MagnifyMoneyhttps://www.magnifymoney.com/blogThe Fine Print Blog and NewsFri, 15 Jan 2021 12:27:11 +0000en-CA hourly 1 https://wordpress.org/?v=5.6Top 10 Jumbo Money Market Accountshttps://www.magnifymoney.com/blog/earning-interest/jumbo-money-market-accounts/Fri, 15 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=74538What is a jumbo money market account? When you’re saving money, you want to make sure you’re stashing it in the right place. Ideally, that will be in an account with a high rate of return. While savings accounts tend to offer a higher return than checking accounts, money market accounts — which are FDIC-insured … Continue reading Top 10 Jumbo Money Market Accounts

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Jumbo money market accounts
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What is a jumbo money market account?

When you’re saving money, you want to make sure you’re stashing it in the right place. Ideally, that will be in an account with a high rate of return. While savings accounts tend to offer a higher return than checking accounts, money market accounts — which are FDIC-insured up to $250,000, unlike money market funds — may yield an even higher rate of return.

That’s if you know where to find the best rates.

The money market accounts that offer the highest returns are known as jumbo money market accounts. In the past, these high-yielding accounts could have minimum initial deposits as much as $100,000, but today, you can get these higher rates with a much lower initial investment and sometimes there’s no minimum at all. For this round-up, we included accounts that required a minimum deposit of $25,000 and up.

In this roundup, we’ll explore the top rates.

UFB Direct, 0.20% APY, $25,000 Minimum Deposit to earn APY

UFB Premium Money Market - New Money from UFB DirectWhile you only need a minimum deposit of $5,000 to open an account with UFB Direct, you’ll need to have a minimum balance of $25,000 to earn the 0.20% APY. If you balance is less than $25,000, you’ll end up earning an APY of 0.10%.

This account does come with a $10 monthly fee, but if you have an average daily balance of $5,000 or more in the account, UFB Direct will waive the fee. Checks and a Visa® Debit Card are available upon request. There is also a mobile banking app that will allow you to conveniently manage your account on-the-go. All deposits held with UFB Direct are FDIC-insured.

UFB Direct is an online bank and a division of Axos Bank The overall company has acquired over $9 billion in assets.

SEE DETAILS Secured

on UFB Direct’s secure website

Member FDIC

Customers Bank, 0.80% APY, $25,000 minimum deposit

Ascent Money Market - Online Only (New Money) from Customers Bank Customers Bank’s Ascent Money Market Savings Account is currently offering an impressive rate of 0.80% APY, launching it to the top of our list. In order to earn the high APY, though, there is a minimum deposit required of $25,000, and it’s worth noting that balances below $25,000 do not earn interest. This rate is only available for new money, and is only available for online accounts.

The Ascent Money Market account has no minimum balance fee, but withdrawals and transfers are limited to six per monthly statement cycle. Interest for this account is compounded and posted to your account monthly. Customers Bank is a Pennsylvania-based bank with locations also in New York and New Jersey.

SEE DETAILS Secured

on Customers Bank’s secure website

Member FDIC

Gold Coast Bank, 0.75%c APY, $50,000 minimum to earn APY

Money Market Account from Gold Coast Bank Located in Chicago, Gold Coast Bank is currently offering a standout rate of 0.75% on money market account balances of at least $50,000. There is a minimum opening deposit of $5,000 required for this account, and balances below $50,000 will earn a lower APY.

SEE DETAILS Secured

on Gold Coast Bank’s secure website

Member FDIC

CFG Bank 0.68% APY, $25,000 minimum to earn APY

CFG High Yield Money Market - New Money from CFG BankMaryland-based bank CFG Bank is currently offering the highest APY on a jumbo money market account. The Online CFG High Yield Money Market account comes with a 0.68% APY.

This account requires a $1,000 minimum deposit to open. However, you’ll need a minimum daily balance of at least $25,000 to earn the 0.68% APY, and only new funds are eligible

SEE DETAILS Secured

on CFG Bank’s secure website

FDIC Insured

Veridian Credit Union, 0.65% APY, $100,000 minimum to earn APY

Premier Money Market from Veridian Credit Union Veridian Credit Union’s tiered money market account is currently featuring a robust rate of 0.65% on funds between $100,000 and $249,999. If you have at least $250,000 to deposit, you could score an even higher rate of 0.80% APY.

Membership to Veridian Credit Union is open to anyone who opens a Member Equity Savings Account for $5.

SEE DETAILS Secured

on Veridian Credit Union’s secure website

NCUA Insured

Federal Savings Bank, 0.60%, $100,000 minimum to earn APY

Money Market from The Federal Savings Bank Federal Savings Bank boasts a noteworthy APY of 0.60% on balances of $100,000 or greater for its money market account. A minimum deposit of $1,000 is required to open this account, and balances below $100,000 will earn a lower APY. Interest for this account is compounded and credited on a monthly basis.

Headquartered in Chicago, Federal Savings Bank offers its products to consumers nationwide, online.

SEE DETAILS Secured

on The Federal Savings Bank’s secure website

Member FDIC

Premier America Credit Union, 0.60% APY, $100,000 minimum to earn APY

Money Market Savings from Premier America Credit UnionPremier America Credit Union boasts a competitive, tiered-rate money market account, rewarding depositors with big balances. All of the rates for its tiered money market are as follows:

  • $2,500-$24,999: 0.40%
  • $25,000-$49,999: 0.50%
  • $50,000-$99,999: 0.50%
  • $100,000-$249,999: 0.60%
  • $250,000-$499,999: 0.65%
  • $500,000+: 0.70%

Membership to Premier America Credit Union is open to anyone who also joins the Thousand Oaks Alliance for the Arts.

SEE DETAILS Secured

on Premier America Credit Union’s secure website

NCUA Insured

State Department FCU, 0.60% APY, $100,000 minimum to earn APY

Premiere Money Management Shares from State Department Federal Credit Union State Department FCU is currently offering a generous APY of 0.60% on its Premier Money Market account for balances of at least $100,000. A balance of $2,000 is required to earn any dividends for this account.

Membership to State Department FCU is open to anyone who also joins the American Consumer Council.

SEE DETAILS Secured

on State Department Federal Credit Union’s secure website

NCUA Insured

Ideal Credit Union, 0.55% APY, $100,000 minimum to earn APY

High Yield Money Market from Ideal Credit Union Ideal Credit Union’s tiered High Yield Money Market account currently boasts an impressive0.55% APY on balances between $100,000 and $24,999.99. There is a minimum of $25,000 required to open this account, and while lower balances earn lower APYs, if you have a balance over $250,000 you’ll earn a higher APY of 0.70%.

Located in Minnesota, Ideal Credit Union opens its membership to anyone who makes a one-time donation of $5 to the John D. Miller Foundation.

SEE DETAILS Secured

on Ideal Credit Union’s secure website

NCUA Insured

iGObanking, 0.55%, $25,000 minimum to earn APY

iGOmoneymarket - New Money Only from iGObanking Online bank iGObanking is currently offering a competitive rate of 0.55% on funds of at least $25,000 in its iGOmoneymarket account. This account allows you to make up to six transfers per month, and allows you to set up automatic monthly transfers from your checking account. There are no monthly maintenance fees associated with this account.

SEE DETAILS Secured

on IGObanking’s secure website

Member FDIC

How these jumbo money market accounts’ rates compare with regular money market rates

Jumbo money market accounts are typically called jumbo because they require a significant deposit to earn the top rate. You may have noticed that many of these accounts do not necessarily have the label “jumbo” attached to them. This is because with the advent of online banking, more and more financial institutions are passing along the savings they incur from not having to maintain brick-and-mortar locations on to their customers via higher returns on products like money market accounts.

For that reason, you’ll notice that many of the highest-yielding accounts on this list can also be found on our Best Money Market Rates & Accounts lineup.

The post Top 10 Jumbo Money Market Accounts appeared first on MagnifyMoney.

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Pharmaceutical Investments Expected to Ramp Up in 2021, and 57% of Investors Say Vaccine Promise Is a Key Factorhttps://www.magnifymoney.com/blog/investing/pharmaceutical-investments-survey/Thu, 14 Jan 2021 13:42:05 +0000https://www.magnifymoney.com/blog/?p=143513When COVID-19 hit, the whole world anxiously watched the pharmaceutical sector for a cure. And it came through, creating a vaccine in record time. This success led to a new surge of investor interest, as 36% of investors expect to put more money in pharmaceutical stocks in 2021, according to the latest MagnifyMoney survey of … Continue reading Pharmaceutical Investments Expected to Ramp Up in 2021, and 57% of Investors Say Vaccine Promise Is a Key Factor

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When COVID-19 hit, the whole world anxiously watched the pharmaceutical sector for a cure. And it came through, creating a vaccine in record time.

This success led to a new surge of investor interest, as 36% of investors expect to put more money in pharmaceutical stocks in 2021, according to the latest MagnifyMoney survey of nearly 1,000 investors. In addition, 57% of investors said the promise of a vaccine made them more likely to invest.

MagnifyMoney looked at this new interest from multiple angles, including the expectations, regrets and ethical concerns people had about pharmaceutical investments.

Key findings

  • 36% of investors expect to invest more in pharmaceutical stocks in 2021, with 57% of investors saying the promise of a COVID-19 vaccine makes them more likely to do so.
  • The vast majority (82%) of current pharmaceutical investors have purchased a related stock or increased their spend on a pharma investment amid the coronavirus pandemic. Of that group, 28% did so within the past month.
  • 1 in 10 investors say they don’t think investing in pharmaceuticals is ethical but do so anyway. At the same time, nearly a third (31%) of investors who don’t currently invest in these stocks say it’s because they don’t trust big pharma.
  • 47% of investors say they regret not investing in pharmaceutical stocks in the past. In fact, 59% of those with regrets say vaccine news would have increased their portfolio value had they invested in pharmaceutical stocks.

More than 1 in 3 investors expect to increase pharmaceutical investments as COVID-19 vaccine spurs stock market gains

As noted, our survey showed that 36% of respondents said they expect to invest more in pharmaceutical stocks in 2021:

Male investors (43%) seemed more interested in investing more in pharmaceutical stocks in 2021 than female investors (25%). Gen Xers (47%) led the way among the age groups, compared with:

  • 40% of millennials
  • 15% of baby boomers

Tendayi Kapfidze, LendingTree’s chief economist, believes there are good reasons to consider pharmaceutical stocks for investors looking to make money.

“Health care is one of the fastest-growing sectors of the U.S. economy,” Kapfidze said. “An aging population means that demand for health products, including pharmaceuticals, will continue to increase.”

Still, he acknowledged that pharmaceutical investing does have its downsides.

“The products are complex, which can be difficult for the average investor to analyze,” he said. “Drug development is also a risky process, as potential drugs have low odds of reaching the market.”

Pharmaceutical investing gets boost from vaccine development

Given the potential risks and downsides of pharmaceutical stocks, it makes sense that 20% of investors don’t expect to invest in pharma at all in 2021. However, given that 31% of investors didn’t have any pharmaceutical stocks in 2020, this is another sign that the promise of a COVID-19 vaccine increased interest.

Our survey data backs this up, as 57% of respondents said the vaccine made them more likely to invest — once again with a greater impact on male investors than female investors (62% versus 47%, respectively).

Some stocks working on vaccines have performed very well the past year, said Kapfidze, explaining the appeal. However, he cautioned that those gains may be already realized, so future investment earnings could depend on new innovations.

Pharmaceutical investors, by the numbers

Overall, 61% of investors have at least one pharmaceutical stock in their portfolio. Of those investors, the most likely to invest in pharmaceuticals include those with a household income of $100,000-plus (71%), men (68%) and millennials (also 68%).

Noteworthy: 18% of baby boomer investors weren’t sure if there were any pharmaceutical stocks in their portfolio, while only 6% of both millennial and Gen X investors said the same.

Of those investors who have at least one pharmaceutical stock in their portfolio:

  • 36% have an individual pharma-related stock they purchased
  • 22% invest in a mutual fund that includes pharmaceuticals
  • 16% invest in an exchange-traded fund (ETF) that includes pharmaceuticals

As for how investors decide which pharmaceutical stocks to invest in, the reasons vary:

Nearly 2 in 10 (18%) noted a financial advisor or robo-advisor makes those decisions for them. That’s especially true for baby boomers, as nearly a third (32%) who invest in pharmaceuticals said an advisor helps them select which investments to make, versus 17% of Gen Xers and 13% of millennials.

More than 8 in 10 current pharmaceutical investors have made related investment amid coronavirus pandemic

More than 8 in 10 (82%) investors have made some sort of pharmaceutical investment over the past nine months — amid the coronavirus crisis. Here’s how those numbers break down:

The constant news about COVID-19 and the vaccine rollout made an impact on investors. They seem to be tracking the news, as 28% made their most recent purchase within the past month — during the vaccine rollout — and another 27% made their most recent purchase more than a month ago but within the past three months, when the vaccines were getting close to launch.

Of interest:

  • 85% of male investors made a pharma-related purchase or increased their spend over the past 9 months, versus 75% of female investors
  • 31% of male investors made an investment within the past month, versus 23% of female investors
  • 37% of investors earning $100,000-plus made an investment in the past month

Investors overall have been active, as 74% have reallocated their portfolio in some way over the past month. Of this group, 35% reallocated their portfolio to put more money in pharmaceutical investments — with men being more likely to invest more compared to women and Gen Xers and millennials being more likely to move into pharma than baby boomers.

If you’d like to be more active with your investing, you could start trading with one of these online brokers.

1 in 10 investors think investing in pharmaceutical stocks is unethical, but they do it anyway

The majority of investors — nearly 60% — believe it’s ethical to invest in pharmaceutical stocks. Interestingly, another 10% said it’s unethical, but do it anyway:

Whether investing in pharmaceuticals is ethical is a topic of debate. After all, these companies can profit off life-saving discoveries. They can also end up putting shareholder returns above helping others, such as charging a high price for an essential medicine.

That’s why 12% of investors reported not putting their money in pharmaceutical stocks due to ethical concerns. Female investors (14%) were more likely than male investors (10%) to avoid pharma due to ethics.

Still, money talks, as another 10% of investors put money in pharmaceutical stocks even though they had issues. Millennial investors were the most likely of all generations to override their concerns, as 14% put money in pharmaceutical stocks despite seeing the industry as unethical.

Interesting finding: Though Democratic and Republican voters seem to have trouble agreeing on most anything these days, they generally felt the same way in terms of the ethics of pharmaceutical investing.

In the end, 58% believe it’s ethical to invest in pharmaceutical stocks. Kapfidze also believes that the good outweighs the bad.

“Pharma advancements over the past 100 years have increased life expectancy significantly, and the industry is currently at the forefront of the response to the coronavirus,” he said.

When you invest in pharmaceutical stocks, you’re putting your money toward funding these innovations.

47% of investors regret not investing in pharmaceuticals stocks in the past

For investors sitting on the sidelines, it was tough watching the recent gains in pharmaceutical stocks. In fact, 47% of investors regret not investing in these stocks in the past:

Male investors (53%) were more likely to regret not investing in pharmaceutical stock than female investors (38%). This makes sense given that men were more involved with managing their investments, so they may be more aware of what they’ve missed. It would likely be even more frustrating for the 42% of investors who sold stock at the start of the pandemic, as nearly all regret doing so.

When asked why they regretted not investing in pharmaceutical stocks, the top reasons these investors gave were:

  • The news of the vaccines would have increased the value of their portfolios should they have invested in those stocks (59%)
  • They would have been able to benefit from longer-term gains (42%)
  • Many people are buying these stocks now, so the price has gone up (13%)

Still, not all investors regret keeping their money out: Nearly a third who don’t invest in pharmaceutical stocks said it’s because they don’t trust big pharma.

Here are the rest of their reasons:

When it comes to not investing, female investors (52%) were more likely to not have a specific reason than male investors (39%).

Getting started with pharmaceutical stocks

Kapfidze’s main piece of advice for investors looking to get in on pharmaceutical stocks is to do so cautiously.

“Make sure your investments in pharma are part of a diversified portfolio in order to manage risk,” he said.

Even if you are optimistic about pharma’s potential, you should still make these investments only a part of your portfolio rather than the entire thing, so you don’t have all your eggs in one basket. After all, diversification is one of the most important strategies for trading stocks.

Tip: You should avoid putting all your money in just one or two pharmaceutical companies, even if you think they’ve got great developments in the pipeline. Since it’s difficult and unlikely for any one drug to reach the market, spreading your money across multiple stocks increases your chances of finding one that comes through.

Another option is to invest through an ETF or mutual fund (used by 37% of investors). These funds take your money to buy a large portfolio of pharmaceutical stocks, managed by a professional investor. That way, they handle the research and picks for you.

Finally, consider meeting with a financial advisor before making trades and putting more money into pharmaceutical stocks. Given the high interest in this sector these days, it should be a topic they’re used to discussing.

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 954 consumers with at least one investment account. The sample base was proportioned to represent the overall population, and all responses were reviewed by researchers to ensure quality control. The survey was fielded Dec. 17, 2020 through Dec. 21, 2020.

