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10 Best Online Checking Accounts in 2019

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.

banking apps

Opening an interest-bearing checking account is an easy way to boost your savings without completely rearranging your budget. Nowadays, your checking account doesn’t have to be the basic, low-yield account you might be accustomed to. A checking account can earn interest at pretty competitive rates, especially if you’re willing to ditch the traditional big bank in lieu of digital-only competitors.

Brick-and-mortar rates often pale in comparison to online rates. You’ll typically find checking account rates around 0.01% APY if you head to your local big bank branch. Let’s say you have $10,000 to deposit into your new checking account. Choosing an account with that low 0.01% APY will earn you $1 at the end of a year. On the other hand, opening a high-yield checking account at a 2.00% APY, for example, will earn just over $200 in a year.

Your best bet is to open an online checking account, as those tend to have the highest rates. You’ll also find hardly any monthly service fees and little to no fees for ATM usage. Plus, with some of the best mobile apps, online banks making banking on-the-go easier than ever.

There are several great options out there, which give you a great opportunity to find an account that’s just right for you. But we understand that it can also be overwhelming to search through all your options and commit to switching banks. We’ve made it a little easier for you by searching through 12,000 banks and credit unions.

To find the best online checking accounts, we looked for accounts that offer:

  • Competitive interest rates
  • No monthly account fee
  • No ATM fees and reimbursement of other bank ATM fees
  • Interest income on the deposited funds
  • Strong mobile banking app and user interface

It’s important to figure out which aspects of a checking account are the most crucial for your own banking success, whether that’s easy ATM access or earning at the highest rate. There isn’t always going to be one account that’s the “best” across every dimension: for example, the account with the highest interest rate may not have unlimited ATM fee reimbursements. You might have to make a trade-off when choosing an account.

Here are our favorite checking accounts available in August 2019:

The Best Checking Accounts in August 2019

Institution

APY

Minimum Balance Amount

Simple

2.02%

$0.01

Aspiration

2.00%

None

nbkc bank

1.01%

$0

Discover Bank

None, but offers 1% cash back on up to $3,000 each month

None

Ally Bank

0.60%

None

MemoryBank

1.40%

$50

Axos Bank

Up to 0.42%

None

TIAA Bank

1.21%

$5,000

Consumers Credit Union

Up to 5.09%

$10,000 - $20,000

Charles Schwab

0.31%

None

1. High APY – Simple – Protected Goals Account – 2.02% APY (no minimum) + Up to $500 Bonus Offer with qualifying activities

Checking Account + Protected Goals Account*Simple was created out of frustration over the banking industry. The founders were confounded by the complexities of certain bank accounts. So instead of just letting the problem be, they came up with a solution – an account that earns interest and helps you budget your money “in one simple app”. What makes this banking platform stand apart from other online accounts? Well, for starters, it’s a Checking Account + Protected Goals Account that hardly has any fees, not even if you use an international ATM (however, a fee may be charged by the ATM owner). Another standout feature is that you have the opportunity to earn 2.02% APY in the Protected Goals Account. To earn the APY, you’ll have to have a minimum of $0.01 in the Protected Goals Account. This account is meant to be used to help you save money towards a goal. It’s like a savings account without transfer limitations. You can make as many transfers between this account and the checking account as you’d like without running into excess transfer fees. Plus, right now, Simple is offering a bonus of up to $500 with qualifying activities. If you open an Individual Protected Goals Account, you can earn $250. If you open a Shared Protected Goals Account, you can also earn $250. If you choose to open both, you can earn a total of $500. You’ll need to open each account(s) by 8/31/19 4:59PM PT. You’ll need to deposit a minimum of $10,000 in each account by 9/16/19 4:59PM PT. If you can maintain that balance through 12/31/19 4:59PM PT, you’ll earn the bonus(es), which will be credited to you by 1/14/20 4:59PM PT. In addition to this competitive offer, there are a ton of other features that make Simple worth considering!

LEARN MORE Secured

on Simple’s secure website

2. No ATM fees: Aspiration – The Aspiration Account – Unlimited ATM fee reimbursement + 2.00% APY

Aspiration AccountAspiration is a unique company that is trying to change the face of banking services. This account is a great way to avoid fees. There is no monthly fee and no minimum deposit. Even better, there are no ATM fees and unlimited reimbursement of ATM fees charged by others. You can use your ATM card anywhere in the world and never pay a dime. You decide how much you want to pay for the account – and that can be $0. Aspiration is making the bet that you will appreciate the value and decide to pay them something. But you are not obligated to make any payment.You can also earn interest on this account. You’ll earn up to 2.00% APY on your entire balance. And the best part: you don’t have to “do things” (like use your debit card) to get the rate. So long as you have the account, you get the interest rate.

