instantly transfer money in and out of as many times as you want without any penalty.

SEE DETAILS Secured

on Simple’s secure website

Betterment Cash Reserve and Checking

Betterment intends for its Cash Reserve and Checking accounts to work in tandem, and offers an APY of  0.40% on funds in the Cash Reserve account.

Because money in the Cash Reserve account is held by several program banks, customers enjoy FDIC protection up to $1 million. There’s no limit to the amount of times you can transfer money in and out of your Cash Reserve account (unlike a traditional savings account at a bank) but it does take 1-2 business days to for Betterment to process these transfers.

SEE DETAILS Secured

on Betterment’s secure website

FDIC Insured

Wealthfront Cash Account

This robo-advisor offers savers a cash management account that earns 0.35% APY and doesn’t require you to open an investment account. Because Wealthfront sweeps the money you deposit in the cash account into several partner bank accounts, your money is FDIC insured up to $1 million, a selling point for those wanting large balances to receive the maximum protection. Currently Wealthfront doesn’t offer a debit card to allow you to directly spend the money with a merchant (though the company promises its working on it), but you can transfer funds from the cash account to a third-party account or an internal Wealthfront investment account free of charge.

SEE DETAILS Secured

on Wealthfront’s secure website

FDIC Insured

SoFi Money

Though it’s probably better known for its mortgages and student loans, this online-only investment firm has staked a claim in consumer banking by offering its Money account, which offers a generous APY.

SoFi doesn’t require depositors to maintain a minimum balance in this account in order to earn that high interest rate, one of the few accounts in the market that doesn’t place a barrier between the customer and the high APY. Account holders also get additional goodies like free paper checks upon request and unlimited reimbursement of ATM fees.

SEE DETAILS Secured

on SoFi’s secure website

Radius Rewards Checking Account

Radius Bank is a community bank headquartered in Boston. The Radius Rewards Checking account is free, as long as you open the account with the required deposit of $100.

Because the Rewards account offers a much-higher than average interest rate for a checking account without saddling the customer with a laundry list of requirements — like a number of debit transactions required each month — Radius’s account joins the list of best cash management accounts.

SEE DETAILS Secured

on Radius Bank’s secure website

Member FDIC

Aspiration Spend and Save Account

Aspiration aims to transform personal banking from a chore customers tolerate to an act of social responsibility — at least according to their marketing campaign, which heavily emphasizes the fact that customers only pay whatever they wish in fees, with 10 percent of that money going to charity. But even depositors who don’t buy into Aspiration’s brand ethos will likely find themselves intrigued by the company’s Spend and Save account, which promises a 1.00% APY on what is effectively a checking account.

Similar to Simple, Aspiration has packaged together a savings account and a checking account into a single consumer product allowing users to move their money between both portions instantly and as many times as they wish. Users should be careful not to leave the majority of their funds in the checking portion, which owns zero APY. Instead most of the money should live in the savings account, where it earns the 1.00% APY the company advertises so prominently.

You can move your money between both parts of the Spend and Save account instantly, so having most of it in the savings portion shouldn’t slow you down during a shopping spree; however, it’s important to note in case you get careless and leave a big chunk of change in the spending portion, where it earns no interest.

SEE DETAILS Secured

on Aspiration’s secure website

 

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.