We defined generations as the following ages in 2020:

  • Millennial: 24 to 39
  • Generation X: 40 to 54
  • Baby boomer: 55 to 74

The survey also included responses from Generation Z (ages 18 to 23) and the silent generation (75 and older). However, their responses weren’t included in the generational breakdowns due to low sample size among investors in those age groups.

The post Pharmaceutical Investments Expected to Ramp Up in 2021, and 57% of Investors Say Vaccine Promise Is a Key Factor appeared first on MagnifyMoney.

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What You Need to Know About Wage Garnishmenthttps://www.magnifymoney.com/blog/pay-down-my-debt/need-know-wage-garnishment572325629/https://www.magnifymoney.com/blog/pay-down-my-debt/need-know-wage-garnishment572325629/#respondWed, 13 Jan 2021 14:00:25 +0000https://www.magnifymoney.com/blog/?p=5144When your unpaid debt goes into collections, you’ll likely receive calls and letters from collectors urging you to pay. If your debt remains unpaid, in some cases, creditors can pursue wage garnishment as a last-ditch attempt to recoup their losses. Wage garnishment is a legal process that allows creditors to deduct money from a borrower’s … Continue reading What You Need to Know About Wage Garnishment

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When your unpaid debt goes into collections, you’ll likely receive calls and letters from collectors urging you to pay. If your debt remains unpaid, in some cases, creditors can pursue wage garnishment as a last-ditch attempt to recoup their losses.

Wage garnishment is a legal process that allows creditors to deduct money from a borrower’s paycheck to collect their unpaid debt. If a creditor is able to secure a garnishment of wages, the employer must withhold a portion of funds from the employee’s paycheck until the debt is repaid.

How wage garnishment works

If you don’t pay back your debts, tax bills or mandated payments such as child support, creditors and lenders will try in different ways to obtain payment from you. When more subtle debt collection efforts don’t pay off, the creditor may proceed with wage garnishment — one of the most drastic methods of debt collection.

For most types of debts, if a creditor wants to garnish your wages, they must sue you and take you to court. If they win a judgment against you, they could receive a court order that allows them to garnish your wages whether you like it or not. Some forms of federal debt, such as back taxes owed to the IRS or federal student loans, can result in wage garnishment without needing to go through that legal process. Laws vary a bit from state to state, however.

Read on for more common questions and answers about how wage garnishment works.

The Consumer Credit Protection Act limits how much money can be garnished from your paycheck, though in some cases, there are differences due to state laws. If your state’s laws require a lower garnishment amount, your employer has to use that standard rather than the federal law.

In general, for garnishments other than for child support, bankruptcy or state/federal back taxes, the weekly garnishment amount can’t exceed the lesser of:

  1. 25% of the disposable earnings; or
  2. The amount by which the disposable earnings are greater than 30 times the federal minimum wage

Federal agencies can garnish up to 15% of disposable income for defaulted debts that are owed to the U.S. government, and up to 15% of disposable income can be garnished for defaulted federal student loans. According to the Department of Labor, these limits don’t apply to debts for federal or state taxes, or for certain bankruptcy court orders.

If your wages are garnished due to court orders for child support or alimony, the limits under the CCPA are different. In these cases, up to 50% of an employee’s disposable income can be garnished if they’re supporting another spouse or child. If they aren’t, their wages can be garnished up to 60%. If payments are over 12 weeks in arrears, an additional 5% can be garnished.

In 2017, the three major credit bureaus made a move to no longer display civil judgments and tax liens in the public record section of credit reports. This means a wage garnishment judgment shouldn’t appear on your credit report and therefore won’t affect your score. If it does show up on one of your credit reports, you can file a dispute to get it removed.

Possibly; some creditors may be willing to work with you. If you’re notified you’re being taken to court for wage garnishment, call the creditor and ask if there are any alternative options, such as debt settlement or debt repayment plan.

If you think the wage garnishment is inaccurate or that you don’t owe the debt, you can object at the garnishment hearing. The judge has the option of reducing or terminating the garnishment, or they can give the creditor the ability to proceed.

Once a judgment for paycheck garnishment has been issued, your employer will be notified by the court. They are supposed to begin the process of withholding the money from your paycheck and remitting it to the creditor or government as soon as possible, so the garnishment may happen as soon as your next pay period.

When your debt is fully repaid, the wage garnishment will end. While the process varies depending on the type of garnishment, your employer will typically receive a letter from the creditor or government notifying them that the garnishment can be terminated.

When your wages are garnished, they’re taken from your disposable earnings. These earnings are what’s left after legally required deductions such as taxes, Social Security and involuntary retirement contributions. It doesn’t factor in any deductions that aren’t legally required, such as union dues.

Federal benefits are usually exempted from being garnished, according to the Consumer Financial Protection Bureau (CFPB). This includes Social Security, veteran benefits, servicemember pay, federal student loan, federal retirement or disability, and so on. However, the CFPB warns that some benefits may not be exempted if the wage garnishment is for federal student loans, federal taxes or child support.

If you’re unsure of how much you still owe or how much longer your wages will be garnished, contact your creditor directly and ask for your current balance. They can let you know how much you’ve paid so far and how much you have left to go.

How much of your wages can be garnished

The amount of wages that can be garnished depends on a few factors, but most importantly, the type of debt. In general, here’s how much money can be garnished from your paycheck for each form of debt:

Type of debtHow much income can be garnished
Consumer debt, like credit cards, medical bills and personal loansThe lesser of:
  • 25% of your disposable earnings
  • Any income that exceeds 30 times the federal minimum wage

Court-ordered debt, like child support and alimonyUp to 50% if supporting another spouse or child, or up to 60% if you aren’t. Add 5% if the payments are over 12 weeks behind.
Federal student loans15%
Federal taxesVaries depending on your filing status and dependents

What to do if your creditor is pursuing garnishment

If you’re being sued by a creditor, first verify that all of the information in the lawsuit is accurate and that it isn’t a debt you’ve already repaid. If the information is correct, there are a few different ways to proceed:

Option 1: Contact your creditors to work out a payment plan

If you’ve been notified that a creditor is suing you and wants to pursue wage garnishment in court, you can try to stop the process before it starts. Call your creditors and ask if they would be willing to create a repayment plan or agree upon a settlement with you.

If you’re nervous about attempting this yourself, you could hire a nonprofit credit counselor to help advise you or help you work with your creditor. For those who can afford it, the CFPB recommends hiring a lawyer who works in consumer law or debt collection defense to help you navigate this process early on.

These proactive measures don’t always work, but they may be worth a shot to try to avoid wage garnishment. Just make sure you act quickly, since wage garnishment is difficult to undo once it’s been decided in court.

Option 2: Object to the garnishment

When you’re sued for wage garnishment, you have the right to attend the hearing and object to the process. The process varies depending on the type of debt and the state where you reside. Your garnishment papers should explain what you need to do in order to object to the decision, but if they don’t, contact the court to find out.

If the creditor is granted the court order for wage garnishment in court, you may still be able to challenge it. The documents you receive with the court order should explain how you can challenge it in court and how much time you have to do so, though you may only have a matter of days. It may be wise to employ a lawyer to help you navigate this process. If you can’t afford one, see if your area has a low-cost or free legal clinic or legal aid office.

Also, keep in mind that you will need a legitimate reason for your challenge or objection, such as that you’ve already paid the debt or you’ll experience financial hardship if it’s implemented.

Option 3: Accept the garnishment

Perhaps the lawsuit is accurate — you owe the debt, and your creditor won’t agree to a repayment plan or settlement. If you’re still able to make ends meet with the garnished wages, one option is to simply go along with the process.

It may be a hard pill to swallow, but take solace in knowing that the money coming out of your paycheck will go toward the debt you owe, and once it’s fully repaid, the garnishment will end.

Your rights in the wage garnishment process

Under the Fair Debt Collection Practices Act, a creditor can’t threaten to garnish your wages if they aren’t able to legally garnish them.

If you’re wondering how to stop wage garnishment, you may have a few options:

  • Bankruptcy: While it’s a last resort and not always advisable, filing for bankruptcy may allow you to avoid wage garnishment from consumer debts (but not court-ordered debts).
  • Claim an exemption: Some states also allow you to claim exemptions, such as a head of household exemption, if you’re the primary breadwinner for your family and can’t survive on the adjusted wages. This could either prevent the judge from granting the garnishment or reducing how much is taken from your paycheck.

Additionally, under federal law, an employer cannot fire you or take any negative actions against you if your wages are garnished for one debt. An employer also can’t refuse to hire you because of this. Be aware, however, that you are no longer protected from getting fired if your wages are garnished for a second or future debt.

As a general rule, if you’re unsure of your rights in the wage garnishment process, consider hiring an attorney, or visiting a local legal clinic or legal aid office to assist you.

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The Best 6-Year CD Rates in 2021https://www.magnifymoney.com/blog/best-of/6-year-cd-rates/Wed, 13 Jan 2021 05:05:06 +0000https://www.magnifymoney.com/blog/?p=111818If you want to earn the highest CD rates, you generally need to invest in a longer-term CD. When the bank or credit union gets to keep your money for an extended period of time, it rewards you with higher interest rates. Higher rates can make a 6-year term an appealing choice when considering CDs. … Continue reading The Best 6-Year CD Rates in 2021

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If you want to earn the highest CD rates, you generally need to invest in a longer-term CD. When the bank or credit union gets to keep your money for an extended period of time, it rewards you with higher interest rates.

Higher rates can make a 6-year term an appealing choice when considering CDs. However, there aren’t as many 6-year CDs available as with other CD terms. Most banks don’t offer this particular term, often maxing out at five years or skipping to 7-year CDs. In our analysis, we managed to find ten great choices when sorting through long-term CD data from DepositAccounts.com, a LendingTree-owned company.

To find the best 6-year CDs, we first looked at the highest 6-year CD rates available nationwide. Then we ranked each by APY, taking the accounts’ minimum deposit requirements into consideration for wider availability. We also made sure to include institutions with great health ratings so you know you’re working with a reputable bank with FDIC or NCUA insurance.

The best 6-year CD rates

Institution

APY

Minimum deposit amount

Evansville Teachers Federal Credit Union

1.30%

$1,000

SRP Federal Credit Union

1.26%

$5,000

AFFCU

1.15%

$2,500

First National Bank of America

1.05%

$1,000

Third Federal Savings and Loan (OH)

0.70%

$500

INOVA Federal Credit Union

0.70%

$200

EmigrantDirect.com

0.70%

$1,000

Chartway Federal Credit Union

0.65%

$100

Marcus by Goldman Sachs

0.60%

$500

1st Source Bank

0.50%

$500

As of January 2021
All rates expressed in annual percentage yield (APY) unless otherwise stated.

1. [EvansvilleTeachersFCU6yearcd]Evansville Teachers FCU[/EvansvilleTeachersFCU6yearcd]— 1.30% APY, $1,000 minimum deposit

The 6-year certificate is Evansville Teachers FCU’s longest term and earns at a competitive interest rate alongside the credit union’s other certificates. You’ll need at least $1,000 to open an account. The penalty for an early withdrawal will equal either $100 or 180 days’ worth of interest, whichever is greater.

ETFCU was founded in 1936 by several teachers in Evansville, Ind. who needed better financial services. Today, you can be eligible for Evansville Teachers FCU membership not just as a teacher, but also through select employers or organizations, or a family or household member. You may also join by donating $5 to the Mater Dei Friends & Alumni Association.

SEE DETAILS Secured

on Evansville Teachers Federal Credit Union’s secure website

NCUA Insured

2. SRP Federal Credit Union — 1.26% APY, $5,000 minimum deposit

A longer-term account worth consideration is the 7 Year Flex Certificate from SRP Federal Credit Union. It requires an opening deposit of at least $5,000. The account allows you to adjust your rate at the end of your 5th and 6th years, allowing you to snag the current rate at the time if it’s higher. The penalty for an early withdrawal equals one year’s dividends.

SRP Federal Credit Union was founded in 1960. SRP membership is open to members of select Georgia and South Carolina communities, their family and household members and spouses of deceased members. You’re also eligible if you sign up for a membership with the Greater Augusta-Fort Gordon Chapter of the Association of the United States Army.

SEE DETAILS Secured

on SRP Federal Credit Union’s secure website

NCUA Insured

3. AFFCU — 1.15% APY, $2,500 minimum deposit

Though this 7-year certificate is already a top earner, you can earn even higher dividends if you are part of AFFCU’s member rewards program. Interest is compounded and credited monthly. The penalty for early withdrawal is half of the dividends you would have earned from the date of withdrawal until maturity on the amount withdrawn.

AFFCU was formed in 1952 by servicemen at Lackland Air Force Base as Lackland Federal Credit Union. It grew over the years, eventually becoming AFFCU, with now over 52,000 members. There are a number of ways to qualify for membership as a member of the military or a civilian in certain areas, but if you live outside of Texas, Oklahoma, Arkansas, Louisiana or Mississippi, your best bet is joining through a $25 donation to the Airman Heritage Foundation.

SEE DETAILS Secured

on AFFCU’s secure website

NCUA Insured

4. First National Bank of America — 1.05% APY, $1,000 minimum deposit

This 72-month CD from First National Bank of America easily earns one of the top spots. The CD will roll over automatically when it matures, or you can opt for a new CD term or withdraw your money altogether. First National allows for partial withdrawals but at a stiff penalty — you’ll lose 540 days’ interest on the amount you take out.

First National Bank of America is based in Michigan and is family-owned. The bank opened their doors in 1955.

5. Third Federal Savings and Loan — 0.70% APY, $500 minimum deposit

The 72-month standard CD is the longest term offered by Third Federal Savings and Loan. It earns at a competitive rate and requires only $500 to open and start saving. The penalty for an early withdrawal from a 72-month CD equals 18 months’ interest, whether earned or not.

Third Federal is based in Cleveland, where it was founded back in 1938.

SEE DETAILS Secured

on Third Federal Savings And Loan (OH)’s secure website

Member FDIC

6. [INOVAFCU6yearcd]INOVA Federal Credit Union[/INOVAFCU6yearcd]— 0.70% APY, $200 minimum deposit

Earn the best 6-year CD rate from Inova FCU. You need at least $200 to deposit and open up INOVA’s 6-year certificate. The penalty for an early withdrawal from this account is equal to 180 days’ of dividends.

Headquartered in Indiana, INOVA Federal was originally founded to serve the employees of Miles Laboratories in 1942. You can join INOVA through your employer or other organization, or through an immediate family member who is already an INOVA member. Membership is also open to those who join the Tru Direction Financial Literacy Program.

SEE DETAILS Secured

on INOVA Federal Credit Union’s secure website

NCUA Insured

7. EmigrantDirect — 0.70% APY, $1,000 minimum deposit

EmigrantDirect offers a lower but still good rate on its 60- to 120-month certificates of deposit, including its 6-year term. You need $1,000 to open an account here. The penalty for early withdrawals will be an amount equal to 180 days’ interest, whether earned or not.

EmigrantDirect is a digital-only division of Emigrant Bank.

SEE DETAILS Secured

on EmigrantDirect.com’s secure website

Member FDIC

8. [ChartwayFCU6yearcd]Chartway Federal Credit Union[/ChartwayFCU6yearcd]— 0.65% APY, $0 minimum deposit

You can take advantage of Chartway FCU’s longest share certificate term of 71 months with a $100 minimum. It earns at a competitive rate, which applies to certificates between 60 and 71 months. This rate is not applicable to accounts opened in North Carolina, Nevada, Texas, Utah or Virgina. The penalty for making an early withdrawal from this certificate will equal 180 days’ worth of interest.

Chartway FCU started as NorVA N.A.S. Federal Credit Union by civilian workers at the Norfolk Naval Air Station in 1959. Today, you can join Chartway if you live, work, go to school or worship in select areas in Texas, Utah or Virgina, you work for a select partner employer or you have an immediate family member who is a member. You may also join by donating $10 to Chartway’s We Promise Foundation, which benefits children with medical issues and illnesses.

SEE DETAILS Secured

on Chartway Federal Credit Union’s secure website

NCUA Insured

9. [GoldmanSachsBankUSA6yearcd] Marcus by Goldman Sachs [/GoldmanSachsBankUSA6yearcd]— 0.60% APY, $500 minimum deposit

A big name in the online banking space, Marcus by Goldman Sachs, offers consistently competitive rates. This includes its high-yield 6-year CD, the longest term among its offerings. It features a competitive annual percentage yield and requires an initial deposit of at least $500 within 10 days after opening the account. Marcus by Goldman Sachs makes a 10-day CD rate guarantee, so if the rate increases during that period, you can switch to that higher rate.

Just be careful of making an early withdrawal from the 6-year CD, as it will trigger a penalty of 365 days’ worth of simple interest on the principal.

Marcus by Goldman Sachs is the banking branch of investment giant Goldman Sachs, which traces its history back to 1869.

SEE DETAILS Secured

on Marcus By Goldman Sachs’s secure website

Member FDIC

10. [1stSourceBank6yearcd]1st Source Bank[/1stSourceBank6yearcd]— 0.50% APY, $500 minimum deposit

You can get started with 1st Source Bank’s 6-year CD with just $500. The penalty for an early withdrawal is 12 months’ interest that would have been earned on the amount withdrawn.