Aspiration has recently launched a mobile banking app, making it even easier to get everything you need done. You can read our full review of Aspiration here. If you want an easy way to use any ATM, free BillPay and earn a good (by checking account standards) interest rate, the Aspiration Account is a great choice.

LEARN MORE Secured

on Aspiration’s secure website

3. No fees: nbkc bank – No monthly fees + 1.01% APY

Personal Accountnbkc bank, formally known as National Bank of Kansas City, is a small institution in the Midwest that caters customers nationwide through their online and mobile banking platforms. They are a privately owned company with more than $630 million in assets.nbkc is all about making banking simple and they’ve done just that with their checking account that virtually has no fees. All it takes is $5 to open the account and you can start earning 1.01% APY on all funds held in the account.There are no monthly fees, no overdraft or non-sufficient funds fees, no fees to stop payments, no fees to get a box of checks, no fees for incoming domestic wires, no minimum balance to earn the APY once the account is opened, and no ATM fees as long as the ATM is part of the Moneypass® network. Even if the ATM is not part of the Moneypass® network, nbkc will reimburse up to $12 in ATM fees per month. And just to prove how transparent they are, they openly disclose that the only two fees that may apply are $5 to send a domestic wire and $45 to send or receive international wires.

Banking can be done online or through their mobile banking app, which allows you to deposit checks at no charge. If you want a checking account that charges hardly any fees and allows you earn a little interest, this account is a great option.

LEARN MORE Secured

on nbkc bank’s secure website

Member FDIC

4. Discover Bank – No fees + 1% Cash Back on up to $3,000 in debit card purchases per month

Discover Cashback DebitDiscover’s Cashback Debit is a unique checking account because it offers 1% cash back each time you swipe your debit card to purchase something up to $3,000 each month. This means that you can earn up to $360 back in cash each year. Keep in mind that there are certain exceptions (like ATM transactions) to receiving the 1% cash back. Other perks of this account include no monthly fees, and access to over 60,000 ATMs for free. Discover used to have a First Fee Forgiveness policy where they would waive the first eligible fee charged to the checking account during each calendar year. However, Discover recently decided to not charge any fees at all. This is a huge perk for accountholders. Discover doesn’t require a minimum amount to open or a minimum daily balance to earn the cash back.

LEARN MORE Secured

on Discover Bank’s secure website

Member FDIC

5. Ally – Interest Checking Account: $10 of ATM fees reimbursed monthly, and up to 0.60% APY

Ally Bank
Ally is a great all-around online bank with no monthly fees and no minimum balance or direct deposit requirement. Ally charges no ATM fees, and it reimburses up to $10 each month. You can link your savings account (which is one of the best in the country, paying 1.90% APY), and it will provide free overdraft protection.

The checking account pays 0.10% APY on balances less than $15,000, and 0.60% APY on balances of over $15,000.

Banking with Ally also gives you 24/7 access to customer service, which is just a phone call or chat session away. They also use 21st century technology like remote deposit through their mobile banking app and Zelle®, which allows you to securely send and receive money from friends and family.

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

6. Highest APY: MemoryBank – 1.40% APY (for the first year) on balances up to $250,000

MemoryBank
If you are looking for a high interest rate on a big balance, it is hard to beat MemoryBank. You can earn 1.40% APY on balances up to $250,000 for the first year so long as you do the following three things. (1) You must receive at least one electronic deposit every month. If you have your payroll deposited into the account, that works. (2) You will need to use your debit card for at least 5 in-person or online purchases. And (3) you need to get your statements online (no paper statements). If you have a large balance and want to find the best liquid account, MemoryBank has a good offer. You need at least $50 to open the account. You will get access to AllPoint ATMs.

