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Strategies to Save

The Ultimate Guide to Handling Your Emergency Fund

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

emergency fund
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Unexpected expenses have a way of popping up at the worst possible times. A good way to be prepared is having an emergency fund. An emergency fund is money put aside to use when something comes up and you need money right away.

One example of an unexpected financial emergency is a car repair – and they are not cheap. The average cost of car repairs after an accident can range anywhere from $50 to $1,500+.

The Federal Reserve recently reported that 4 out of 10 people in 2017 would have difficulty paying for a financial emergency of $400. Instead of having an emergency fund to rely on, these people may use credit cards to pay off the bill, only racking up more debt, or asking someone else to fund them the money.

Don’t let an unexpected expense put your finances in jeopardy. In this guide, we’ll explain how much to save in an emergency fund and where to keep yours stashed.

What is an emergency fund?

An emergency fund is money put aside specifically for an unexpected financial emergency. These funds are there to help you tackle an emergency so you don’t have to take on debt to cover expenses.

There are many reasons why you might need an emergency fund. Some of the most common scenarios include:

  • Handle an unexpected medical cost
  • Pay for car repairs after an accident
  • Provide liquid assets in the event of a job loss
  • Use toward an unexpected home repair

And once you use your emergency fund, it’s essential to start saving again right away. You don’t want to be unprepared for anything else that can come up.

Deciding how much to set aside for a rainy day is a question with multiple answers. In the next section, we’ll look at a few different rules of thumb for saving amounts.

How much money you should save

When you start saving money for your emergency fund, you should strive to cover your financial needs that are based on your individual income and living expenses. Single-income families may differ from dual-income families, and self-employed may differ than those who have full-time jobs.

Here are a few good rules of thumb when determining how much to save:

3 months: Best for singles

If you are single with a steady job, saving three months can work well. You only have yourself to worry about so it’s only your living expenses that will need to be covered, rather than those of a spouse or children.

6 months: Best for married couples with kids

Those who have a spouse and children will likely need to save more money than those who are independent. Six months should cover the costs for those who are married with a stable income and have young children living with them.

9+ months: Best for the self-employed

Anyone who is self-employed or with infrequent income, such as freelancers, can benefit by saving more than those who have a stable income. Nine months is a good go-to target. This way you’re able to pay for any unexpected emergency, such as car damage, or the loss of a client or project.

Where to keep your emergency fund

Now that you know why you should have an emergency fund, it’s time to decide which accounts are best to stow away your cash.

Two popular accounts for emergency funds are savings accounts and certificates of deposit (CDs). A savings account at a financial institution allows you to earn interest on your funds. Savings accounts can be ideal for emergency situations because it’s easy to write a check and access funds via wire transfer or an ATM.

CDs are deposit accounts which require you to keep your money stowed away for a particular time frame. In return for keeping your funds tied up longer, you can receive a higher rate of return than you typically would with a savings account

There are also CD ladders, which should not be confused with CDs. A CD ladder a strategy used to open multiple CDs with different terms. The idea is that you’ll have a new CD maturing every few months or so, giving you more flexibility in how often you can access the funds in those accounts.

With all the different accounts out there, it’s hard to know exactly why a savings account or a CD is the best option for emergency funds. But there are some distinctions to watch out for.

Unlike stocks and mutual funds, which have principal risk so you can lose money, savings accounts and CDs do not. This is incredibly important for an emergency fund. You don’t want your emergency fund to go down when the market does and therefore, not be able to withdraw the exact amount you need.

Why checking accounts aren’t the best options for savings

A checking account is similar to savings and CDs because it doesn’t have principal risk. You can access your money freely without any limitations, which can also be a negative. If you can access your funds at any time, you may find yourself withdrawing from your checking when it’s not necessarily an emergency. Plus, the rates for a checking account are usually much lower than those with a savings account or CD.

You want to be able to access your money when needed, but you also want to be able to save it so it’s there should an emergency pop up. A savings account allows you to get your money fast while CDs can take a few days and with a penalty. As for CD ladders, the full balance is not usually available, only a portion of what’s in your accounts.

Savings accounts vs. CDs for your emergency fund

When deciding on savings accounts or CDs for your emergency fund, there are several factors to take into consideration. Let’s take a look at the pros and cons for these two accounts to gain a better perspective on which might work best for you.