1st Source Bank was established back in 1863 in South Bend, Ind. It has branches in Florida, Indiana and Michigan.

SEE DETAILS Secured

on 1st Source Bank’s secure website

Member FDIC

Is it worth getting a 6-year CD?

It can be worth getting a 6-year CD if you’re signing up for the highest rates on our list. Perhaps it would make a solid addition to a CD ladder you’re building.

In truth, 6-year CD rates aren’t always competitive enough to make them a reliable investment. In fact, 5- and 7-year CD terms consistently have much better rates, despite the small one-year difference.

When we compare 6-year CD rates with 5-year CD rates, the 6-year yields struggle to keep up. You can see above that the best 6-year CD rates jump from 1.30% APY at the top all the way to 0.50%. Meanwhile, all the best 5-year CD rates offer a much better savings opportunity, ranging between 1.50% and 1.15% APY. No matter which 5-year CD you pick from the list, you’re bound to yield some solid earnings.

We tend to expect that the longer the CD term, the higher the rate will be, but we just don’t see that when comparing 6-year CDs with other long-term CDs. On the whole, 6-year CD terms are bookended by better-earning products. Opening 5- and 7-year CDs will give you a wider product selection to choose from and a better chance at growing your savings.

Alternative long-term investments

Other than 5- and 7-year CDs, Ken Tumin, founder of DepositAccounts.com (which similar to MagnifyMoney, is owned by LendingTree) suggests turning to individual bonds to beef up your savings. “Much like a CD ladder, the same technique can be used with individual bonds (Treasury, municipal, corporate, etc.) to build steady savings over time,” he offered. Note that non-Treasury bonds do have some default risk that CDs don’t carry when they have FDIC/NCUA insurance.

Another alternative to a bond ladder is a mutual fund or an ETF of bonds. Unlike a ladder, the value of a bond mutual fund or ETF fluctuates with interest rates. This can give you the chance to boost your savings when interest rates go down. However, the opposite is also true, where the value of your bonds decrease when interest rates rise.

The post The Best 6-Year CD Rates in 2021 appeared first on MagnifyMoney.

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The Best 5-Year CD Rates in January 2021https://www.magnifymoney.com/blog/best-of/5-year-cd-rates/Wed, 13 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=110103Five-year CDs offer some of the highest savings interest rates available. In exchange for keeping your money on deposit for half a decade, banks are willing to dole out higher returns on these long-term accounts. For example, in January, the average 1-year CD interest rate is 0.41% APY and the average 3-year CD rate was … Continue reading The Best 5-Year CD Rates in January 2021

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Five-year CDs offer some of the highest savings interest rates available. In exchange for keeping your money on deposit for half a decade, banks are willing to dole out higher returns on these long-term accounts. For example, in January, the average 1-year CD interest rate is 0.41% APY and the average 3-year CD rate was 0.62% APY, compared to the average 5-year CD rate of 0.79% APY in the same month.

Longer term CDs do exist, but even their yields don’t often exceed 5-year CD rates. The highest yield on a nationally available CD of six or more years is 1.30% APY.

To make sure you’re getting the best CD rates, MagnifyMoney has uncovered the highest 5-year CD rates available nationwide. Using data from DepositAccounts.com, we found that the best 5-year CD rates earned well above the national average interest rate for 5-year CDs. We also took minimum deposit requirements into consideration, to check for wider customer availability.

The 10 best 5-year CD rates in January 2021

1. Affinity Plus Federal Credit Union — 1.50% APY, $500 minimum deposit

To start earning at Affinity Plus FCU’s competitive rate on a 60-month basic certificate, you’ll need an opening deposit of at least $500. Early withdrawals from this account may trigger a penalty of 365 days’ worth of dividends.

Affinity Plus FCU membership extends to employees and volunteers of select organizations; those who live, work or worship in certain Minnesota cities; and relatives and roommates of current members. You can also easily join by making a one-time $25 donation to the Affinity Plus Foundation. Affinity Plus Federal Credit Union was founded in 1930 and is currently headquartered in St. Paul, Minn.

SEE DETAILS Secured

on Affinity Plus Federal Credit Union’s secure website

NCUA Insured

2. Hiway Federal Credit Union — 1.35% APY, $25,000 minimum deposit

Typically, Hiway Federal Credit Union Certificates require a $500 minimum deposit, but you’ll need to deposit at least $25,000 to unlock the highest rate available on this 60-month certificate. The penalty for an early withdrawal from this account will equal 365 days’ worth of dividends.

Hiway Federal Credit Union was founded in 1931 to serve employees of the Minnesota Department of Transportation. Today, it is based in St. Paul, Minn., and opens up membership to employees of qualifying companies or government agencies; members of Minnesota Recreation & Park Foundation; members of the Association of the U.S. Army; and those who live, work, worship or attend school in the Metro Community Area. You may also qualify through a current member or household member.

SEE DETAILS Secured

on Hiway Credit Union’s secure website

NCUA Insured

3. Wings Financial Credit Union — 1.31% APY, $10,000 minimum deposit

Wings Financial Credit Union offers a few options on its certificates, where different rates apply to different balances and can depend on how often you receive dividend payouts. Interest is paid out quarterly. The early withdrawal penalty equals two years’ dividends (730 days), which is the highest penalty on this list.

Wings Financial was founded in 1938 by Northwest Airlines employees. Today, membership is open to those who live or work in the Minneapolis-St. Paul area or the Seattle-Tacoma area; work in the U.S. aviation industry; are related to current members; and members of the Wings Financial Foundation.

SEE DETAILS Secured

on Wings Financial Credit Union’s secure website

NCUA Insured

4. Partner Colorado Credit Union — 1.30% APY, $500 minimum deposit

Partner Colorado Credit Union offers a solid rate on its 60-month CD, which you can open with at least $500. You’ll lose 180 days’ interest on an early withdrawal.

Founded in 1931, Partner Colorado Credit Union membership is open to a wide range of potential members. This includes current or retired employees of affiliated organizations, family or household members of current members, anyone who lives or works in select Colorado counties and more. You can also join by making a $5 donation — which the credit union will help fund — to the Partner Colorado Foundation.

SEE DETAILS Secured

on Partner Colorado Credit Union’s secure website

NCUA Insured

5. Superior Choice Credit Union — 1.30% APY, $25,000 minimum deposit

While you only need $2,500 to open a Superior Choice Credit Union 5-year share certificate, you’ll need at least $25,000 to earn at its most competitive rate. All other balances will earn at a lower APY but would still hover around our list. According to Superior Choice Credit Union customer service, making an early withdrawal from this account will result in a percentage of your balance being charged as a penalty, including accrued interest.

Established in 1932, Superior Choice Credit Union has a handful of branches near its Superior, Wisc., headquarters. You can also access over 30,000 fee-free ATMs and 5,000 branches nationwide and in Canada through the CO-OP Network. The easiest way to qualify for membership to Superior Choice, especially for those who don’t live in Minnesota or Wisconsin, is by joining the American Consumer Council.

SEE DETAILS Secured

on Superior Choice Credit Union’s secure website

NCUA Insured

6. Lafayette Federal Credit Union — 1.26% APY, $500 minimum deposit

Lafayette Federal Credit Union offers a variety of certificates, but it’s the 5-year fixed-rate certificate you’ll want to turn to for competitive savings. It earns 1.26% APY and requires only $500 to open. You’ll lose 600 days’ worth of dividends if you make a withdrawal from the 5-year term fixed rate certificate.

There are several ways you can become an LFCU member: You can live or work in its serviced areas; work at partner institutions; be an immediate family member of a current credit union member; or be a member of the Home Ownership Financial Literacy Council.

LFCU was founded in 1935 and is based in Rockville, Md. Members can take advantage of its branches throughout Maryland, Virginia and Washington, D.C., as well as CO-OP Shared Branches and ATMs nationwide.

SEE DETAILS Secured

on Lafayette Federal Credit Union’s secure website

NCUA Insured

7. Evansville Teachers Federal Credit Union — 1.25% APY, $1,000 minimum deposit

You can open any fixed-rate certificate at Evansville Teachers Federal Credit Union with only $1,000 — including this 5-year certificate. You will earn this rate until the certificate matures. To gain access to the credit union’s certificates, however, you will also need to open a regular share account with at least $5.

Evansville Teachers FCU was formed to help teachers in Indiana after the Great Depression, but today anyone can join by making a charitable contribution of as little as $5 to the Mater Dei Friends and Alumni Association. Membership may also extend to you through your employer, organization or family or household member.

8. Pen Air Federal Credit Union — 1.20% APY, $500 minimum deposit

Open a 60-month Pen Air Federal Credit Union Certificate Account with a $500 minimum deposit. The penalty for an early withdrawal will equal 180 days of dividends.

Founded in 1936, Pen Air is headquartered in Pensacola, Fla. and has 16 locations in Florida and Alabama. You qualify for Pen Air membership if you are active duty or retired military, a civil service employee, an employee at a partnering Select Employer Group or an immediate family member of eligible individuals. You can also become a member by joining the Navy-Marine Corps Relief Society, Inc.

SEE DETAILS Secured

on Pen Air Federal Credit Union’s secure website

NCUA Insured

9. Ideal Credit Union — 1.16% APY, $25,000 minimum deposit

Investing $25,000 in Ideal Credit Union’s 60-month CD will earn you this high APY, but amounts less than that still pay out at a rate that would nearly make our list. The penalty for withdrawing funds before maturity will cost you the lesser of 180 days’ interest or interest earned.

Ideal Credit Union was established in 1926 by and for postal workers as the St. Paul Postal Employees Credit Union. Today, anyone who lives, works, worships, attends school or volunteers in any of six Minnesota counties can join the credit union. You can also join by making a one-time $5 donation to the John D. Miller Scholarship Foundation, which is donated automatically during the process of opening an account.

10. Lake Michigan Credit Union — 1.15% APY, $500 minimum deposit

Lake Michigan Credit Union’s 60-month CD only requires $500 to open. What’s more, if you have other accounts with the credit union that accrue points through their MORE VIP Relationship Rewards program, you can cash in for an additional 0.25% on the listed APY if you have enough points.

Membership to Lake Michigan CU is open to anyone who donates $5 to the ALS (Amyotrophic Lateral Sclerosis) Foundation, but is also open to select individuals in Michigan or Florida and family members of current LMCU members.

SEE DETAILS Secured

on Lake Michigan Credit Union’s secure website

NCUA Insured

5-year CDs vs. savings accounts

If you’re simply looking for the highest rates available, 5-year CDs are going to seem much more appealing than a savings account. Even the best savings accounts can’t quite reach the 5-year CD rates you’ll find above. Plus, 5-year CDs lock in their rates at opening for the term of the investment, guaranteeing your rate of return. This can make for a great savings vehicle for conservative investors, who don’t want to ride the waves of an ever-changing economy.

Looking at the numbers, a $5,000 deposit into a 5-year CD at 3.25% APY would result in $881 of extra savings at maturity. Meanwhile, making a $5,000 deposit into one of the best savings accounts at 2.25% APY lands you with nearly $595 in savings after five years.

Savings accounts do provide easier access to your money, though. If you find yourself in a pinch suddenly, you can make a quick ACH transfer online or a withdrawal at a branch or ATM. Withdrawing from CDs isn’t as easy, especially when you account for the money you’ll lose to early withdrawal penalties. As you can see from the accounts above, early withdrawals from a 5-year CD can result in the loss of six months’ to two years’ worth of interest.

5-year CDs vs. other investment options

Investing in individual bonds — Treasury, municipal, or corporate — can be a solid alternative to saving with 5-year CDs. Non-Treasury bonds do have some risk by default as they don’t have the FDIC/NCUA insurance coverage limits. You can use these bonds to build a ladder similar to a CD ladder, so each bond matures a year or so apart.

An alternative to creating a bond ladder is to invest in a mutual fund or ETF of bonds. Unlike a ladder, however, the value of a bond mutual fund or ETF does fluctuate with interest rates. So when interest rates go up, the value of those investments will drop and vice versa.

The best way to maximize your 5-year CD investment

If you’re putting away money for five years, you’re going to want to make it worthwhile. For starters, CDs are best for those who have already maxed out their other savings accounts and have their emergency savings in a liquid savings account for easy access. They’re also better if you have a higher deposit to stash away. That will earn more interest in the long term for more tangible savings.

For example, placing $1,000 in a 5 year CD with a 3.25% APY will yield about $176 in savings by the end. Making a $10,000 deposit, on the other hand, lands you with a little over $1,764 in interest. That $176 is a good chunk of change, but you should make sure it’s enough to justify stashing away $1,000 now instead of perhaps waiting to make a larger deposit.

A great way to utilize a 5-year CD is to include it in a CD ladder. A 5-year, five-CD ladder is a standard and easy-to-track method of saving. You open five CDs, each maturing a year apart. Once a CD matures, you renew it as a new 5-year CD. Eventually, all your CDs will be 5-year accounts, maturing a year apart. You can also choose to withdraw your money whenever an account matures if you need to use those funds. This allows you to take advantage of the longer terms’ higher rates and bigger savings.

The post The Best 5-Year CD Rates in January 2021 appeared first on MagnifyMoney.

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What Is a Cash Management Account?https://www.magnifymoney.com/blog/banking/cash-management-account/Wed, 13 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=110436Actions 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 … Continue reading What Is a Cash Management Account?

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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 high APYs, 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.

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 yield 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 — 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 0.110%. 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
0.110%0.154%0.409%0.791%

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.

Management Fees

0.25%

Account Minimum

$0

Promotion

Three months free for new customers who are referred by an existing Betterment account holder

Management Fees

0.89%

Account Minimum

$100,000

Promotion
N/A
Management Fees

0%

Account Minimum

$100 one-time deposit or $20 monthly deposit

Promotion
N/A

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
Betterment Cash Reserve 0.40%$0$0
Wealthfront Cash Account0.35% APY on the entire balance$1$0
SoFi Money0.25% APY on the entire balance if you have $500 or more in recurring, monthly deposits$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 SaveUp to 1.00% APY on balances up to $10,000; 0.10% on balances over $10,000$1,000 spent monthly on debit card to earn 1.00% APY or rate drops to 0.10%$15 for Aspiration Plus in order to receive the APY

Betterment Cash Reserve

Betterment’s Cash Reserve account promises an APY of 0.40%. You can also opt to open a checking account, which they offer through a partnership with nbkc bank.

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 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.

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 0.25% APY. SoFi doesn’t require depositors to maintain a minimum balance in this account in order to earn that interest rate, but you will need $500 in monthly deposits; otherwise, that rate drops to 0.01%. Account holders also get additional goodies like fee-free Allpoint ATMs worldwide.

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 their 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’ account joins the list of best cash management accounts.

Aspiration Spend and Save Account

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 can earn the 1.00% APY the company advertises so prominently. To get that APY, you’ll need to upgrade from the base account to Aspiration Plus for a monthly fee of $15. You’ll also need to make at least $1,000 in purchases on the debit card per month or the rate drops to 0.25%, and balances over $10,000 earn 0.10%.

With Plus you get a few extra perks. You’ll earn more cash back on your socially conscious purchases, get one out-of-network ATM fee refunded per month, and be eligible for their Planet Protection program, which aims to offset the carbon footprint you leave by gassing up your car. Again, 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

The post What Is a Cash Management Account? appeared first on MagnifyMoney.

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The Best High-Yield Online Savings Accounts in January 2021https://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001/https://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001/#respondWed, 13 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=3362Online savings accounts are the future of savings, with high yields, little to no fees and convenient 24/7 access. Our top savings account picks yield an average interest rate of 0.60% APY, far higher than the national average of 0.05% APY (according to the FDIC). Choosing one of our accounts could multiply your yearly interest … Continue reading The Best High-Yield Online Savings Accounts in January 2021

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Online savings accounts are the future of savings, with high yields, little to no fees and convenient 24/7 access. Our top savings account picks yield an average interest rate of 0.60% APY, far higher than the national average of 0.05% APY (according to the FDIC). Choosing one of our accounts could multiply your yearly interest earnings by up to 16 times the national average, which is significantly higher than what you can expect at most local bank branches.

Our team of experts evaluated over 100 banks and credit unions to find the best high yield online savings account. We cross-referenced each of the key traits that customers look for in a high-yield savings account, including APY, minimum balance requirements and monthly fees. We considered accounts from industry leaders that have a proven track record of offering competitive savings rates based on pricing data from over the past five-plus years.

This list is refreshed every week to ensure it always features the best online savings accounts and we’re constantly adding new ones to our database as they become available. If you don’t find what you’re looking for today, make sure you check back regularly to see a new selection.

MagnifyMoney has been covering deposits, investing and personal finance for almost a decade. Our team collectively has over 50 years of experience covering and researching financial topics. Our ranks include former analysts from major banking institutions, financial news reporters who have been featured on major networks like Forbes, CNN and MarketWatch and economists and thought leaders from major media outlets like LendingTree and DepositAccounts.com.