LEARN MORE Secured

on MemoryBank’s secure website

Member FDIC

7. No domestic ATM fees & high APY – Axos Bank – Rewards Checking – up to 0.42% APY

Rewards Checking - 3 QualificationsAxos Bank offers a nice combination of a good interest rate and ATM fee reimbursement. You can receive up to 0.42% APY based upon your activity in the account. There are three requirements, and each requirement gives you 0.4166%. If you receive a monthly direct deposit totaling $1,000 or more, you can earn 0.4166%. If you use your debit card at least 10 times per month, you can get another 0.4166%. And if you use your debit card 15 times a month, you get another 0.4166%. So – if you get your direct deposit and use your card 15 times a month – you will get the 0.42% APY. You can also get unlimited domestic ATM reimbursement. If you are a heavy debit card user and do not travel overseas very often, Axos Bank can be a better option than Aspiration.

LEARN MORE Secured

on Axos Bank’s secure website

Member FDIC

8. TIAA Bank – High Yield Checking: 1.21% APY (for the first year) with $5,000 minimum to open

TIAA Bank
TIAA Bank is currently offering a one-year introductory APY of 1.21% on their checking account. They don’t charge a monthly fee or ATM fees (as long as the ATM is within network). Aside from depositing a minimum of $5,000 into the account, TIAA Bank does not impose requirements to earn the APY. While they do have an online banking platform, their mobile app seems to be lacking. If banking on-the-go is important to you, you may want to consider another institution. However, they do have a great rate for a checking account with little-to-no fees.

LEARN MORE Secured

on TIAA Bank’s secure website

Member FDIC

9. Consumers Credit Union – Free Checking: Unlimited ATM fee reimbursement + up to 5.09% APY possible

Consumers Credit Union (IL)
Anyone can join Consumers Credit Union, which has been around since 1930 and is based in Lake County, IL. In order to join, you only need to pay a one-time, non-refundable $5 fee to their sponsor, the Consumers Cooperative Association. Once you are a member, you are eligible for all products, including the Free Checking Account.

This account can offer incredible value, but you need to meet certain conditions. In order to get unlimited ATM fee reimbursement, you need to:

  • Make at least 12 debit card purchases per month. The purchases cannot use the 4-digit pin code – it has to be treated as a credit transaction (so that the credit union earns the maximum interchange possible)
  • Each month there must be at least one direct deposit OR one ACH debit OR one online bill payment.
  • Login to online banking at least once per month, and
  • Receive eDocuments / eStatements (no paper statements).

If you meet those requirement, you will earn a 3.09% APY on balances up to $10,000. You have the opportunity to earn an even higher rate of return if you open a Visa credit card from the credit union. If you spend at least $500 a month on the credit card, your interest rate increases to 4.09% APY on balances up to $15,000. If you spend at least $1,000 a month, you can earn 5.09% APY on balance up to $20,000.

This is a valuable proposition – but it is complicated. We have included it because 5.09% APY and unlimited ATM fee reimbursement is an amazing deal. However, if you don’t meet the requirements you will not get ATM reimbursement and will only earn 0.10%.

LEARN MORE Secured

on Consumers Credit Union (IL)’s secure website

NCUA Insured

10. Charles Schwab – High Yield Checking: Unlimited ATM fee reimbursement + 0.31% APY

Charles Schwab Bank
If you want to be able to use your ATM card anywhere in the world – for free – this account is a good option. With Charles Schwab’s High Yield Investor Checking Account, you will not be charged a fee for using an ATM. If you use an ATM overseas, there will be no foreign transaction fee. And – best of all – if the ATM charges a fee of its own, Schwab provides unlimited ATM fee reimbursement.

This account pays 0.31% APY, and there are no minimums or monthly service fees.

There are no fees to cover overdrafts when funds are available from a linked Schwab brokerage or savings account.

LEARN MORE Secured

on Charles Schwab Bank’s secure website

Member FDIC

Runner Up: Fidelity Cash Management Account: Unlimited domestic ATM fee reimbursement

Fidelity
Fidelity’s Cash Management Account is great for those that have larger balances, as there is a $1,250,000 insurance limit, but there is no minimum balance required.

Similar to Charles Schwab, there are no ATM fees to worry about – they’ll reimburse you the same day if you’re charged. There are also no monthly or overdraft fees to worry about. There is one big difference to Schwab: if you get charged for using your ATM outside of the country, that fee will not be reimbursed.

Fidelity currently offers 0.13% APY, but it is a brokerage account rather than a “regular” checking account. They offer cash management tools so you can set up custom alerts when you reach a certain balance that will remind you it’s time to invest.

Unfortunately, there’s no option to open a line of credit – you have to link a savings or brokerage account to your Fidelity account in case you overdraft and want items to clear.