When savings accounts make sense

A savings account is a viable option for an emergency fund because you are able to place your money in a safe place and have access to it when you need it. As long as you follow the transaction guideline limits, you will not have to pay a fee, and you still earn interest on your money as long as it’s in the account.
Pros

  • FDIC insured up to $250,000 per account
  • Deposit as much as you want without restrictions
  • You can withdraw from your account six times per month without any penalties
  • Online banks offer very competitive rates on savings accounts, many times more than traditional banks
  • As rates rise, online banks tend to offer higher rates on deposit accounts as well
  • Some savings accounts allow for check-writing abilities

Cons

  • Interest can be lower than some CDs
  • Traditional banks offer rock bottom interest rates
  • May get hit with excessive transaction fee if you make a withdrawal/transfer from the account more than six times per month

When CDs make sense

While a savings account may have an advantage over CDs when saving money in an emergency fund, there are times when CDs may work better, such as for overflow savings. Once you have met your goal with your savings, you may want to invest the rest of your money (or a portion of it) into a CD or a CD ladder strategy to earn interest.

A CD or CD ladder strategy makes the most sense for those who don’t need the money right away or want ongoing access to it. If you take the money out before the CD term is up, you are at risk of paying a penalty fee. And remember, if you leave your money in there, you can get a higher rate of return.
Pros

  • FDIC insured up to $250,000 per account
  • Interest rates are usually higher than regular savings accounts
  • Rates are locked until maturity so they won’t fall

Cons

  • Rates are locked, which means they can’t rise
  • Possible penalties for early withdrawals
  • Restrictions on deposits

Best savings accounts for emergency funds

A savings account can be a good option for an emergency fund. MagnifyMoney has its own savings account marketplace to help compare and find the right account for you. Simply add your zip code and account balance to review your results instantly. To help get you started in your search, here are some of the best online savings accounts that may help you stow away cash for an emergency.

 

Marcus by Goldman Sachs Bank USA

Ally Bank

Synchrony

MySavings Account from MySavingsDirect

APY

2.05%

1.90%

2.05%

2.35%

Linked debit card?

No

No

Yes

No

Ways to access your funds

- Funds transfer with linked account
- Wire transfer

- Funds transfer
- Wire transfer Phone transfer -Check request

- Online transfer
- Phone request
- ATM withdrawals

-Transfer funds electronically

Time to transfer funds

Next business day

3 days; can also be expedited for 1-day transfer

Immediately for outgoing transfers

2-4 days

What to look for when vetting emergency savings accounts

When searching for a savings account, it’s smart to check out online banks. Many times you can find higher yields without monthly maintenance fees tacked on.

Keep an eye on savings accounts that can offer limited check-writing abilities for easy access to your money. Also, look into the bank’s transfer requirements and restrictions.

“If you need to move money from the savings account to your checking account to cover an emergency bill, you’ll want the transfer to be fast without small-dollar limits on the transfer,” said Ken Tumin, editor of DepositAccounts.com (also owned by LendingTree).

Best CDs for emergency savings

If you’re looking for CDs to help keep your emergency fund on hand, there are also many to choose from. Find some of the best CD rates directly on MagnifyMoney’s CDs marketplace by putting in your zip code and the amount you’d like to deposit.

Here are a few CDs you may want to keep an eye on as you begin your search.

 

Goldman Sachs Bank USA

Synchrony

Barclays Bank

Ally Bank

Terms available

6 months — 6 years

3 months — 5 years

1 year — 5 years

3 months — 5 years

Deposit required to earn starting APY

$500

$2,000

No minimum deposit

No minimum deposit

APY range

0.60% APY — 3.15%APY

0.75% APY — 3.10%APY

0.35% — 3.10% APY

0.75% APY — 3.10% APY

Early withdrawal penalty

For a CD term of less than 12 months, there is
“90 days simple interest on the principal at the rate in effect for the CD”

Starting with: 12 months or less terms are charged 90 days interest at “current rate”

Less than 24 months, there is a penalty equivalent to 90 days interest

There is an early withdrawal penalty for both high-yield CDS and raise your rate CDs; penalties vary and are determined on your CD term

What to look for when vetting emergency CD accounts

As with savings accounts, there are many options when shopping for CDs. Be sure to seek out banks that offer competitive rates, low early withdrawal penalties, interest withdrawal without penalty and bank-to-bank transfers that are done electronically so you can get your money the fastest.