Do you have a savings goal in mind? Tell us about it!

1. High Rate: Synchrony Bank – 0.60% APY

  • Annual Percentage Yield (APY):0.60%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: Yes
  • App Available: Yes
Overview: Synchrony Bank pays a healthy 0.60% APY. There is no minimum balance requirement and no monthly fee. In addition to the great rate, you can get an ATM card. Most internet-only banks require you to transfer funds electronically, which can take a few days. If you ever need quick access to your funds, the ATM card makes access easy.

You might not recognize the Synchrony brand in the banking space, but it is a large, well-capitalized business. Synchrony used to be a part of General Electric (GE), and was spun out as a separate company. Unfortunately, the digital experience is not the best, but they now have a mobile banking app.

2. High Rate: American Express National Bank – 0.50% APY

High Yield Savings Account from American Express National Bank

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on American Express National Bank’s secure website

Partner Offer

Member FDIC

  • APY:0.50%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: No
Overview: Our sponsored advertiser, American Express National Bank, offers a Personal Savings account, which earns a 0.50% variable Annual Percentage Yield (APY) as of 1/13/2021. The account charges no monthly fees and requires no minimum deposit, making it an affordable account to open. You must fund your account within 60 days of applying for the account, and the FDIC insures your deposits up to $250,000. Overall, the account is a great option for anyone who wants the flexibility of earning a high interest rate on a sum of money you’ve stashed away, minus the withdrawal restrictions of a certificate deposit.

3. High Rate: Marcus by Goldman Sachs – 0.50% APY

High-yield Online Savings Account from Marcus by Goldman Sachs

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on Marcus By Goldman Sachs’s secure website

Member FDIC

  • Annual Percentage Yield:0.50%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Our advertiser Marcus by Goldman Sachs, the consumer bank of Wall Street giant Goldman Sachs, offers a 0.50% Annual Percentage Yield on deposits. There isn’t a minimum balance requirement to earn the APY and there are no transaction fees. Upon opening the account, you can deposit funds via electronic transfer, wire transfer, or deposit by check. You can get access to your funds via electronic transfer or wire transfer.

Goldman has been investing heavily in Marcus, its online consumer bank. Marcus is already offering some of the best savings accounts and personal loans in the market, and further expansion is expected. The savings account has consistently been paying one of the highest rates in the market. With a 0.50% APY, you can get one of the highest rates in the market from a well-known brand. The maximum deposit is $1,000,000 and deposits are FDIC insured up to the $250,000 limit.

Marcus is accessible both online and via the Marcus mobile app, available only in the Apple App Store.

4. Favorite Online Package: Ally Bank – 0.50% APY

Online Savings Account from Ally Bank

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on Ally Bank’s secure website

Member FDIC

  • APY:0.50%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Ally is a bank without branches that had been consistently paying high interest rates on savings accounts. While Ally is still offering rates way above what brick-and-mortar banks are offering, it seems this online bank no longer wants to be seen as the online bank with the most competitive rates. The current APY on Ally’s savings account is 0.50%.

Although Ally has dropped its rate significantly, along with its competitors, we still favor this online bank. It doesn’t require a minimum balance to earn the APY and, even better, you can open a free checking account (also with no minimum balance requirement). This makes access to your savings account incredibly easy – because you can transfer funds online (or via the app) and have immediate access via checks, debit cards and ATMs. With an Ally account, you will have access to their full suite of expanding (and market-leading) products such as CDs, money market account, checking account, and IRA accounts.

5. High Rate: Barclays Bank – 0.40% APY

Online Savings Account from Barclays

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on Barclays’s secure website

Member FDIC

  • APY:0.40%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Barclays is a large, old British bank, based in London and with more than 325 years of history. Although Barclays is huge in the United Kingdom, it is a challenger brand in the US. Barclays offers savings products with highly competitive rates. These deposits are used to fund their rapidly growing American credit card business.

The online savings account has a 0.40% APY with no minimum balance to open and no monthly fees. Your deposits are FDIC insured up to the legal limit. The Barclays website has a good look and feel. And you can have the confidence of keeping your money with one of the world’s largest and oldest universal banks.

6. High Rate: Capital One – 0.40% APY

  • APY:0.40%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: A consistent rate leader for its deposit accounts, Capital One now offers its 360 Performance Savings. With a 0.40% APY on all balances and no monthly fee, you get a chance to boost your savings uninterrupted. There are no minimum balances required to open or maintain the account, either.

Capital One is able to offer higher rates and lower (to no!) fees on this online savings account compared to traditional in-branch offerings. Still, you can head to a Capital One branch or Capital One Café to open a new 360 Performance Savings account, if you prefer. You cannot use an ATM to withdraw or deposit funds, but you can visit a branch, call the bank or make your own online transfer. You can access all accounts on your mobile device through the Capital One app, as well.

7. High Rate: SmartyPig – 0.80% APY

  • APY:0.80%
  • Minimum balance requirement: $0
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: SmartyPig is a division of Sallie Mae Bank, which provides the FDIC insurance for SmartyPig accounts. SmartyPig is accessible online and in its mobile app, which is available in both the Apple App Store and Google Play Store.

The SmartyPig savings account works with all balances. However, SmartyPig rewards lower balances with higher rates. Balances from $0.01 to $2,500 earn 0.80% APY; balances from $2,500.01 to $10,000 earn 0.80% APY; balances from $10,000.01 to $50,000 earn 0.55% APY; and balances over $50,000 earn 0.55% APY.

There is no monthly fee to worry about. The account allows you to create and save towards specific savings Goals, which is handy if you need to differentiate where your money is going. You can even set a target date to reach each goal to help you stay motivated and on track.

8. Unique Bank + High Rate: Fitness Bank – 0.70% APY

Fitness Savings (12,500+ Steps) from FitnessBank

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on FitnessBank’s secure website

Member FDIC

  • APY:0.70%, contingent on taking 12,500 steps
  • Minimum balance requirement: $100
  • Monthly Fees: $10
  • ATM Access: No
  • App Available: Yes
Overview: Fitness Bank is unique and new online bank. It’s a division of Affinity Bank, which has been around since 2002 and has acquired over $318 million in assets. Affinity Bank decided to launch a concept like no other to reward actively fit individuals with the highest APY currently available. While most institutions choose to offer tiered rates based on balance amounts, Fitness Bank offers tiered rates based on the average number of steps you take on a daily basis. To earn the high 0.70% APY, you’ll need to take an average of 12,500 steps or more per day. If you only take an average of 10,000 to 12,499 steps per day, you’ll earn an APY of 0.60% (which is still a great APY). You’ll earn 0.50% APY if you take an average of 7,500 to 9,999 steps per day. Taking an average of 5,000 to 7,499 steps per day will qualify you for an APY of 0.40%. Finally, if you take anywhere between 0 to 4,999 steps on average per day, you’ll only earn 0.25%.

Fitness Bank will track your steps by requiring you to download its Step Tracker app. The bank will then calculate your average steps from the previous month to determine which tier you qualify for. Once the bank determines which rate your activity qualifies you for, you will continue earning that rate for an entire month until the bank recalculates your activity. The activity requirement will be waived for the first month so that you can get your app all set up and start logging in some steps. For this first month, you’ll automatically earn the 0.70% APY.

In terms of actual money, you will need at least $100 to open the account and you’ll need to maintain this balance to waive the $10 monthly maintenance fee. The bank does impose a limit on the amount of money you’re able to transfer in and out of the account via ACH. You cannot transfer more than $15,000 per day in or out of the account. In addition to the Step Tracker app, Fitness Bank has a mobile banking app to manage your account.

9. High Rate: Nationwide by Axos Bank – 0.70% APY

My Savings from Nationwide by Axos Bank

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on Nationwide By Axos Bank’s secure website

FDIC Insured

  • APY:0.70%, contingent on having a My Checking account with a deposit of at least $1,000
  • Minimum balance requirement: $100
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Through this partnership, Nationwide by Axos Bank is able to offer a full suite of financial accounts and services. Axos Bank, a digital bank founded in 2000, provides these services and the FDIC insurance on deposit accounts. Mobile access is available through the Axos Bank for Nationwide mobile app on both iPhone and Android devices.

My Savings is just one of Nationwide by Axos Bank’s savings accounts and requires at least $100 to open. Its competitive 0.70% APY applies to all balances, although you’ll need to have a My Checking account with a monthly direct deposit totaling at least $1,000 to that checking account to snag the competitive savings rate. If you don’t want the My Checking account, you can still earn a solid rate of 0.40% APY. The My Savings account does not charge a monthly service fee.

10. High Rate: MutualOne Bank – 0.60% APY

Online Savings from MutualOne Bank

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on MutualOne Bank’s secure website

Member FDIC

  • APY:0.60%
  • Minimum balance requirement: $0
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: MutualOne Bank’s Online Savings Account earns one of the industry’s top savings account rates on balances up to just under $1 million. Balances $1 million and over will earn a lower rate. Interest is compounded and paid monthly.

You will need at least $500 to open the Online Savings account, which is accessible only online and on mobile. There is no check writing, ATM access or online bill payment via this account.

Why trust us?

At MagnifyMoney, it is our mission to inform our readers about the best financial opportunities out there. Our insights have been cited by top financial publications including Marketwatch, CNBC and the Wall Street Journal.

Our dedicated team of financial experts spends dozens of hours grading online savings accounts according to their interest rates, fee schedules, extra features, minimum balance requirements and accessibility, adjusting our rankings as banks and their offerings change on a weekly basis.

We distilled our picks from a list that included hundreds of banks, credit unions and online institutions nationwide.

Our methodology for picking the best high-yield savings accounts

To find the best high-yield online savings accounts, MagnifyMoney looks at over 6,000 financial institutions each week, from small community banks and credit unions to traditional brick-and-mortar banks to new online banks.

  1. Savings account rates: We heavily weighted the APYs offered by each bank in terms of both magnitude and consistency. Higher savings rates were prioritized over lower rates. Due to the variable rates on savings accounts, we also gave additional consideration to banks that were known to maintain competitive rates over longer periods of time.
  2. Minimum deposit and balance requirements: To ensure accessibility to all customers, we focused on banks that welcome deposits of all sizes, where the ideal banks in this category have minimum balance and deposit requirements of $0.
  3. Bank account fees: Unnecessary fees can eat into your long-term savings in a major way. Banks that offered low or no fees were given priority in this category over banks that are known to charge account maintenance fees, service charges and other surcharges.
  4. Customer service: We considered overall customer satisfaction and bank reputation when weighing each bank performance in this category. While each customer’s experience varies, we looked at relative feedback each bank received at the national level based on data sourced from consumer advocates like the Consumer Financial Protection Bureau (CFPB) and the Better Business Bureau. Banks that failed to meet minimum standards of performance were excluded.

What should I know about high-yield savings accounts?

It’s easy to take your savings account for granted, setting up automatic deposits and forgetting about it. But there’s a lot more to high-yield savings accounts that you should know.

For one, you can find consistently more competitive rates at online banks than with your typical big bank. Online banks are also more fee-friendly — although there are still some legal limitations you should be aware of to avoid extra fees.

What is a high-yield savings account?

A high-yield savings account, also known as a high-interest savings account, is a savings account that earns interest at a higher rate than a traditional savings account. The average savings account interest rate tends to hover around 0.20% APY, but big brick-and-mortar banks often offer interest rates more like 0.01% APY.

High-yield savings accounts raise the bar and offer upwards of 1% to 2% APY — sometimes even 3% APY in good rate conditions. High-interest savings accounts are also more likely to come with added benefits like little to no fees, especially when offered by an online bank.

How much interest will I earn with a high-yield savings account?

When you open a high-yield savings account, you’re almost guaranteed to earn more in interest than with a traditional savings account.

For example, let’s say you have $5,000 to deposit into a savings account. If you choose a high-interest savings account with a 2.30% APY, for example, you’ll earn $116 and some change in a year, provided you don’t make any additional contributions to the account in that time (which would boost your savings even more).

If you deposit your $5,000 into an average savings account at 0.20% APY for a year, you’ll earn just $10 in interest. It’s a pretty big difference in earnings, and all it takes is a simple account switch.

Even in a low-rate environment, where a high-yield savings account might be earning 1.30%, for example, you’ll still make about $65 in interest, which is still well over the $10 average earnings from a traditional savings account.

Does the APY for high-yield savings accounts change?

Savings accounts are variable-rate accounts, so their rates are subject to change — and they will over the course of an account’s lifetime. This is in contrast to fixed-rate savings vehicles, like CDs, which have set rates for predetermined periods of time.

There is no universal answer for how often interest rates change on high-yield savings accounts, since each institution has its own policies and decisions. However, you can often expect an institution to change its savings account rates about once a month at least. This change typically happens at the beginning of the month.

High-interest savings accounts are also more likely to see changes in their APYs than traditional low-rate savings accounts, because high-interest accounts have more room to change. Traditional savings account rates can only go so low, especially since many of them are already bottomed out at 0.01% APY.

How to choose the best high-yield savings account

  • Start by finding the highest APY
  • Check whether the institution is consistent with its high rates
  • Look for a no-fee account
  • Confirm any account balance minimums

When you’re looking for the best high-yield savings account, it’s tempting to go straight for the highest APY you can find. That account will certainly offer the highest yield at the moment, but there’s also more to it than that. Unless you’re okay with the possibility of switching accounts periodically to chase the highest rates, it may help to find an account offered by an institution that consistently offers some of the most competitive savings account rates. We’ve started our roundup above with those accounts, offered by consistent industry-leaders over the past two years.

But high yields may mean nothing if you lose your earnings to fees, so the best high-interest savings accounts out there are also the ones with little to no fees. Look for accounts with no monthly service fees, no overdraft fees and/or no excessive transaction fees. This will help you keep your savings intact.

You’ll also want to choose a high-yield savings account that works within your existing finances. Some accounts may impose minimum deposit or balance requirements to open and keep the account. We think the best high-interest accounts are the ones that require low or $0 minimums, which makes the account much more accessible to savers. But, if you have a high balance and find a savings account that offers a higher rate for high balances, then you can go for that account if it better fits your needs.

How do I open a high-yield savings account?

In most cases, opening a high yield savings account is as easy as clicking a button on the institution’s website and completing a short application form. You will likely be approved for the account right away.

A savings account application will likely require your name, home address, email address and Social Security Number. If the account requires a minimum deposit at opening, you’ll also likely have to link an external account at this time. Otherwise, you may make your initial deposit after opening, often within a 30- or 60-day window.

If you have a rocky banking history, like previous negative balances or circumstances where the institution closed your account, your application for a high-interest account may be denied. You can check out your recorded banking history with ChexSystems, a reporting system that many banks use. If there are any errors or points of contention, you may be able to dispute an item in your ChexSystems report.

What should I use a high-yield savings account for?

You can use a high-yield savings account for a variety of reasons and savings goals. You can use it as your emergency fund, where you stash your cash for a rainy day, for example. Perhaps you want to use a high-interest savings account to boost your savings toward your next vacation or your kid’s college education.

Luckily, many institutions allow you to have several savings accounts at a time, meaning you can save toward separate goals simultaneously without ever getting your wires crossed.

Should I get an online savings account?

An online savings account is your best bet for obtaining the highest interest rate available. Online banks lack the costs associated with maintaining brick-and-mortar branches, and they generally pass the savings onto you in the form of better interest payouts. And like we’ve said, if your money is going to sit in an account, you might as well make it worth your while by growing it at a competitive rate.

Online savings accounts generally feature superior accessibility. Online banks are laser-focused on offering the best possible and most user-friendly app experiences. There’s often 24/7 customer service, and they tend to provide very good ATM access. When shopping for the best savings account to suit your needs, make sure you include a good mix of online banks offering high yields, brick-and-mortar banks and credit unions in your search.

What impacts savings rates?

Institutions typically alter their rates in response to changes in market interest rates, which are in turn driven by the federal funds rate set by the Federal Reserve. The federal funds rate influences the rates banks lend money to each other. When the Fed increases the federal funds rate, financial institutions respond by increasing the interest rates they offer on deposit accounts. When the federal funds rate falls, interest rates decrease.

If you’re not keen on tracking the federal funds rate, changes to the APY on your savings account may come as a surprise. Luckily, chances are that if you keep your deposits with an online bank, you’ll still get the most competitive rates regardless of a Fed pause or rate decrease. Online savings accounts outperform most brick-and-mortar rates any day.

What are the best banks for high-yield online savings accounts?

Here’s a summary of our top picks:

  • 0.50% APY – American Express National Bank
  • 0.50% APY – Ally Bank
  • 0.60% APY – Synchrony Bank
  • 0.50% APY – Marcus by Goldman Sachs
  • 0.40% APY – Barclays Bank
  • 0.40% APY – Capital One
  • 0.65% APY – Affirm
  • 0.70% APY – Ftiness Bank
  • 0.80% APY – SmartyPig
  • 0.65% APY – ConnectOne Bank

Savings Account FAQs

There is nothing inherently unsafe about a high-yield savings account. As long as you make sure you’re depositing your money into an FDIC-insured bank or NCUA-insured credit union, your money will be insured up to legal amounts in case your institution fails.