LEARN MORE Secured

on Fidelity’s secure website

Member FDIC


Checking account best practices

Consider hybrid savings/checking accounts

In today’s competitive savings rate atmosphere, some banks are offering the best of both a checking and savings account in the same product, like the Simple Checking Account + Protected Goals Account, our top pick above. These hybrid accounts offer the flexibility of a checking account by including a debit card and avoiding the six-transaction limit of savings accounts. Some accounts might also offer the ability to write checks through the account (however, Simple does not).

Even better, these hybrid accounts also offer the high-yield competitive rates of a savings account (think above 2%!). Opening this kind of account can prove to be a great addition to your savings profile, especially since most checking accounts tend to offer unremarkable rates. Simple goes even further by helping you save towards a specific Savings Goal instead of just earning a high interest rate — although saving at least $2,000 towards that goal enables that high rate.

Of course, money market accounts are already known as hybrid-like accounts with high interest rates. But without limiting your transfers and transactions to six per cycle, these new checking/savings hybrid accounts (or cash management accounts, as they might be called) are able to set themselves apart from money market accounts. Money market accounts also tend to require much higher balance limits and charge monthly service fees, unlike these new accounts we’re starting to see.

Pair your checking account with a high-yield savings account

So if not in a checking account, where should you keep the rest of your money? Like we say above, you have a number of options including savings accounts, money market accounts and CDs. Online savings accounts generally earn at much higher interest rates than checking accounts, so they’ll grow your money more efficiently.

In turn, money market accounts can earn even higher rates, although they usually require high deposits and balances. Both MMAs and savings accounts limit you to six transfers or withdrawals per month so you can leave your savings alone to grow. Money market accounts are like a mix between checking and savings accounts, as many of them include check-writing abilities and/or a debit/ATM card for more convenient access than a typical savings account.

For a longer-term savings commitment, you can turn to certificates of deposit or CDs. They earn at high interest rates and lock in your opening rate for the duration of an account’s term. You can’t withdraw your growing funds until the term ends.

Find an account with little to no fees

Another way to make better use of your checking account is to avoid the fees that are often associated with brick-and-mortar bank accounts. According to a MagnifyMoney analysis of FDIC data, in 2017 Americans paid over $36 billion in fees to banks (see graph below), some of which include overdraft fees, ATM fees and monthly maintenance fees. This number is down since 2009’s $41 billion in total fees, but has seen a steady increase since 2013.

 

Among the fees, overdraft fees are the biggest single burden on Americans, representing over one third of fees paid over the last five years. Account maintenance fees come in second, at over 10%, while ATM fees represent over 5%.

 

Moving your banking online can help you avoid monthly service fees. The same is also true for ATM fees. Even without physical locations, online banks can still provide access to tens of thousands of ATMs through various ATM networks. Plus, many online banks will refund any ATM surcharges you do face, sometimes up to a certain dollar amount.

Resist the urge to hoard cash in a checking account

It can be easy to just dump all your income into your checking account and leave it there. After all, that’s the account you use to pay for expenses. But even if your checking account earns interest, you can do better by your money.

There are two main reasons your money would be better off not sitting in checking:

#1 You could miss out on higher interest rates
Interest rates on checking accounts are generally pretty pitiful. Even when they seem high (perhaps 0.60% or even 1.00%), there can be a lot of hoops to jump through in order to secure that interest rate. Instead, consider putting your money into one of the nation’s best savings accounts,best money market accounts or CDs. Your money can easily earn 1.00% or more with those accounts.

#2 You don’t want to give fraudsters access to your life savings
Fraud is another reason you may want to keep a minimal amount in checking. Bank fraud is so prevalent you’ll likely get smacked by it at some point. For credit card users, it isn’t as worrisome because the money charged to a credit card isn’t coming directly out of your bank account and credit issuers commonly offer zero fraud liability protection. On the other hand, debit card fraud means a crook gains direct access to your account and can be draining your actual funds in real time. By not keeping a ton of money in checking, you can reduce the damage a thief can do.

If your card is stolen and you report it to your bank within two days, you can be responsible for up to $50 of unauthorized charges. Waiting longer than two days can make you responsible for up to $500 in unauthorized charges. Additionally, if you notice any unauthorized charges on your account statement, you have 60 days to tell your bank to avoid liability for following transfers. Even if your bank reimburses you for the funds, it’s still a hassle to spend days — even weeks — without having access to that money.