6 tips for saving money for an emergency

Saving money for an emergency fund can seem daunting, especially when you are first starting to save. However, there are a few easy tips to help pave the path for a solid fund.

1. Make your emergency fund a priority

Start saving for an emergency immediately. Once you have reached your emergency fund goal, work on other financial plans and investments.

2. Adjust your budget

Cut down your spending habits and try your best to stick to a budget. Be truthful about your financial situation and don’t spend money you don’t have.

3. Use other cash sources

Try to put away cash received from other resources before you even miss it, such as work bonus, a raise or additional income from another resource. This way you won’t be worrying about trying to nickel-and-dime your paycheck to add money to your fund.

4. Don’t use your emergency fund for just anything

As your emergency fund grows, be sure to keep it there. You don’t want to use it on something else, such as a big, lavish purchase and then need it for a future emergency only to find it’s no longer there.

5. Be diligent about saving

Try to stick to your savings goal. Put away the same amount every month no matter what else may come up.

6. Pay down your debt

If you have a lot of debt, you’ll want to get that paid off as fast as possible. It’s hard to save when you have high bills (with high-interest rates) to pay off every month. Treat debt payments as a form of savings — just think about all the interest charges you’ll avoid by paying it off quickly.

You never know when a financial emergency might come up. Try your best to be well-prepared with an emergency fund. This fund will keep your money in a safe place so you can access it if an emergency should happen.

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

Carissa Chesanek
Carissa Chesanek |

Carissa Chesanek is a writer at MagnifyMoney. You can email Carissa here

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Reviews, Strategies to Save

BB&T CD Rates and Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Trying to find BB&T CD rates
Source: iStock

As you may know if you’ve done a search for BB&T CD rates, their website is not a helpful place to turn for information. Beyond a basic overview of their CDs on their website stating that they have CDs with terms ranging from seven days to five years, they do not give details on their current rates. BB&T did not respond to email and phone inquiries from MagnifyMoney asking why the bank does not publish its CD rates online. When we called their customer service number, a representative said BB&T’s CD rates change on a daily basis and said the best way to learn about CD rates is to call or visit a local branch.

So that’s what we did.

We reached out to BB&T branches on November 9th. After conducting this research, it’s not surprising BB&T makes their CD rates hard to find — they’re terrible.

BB&T CD rates and products

BB&T offers CD terms ranging from as short as seven days to as long as five years. They have eight CD options, each with different investment goals.

7-day to 60-month

For short-term investments, BB&T offers CDs ranging from seven days to 60 months. These personal CDs offer a fixed rate of return along with the flexibility to focus on developing either a short- or long-term investment.

BB&T CD Term

APY

Minimum Deposit Amount

6 Months

0.05%

$1,000

1 Year

0.10%

$1,000

18 Months

0.15%

$1,000

2 years

0.20%

$1,000

3 Years

0.30%

$1,000

4 Years

0.30%

$1,000

5 Years

0.30%

$1,000

Not only can you find better CD rates at other banks and credit unions for each of the terms BB&T offers, you can get those better rates with smaller minimum deposits. BB&T’s offerings are far from the best in every term length above — you can see some of the top options in our monthly roundup of the best CD rates.

With the seven-day to 60-month BB&T CDs, there are no penalty-free options for withdrawing your funds prior to the CD reaching maturity. The early withdrawal penalty is the lesser of $25 or 12 months of interest for longer-term CDs. So with smaller initial deposits, early withdrawal penalties will negate any interest you may have earned.

Can’t Lose

As the name of this CD implies, whether rates go up or down, you can’t lose. Well, actually, you can: The APY is so low, you’re almost certainly going to lose money to inflation.

At the 12-month mark of the CD’s term, you may make one withdrawal without paying any fees. So if the market rate is higher than what you’re currently getting, simply withdraw the money and reinvest at the higher rate.

If, however, the interest rate you’re receiving is better than what’s currently available, you also have the option of making a second deposit into the Can’t Lose CD, up to $10,000. This locks in the rate for the new investment amount for the remainder of the term. So whether rates go up or down, you’ll lock in the higher rate.