You may also want to double check an institution’s security measures before signing up for an account. Check whether their website and information is protected by encryption and firewalls. Reputable institutions will also include anti-virus and anti-fraud measures. Other protections include biometric logins (fingerprints or face match), two-factor verification and security questions.

There is often not much difference between high-interest savings accounts and money market accounts. A money market account is a type of savings account that also tends to have higher rates than traditional savings accounts.

Some money market accounts set themselves apart by offering a debit or ATM card and/or check-writing capabilities. These accounts offer further accessibility to your money. However, money market accounts still fall under the six-limit “convenient” transaction requirement, like regular savings accounts.

High-yield savings accounts are taxed like regular savings accounts. However, your earnings from a high-interest savings account are more likely to be taxed, as you are more likely to be earning more in that account than a traditional low-rate account.

Savings account earnings are taxed if you make $10 or more. Regardless of your earnings, your institution should send you and the IRS a copy of Form 1099-INT, which details the interest you’ve earned in a year. Even if you don’t receive that form, the IRS will, and they will expect you to report your interest income on your tax return.

If you earn $1,500 or more in interest income in a year, you will also need to detail those sources of income on Schedule B of Form 1040.

Thanks to the Federal Reserve’s Regulation D, you can withdraw up to six times per statement cycle from a high-yield savings account, like any other savings account. This includes pre-authorized and automatic withdrawals and transfers, and transfers made by debit card, check or other similar ways.You can get around this limit by performing “less convenient” withdrawals, like those made in person at the bank or ATM. Exceptions to the rule also include withdrawals and transfers requested by mail and those initiated over the phone if you receive the withdrawal as a mailed check.

Online banks don’t incur the costs of maintaining brick-and-mortar branches. These costs include rent, building maintenance, staff salaries and the cost of keeping physical cash safe. Without these expenses weighing them down, online banks reap big savings — savings they then pass on to their customers in the form of high interest rates.

74% of Americans don’t know online-only banks generally offer better savings rates

A new survey by MagnifyMoney has found that Americans largely misunderstand online savings accounts and the financial opportunities they offer.

Key findings

  • 74% of Americans don’t know online-only banks typically offer higher interest rates than traditional brick-and-mortar banks.

    • Additionally, 16% believe online-only banks charge more fees than traditional brick-and-mortar banks, which is generally false. To see our picks for the best high-yield online savings accounts, scroll up.
    • Another 11% believe money deposited in an online bank isn’t insured, which is most often untrue. All the online banks listed above — and more — are FDIC insured. Even many fintechs and neobanks offer FDIC insurance on their cash management accounts, via partner banks.
  • Just over 143.3 million consumers are likely missing out on higher interest rates for their savings by not banking with online-only financial institutions. Of those without an account, complacency is the primary reason, as 55% are satisfied with their brick-and-mortar bank.
    • Less than half of Americans (44%) have an account with an online-only bank. Their main reasons for the switch are better interest rates (30%), fewer fees (28%) and recommendation by a financial advisor (27%).
  • Who’s most likely to have an online-only savings account? Generation Xers (61%), those earning $75,000 or more a year (58%), college graduates (57%) and men (57%).
  • More than 44% of respondents fear online banking puts them at risk for data breaches, while 40% are concerned hackers will have an easier time accessing their data. Still, of those without an online bank, just 19% said it was because they don’t trust the bank with their money.

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,029 Americans, with the sample base proportioned to represent the overall population. The survey was fielded on Aug. 25, 2020.

For the purposes of our survey, generations are defined as the following ages in 2020:

  • Generation Z: 18 to 23
  • Millennial: 24 to 39
  • Generation X: 40 to 54
  • Baby boomer: 55 to 74
  • Silent generation: 75 and older

While Gen Z and the silent generation were surveyed — and their answers were factored into the overall percentage totals among all respondents — they were omitted from generational comparisons, due to the low sample size among both groups.

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Editors’ Choice: Best Checking Accounts for January 2021https://www.magnifymoney.com/blog/banking/best-checking-accounts/https://www.magnifymoney.com/blog/banking/best-checking-accounts/#respondWed, 13 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=3950The best checking accounts can provide a competitive interest rate, ATM fee reimbursements and even cashback rewards. If your current account doesn’t offer any of these features, it may be time to switch. Why Trust Us? At MagnifyMoney, it is our mission to inform our readers about the best financial opportunities out there. Our insights … Continue reading Editors’ Choice: Best Checking Accounts for January 2021

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The best checking accounts can provide a competitive interest rate, ATM fee reimbursements and even cashback rewards. If your current account doesn’t offer any of these features, it may be time to switch.

Why Trust Us?

At MagnifyMoney, it is our mission to inform our readers about the best financial opportunities out there. Our insights have been cited by top financial publications including Marketwatch, CNBC and the Wall Street Journal.

Our dedicated team of financial experts spent dozens of hours grading each checking account on its features, including fees, minimum balance requirements, ATM and branch network availability, APYs and customer satisfaction. We distilled our picks from a list that included hundreds of banks, credit unions and online institutions nationwide.

We ensure our list is updated every month as new banks are added to our database, and we update information as banks change their terms. Check out our best checking account picks for October 2020 and click on the links in the table below to read about why we picked each bank.

Please note: While this list is up-to-date as of this writing, many banks have cut back on or even halted their hours temporarily in response to the COVID-19 outbreak to protect their customers and employees. Many banks continue to offer standard services online and over the phone as well as through automated ATMs.

Best Checking Accounts of January 2021

Summary of the Best Checking Accounts for January 2021

Best Overall Checking Account

Ally Bank Interest Checking

Ally Bank Review

Best High-Yield Checking Account

Consumer Credit Union Rewards Checking

Consumer Credit Union Review

Best Free Checking Account

Axos Bank Rewards Checking

Axos Bank Review

Best No-Fee Checking Account

Discover Cashback Debit

Discover Bank Review

Best Checking Account Bonus

HSBC Premier Checking

HSBC Premier Review

Best Rewards Checking Account

Radius Bank Rewards Checking

Radius Bank Review

Best No-ATM Fee Checking Account

TD Bank Beyond Checking

TD Bank Review

Best Business Checking Account

Axos Bank Business Interest Checking

Axos Bank Review

Best Checking Account for Students

Chase College Checking

Chase Bank Review

Best Joint Checking Account

PNC Virtual Wallet Checking Account

PNC Virtual Wallet Review

Best Overall Checking Account – Ally Interest Checking

Highlights:

  • Free access to Allpoint ATMs and up to $10 in ATM fee reimbursements per statement cycle
  • No required minimum opening deposit
  • 0.10% APY on balances less than $15,000; 0.25% APY on accounts with a minimum daily balance of $15,000
  • APY: Up to 0.25%
  • Maintenance Fee: $0
  • Current Promotions: N/A

Read the full review

Why we picked it: Ally Bank’s Interest Checking account features minimal fees, variable interest and added perks like up to $10 in ATM fee reimbursements every month. The bank itself has a solid history of consistently offering top-tier rates, even in a plunging rate environment.

All of Ally Bank’s banking products support joint ownership, and you are allowed up to four owners on the account without any additional fees.

What to watch out for: There’s not much to watch out for with this account, just be aware of the $25 overdraft fee.

Best High Yield Checking Account – Consumers Credit Union Rewards Checking

Highlights:

  • Access to over 30,000 ATMs
  • Most lucrative rates require minimum direct deposits or spend on CCU Visa credit card
  • APY: up to 4.09%
  • Maintenance Fee: $0
  • Current Promotions: N/A

Read the full review

Why we picked it: The Consumers Credit Union has routinely offered sky-high rates, even in a plummeting rate environment, earning this account the title of Best High-Yield Checking account.

While this is a tiered rate account, the lower tiers — which can be earned with fewer requirements — still offer attractive rates that are well above those offered by other banks and credit unions.

What to watch out for: While balances between $10,000 and $25,000 — regardless of your tier — earn an APY of 0.20%, it’s worth noting that balances over $25,000 earn an APY of just 0.10%.

Additionally, if you don’t meet the monthly activity requirements, you’ll earn an APY of just 0.01% and won’t receive ATM refunds. The account also has an overdraft fee of $30.

Best Free Checking Account – Axos Bank Rewards Checking

Highlights:

  • No overdraft or non-sufficient funds fees
  • Unlimited domestic ATM fee reimbursements
  • APY: up to 1.25%
  • Maintenance Fee: $0
  • Current Promotions: N/A

Read the full review

Why we picked it: We have crowned the Axos Bank Rewards Checking account as the Best Free Checking account not only for its attractive features, but for its consistency, too.

The Axos Bank Rewards Checking account has consistently offered competitive APYs — even as earning rates drop at other banks. This account also offers all of the bells and whistles that the best standard checking accounts have been known to include, like ATM fee reimbursements and no overdraft fees.

What to watch out for: The Axos Bank Rewards Checking account is a tiered, interest-earning variable rate account. So, in order to earn the 1.25% APY, you must meet the following requirements:

  • Receive monthly direct deposits totaling $1,000 or more
  • Use your debit card for a total of 15 transactions per month minimum of $3 per transaction)

If you don’t meet those requirements, you will receive a reduced APY from what is advertised. There is also a $50 minimum balance required to open this account.

Best No-Fee Checking Account – Discover Cashback Debit

Highlights:

  • No insufficient funds fee
  • Access to over 60,000 no-fee ATMs
  • 1% cash back on up to $3,000 of debit card purchases per month
  • APY: None
  • Maintenance Fee: $0
  • Current Promotions: N/A

Read the full review

Why we picked it: The Discover Cashback Debit checking account is a truly no-fee checking account, with no fees, no insufficient funds fees and access to over 60,000 ATMs.

As the icing on the cake, this account offers 1% cash back on all debit card purchases, up to $3,000 per month. This is a unique perk among checking accounts, and if you prefer cash back to earning interest, this could be the account for you.

What to watch out for: There aren’t too many surprises with this account, just be aware that fees for non-Discover ATMs may apply.

Best Checking Account Bonus – HSBC Premier Checking

Online HSBC Premier Checking

SEE DETAILS Secured

on HSBC’s secure website

Member FDIC

Highlights:

  • Unlimited ATM fee rebates within the U.S.
  • No foreign transaction fees
  • $50 monthly service waived if you meet any one of the requirements
  • APY:0.01%
  • Maintenance Fee: $50
  • Current Promotions: $450 welcome bonus

Read the full review

Why we picked it: HSBC is currently offering up to a $450 welcome bonus for those who open and fund a new Premier Checking account by March 31, 2021. To earn the bonus, you must make recurring monthly qualifying direct deposits totaling at least $5,000 from a third party to your HSBC Premier checking account for three consecutive calendar months, beginning the second full calendar month after account opening. You also must be a new HSBC customer to take advantage of this offer, and fund your new account with new money.

What to watch out for: The Premier Checking account earns a dismal 0.01% APY on balances of $5 or more. It also charges a hefty $50 monthly fee.

Best Rewards Checking Account – Radius Bank Rewards Checking

Highlights:

  • Earn up to 1.00% cash back on debit card purchases
  • Offers early direct deposit
  • Unlimited ATM fee rebates
  • APY:0.10% on balances between $2,500 and $99,999, 0.15% on balances over $100,000
  • Maintenance Fee: $0
  • Current Promotions: N/A

Read the full review

Why we picked it: Radius Bank’s Rewards Checking account features a robust rewards program, offering up to 1.00% cash back on debit card purchases as well as a decent APY on the funds in your account. There is a minimum $100 opening deposit required for this account.

This account also stands out for offering unlimited ATM fee rebates, an early direct deposit feature and no fees.

What to watch out for: To earn the cash back, you must maintain a minimum balance of at least $2,500.

Best No-ATM Fee Checking Account – TD Bank Beyond Checking

Highlights:

  • No fees at TD Bank ATMs, and reimbursed fees for out-of-network ATMs for accounts that maintain a daily balance of at least $2,500
  • No required minimum opening deposit
  • Overdraft fees reimbursement offered up to two times per year
  • APY: Up to 0.03%
  • Maintenance Fee: $25
  • Current Promotions: N/A

Read the full review

Why we picked it: TD Bank’s Beyond Checking account is a great option for those who prioritize fee-free access to ATMs.

With this account, not only do you receive fee-free ATM access to TD Bank’s network of ATMS, but if you maintain a minimum daily balance of at least $2,500, TD Bank will reimburse you for any fees incurred at out-of-network ATMs.

What to watch out for: Be aware of the dismal APY offered, and note that there is also a $35 overdraft fee associated with this account.

Best Business Checking Account – Axos Bank Business Interest Checking

Business Interest Checking

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on Axos Bank’s secure website

Member FDIC

Highlights:

  • Unlimited domestic ATM fee reimbursement
  • Up to 50 free transaction items per month
  • Monthly service fee can be waived if you maintain an average, daily minimum balance of $5,000
  • APY: Up to 0.81%
  • Maintenance Fee: $10
  • Current Promotions: $100 welcome bonus for businesses that incorporated after June 1, 2020

Read the full review

Why we picked it: Axos Bank’s Business Interest Checking account stands out among other business checking account products for a myriad of reasons, most notably its surprisingly low fees.

Additionally, Axos Bank throws in a number of freebies with its Business Interest Checking account, from ATM fee reimbursements to free checks, making it our pick for the Best Business Checking Account.

What to watch out for:Transactions are $0.50 each after the first 50, and there is a $100 minimum opening deposit required for this account.

Best Checking Account for Students – Chase College Checking

Chase College Checking

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on Chase Bank’s secure website

Member FDIC

Highlights:

  • $6 monthly service fee waived for up to five years if you are 17 to 24 years old, have proof of student status and are enrolled in college, or if you meet any one of Chase’s monthly requirements
  • No monthly service fee on a Chase Savings account linked to this account for overdraft protection
  • APY: None
  • Maintenance Fee: $6
  • Current Promotions: $100 welcome bonus for businesses that incorporated after June 1, 2020

Read the full review

Why we picked it: The Chase College Checking account is a great option for students, as it waives its monthly service fee for those between the ages of 17 and 24 who have proof of a student status, for up to five years while in college.

With widespread ATM access, the ability to pay friends with QuickPay or Zelle and a robust mobile app, this account checks all the boxes for college students.

What to watch out for: For this account, you’ll need to show proof of student status. Also, there’s a $2.50 non-Chase ATM fee and $34 overdraft fee associated with this account.

Best Joint Checking Account – PNC Virtual Wallet

Highlights:

  • Free access to 18,000 ATMs, plus two PNC ATM fee reimbursements per statement cycle and up to $5 in fee reimbursements from other financial institution’s ATM surcharges per statement cycle
  • Budgeting tools and features
  • Fee waiver
  • APY: N/A
  • Maintenance Fee: $7, but waived if certain requirements are met
  • Current Promotions: N/A

Read the full review

Why we picked it: The PNC Virtual Wallet is a standout checking account that supports joint ownership. This account comes with a plethora of budgeting tools that can help couples manage their money more effectively, such as the ability to create budgets for different spending categories and set up alerts for certain account activities. This account also waives its $7 monthly maintenance fee if you have a minimum of $500 in monthly direct deposits or if you maintain a monthly balance of $500 in the Spend + Reserve account — both of which are easier to achieve with two people owning the account, as opposed to one.

What to watch out for: If you can’t meet the monthly qualifications to waive the monthly service fee, you’ll have to pay $7 per month. Additionally, your balance does not earn interest.

Other Honorable Mentions

Charles Schwab High Yield Investor Checking: This account from investment firm Charles Schwab offers a few attractive perks like unlimited ATM fee rebates worldwide, no monthly fees or minimums and no foreign transaction fees. However, the Charles Schwab High Yield Investor Checking account falls flat with its paltry 0.03% APY, which can’t quite compete with the Best High Yield Checking Account, the Consumers Credit Union Rewards Checking account, which earns up to 4.09% APY.

Aspiration Spend and Save: The Aspiration Spend and Save cash management account is one of the most fee-friendly accounts out there, even allowing you to pay a monthly fee in an amount that you think is fair. Aspiration comes with the added bonus of access to over 55,000 ATMs, cash back rewards — especially at conscience-minded businesses. However, to reap the real benefits (including up to 0.00% APY on balances in your Save portion), you will have to pay $15 per month for Spend and Save Plus.

Betterment Checking and Cash Reserve: Another cash management account, Betterment Checking and Cash Reserve maximizes your FDIC insurance up to $1 million and provides unlimited transfers in and out of your account. It also earns interest at 0.40% APY.

Chase Premier Plus Checking: A step up from Chase’s basic checking account, the Chase Premier Plus Checking account earns interest (although at a paltry 0.01% APY) and waives select fees, including on the first four non-Chase ATM transactions per month. However, its features don’t quite justify the $25 monthly service fee, which you can only waive by meeting certain requirements.

Chime: The mobile-first Chime account is great for individuals who have trouble with traditional checking accounts. It allows you to receive direct deposit up to a couple days early, grow savings automatically and even overdraw your account for free if you meet certain eligibility requirements. Chime also provides free access to over 38,000 ATMs, which you can access with the account’s linked debit card. Despite all these perks, Chime doesn’t earn any interest on account balances. However, Chime does stand out for having a robust, no-overdrafting policy.