The bottom line: It’s probably time to move your banking online

In all, the best way to make the most of your checking account is to ditch your brick-and-mortar bank in favor of fewer fees, less hassle, more convenience and higher interest rates. All of these banks listed above offer mobile apps with several convenient features, including the ability to deposit checks by taking a photo, so you don’t have to worry about running out to a local branch. These apps also make it easier to transfer money between your accounts, pay bills online or send money to family and friends in a pinch.

If you want your money to do more for you with less maintenance, online checking is the way to go.

promo-checking-wide-v2

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.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at [email protected]

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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Eliminating Fees

What You Need to Know About Wire Transfers

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.

wire transfers
iStock

Need to send money quickly? Or maybe someone wants to send money to you fast. If so, a wire transfer might be the solution.

In some cases, like closing on a new home, it might even be a requirement. But the term wire transfer is often confused with other types of electronic transfers including services from places like Western Union, ACH transfers and peer-to-peer payment apps such as Venmo or Square Cash. We’ll explain the differences and how to complete a wire transfer safely.

What is a wire transfer?

Speed is what sets a wire transfer apart from the other services we mentioned earlier. With a wire transfer, you can send money electronically from your bank account to another person’s or company’s bank account instantly. And if you are owed money, a company or individual can send money to you with the same speed.

If you are sending a wire transfer domestically — to another individual or company in the United States — the funds you are sending should be available during the same business day. If you are receiving funds from a company or individual based in the country, you should also receive those dollars in your account the same day.

Wire transfers happen quickly because they are electronic. When someone asks for a “bank wire,” a bank or credit union sends funds to an account holder at another bank or credit union through an electronic network. The most common of these networks are SWIFT, Fedwire or the Clearing House Interbank Payments System known as CHIPS.

There are two main types of wire transfers: domestic and international.

  • A domestic wire transfer occurs between individuals or companies in the same country. These transfers can happen quickly. To complete a domestic wire transfer, you’ll usually just need some basic information such as the recipient’s bank name and address, the bank’s routing code, also known as its ABA number and bank account number.
  • An international wire transfer happens when a person or company sends money to an individual or company in a different country. For an international wire transfer, you might need to provide additional information. For instance, Bank of America says that you’ll need to state the purpose of the wire transfer, the currency that the recipient of your transfer is using and the recipient’s SWIFT code or International Bank Account Number, better known as an IBAN.

How to complete a wire transfer

Fortunately, wiring funds is an easy process. The fastest way usually involves signing up for online banking at your local bank and then initiating a transfer from your financial institution’s online banking portal.

Wells Fargo, for instance, recommends that its customers sign up for its online banking and then visit the “Transfer & Pay” section to enroll in its wire transfer service.

You then simply choose the recipient of your funds and the account from which you want to send your money. You might have to provide additional information if you are sending funds to a different country.

There might be a limit on how much money you can send through a wire transfer. For instance, if you a completing a wire transfer from Chase online, you can only transfer a maximum of $100,000 a day if you have a personal account at the bank. You can transfer up to your available bank account balance if you send a wire transfer through the phone or by visiting a branch in person.

Make sure, though, that you have enough funds to cover your wire transfer. Your bank won’t complete your transfer if you don’t have enough money in your account to cover the amount you want to send.

How long does a wire transfer take?

Speed is the biggest advantage of sending a wire transfer. It’s no surprise, then, that wire transfers can take as few as one business day to clear.

Gurnee, Ill.-based Consumers Credit Union says on its website that it usually takes half a business day for the funds from a domestic wire transfer to arrive in an account. If you send a transfer to a U.S. account in the morning, the funds will usually be available that afternoon.

Wiring money to international destinations takes longer, usually from three to five business days. TD Bank, for instance, says on its website that international wire transfers usually take three to five business days to close.

How much does it cost to send a wire transfer?

Most banks and credit unions will charge a fee to send a wire transfer. These fees vary according to the bank or credit union you are using.

Ally Bank, for instance, charges a $20 fee every time you wire money to another financial institution in the U.S.

Citibank, though, charges a range of fees depending on the type of account you have with the institution. Citi’s fees for domestic wire transfers range from $17.50 to $25. It charges more for international wire transfers, $20-$35. Citi does waive both its domestic and international wire transfer fees for customers with higher-level accounts.