CD Term

APY

Minimum
Deposit Amount

Withdrawal
Penalties

30-month "Can't Lose"

0.25%

$1,000

No penalty for one
withdrawal after 12 months

Still, you can find many CDs with better APYs than BB&T’s Can’t Lose, whether you’re looking for a 12-month investment or longer.

Stepped Rate

Laddering is a way to stagger your CD investments so you’re able to take advantage of increasing rates. With the Stepped Rate option from BB&T, laddering is built into the CD product. The initial CD starts out at a lower rate and increases each year. For example:

Months

APY

12

0.30%

24

0.40%

36

0.55%

48

0.75%

As of November 9, 2018

This product also allows you to make an additional deposit each year (up to $10,000). So if the interest rate you’re receiving is better than the market, you can invest more money into your existing CD to make a higher return. But if the current CD market is offering better rates than your existing CD, you can simply take advantage of that offer and still make a higher return.

In addition, you may make a withdrawal from what you initially deposited into your Stepped Rate CD after two years. So, again, if the market changes dramatically, you may withdraw your money with no penalty and reinvest in a better option.

Or you could create a CD ladder on your own, choosing CDs with better rates than BB&T’s — higher rates are certainly available.

Add-on

The Add-on CD option from BB&T offers a 12-month CD at 0.10% and an opening deposit of $100. You’ll need a BB&T checking account and a $50/month automatic deposit from your checking account into the CD. To get a personal account, you’ll just need to set up direct deposit or maintain a $1,500 balance.

CD Term

APY

Minimum
Deposit Amount

Withdrawal
Penalties

12-month Add-on

0.10%

$100

Greater of $25 or
6 months’ interest

As of November 9, 2018

Home Saver

If you’re in the market for a new home, and you want to earn a little more interest on the money you’re saving, consider the Home Saver CD. Starting with as little as $100, you’ll be able to deposit money earmarked for your new home every month and earn 0.40% APY. With this CD, as long as you’re withdrawing the money for use toward the purchase of your new home, you won’t pay any penalties for the withdrawal. But you will need a BB&T checking account set up for a monthly deposit of $50 into your Home Saver CD.

CD Term

APY

Minimum
Deposit Amount

Withdrawal
Penalties

36-month Home Saver

0.40%

$100

No penalty for
home purchase

As of November 9, 2018

College Saver

Similar to the Home Saver CD, the College Saver CD is meant for parents or students saving for college. It offers the benefit of starting at a higher APY (0.40%) with the flexibility of withdrawing the money up to four times per year to pay for the cost of attending school. As with the Home Saver, you’ll need to have a BB&T checking account with an automatic monthly deposit of $50. The College Saver offers terms of 36, 48, and 60 months.

CD Term

APY

Minimum
Deposit Amount

Withdrawal
Penalties

36-month College Saver

0.40%

$100

No penalty for
school costs

48-month College Saver

0.45%

$100

No penalty for
school costs

60-month College Saver

0.50%

$100

No penalty for
school costs

As of November 9, 2018

Treasury

This CD offers the ability to make additional deposits of at least $100 into your CD at any time and one monthly withdrawal without penalty. The CD has a six-month term with a variable interest rate tied to the U.S. Treasury Bill — if the rate goes up, you’ll make more money, but if the rate declines, you’ll make less. Right now, rates start at 1.96% and adjust quarterly. Throughout 2017, Treasury Bill rates increased almost every month and have continued to rise in 2018, reaching 1.969% in July. So this is a great option if you have the $5,000 minimum deposit amount and want a short-term investment with the option to add or remove funds from the CD.

CDARS

CDARS stands for Certificate of Deposit Account Registry Service and protects your principal and interest by making sure your money is placed into multiple CDs across a network of banks to keep your CDs insured by the FDIC (maximum limit for each CD is $250,000).

Other things to know about BB&T CDs

Does BB&T allow customers to take advantage of rising rates once they’ve opened a CD?

BB&T has two CD options that allow you to take advantage of rising rates: the 30-month Can’t Lose CD and the 48-month Stepped Rate CD. Both allow you to make a withdrawal before the CD comes to maturity in case rates increase (terms apply). They also allow additional deposits in case rates drop and you want to invest more at the existing rate of your CD. However, the current rates on those products are very low, negating the value of their flexibility.

About BB&T

BB&T (Branch Banking and Trust Co.) is a North Carolina-based bank with locations in 16 states and the District of Columbia, including Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and West Virginia.