TIAA Bank Yield Pledge Checking: Despite TIAA Bank’s Yield Pledge promise, which ensures their rate will always remain among the top 5% of competitive accounts, the Yield Pledge Checking account earns a pretty low APY of 0.12%. Luckily, there is no monthly service fee, nor fees for out-of-network ATM usage. Plus, you can get reimbursed for ATM surcharges. This made it a strong contender for our Best Overall Checking Account.

Varo Money: Pioneering fintech company Varo offers a pretty much fee-free, checking-like cash management account, where customers who meet certain requirements can overdraft up to $50 at no cost. Varo also can get you your paycheck up to two days early with direct deposit, offers fee-free access at over 55,000 Allpoint® ATMs and provides a free Varo Visa® Debit Card, which you can lock in the app at any time. Though all of these perks are nice, the checking account doesn’t earn interest; you’ll have to open the Varo Savings Account for that.

Capital One 360 Checking: The Capital One 360 Checking account is easily accessible via its debit card, mobile and online. There’s no fee or minimum balance to worry about. You also get access to over 39,000 Capital One or Allpoint ATMs for free. However, it can’t quite keep up with its competitors with its low 0.10% APY.

Bank5 Connect High-Interest Checking: Bank5 Connect’s High-Interest Checking account isn’t always so high-yield, as it earns 0.20% APY. Still, the account is relatively customer friendly as it doesn’t charge any monthly maintenance fees and offers free access to thousands of ATMs nationwide in addition to up to $15 in surcharge reimbursements.

How we chose the best checking accounts

We took a look at hundreds of financial institutions and reviews. We considered the following factors:

  1. Checking account rates: We heavily weighted the APYs offered by each institution on their checking accounts, paying attention to both high interest rates and consistent rates. Higher and more consistently competitive interest rates were prioritized over others, respectively.
  2. Minimum deposit and balance requirements: We also controlled for accessibility by looking at minimum deposit and balance requirements, prioritizing banks and accounts that have low requirements or none at all.
  3. Bank account fees: The best bank accounts are the ones that don’t cut into your hard-earned money. We favored checking accounts that don’t charge monthly service fees or ATM fees, as well as those that offer ATM-fee reimbursements.
  4. Special offers: As an added bonus to their checking accounts, some institutions offer cash bonus offers for new customers or even cash-back rewards for debit card usage. We made sure to include these special accounts and offers so you can get more from your account.
  5. Specialized accounts: Checking accounts aren’t one-size-fits-all — nor should they be. We looked for specialized accounts that have specific features made for certain groups, like students to joint account holders.

What are the best banks for checking accounts?

In summary, these are our picks for the best checking accounts:

What should I look for in a checking account?

When shopping for a checking account, keep in mind that their main purpose is to provide a convenient and safe place to stash the cash you use for your daily spending. With that in mind, factors such as safety, ease of use and minimal costs should be top-of-mind. When looking for checking accounts, that means finding accounts with zero fees, a wide ATM network, Federal Deposit Insurance Corporation (FDIC) insurance and overdraft protection. Accounts with these features, alongside earned interest or rewards, are your best bet.

Understand what you want from a checking account

A great first step to finding the right checking account is first understanding what you want from a checking account. Of course, you’ll want an account that’s easily accessible. But only you can decide whether that means prioritizing brick-and-mortar branches, mobile app access or worldwide ATMs. As debit cards are a big part of accessibility, also make sure you’re getting a debit card that’s protected.

Figure out what kind of fees — if any — you want to pay for your checking account. No fee checking accounts exist, and they’re some of the best checking accounts on the market.

If you’re a senior citizen, a student or perhaps a couple looking for joint account ownership, these are things to consider when making your checking account wishlist. There are several specialized accounts out there that offer special deals and features for members of these groups.

Then determine whether you want your checking account to earn interest or other rewards. Often these rewards only add to the checking account experience, rewarding you for owning the account rather than you paying to own it. Rewards on some accounts may also offset any fees you face.

If you don’t know where to start, it helps to check out high-yield checking accounts first. These accounts are most often free, easily accessible, provided by reputable institutions and, as an added bonus, can earn you money.

Also consider that perhaps it’s not a checking account you need at all, but rather a prepaid debit card account. You deposit money into prepaid cards as you would with a checking account, but you cannot use more than what’s in the account. This allows you to avoid overdrafting your account and paying the exorbitant fees that often come with that. Just watch out: prepaid debit cards are also known for their multiple fees for reloading the card, monthly service, ATM usage and more.

Find an account with few or zero fees

There are many checking accounts that charge little to no fees. Online banks, in particular, offer checking accounts with zero fees, as they are able to save on the operational costs that burden brick-and-mortar banks. Some checking accounts even offer unlimited ATM-reimbursements or a monthly allowance for reimbursable ATM surcharges.

Since many checking accounts offer little to no interest, it’s even more critical to opt for an account with minimal fees. Common checking account fees include:

  • Maintenance fees
  • Minimum balance fees
  • ATM fees
  • Overdraft fees

Even if you’re using a high-yield checking account, why pay your bank fees for access to your own cash? It’s a good idea to check for bank fees when shopping for a checking account. If your checking account has any monthly balance or spending requirements, make sure you stay within those limits to avoid any unnecessary fees.

Check for widespread ATM access

There’s nothing worse than needing cash in a pinch and not having any way to get some. Then even when you find an ATM, it’s out of your bank’s network so to add insult to injury, you’re charged a fee (or two) for using the ATM.

Avoid this situation by finding a checking account that offers widespread ATM access. Often, this isn’t even brick-and-mortar banks which may offer free access to a few thousand branded ATMs across the country. Online banks tend to go above and beyond, offering free access to tens of thousands of ATMs, often worldwide, through ATM networks like AllPoint and MoneyPass.

Look for FDIC Insurance

You want to make sure your money is protected no matter what. FDIC insurance — and National Credit Union Administration insurance for credit unions — insures your money up to legal limits, which for an individual’s checking account would amount to $250,000. This means that up to $250,000 in your checking account will be recovered if your bank or credit union fails.

In the event of institution failure, you’ll either get a check for the amount that was in your checking account, or set up with a new account for the same amount at another insured institution.

Look for Overdraft Protection

Overdraft protection is a crucial feature, especially if you’re often at risk of overextending your funds. This feature works in a few different ways, depending on the institution and the account. Often, a bank’s overdraft protection will link your checking and savings accounts, drawing on your savings account when you overdraft from your checking account. Other iterations may simply not allow you to overdraft the account at all.

Typically, you have to enroll in overdraft protection. Some accounts charge an extra fee for overdraft protection, but many of the best no-fee checking accounts offer this feature for free.

Look for a checking account that pairs with a high-yield savings account

You might want to pair your checking account with a high-yield savings account if you’d like to maintain your day-to-day spending but stash away a portion of your cash to earn a higher rate of return in longer-term savings.
This is also a great option for those who don’t want to be tempted with the ability to easily spend their savings on everyday needs.

If this is what you’re looking for, start by finding a checking account that fits your daily spending needs, is easily accessible and FDIC-insured. You can then track your spending and set up regular deposits into a separate, high-yield savings account for any excess cash you don’t spend. Keep in mind that not all savings accounts are created the same, and it’s worth shopping around for the best rates when it comes to your savings account.

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

Where do households have the most checking accounts in 2020?

More than 90% of households in the nation’s 100 largest metros have a checking account in 2020, according to data from Standard & Poor’s. But some metros have higher percentages of households with checking accounts than others, according to MagnifyMoney’s research. And almost 6 in 10 of the metros have a lower percentage of households with checking accounts in 2020 than they did in 2015.

Key takeaways

  • If you’re looking for places where checking accounts are more prevalent, look to the Pacific Northwest. Seattle tops the list with 95.4% of households having a checking account. Portland, Ore. (94%), and Boise, Idaho (93.5%), are the metros with the next highest percentage of households with checking accounts.
  • Only 88% of households in Detroit have a checking account. Detroit is tied with two California metros — Bakersfield and Fresno — at the bottom of our list of the 100 largest metros.
  • New York state appears to have more cities with a lower percentage of households with checking accounts than the rest of the nation. Albany, Buffalo, New York City, Rochester and Syracuse all are in the bottom 10 metros with checking accounts in 2020.
  • Of the 100 largest metros, 39 had a higher percentage of households with checking accounts than they did in 2015. However, 58 metros saw the percentage of households with checking accounts fall in the past five years. Three metros — New Haven, Conn; Boston; and Lansing, Mich. — saw no changes from 2015 to 2020.

Methodology

In June 2020, MagnifyMoney used Standard & Poor’s data to examine the percentage of households with checking accounts in 2020 in the 100 largest metropolitan statistical areas (MSAs) in the U.S. Using further S&P data, we then compared them to the percentage that had a checking account in 2015.

FAQs: What should I know about checking accounts?

A checking account is a bank account for your day-to-day spending needs. They typically come with a debit card, which allows you to make purchases and provides quick and easy access to cash, making it a safer option than carrying cash. Many checking accounts are also offered with paper checks.

Unlike savings accounts, checking accounts typically have no transaction limits, making them the most liquid option for your money aside from holding large amounts of cash. Checking accounts are also FDIC-insured which adds peace of mind.

Checking accounts are used for your everyday spending needs and generally don’t carry interest (however high-interest checking accounts do exist); by contrast, savings accounts usually carry higher interest rates and are meant for you to save money over the long-run.

Keep in mind that savings accounts will typically restrict access to your cash to around six withdrawals per month while checking accounts allow you almost unrestricted access to any cash you hold in the account.

It’s a good idea to maintain a free or no-fee checking account for day-to-day use. Generally speaking, the best checking accounts allow unfettered access to cash and carry no monthly fees, ATM-fees, or other account surcharges.

It’s generally better to keep just enough in your checking account to cover your daily needs, meet any minimum balance requirements and avoid any possible overdraft charges.

Despite their everyday usefulness, checking accounts aren’t the best places to stash your cash long-term. Savings accounts usually offer higher interest rates, making them a better place to store cash.

There are many free checking account options out there. Some options — especially those offered by online banks — are free accounts that even offer extra features like interest and rewards. Keep in mind that many banks will still feature things like inactivity fees, minimum balance requirements or paper statement charges for their “free checking” accounts.

If you’re paying monthly maintenance fees, minimum balances fees or even third-party ATM fees, it’s worth it to do some research, as there are other accounts out there that will give you more bang for your buck and won’t nickel and dime you for it either. Shop around to find the best free checking account for you.

Yes, many checking accounts earn interest, although the amount offered is typically far less than rates offered by savings accounts or money market accounts.

If you’re looking for the best high-yield checking account, many smaller banks and credit unions offer Kasasa checking accounts, which are essentially free checking accounts that offer higher interest rates, so long as you meet a few monthly requirements.

Checking account interest is taxed if you earned $10 or more in interest in a year. For all your interest-earning deposit accounts, your bank should send you a copy of Form 1099-INT, which they will also send to the IRS. This form will help you report the interest income on your tax return. If you don’t receive this form from your institution, but still earned $10 or more in interest, you will still have to report the interest on your taxes.

If you were lucky enough to earn $1,500 or more in interest, you will have to detail the sources of that income on Schedule B of Form 1040.

Almost every checking account offered by major banking institutions is insured by the FDIC, which provides an account holder with up to $250,000 in federal deposit insurance in the event the underlying bank runs into trouble.

As with any other deposit account, it’s easy to find out whether your checking account has FDIC coverage. You can check to see if your financial institution has FDIC insurance by looking for the “Member FDIC” tag that often appears at the bottom of the bank’s marketing materials.

FDIC insurance covers deposits in checking accounts, savings accounts, CDs and money market accounts, up to $250,000 per ownership category per person within a single financial institution. Credit unions receive deposit insurance from the National Credit Union Administration (NCUA), up to $250,000 per owner, per insured credit union, per account category.

One checking account should suffice for most shoppers. However, there may be instances where you’d want to open multiple checking accounts to help keep your finances organized or separated for different purposes.

For example, many small business owners have their own business checking account to segregate their professional finances from their personal finances.

Some parents may even want to open separate student checking accounts to help teach their kids or budding college students financial responsibility and keep track of their finances.

Keep in mind that you can also open joint checking accounts, which make it easier for couples and those who share their lives to also share finances and track spending. With a joint account, two or more people share ownership, and can deposit and withdraw funds from the same checking account.

Every checking account will feature a routing number and an account number. These two numbers are associated with your bank account and serve as unique identifiers for your account.

The routing number associated with your checking account is a nine-digit string of numbers that identifies the institution that manages your checking account.

Your bank account number identifies your personal account and is the unique identifier that your bank uses to direct cash or wire transfers, track your balance, and rout payments as needed.

If you were rejected after trying to open a checking account, it’s probably because you have a rocky past with previous accounts. When you apply for new bank accounts, most institutions run your information through ChexSystems, which keeps a record of your banking history when institutions report it. This means any history of overdrafts, negative account balances, account closures and the like will be available for ChexSystems users to see.
If you were rejected from opening a new checking account, take a look at your ChexSystems report. It may help to figure out what bad marks on there you may be able to change. There may even be errors on the report that you can dispute and have removed.

A second-chance checking account is a type of checking account available to those who might not otherwise qualify for a traditional checking account due to their credit or ChexSystems history.

It may be worth exploring a second-chance checking account if your banking history might have been blemished by closing an account with a negative balance or outstanding fees.

Typically, second-chance checking accounts have lower spending limits, fewer features and may charge monthly maintenance fees. However they exist mainly to assist people who are determined to get their financial lives back on track. Once you’ve had the chance to rebuild your credit history, you may be able to trade back up for a standard checking account.

Deposit accounts, including checking and savings accounts, are not included in your credit report, since you’re not borrowing money from these kinds of accounts. So the way you use your checking account or even when you close a checking account doesn’t affect your credit.

If you overdraft your checking account and don’t pay back what you owe to your institution, however, that can land in your credit report if the institution sends it to collections. That’s because it’s become more about your debt, which is reported in credit reports, than simply your checking account.

Overdraft protection works a lot like it sounds: it protects you when you overdraft your account. Often, overdraft protection links your checking account to a savings account. Any time you overdraft your checking account, funds are automatically pulled from the savings account to cover the purchase.

Other institutions may offer overdraft protection that simply doesn’t allow you to overdraft the account. This prevents the transaction from going through, but also prevents you from facing an overdraft fee and recovering the extra cost.

Depending on the type of overdraft protection and the institution, overdraft protection can come at an extra fee, or it could be free.

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The Best CD Rates – January 2021https://www.magnifymoney.com/blog/earning-interest/best-cd-rates967994263/Wed, 13 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=17644If you’re looking for a better yield on your savings and have time to burn, a high-rate CD at an online bank would be a great option. With a CD, you agree to lock up your funds in an account for a specific period of time, and in return the bank offers a higher yield … Continue reading The Best CD Rates – January 2021

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If you’re looking for a better yield on your savings and have time to burn, a high-rate CD at an online bank would be a great option. With a CD, you agree to lock up your funds in an account for a specific period of time, and in return the bank offers a higher yield than you’d find on a standard savings account. If you’re not keen on the idea of completely locking your money away for a set amount of time, you may want to consider a no-penalty CD. These accounts give you the benefit of locking down a rate for a set amount of time without requiring you to lock in your money for the length of the term.CDs are often seen as the next level up after savings for that reason. If you’ve maxed out your savings account with enough funds to see you through the next year or so, it can be wise to start shoveling savings into a CD to maximize your returns.

For the best CD rates in the industry, check out online banks. They tend to offer much better interest rates than traditional banks, thanks to the lack of typical brick-and-mortar costs.

For example, let’s say you find a 12-month CD at a big brick-and-mortar bank that requires a $1,000 minimum deposit and pays 0.05% APY. If you were to open that account with just the minimum, you’d earn 50 cents after a year. Even a bigger deposit of $10,000 would only yield $5 at maturity.

At an online bank, on the other hand, you could earn 2.80% often with a minimum deposit of $1,000. Opening the account with $1,000 would yield $28, while a $10,000 deposit would earn $280 in a year, a much better return on your money no matter how you look at it. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).
Check out MagnifyMoney’s top picks for the best CD rates below.

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The best CD rates for January 2021

To find the best CD rates, we look for the banks that consistently offer competitive CD rates month over month. This list is updated weekly and the rates are organized by 1-year rates from highest to lowest. Here are the accounts from top banks with consistently competitive CD rates:

3 months – 5 years: Ally Bank – 0.20% APY – 0.85% APY; $0 minimum deposit to open (higher APY with higher deposit)

12 Month High Yield CD from Ally Bank

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on Ally Bank’s secure website

Member FDIC

Ally is one of the largest internet-only banks in the country. Ally’s former advertising campaign made it very clear: no branches = higher rates. And Ally has consistently paid some of the highest rates in the country across savings accounts, money market accounts and CDs. For savers with fewer funds, Ally is unique. There is no minimum deposit to open a CD. However, if you have more money, you’ll earn more in interest and in some cases, earn a higher APY. And one of our favorite features of Ally: they often (although not always) offer preferential rates on renewal. Far too often banks give the biggest bonuses to new customers, but Ally has done a good job of rewarding its existing customers. All deposits at Ally are FDIC insured up to the legal limit.