Bank of America charges a $30 fee for outbound domestic wire transfers, $35 for international transfers sent in foreign currency and $45 for international wire transfers sent in U.S. dollars.

You might also have to pay to receive wired funds. Wells Fargo, for instance, charges $15 for its clients to receive a wire transfer.

Are wire transfers safe?

Wire transfers are generally safe, if you are wiring money to someone you know or to a company for a service provided. Even then, it’s recommended that you call to confirm wiring instructions rather than rely on emailed instructions — read more about phishing scams targeting homebuyers below.

Scams can happen when people wire money to strangers, both in the U.S. and in other countries.

The Federal Deposit Insurance Corporation says that criminals like wire transfers because the money in these transactions arrives in bank accounts so quickly. Because of this, criminals can get their money before their victims discover they’ve been scammed.

Why would anyone wire money to a stranger? The FDIC says that scammers might convince victims to wire them funds to claim their winnings from a lottery that doesn’t exist. Others might offer victims a profitable work-from-home opportunity, but require a wire transfer of funds to get this opportunity started.

The FDIC recommends that you always ignore requests from strangers asking you to wire them money. As the agency says, this is usually the sign of a scam. Anytime someone pressures you to wire money quickly, you have probably been targeted by a scammer.

A common scam? The FDIC says that a criminal might call you, saying that one of your loved ones is stranded in a foreign country and needs you to wire cash so this relative can get home.

The best way to avoid scams is to only send money to people you know and companies that have performed a service for you or from which you have ordered a product. Never wire money to a stranger, no matter how convincing a story that stranger may be telling.

Mortgage closing scams. Fraudsters take advantage of the flurry of emails common at the end of a homebuying process as the closing date approaches. A common phishing email might falsely claim that wiring instructions have changed, instructing the homebuyer to send closing funds to an account that scammers control. Even if you don’t receive any suspicious emails, it’s good to call your real estate agent or settlement agent to confirm instructions and that funds have “cleared.”

Wire transfer vs. ACH payment

Wire transfers and ACH payments are similar. Both are ways to send money from one account to another without the use of physical checks.

But an ACH payment — a payment made with the help of an automated clearing house — differs from a wire transfer because it relies on what is known as a batch process. ACH payments typically power the transactions you make when you use online banking to pay bills.

Your bank will receive ACH transactions in a batch, which are then processed by the Automated Clearing House. Then, these transactions are dispersed to the proper bank accounts.

Because of this extra step, it takes longer for the money from an ACH transaction to show up in your account. The money could appear in your account the next business day, though this can vary depending on your bank.

Alternatives to wire transfers

You could always choose a personal check or cashier’s check, but if you want to send money to another source electronically, you do have some other options. However, if you’re looking to skirt your bank’s wire transfer fees, several of these have fees of their own.

Apps: You can use financial apps such as PayPal, Square Cash and Venmo to send money to service providers and individuals. Beware, though, that “instant” transfers usually carry a fee — Venmo, for example, charges $0.25 for a transfer to an eligible Mastercard or Visa debit card.

Be careful with these, though. As with wire transfers, you might fall prey to a scammer. Never send money to a stranger. And if someone you don’t know requests money from you through an app such as PayPal or Venmo, don’t send anything unless you can verify that the request is legitimate.

ACH transfers: As mentioned above, Automated Clearing House transfers — better known as ACH transfers — can help you move money from your bank account to the account of another. The money, though, often won’t show up for several business days.

Most banks don’t charge ACH fees, but Bank of America is an exception, charging $3 for its customers to send an ACH transfer to another bank account.

Money transfer services: Western Union or MoneyGram transfers are sometimes called “wires” and although you could walk into a Western Union store today, send money (for a fee) to your sister in Dubuque, Iowa, that she pockets a few minutes later, it would take longer to show up in her bank account.

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.

Dan Rafter
Dan Rafter |

Dan Rafter is a writer at MagnifyMoney. You can email Dan here

Advertiser Disclosure

Consumer Watchdog, Eliminating Fees, Featured, News

What the New DOL Fiduciary Rule Means For You

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.

Geeting advice on future investments

Seven years in the making, the Department of Labor’s long-awaited Fiduciary Rule finally went into effect June 9.* The full breadth of the rule’s impact won’t officially be felt until January 2018, when advisors must be fully compliant with the rule’s requirements.