BB&T offers a mobile app for both iOS and Android. While their website is easy enough to use, finding specific information, particularly about rates, is impossible. Their customer service number isn’t much help in that regard either, with most questions answered with a suggestion to visit a branch location. As a result, if you don’t live in an area with a branch, we don’t recommend using BB&T’s CDs. To find the BB&T branch closest to you, use their branch locator.

Pros and cons of CDs

A certificate of deposit (CD) may offer a higher return than you’ll get with your savings accounts, without the risk of loss that accompanies other investment options with higher return rates. The drawbacks associated with CDs are the inability to access your funds during the term of the investment without suffering a penalty and the risk of interest rates increasing while your money is locked into a CD for a specified term.

The bottom line: Are BB&T CDs right for you?

BB&T does offer some flexible deals to its customers, but in general, better CD rates can be found at both banks and credit unions with comparable terms. You can find them on our list of the best CD rates, which we update every month.

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

Ralph Miller
Ralph Miller |

Ralph Miller is a writer at MagnifyMoney. You can email Ralph here

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Strategies to Save

Best Money Savings Apps

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

best mobile apps
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Saving money isn’t always as simple as the oft-prescribed “put it away and don’t touch it” advice makes it seem. With financial concerns constantly tugging at our attention, it can be difficult to find the time and money to save for future goals, events or the unavoidable emergency.

If the savings aren’t there when you need them, you may finance a purchase or cover an emergency with debt like a credit card or personal loan. In a pinch, those tools can be invaluable. But taking on debt should generally be considered a last resort, as carrying debt comes with its own risks.

Luckily for the tech-savvy, the fintech revolution gave rise to several mobile apps designed to help you save money — and make saving a bit more interesting, to boot. Read on to discover the best money savings apps to help you save for short term goals like a vacation, long term goals like a home or college education, and pad your all-too-important emergency fund.

Best money savings apps to help you save daily

Consistency is the root of wealth-building. That said, it follows that saving a little bit of money every single day can be a good practice to start building a wealth mentality. It also happens to be a great way to save money without feeling drastically penalized today to serve your future goals, since you can split your saving into small chunk sand meet targeted saving goals. The following money savings apps can help you get into the habit of saving a little bit of money every day.

Best for saving money on a tight budget: Joy

App Store: 4.3/5, Google Play: n/a
If you’re on a tight budget, the Joy app may be a great way to find money you didn’t think you had.

This free iOS app analyzes your income and spending habits and calculates how much money you can safely save each day without breaking your budget. The Joy app won’t automatically make the transfer for you, so you’ll have to open up the app and decide whether or not to save the money. If you say yes, the funds will be transferred from your linked account to an FDIC-insured Joy savings account.

You can also elect to save more or less than the amount suggested, as you can move money into your Joy savings account anytime. If you need a reminder, set up a daily notification to remind you to make the transfer.

When you’re ready to spend your savings, you can transfer the funds from the Joy savings account to an external account.

Another popular app, Digit, deserves honorable mention. Digit calculates how much you can save each day and will make the transfer for you, automatically — however, Digit costs $2.99, so it may not be a viable option for those on a tight budget.

Best for saving up an emergency fund: Chime Banking

App Store: 4.7/5, Google Play: 4.4/5
Standard financial advice suggests keeping three to six months worth of monthly expenses stashed away in an emergency fund, just in case you run into a financial emergency. In reality, however, around 40% of Americans report they aren’t able to cover a $400 emergency out-of-pocket, while the average U.S. monthly household expenditure is about $5,005.

Chime, a mobile-only bank, hopes its app’s automatic savings features may just help you beat the status quo and make it a little less painful to finally build up your emergency fund. The Chime app is free and available for both iOS and Android devices.

When you enroll in direct deposit and Save When You Get Paid, Chime will automatically transfer 10% of each paycheck into a seperate Chime savings account for you. If you’re enrolled in Chime’s automatic savings program, the bank will also automatically round up each transaction made with your Chime Visa debit card and deposit the amount into your savings account, too.

Best for saving money for a vacation: Tip Yourself

App Store: 4.6/5, Google Play: 4.4/5
Tip Yourself is a free app that may help you save for your dream trip. With the Tip Yourself app, available on iOS and Android devices, you can reward yourself for positive behavior by transferring a little bit of money to your digital tip jar each time you accomplish a personal goal.