3-months:
  • 0.20% APY (less than $5k)
  • 0.20% APY ($5k minimum deposit)
  • 0.20% APY ($25k minimum deposit)
18-months:
  • 0.60% APY (less than $5k)
  • 0.60% APY ($5k minimum deposit)
  • 0.60% APY ($25k minimum deposit)
6-months:
  • 0.25% APY (less than $5k)
  • 0.25% APY ($5k minimum deposit)
  • 0.25% APY ($25k minimum deposit)
3-year:
  • 0.65% APY (less than $5k)
  • 0.65% APY ($5k minimum deposit)
  • 0.65% APY ($25k minimum deposit)
9-months:
  • 0.30% APY (less than $5k)
  • 0.30% APY ($5k minimum deposit)
  • 0.30% APY ($25k minimum deposit)
5-year:
  • 0.85% APY (less than $5k)
  • 0.85% APY ($5k minimum deposit)
  • 0.85% APY ($25k minimum deposit)
12-months:
  • 0.60% APY (less than $5k)
  • 0.60% APY ($5k minimum deposit)
  • 0.60% APY ($25k minimum deposit)
6 months – 6 years: Marcus by Goldman Sachs – 0.15% APY – 0.60% APY; $500 minimum deposit to open

High-yield 12 Month CD from Marcus by Goldman Sachs

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on Marcus By Goldman Sachs’s secure website

Member FDIC

Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive annual percentage yields (accurate as of 7/9/20). Even better: there is only a $500 minimum deposit. So, if you don’t have enough money to meet the minimum deposit of the other banks on this list, or you are looking for another bank for your savings, GS is a good option. It also doesn’t hurt that they also offer some of the best CD rates in the market today. Here are their rates:

Term

APY

Minimum Deposit Amount

6 months

0.15%

$500

9 months

0.25%

$500

12 months

0.55%

$500

18 months

0.55%

$500

24 months

0.55%

$500

3 years

0.55%

$500

4 years

0.55%

$500

5 years

0.60%

$500

6 years

0.60%

$500

3 months – 10 years: Discover Bank – 0.20% APY – 0.60% APY, $2,500 minimum deposit to open
Discover is best known for cash back credit cards. However, Discover has also quietly built a leading internet bank that offers checking accounts, savings accounts and CDs. Discover has invested in a mobile banking app and strong on-shore customer service.Although Discover does not always have the highest rate, it is very close (within basis points) across all durations. If customer service and digital tools (like apps) are important to you, Discover is an excellent consideration. Note: you can even get a CD rate with a duration as short as 3 months. However, you would be better off opening a high yield savings account if you plan on saving the money for less than a year.Keep in mind that all CD terms come with an early withdrawal penalty if you choose to withdraw money before your maturity date. If your Discover CD is less than one year, the penalty is worth three months of simple interest. If the term is between one to three years, the penalty is worth six months of simple interest. Four-year CDs have a penalty that is worth nine months of simple interest. Five year CDs have a penalty that is worth 18 months of simple interest and seven to 10-year CDs have a penalty that is worth 24 months of simple interest.

CD TermAPY
3-months0.20%
6-months0.25%
9-months0.30%
12-months0.50%
18-months0.50%
2-year0.50%
30-months0.55%
3-year0.55%
4-year0.55%
5-year0.60%
7-year0.60%
10-year0.60%
1 year – 5 years: Barclays Bank – 0.25%0.25% APY, no minimum deposit to open
Barclays is one of the oldest banks in the world. Although they’re based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they’re offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don’t require a minimum balance to earn the APY or open an account. Deposit as little or as much as you’d like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.

CD TermAPY
1-year0.25%
2-year0.25%
3-year0.25%
4-year0.25%
5-year0.25%
1 year – 5 years: Citizens Access – 0.10% APY – 0.25% APY; $5000 minimum deposit to open

Online 1 Year CD from Citizens Access

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Member FDIC

Citizens Access is the online division of Citizens Bank, N.A., aimed at providing more convenient access to better banking products. Both divisions are headquartered in Providence, R.I. Citizens Bank was founded in 1828 and as of September 2019, had $150 billion in assets.Citizens Access’ online CD accounts require a pretty high opening deposit of $5,000. However, all its terms earn at premium rates, making your savings more worthwhile. Citizens Access also offers an easy opening process to build a CD ladder with them. You’ll need to deposit at least $5,000 in each new CD, though.

When you fund any new Citizens Access CD within 10 days after opening, the bank’s CD Rate Pledge will apply, snagging you the highest interest rate offered by the bank for that CD term within those 10 days. Here are their rates:

CD TermAPY
12 months0.10%
2 years0.10%
3 years0.15%
4 years0.20%
5 years0.25%
6 months – 5 years: Communitywide FCU – 0.75% APY – 1.00% APY; $1,000 minimum balance

12 Month Share Certificate from Communitywide Federal Credit Union

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NCUA Insured

In exchange for a $1,000 minimum deposit, Communitywide’s 12-month share certificate earns a 0.80% APY. One great feature is flexibility regarding your dividends, which may be compounded in the certificate, deposited to another share certificate, or transferred to another account. Another feature to understand is that there is no automatic renewal of Communitywide’s share certificates, which could be a good thing for savers who like to be reminded to survey the best rates available before rolling over their investments.

For over 50 years, Communitywide Federal Credit Union has provided banking services to the citizens of northern Indiana, and now a completely revamped online and mobile portal brings its great rates to you, wherever you are. Membership in Communitywide FCU is open to members of the Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley, as well as employees of over 40 companies in the central Midwest region.

Term

APY

6 Months

0.75%

12 Months

0.80%

60 Months

1.00%

6 months – 5 years: State Department Federal Credit Union – 0.55%1.10% APY, $500 minimum deposit

12 Month Certificate from State Department Federal Credit Union

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NCUA Insured

State Department FCU offers an array of CDs, ranging in term length of six months to 60 months. Its 1-year CD has a particularly competitive rate, with a 0.80% APY. This product requires a low minimum deposit of $500, and dividends are compounded daily.

Membership to State Department FCU is open to anyone who also joins the American Consumer Council and opens a savings account at the credit union with just $1.

TermAPY
6 months0.55%
12 months0.80%
24 months0.90%
36 months1.00%
48 months1.00%
60 months1.10%
7 months – 5 years: Lafayette Federal Credit Union – 0.70%1.26% APY, $500 minimum deposit

1 Year Fixed CD from Lafayette Federal Credit Union

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NCUA Insured

Lafayette Federal Credit Union offers both variable rate and fixed rate certificates of deposit, but its crown jewel is certainly its 1-year fixed rate CD, with an APY of 0.80%. For this product, a $500 minimum deposit is required to open an account and to earn the high APY. Lafayette’s CDs will automatically renew upon maturity, unless otherwise requested by the customer.

Lafayette Federal Credit Union opens its arms to anyone who also joins the American Consumer Council or the Home Ownership Literacy Council. It offers its products online, nationwide.

CD TermAPY
1-year0.80%
2-year0.90%
3-year1.01%
4-year1.16%
5-year1.26%
3 months – 5 years: Greenwood Credit Union – 0.50% APY – 1.10% APY, $1,000 minimum deposit to open

12 Month CD from Greenwood Credit Union

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Greenwood Credit Union is currently offering a competitive rate of 0.75% APY on its one-year CD offering. This account requires a minimum deposit of $1,000, and you can easily open it online.

Greenwood Credit Union extends its membership to anyone who opens a Share account for a minimum of just $5.

TermAPY
3 months0.50%
6 months0.50%
12 months0.75%
13 months0.50%
15 months0.85%
18 months0.80%
24 months0.90%
30 months0.95%
36 months1.00%
48 months1.00%
60 months1.10%
6 months – 5 years: Latino Credit Union — 0.60% APY – 0.95% APY, $500 minimum deposit

12 Month CD from Latino Credit Union

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Latino Credit Union offers an impressive selection of CDs, which range in term length from six months to five years. Currently, its 1-year CD boasts a competitive rate of 0.75% APY. There is a $500 minimum deposit required for this product.

Latino Credit Union expands its membership to anyone who joins the Latino Community Development Center for a one-time membership fee of $10.

TermAPY
6 months0.60%
12 months0.75%
18 months0.75%
24 months0.80%
36 months0.90%
48 months0.95%
60 months0.95%

The best no-penalty CD rates

No-penalty CDs are unique because these accounts allow customers to withdraw from their CD without incurring an early withdrawal penalty. These CDs are an attractive offer to customers as it provides no risk if they choose to withdraw their money early. Here are some of the best no-penalty CD rates that are available nationwide:

11 months: Ally Bank – 0.50% APY – 0.50% APY; $0 – $25,000 minimum deposit to earn APY

No Penalty 11 Month CD from Ally Bank

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Member FDIC

Unlike the other two banks that offer multiple terms, Ally Bank only offers one term on its no-penalty CD. While Ally doesn’t require a minimum deposit to open, it does reward higher balances with higher APYs. This no-penalty CD is great for low-balance individuals who want to keep their money liquid. However, if you’re okay with locking your money into a CD for 12 months, you’re better off going with Ally’s regular 12-month CD as it has a higher APY (0.60% APY vs 0.50% APY) and doesn’t have a certain balance requirement to earn that high rate.

If you still choose to open Ally’s 11-month no-penalty CD and you need to withdraw money before the terms ends, you’ll need to withdraw your funds in full and won’t be able to do so until seven days after funding the account. Here are the tiered rates for Ally’s no-penalty CD:

TermAPYMinimum balance to earn the APY
11 months0.50%None
7 months – 13 months: Marcus by Goldman Sachs – 0.45% APY – 0.25% APY; $500 minimum deposit to open

7 Month No-Penalty CD from Marcus by Goldman Sachs

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Member FDIC

Similar to its regular CDs, you only need a minimum of $500 to deposit into Marcus Goldman Sachs’ no-penalty CDs. This makes these CDs highly attractive to customers with smaller deposits. If you choose to open one of these CDs, you’ll only be locked in for seven days after you fund the account. After the seventh day, you’re free to withdraw your funds, but keep in mind that you’ll need to withdraw the full amount.

These CDs are an excellent option if you want your money to remain liquid or if you want to invest your money into an interest-earning account for a short amount of time. One thing to note is that the 7-month no-penalty CD has a much higher rate than the regular 6-month CD (0.45% APY vs 0.15% APY). The high APY makes Goldman’s 7-month no-penalty CD a fantastic option if you want to earn interest in a short amount of time. Here is Goldman’s full list of no-penalty CD rates:

TermAPYMinimum balance to earn the APY
7-month0.45%
$500
11-month0.35%
$500
13-month0.25%
$500
6 months: Investors eAccess – 0.25% APY; $500 minimum deposit to open

6 Month No Penalty CD from Investors eAccess

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Member FDIC

Investors eAccess is the online division of Investors Bank, a large bank headquartered in New Jersey that was established in 1926. The parent bank currently has over $26 billion in assets. The online division was launched earlier this year and decided to introduce itself by offering a strong rate on its inaugural product, the eAccess Money Market account. It seems this online bank is slowly offering different deposit accounts, but one thing that sticks out is that it’s offering these new products with high rates.

Currently, Investors eAccess is offering two types of CDs: a 6-month No-Penalty CD and a 10-month regular CD. The 6-month No-Penalty CD is comes with a strong 0.25% APY. You need at least $500 to open the account and you’re free to withdraw from the principal amount after the first seven calendar days from opening the account without incurring any penalties. If you choose to withdraw the full amount (including any interest earned) before the maturity date, you won’t incur any penalties, but the full withdrawal will close the account. Regardless of how much you choose to withdraw from the account, the bank will send you the funds via an official Bank Check. The check will be made out to the account owner and mailed First Class to the address on file.

TermAPYMinimum balance to earn the APY
6-month0.25%$500
11 months – 14 months: PurePoint Financial – 0.15% APY – 0.10% APY; $10,000 minimum deposit to open

13 Month Online No-Penalty CD from PurePoint Financial

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Member FDIC

PurePoint Financial is the online division of Union Bank. Both the parent bank and this online division are backed by financial giant, Mitsubishi UFJ Financial Group (MUFG). Under the MUFG Union Bank umbrella, this institution has acquired over $130 billion in assets. As its online division, PurePoint Financial has been able to offer its customers highly competitive rates not only in CDs, but in an online savings account.

Currently, PurePoint Financial is offering an extremely competitive rate of 0.10% on its 13-month no-penalty CD. It also offers an 11-month and a 14-month no-penalty CD, but those two accounts have lower rates than its 13-month no-penalty CD. Keep in mind that you’ll need at least $10,000 to deposit into any of these CDs. If you do choose to withdraw money from this CD before the term is up, you’ll need to withdraw the full amount. You’ll also have to wait seven days after you fund the account to withdraw any of the money. Here’s a full list of PurePoint Financial’s no-penalty CDs.

TermAPYMinimum balance to earn the APY
11-month0.15%$10,000
13-month0.10%$10,000
14-month0.10%$10,000

The highest CD rates from banks and credit unions by term

The following banks and credit unions are currently offering the highest CD rates for each term.

Best 1-year CD rates

Best 1-year CD rate from a Credit Union – Connexus Federal Credit Union, 0.71% APY, $5,000 minimum deposit

12 Month Certificate from Connexus Credit Union This Wisconsin-based credit union cracks our ranking of the best credit union CD rates for its 12 -month share chertificate’s 0.71% APY. It requires a bit of a hefty minimum deposit of $5,000 to open an account, but its APY is fairly generous compared to its competitors. Anyone can join Connexus by joining the Connexus Association and making a $5 donation.


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NCUA Insured

Best 1-year CD from a National bank: Paramount Bank — 0.75% APY, $1,000 minimum deposit required

12 Month CD from Paramount Bank (MO) Paramount Bank offers an array of CDs, including a competitive 1-year CD that boasts a rate of 0.75% APY. There is a minimum deposit of $1,000 required for this account, and interest is paid to your account on a monthly basis.

While it’s headquartered in Missouri, Paramount Bank offers its products to consumers nationwide, online.


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NCUA Insured

Best 2-year CD rates

Best 2-year CD rate from a Credit Union: Evansville Teachers FCU– 1.04% APY, $1,000 minimum deposit

2 Year CD from Evansville Teachers Federal Credit Union To join this credit union, you may make a $5 donation to the Mater Dei Friends & Alumni Association. You may want to strongly consider doing so, as the 2-year CD rate offered by Evansville FCU is the best on the market in terms of APY, at 1.04%. Plus, it only requires a minimum balance of $1,000.


Best 2-year CD from a National Bank: MutualOne Bank – 0.80% APY, $500 minimum deposit

24 Month CD from MutualOne Bank MutualOne Bank offers an array of CDs, including a 2-year CD with a standout APY of 0.80% for a minimum deposit of $500. Although MutualOne Bank only has branches in Massachusetts, its products are available to consumers online, nationwide.


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on MutualOne Bank’s secure website

Member FDIC

Best 3-year CD rates

Best 3-year CD from a Credit Union: American Heritage Federal Credit Union – 1.10% APY, $1,000 minimum deposit

36 Month Share Certificate from American Heritage Federal Credit Union American Heritage Federal Credit Union is currently featuring a standout rate of 1.10% on its 36-month CD offering, requiring a reasonable $1,000 minimum deposit. American Heritage FCU also offers Bump Up CD offerings, which allow you to increase your dividends one time during the term of your CD.

American Heritage Federal Credit Union opens its membership to anyone who also makes a donation to the Kids-N-Hope Foundation.


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NCUA Insured

Best 3-year CD from a National Bank: Comenity Direct – 0.85% APY, $1,500 minimum deposit

3-Year CD from Comenity Direct Comenity Direct is the internet-only arm of Comenity Capital Bank, a Utah-based bank with roots dating back to 1986. Comenity Direct offers an array of certificates of deposit, with term lengths of 1 year, 2 years, 3 years, 4 years and 5 years, all featuring attractive APYs.

There is a $1,500 required minimum deposit for all CDs. Comenity Direct charges no monthly maintenance fees on its CDs, although there is a $25 fee per outgoing wire transfer, $15 fee per paper check request and a $5 fee per paper statement request. Like most CDs, there are fees associated with early withdrawal. Once your CD matures, you can choose to automatically renew it or cash out without penalty within a 10-day grace period.


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on Comenity Direct’s secure website

Member FDIC

Best 4-year CD rates

Best 4-year CD rate from a Credit Union: Hiway Federal Credit Union – 1.20% APY, $25,000 minimum deposit

48 – 59 Month CD from Hiway Credit Union You’ll need a $25,000 minimum deposit to snag this top rate from Hiway Federal Credit Union. Smaller deposits as low as $500 will still earn interest, just at lower interest rates. The early withdrawal penalty for this range of CDs equals 365 days’ dividends.