The rule survived an upheaval by the Trump administration, which had hinted earlier this year that it might seek to block the rule’s implementation.

Aimed at saving consumers billions of dollars in fees in their retirement accounts, the Department of Labor’s new fiduciary rule will require financial advisers to act in your best interest. However, the final rule includes a number of modifications, including several concessions to the brokerage industry, from the original version proposed six years ago.

Here’s what you need to know about these new rules and how they may affect your money.

*This story has been updated to reflect the rule’s successful release.

What is a Fiduciary?

So what exactly is a fiduciary? According to the Certified Financial Planner (CFP) Board, the fiduciary standard requires that financial advisers act solely in your best interest when offering personalized financial advice. This means advisers can’t put personal profits over your needs.

Currently, most advisers are only held to the U.S. Securities and Exchange Commission’s suitability standard when handling your investments. This looser standard allows advisers to recommend suitable products, based on your personal situation. These suitable products may include funds with higher fees — with revenue sharing and commissions lining their own pockets —  which may not reflect your best possible options.

What is Changing Exactly?

Affecting an estimated $14 trillion in retirement savings, the Department of Labor’s new fiduciary rule is meant to help you receive investment advice that will aid your nest egg’s ability to grow. Many investors have been pushed toward products with high fees that quickly eat away at profits.

All financial professionals providing retirement advice will now be required to act as fiduciaries that must act in your best interest. This applies to all financial products you may find in a tax-advantaged retirement accounts. Because IRAs offer fewer protections than employment-based plans, the Department is concerned about “conflicts of interest” from brokers, insurance agents, registered investment advisers, or other financial advisers you may turn to for advice.

Despite these new protections, the Department of Labor also made some key concessions. Previously, brokers were required to provide explicit disclosures about the costs of products to their clients. This included one, five, and ten year projections. However, this requirement has been eliminated. After heavy pushback from the industry, the Department of Labor also agreed to allow the use of proprietary products.

Additionally, the Department of Labor has pushed the deadline for full implementation of their new rules. Firms must be compliant with several provisions by June and fully compliant by January 1, 2018.

Despite all of these concessions, the Department of Labor’s highest official insists the integrity of their rule is still in place.

Exceptions You Should Know About

Although advisers working with retirement investments will no longer be able to accept compensation or payments that create a conflict of interest, there’s an exception many brokers will likely pursue.

Firms will be allowed to continue their previous compensation arrangements if they commit to a best interest contract (BIC), adopt anti-conflict policies, disclose any conflicts of interest, direct consumers to a website that explains how they make money, and only charge “reasonable compensation.” The best interest contract will soon be easier for firms and advisers to use because it can be presented at the same time as other required paperwork.

How These New Rules Might Affect Your Investment Options

Although these new rules don’t call out specific investment products as bad options, it’s expected advisers may direct you to lower-cost products, like index funds, more regularly. New York Times also predicts the new regulations may also accelerate the movement toward more fee-based relationships. They also suggest complex investments like variable annuities may soon fall out of favor.

What Will the Larger Impact of These Changes Be?

Backed by extensive academic research, the Department of Labor’s analysis suggests IRA holders receiving conflicted investment advice can expect their investments to underperform by an average of one-half to one percentage point per year over the next 20 years. Once their new rules are in place, they are anticipating retirement funds will shift to lower cost investments, savings consumers billions of dollars.

What You Can Do To Protect Yourself

Although these new rules are a positive step for consumers, it’s important to remember there are still a wide variety of financial professionals out there. And the quality of the advice you receive can vary greatly based on their level of education, experience, and credentials. In order to find someone who is equipped to handle your unique financial situation, you will still need to do your homework.

You may want to start by looking for a fee-only financial planner. Due to the nature of how they are compensated, fee-only financial planners operate without an inherent conflict of interest. They are paid a fee for the services they provide and they don’t earn commissions from product sales.

Once you’ve narrowed down your options you’ll want to ask about their credentials, what types of clients they work with, what types of services they offer, while carefully checking their background and references. Like any professional working relationship, you’ll want to feel comfortable with someone you are receiving financial advice from, so it’s important to make sure your personalities and priorities are aligned. Remember, no one cares more about your money than you do. That’s why it’s essential to carefully vet anyone who is working with you to secure a healthier financial future.

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Kate Dore
Kate Dore |

Kate Dore is a writer at MagnifyMoney. You can email Kate at [email protected]