If you make it to the gym on a Tuesday, for example, tip yourself $1 (or whatever amount you feel you deserve). The same goes for every other personal goal you may have, such as getting to work earlier or calling your parents once a week.

The app aims to help its users build savings habits and motivate them to stay more consistent about their personal goals, too. The app also has a social feed, so you can share your wins — big and small — with your peers in a supportive community. If you’re into maintaining a streak, there is also a calendar that keeps track of the days you did tip yourself.

With Tip Yourself, you can set a savings goal for your next vacation. When you reach your goal, you’ll feel confident taking a vacation knowing the money you’re spending is your reward for keeping the promises you made to yourself.

Best money savings apps to help you save monthly

Saving money on a monthly basis for large goals doesn’t have to come down to what’s left over at the end of the month. And it won’t, if any of the following money savings apps have anything to do with it. The apps below encourage users to set aside the funds when they have them, before the money is absorbed into their monthly expenses.

Best for saving money for a car: Qapital

App Store: 4.8/5, Google Play: 4.5/5
A car is a fairly large savings goal to meet, but it can seem less daunting if you can save a bit toward your vehicle each time you are reminded why you need the car in the first place — that’s where Qapital comes in.

With Qapital, you can set customizable autosave rules for just about anything, so you can save money simply with the actions you take living your life. You can set a custom rule; for example, you can save a certain amount of money each time you pay for a public transit ticket or fill up the tank for that friend who drives you to work.

Qapital has a bunch of other ways to help you save up for a car, too. With the round up rule, the app will round up all of your transactions and automatically transfer the difference to your designated goal account. So each time you pay for anything, you will have a little bit of money going toward your car. The spend less rule saves whenever you spend less than a certain amount with a retailer or in a certain spending category, and the guilty pleasure rule saves a certain amount whenever you spend on a chosen guilty pleasure, like ordering takeout.

When your goal is funded, you can withdraw the funds and spend it on your chosen vehicle. The free Qapital app is available for both iOS and Android devices.

Best for saving money for a child’s future: Kidfund

App Store: 4.8/5, Google Play: n/a
Whatever your child’s future holds, having the money on hand to help them accomplish their goals will come in handy. With Kidfund, not only can you contribute to your child’s future success, but so can your family, friends and anyone who supports your child’s dreams.

You can open a dedicated savings account for each of your children and set a rule to gift money to your child’s account on a periodic basis. For example, you can gift each of your children’s Kidfund accounts $20 each month. Kidfund awards interest based on the balance within the account.

On top of your giving, you can invite your friends and family members to follow your child’s Kidfund account and they can gift money to the account for birthdays, holidays or whatever reason. When the time comes, you’ll have the money waiting in the Kidfund account to fund your child’s dreams.

Kidfund is a free social savings app available only on iOS devices.

Best for saving money for the holidays: Simple

App Store: 3.8/5, Google Play: 4.2/5
Simple is a mobile-first bank that helps you set aside money for future goals. With a fee-free Simple account, you can set and fund financial goals with a target date. Simple will then calculate how much money you need to transfer periodically to reach your goal by your specified target date, based on the frequency you set.

For example, you can set a goal to save $500 for holiday shopping over 10 months and set the frequency to transfer an amount each month. Simple will automatically set aside $50 each month so you’ll reach your goal for the holidays.

The money for the goal will remain in your Simple account, but will be set aside and tagged for that specific purpose. The amount designated toward the goal will be deducted from your total to give show you how much money is safe for you to spend. The Simple app is free and available on iOS and Android devices.

Best money savings apps to help you save in the long term

Saving for long-term goals can be difficult when you can’t see the tangible results of your efforts just yet. Using one of the money savings apps below may help you keep track of the progress made toward your savings goal, so you can stay motivated as you wait, save and watch the investment you are making towards your future grow with time.

Best for saving money for a house: Rize

App Store: 4.2/5, Google Play: 3.7/5
Rize is a free automatic savings app available for both iOS and Android devices. It helps you earn extra money on your savings for a long-term goal (like a home down payment) and offers a high APY on your cash savings. You also have the option to earn even more on your savings by investing the funds. You set a goal amount and how often you want Rize to pull a specified amount of money from your account, and the app will do the rest of the work for you.