Hiway Federal Credit Union was founded in 1931 to serve the financial needs of Minnesota Department of Transportation employees. Today, membership is extended to members of select communities, employees of select employer groups, relatives and roommates of eligible individuals and members of the Minnesota Recreation and Park Foundation or Association of the U.S. Army.


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on Hiway Credit Union’s secure website

NCUA Insured

Best 4-year CD rate from a National Bank: Hyperion Bank – 0.90% APY, $500 minimum deposit

48 Month CD from Hyperion BankHyperion Bank offers a large selection of CDs, with terms ranging from 30 days up to 60 months. Currently, its 4-year CD stands out for its 0.90% APY and low minimum deposit of just $500, making it one of the most attractive 4-year CDs currently available.

Based in Philadelphia, Hyperion Bank offers its products and services to consumers online, nationwide.


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on Hyperion Bank’s secure website

Member FDIC

Best 5-year CD rates

Best 5-year CD rate from a Credit Union: Affinity Plus FCU – 1.50% APY, $500 minimum deposit

60 Month CD from Affinity Plus Federal Credit Union Affinity Plus Federal Credit Union offers an array of certificates with different term lengths, but its 60-month Basic Certificate stands out with an impressive 1.50% APY and a reasonable minimum deposit requirement of $500.

Affinity Plus opens its membership to anyone who makes a one-time dues payment to Affinity Plus Foundation.


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on Affinity Plus Federal Credit Union’s secure website

NCUA Insured

Best 5-year CD rate from a National Bank: First Internet Bank – 0.96% APY, $1,000 minimum deposit to open

60 Month CD from First Internet Bank First Internet Bank of America boasts a robust rate of 0.96% APY on its 60-month CD, making it one of the best 5-year CDs currently offered. There is a minimum deposit of $1,000 required for this account, and there is no monthly maintenance fee.

First Internet Bank has roots dating back to 1999, and it claims to be the first FDIC-insured institution to operate entirely online.


SEE DETAILS Secured

on First Internet Bank’s secure website

Member FDIC

The cities that are most likely to use CDs for their savings

We recently looked at the 100 largest U.S. metros to find the cities with the highest percentage of households that own certificates of deposit.

Among the 100 largest U.S. metros, San Francisco came out on top, with 25.4% of households owning certificates of deposit. That’s more a little more than twice as many households, on a percentage basis, than Greensboro, N.C., our bottom-ranked city, where only 12.5% of households own CDs.

Typically, households in large cities are more likely to sock money away in CDs. Chicago, Los Angeles, New York and Washington, D.C. — among the 10 largest metros in the U.S. — all make our list of top 10 cities where people own CDs. There are some exceptions: Odgen, Utah ranks No. 4 in the nation for CD saving: 21.9% of Ogden households have CDs.

Variability in local CD rates may explain some of the differences, as the highest rates available by state can vary by as much as one percentage point. In fact, in Jan. 2019, Utah had the highest average local 1-year CD yield in the country.

Questions to ask before you open a CD

1. How are CDs different from savings accounts?

With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the rate – and the higher the penalty for closing the CD early. With a savings account, you’re limited to six withdrawals or transfers per month. Otherwise, you can empty the account at any time without paying a penalty. You can’t lock in the interest rate on a savings account, though, since the bank can change the interest rate at any time.

2. Am I better off keeping my cash in savings?

CDs work best if you’re confident you won’t need to access a certain amount of money for a specified period of time. Let’s say you have $10,000 laying around that you can safely say you won’t need to use for two years. In a high-yield savings account earning 2.45%, you would earn $496.00 over two years with annual interest compounding — and potentially even more, if your bank compounds interest more frequently. If you put that money into a 2.90% 2-year CD, you would earn $588.41 (compounding yearly) once the account matures. The extra interest income is easy money, considering the ease of opening an account online. However, if you think you might need to use the money in the next couple of months, especially if your finances are already a little rocky, a savings account is a much better idea for its better flexibility.

It’s important to note that deposit rates are a bit in flux right now, due to the uncertainty surrounding the federal funds rate (more on that below). But we’re currently seeing some high, favorable interest rates on 1-year CDs, rates that outstrip savings account rates.

If you can afford to part with the funds, “choosing a 1-year CD now does make sense rather than keeping the money in a savings account,” says Ken Tumin, founder of LendingTree-owned DepositAccounts.com. “However, it is possible that 1-year rates could go below some savings account rates.”

That’s why it’s important to compare rates before you sign up for a certain account.

Tumin also notes that there is an added tax benefit to opening a 1-year CD now over a savings account. With a 1-year CD, you can choose to have interest paid at maturity, or in 2020 on accounts opened now. Taxes would be owed on that interest for 2020, but not paid until 2021. Savings accounts, on the other hand, pay out interest each month. So a savings account opened today will generate interest income for the 2019 tax year.

3. What CD term length should I select?

The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days’ worth of interest is a typical penalty, although it can reach as high as 180 days. On 2- and 3-year CDs, a 6-month penalty is about average. The impact of the penalty on your return can be significant: if you opened a one-year CD with a 2.65% APY and closed it after six months, you would forfeit half of the interest and earn only 1.32%. You would have been better off with a savings account paying 2.25%.

The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.

Given the risk of early withdrawal penalties, it’s important that you’re completely confident that you will not need to withdraw the money early. Check that you already have enough savings in a flexible emergency fund to cover you for the next few years in the event of an accident or surprise trip to urgent care. Ask yourself whether your deposit would be put to better use paying off any debts. If you’re not completely convinced you can sock away that much money for such a commitment, go for a shorter CD term or a savings account.

As of right now, if you’re trying to jump on the best rates and have cash to stash away for years, your best bet is to lock in a 5-year CD to get the best rates possible.

“It doesn’t look like we’ll see another Fed rate hike in the first half of the year,” says Ken Tumin. “In the last month or two, we’re seeing some drops in CD rates.”

However, this downward movement looks like more of a correction being made by banks who may have boosted their CD rates too far too fast, instead of signaling the start of an industry-wide drop in rates.

“We won’t see a big drop until we see signs that the Fed will start cutting rates,” Tumin notes.

Tumin suggests finding long-term CDs with small or mild withdrawal penalties, like Ally. That way, in the event you do need to break into your funds (whether for an emergency or to move to a new, higher rate), you won’t lose the majority of your savings. So while there are still 5-year CDs out there with 3% APY and higher, you’re going to want to lock those in for the long term.

4. Should I consider my local bank or credit union?

The interest rates shown in this article are all from credit unions and online banks that offer products nationally. However, our product database includes traditional banks, community banks and credit unions.

If traditional banks offered better rates, they would have been featured in this article. Internet-only banks have dramatically better interest rates. That should not be surprising — because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates and lower fees.

If you’re worried about early withdrawal penalties, credit union CDs might be your best bet; on average, they tend to have lower penalties than banks. Pair that with high credit union CD rates, and you’ve got a winning savings combo. (Interestingly, while internet banks tend to offer the best CD rates, they also tend to assess bigger early withdrawal penalties than brick-and-mortar banks.)

How to find the best CD for you

If you don’t find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.

Even though CDs are traditionally pretty structured, you still have hundreds of options available to you. If your savings goal is years in the future, look closer at longer terms like 5- and even 10-year accounts. If you don’t quite have thousands of dollars to stash away, you can find a bank that requires a lower minimum deposit, if at all. You can also find select no-penalty CDs, which tend to be around one year long or less.
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The Best 6-Month CD Rates in January 2021https://www.magnifymoney.com/blog/best-of/6-month-cd-rates590790332/https://www.magnifymoney.com/blog/best-of/6-month-cd-rates590790332/#respondWed, 13 Jan 2021 05:05:05 +0000https://www.magnifymoney.com/blog/?p=39766Short-term certificate of deposit (CD) accounts offer investors a safe opportunity to squirrel away money for a future expense. If you’re looking for a brief solution for storing your cash and want to earn more interest than a typical savings account will offer, a 6 month CD can make a lot of sense. (It’s also … Continue reading The Best 6-Month CD Rates in January 2021

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Short-term certificate of deposit (CD) accounts offer investors a safe opportunity to squirrel away money for a future expense. If you’re looking for a brief solution for storing your cash and want to earn more interest than a typical savings account will offer, a 6 month CD can make a lot of sense. (It’s also a good place to start if you’re building a CD ladder.)

Using information from DepositAccounts.com, database of offerings at more than 17,100 banks and credit unions, we found the five banks and five credit unions with the top 6-month CD rates. If there was a tie, we chose the institution with the smaller minimum deposit requirement. The national average APY on 6-month CDs (among banks and credit unions) is 0.28%, according to the DepositAccounts.com database. These options outperform that average by a long shot. (You may also want to view our picks for the overall best CD rates.)

Banks with the best 6-month CD rates

As of January 2021
All rates expressed in annual percentage yield (APY) unless otherwise stated.

1. Continental Bank — 0.60% APY, $1 minimum deposit

6 Month High Yield CD from Continental Bank To open this Continental Bank 6-month CD, you’ll need to go through SaveBetter, which manages the bank’s online products (as it does for a selection of other banks as well). Unlike most CDs, you need just $1 to open. Interest compounds daily and is paid monthly.

The CD will not renew automatically at maturity. You can make one withdrawal seven days after opening, but you will lose 90 days’ simple interest on the principal at the rate in effect.

Continental Bank, founded in Salt Lake City in 2003, is primarily a bank for small and medium-sized businesses. It offers consumer rates to anyone through the SaveBetter platform, with which you will need to open an account to take advantage of these rates.

2. Quontic Bank — 0.60% APY, $500 minimum deposit

6 Month CD from Quontic Bank With at least $500, you can fund your high-rate 6-month CD by transferring money from another Quontic Bank account or an account at another bank, or by making an ACH transfer or mailing a check. Interest is compounded daily and credited to your account each month.

Quontic Bank must approve any request to withdraw funds before maturity. If approved, Quontic will close your CD and assess a penalty equal to the interest for the full length of the 6-month term.

Quontic is a digital bank with headquarters in New York and one physical branch, located in Astoria, N.Y.

3. iGObanking — 0.60% APY, $1,000 minimum deposit

6 Month iGOCD from iGObanking Open an iGOcd® for as little as $1,000 to earn this high APY. Once the CD matures, you can pick your new term and add additional funds if you want. You can also opt to transfer your interest at maturity into any iGObanking account. If you withdraw funds before then, you’ll give up 3 months’ simple interest on the amount withdrawn as a penalty.

iGObanking is an online division of FDIC-insured Flushing Bank. iGObanking offers a range of products and accounts that you can open online.

SEE DETAILS Secured

on IGObanking’s secure website

Member FDIC

4. DollarSavingsDirect — 0.55% APY, $1,000 minimum deposit

6 Month CD from DollarSavingsDirect DollarSavingsDirect offers a select few CDs, including its high-yield 6-month CD which requires $1,000 to open. Interest is compounded daily and credited monthly. It’s best to avoid an early withdrawal, as you’ll lose 90 days’ interest whether earned or not.

DollarSavingsDirect is an online banking division of Emigrant Bank, which was founded in 1850.

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on DollarSavingsDirect’s secure website

Member FDIC

5. TAB Bank — 0.40% APY, $1,000 minimum deposit

6 Month CD from TAB Bank TAB Bank requires a minimum deposit of $1,000 to open this 6-month CD. Interest is compounded daily, but watch out for early withdrawal, as you’ll lose 90 days’ worth on the amount withdrawn.

The bank was founded in 1998 in Utah. TAB, which is rooted in the trucking industry, stands for Transportation Alliance Bank.

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on TAB Bank’s secure website

Member FDIC

Credit unions with the best 6-month CD rates

1. Veridian Credit Union — 0.75% APY, $1,000 minimum deposit

7 Month CD Special from Veridian Credit Union You’ll need at least $1,000 to open a Veridian Credit Union 7-month CD special and start earning interest at this rate. Veridian assesses a penalty of three months’ interest on early withdrawals.

Veridian Credit Union got its start in 1934, founded by John Deere employees. Veridian membership is open to residents and employees of businesses within the credit union’s field of membership, family or household members of eligible individuals, Iowans with disabilities as defined by the Americans with Disabilities Act of 1990 and registered users of the payment platform Dwolla.

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on Veridian Credit Union’s secure website

NCUA Insured

2. CommunityWide Federal Credit Union — 0.75% APY, $1,000 minimum deposit

6 Month Share Certificate from Communitywide Federal Credit UnionWith at least $1,000, you can open a high-yield 6-month CW certificate account online. The early withdrawal penalty from this account is equal to the amount withdrawn multiplied by the remaining days left in the term.

Founded as a credit union to provide quality financial services to individuals in South Bend, Ind., CommunityWide Federal Credit Union has grown to offer its services to various communities within Indiana as well as online.

Anyone can become a CommunityWide member by donating to a list of organizations, including the YMCA. If you’re a member of the Michiana Goodwill Boosters or Marine Corps. League of St. Joseph Valley, you’re also eligible to become a member.

SEE DETAILS Secured

on Communitywide Federal Credit Union’s secure website

NCUA Insured

3. Lafayette Federal Credit Union — 0.70% APY, $500 minimum deposit

7 Month Fixed CD from Lafayette Federal Credit Union Lafayette Federal Credit Union offers a handful of certificates, including its 7-month fixed rate certificate, which requires $500 to open. Interest is compounded and paid quarterly. An early withdrawal from this account will trigger a penalty equal to 360 days’ worth of dividends.

Lafayette Federal Credit Union was chartered in 1935 and is headquartered in Rockville, Md. Members can access its branches in Maryland, Virginia and Washington, D.C., and CO-OP Shared Branches nationwide. LFCU membership is open to those who live or work in its serviced areas; work at partner agencies or companies; or are an immediate family member of a current member. You can also join if you are an existing member or become a member of the Home Ownership Financial Literacy Council.

SEE DETAILS Secured

on Lafayette Federal Credit Union’s secure website

NCUA Insured

4. La Capitol Federal Credit Union — 0.70% APY, $2,500 minimum deposit

6 Month Share Certificate from La Capitol Federal Credit Union This 6-month share certificate from La Capitol Federal Credit Union (La Cap for short) requires a minimum of $2,500 to open. Dividends earned are compounded monthly on this certificate. La Cap may impose a penalty of 90 days’ interest on the amount withdrawn if you take your money out before maturity.

There are many ways to qualify for La Capitol Federal Credit Union membership. It serves folks who live, work, worship or go to school in Baton Rouge or certain parishes in Louisiana, but you can also join by becoming a member of the Louisiana Association for Financial Achievement (ACHIEVE). The membership fee for ACHIEVE is $20 for the first year and $5 per year thereafter.

SEE DETAILS Secured

on La Capitol Federal Credit Union’s secure website

NCUA Insured

5. Evansville Teachers Federal Credit Union — 0.65% APY, $1,000 minimum deposit

6 Month CD from Evansville Teachers Federal Credit Union The 6-month certificate requires a low minimum of $1,000. Opening this account can help you lock in this solid rate that’s even higher than the credit union’s 8-month certificate.

Evansville Teachers Federal Credit Union was started in the 1930s by a handful of teachers from Evansville, Ind. Today, you don’t have to be an Evansville teacher — or a teacher at all, for that matter — to become a member. You can join Evansville if you’re an employee or retiree within their field of membership, as can family members and immediate household members. If you don’t qualify through these methods, you also can join by making a one-time $5 donation to the Mater Dei Friends & Alumni Association.

Pros and cons of using 6 month CDs

Pros:

  • The CD rates offered by banks and credit unions are generally higher than those on savings accounts.
  • The rates are fixed and guaranteed for the length of their term.
  • The discipline of keeping the funds in the CD means the money will be available upon maturity. (Note: Most banks offer a seven-day grace period to reinvest or withdraw the investment, after which the funds will roll over into a new CD. However, you are not guaranteed the same rate.)

Cons:

  • Six-month CD rates are lower than those offered on longer CD investment terms.
  • To tap into the CD funds — even for emergencies — consumers must accept a loss through penalties, which can include a percentage of the funds, a percentage of the earned interest, or a combination of both. A typical penalty on a short-term CD is between 30 and 90 days’ worth of interest earnings.
  • If you’re not confident you can do without access to the funds for six months, you may be better off putting your money in a traditional savings account, which is likely to earn less interest than a CD.
  • Since CD rollovers may reset at a different percentage rate, consumers must speak with the bank before the grace period ends to ensure they are getting the best deal.

Using a 6 month CD for laddering

A CD ladder comprises small-amount CDs with varying terms and respective interest rates that contribute to a long-term investment strategy. After the 6 month CD matures, investors can withdraw the funds for a predetermined expense. Or, they can reinvest the money into a longer-term CD with a better rate. By staggering the maturity dates on short-term CDs, consumers have access to their cash on a regular, predictable basis.

Where can you open a CD account?

Consumers can open 6 month CD accounts (or longer) from banks and credit unions. Bank and credit union CD rates are based on Federal Reserve rates, and there may be strategic times to pursue these short-term instruments following a rate increase.

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