You can set investment or cash savings goals. The money saved in a Rize account earns interest on cash savings. If you choose to invest your money, it’s put into exchange-traded funds which earn varying interest rates.

Rize doesn’t charge any fees on your cash savings or require a minimum amount to open an account; instead, it lets you decide how much you want to pay. If you invest your money, Rize asks you contribute a minimum $2 per month to your account and pay an annual 0.25% management fee of your invested assets.

Rize also has a few built-in features to help you reach your goal a bit faster. It calls the features “Power Ups,” and you can turn them on or off at any time. You can use the Accelerate feature to automatically increase your contribution by 1% each month. So if you are saving $100 toward your down payment this month, Rize will increase your contribution to $101 the next month.

Rize also has a Boost feature that calculates how much extra money you have based on your income and spending habits, and automatically transfers up to $5 to your goal whenever “it makes sense,” which Rize says is about once or twice a week.

Best for saving money for college: Clarity Money

App Store: 4.7/5, Google Play: 4.1/5
Clarity Money is a free automatic budgeting and savings app available for both iOS and Android devices. The app helps you save by setting rules for how often and how much you want Clarity to automatically stash away for goals, like paying for next semester’s tuition or funding your child’s college savings account.

Clarity Money also has a few other features that may help you find more money in your budget to save for school fees. The app can analyze your expenses to find where you may be able to cut back on subscription services and free up some of your funds. Its budgeting features display your spending habits and let you know when you are going over your intended budget in a category, so you can adjust your spending behavior before you overspend. Clarity Money does not charge any fees for its services.

Best for saving money for retirement: Acorns

App Store: 4.7/5, Google Play: 4.3/5
Acorns is an investing app popular for letting its users invest the spare change from their daily transactions with its Acorns Core option. With Acorns Core, the app automatically rounds up your transactions to the nearest dollar and invests the difference into your chosen investment portfolios (once you’ve reached a minimum $5 in roundup savings).

Acorns also has a retirement savings feature called Acorns Later. With Acorns Later, you can invest your money in an Independent Retirement Account (IRA) and set recurring contributions from your linked account. You can invest using a Roth IRA, Traditional IRA or SEP IRA. The ETFs in your investment portfolio will automatically adjust to fit your needs over time based on your retirement date and goals. You can’t have Acorns Later without have Acorns Core, and having both costs the user $2 per month. Acorns Core only is $1 per month.

The Acorns app is free and available for both Android and iOS devices, but the Acorns service costs $1, $2, or $3 (with the Acorns Spend checking account) per month depending on what plan you select.

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

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Earning Interest, Reviews, Strategies to Save

Review of Live Oak Bank’s Deposit Rates

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Year Established2008
Total Assets$3.4B

LEARN MORE on Live Oak Bank’s secure websiteMember FDIC

Chances are you haven’t heard of Live Oak Bank. After all, this lender, based mostly on the web, has only been around since 2008, and it mostly focuses on giving out small business loans to businesses in specific industries, such as veterinary practices or craft breweries.That’s no reason to pass it up for your personal banking needs, however. In fact, this little gem of a bank has one of the best-kept secrets in the personal banking world: it has one of the highest savings account interest rates you’ll find from an online bank. (More on that below.) And, most of its other personal deposit accounts offer relatively high rates as well.Let’s take a more in-depth look at its deposit accounts to see if they’re right for you.
Live Oak Bank’s Most Popular Accounts

APY

Account Type

Account Name

1.10%

Savings

Live Oak Bank Business Savings

LEARN MORE Secured

on Live Oak Bank’s secure website

Member FDIC

Live Oak Bank’s savings account

When it comes to the best savings accounts with high interest rates, Live Oak Bank currently has one of the highest rates.

APY

Minimum Deposit

2.00%

Up to $5 million

(but only up to $250,000 is FDIC-insured)

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fees: None
  • ATM fee refunds: None

Live Oak Bank currently has one of the best savings account rates available. This means that Live Oak Bank is lowering the bar and allowing anyone to take advantage of these high interest rates, no matter how much is in his or her pocket right now.

Live Oak Bank wants you to use your savings account, and use it often, which is one reason why it has no monthly maintenance fee. If there is no activity on your account for 24 months and your balance is less than $10.01, Live Oak Bank will take the remainder of your balance as a Dormant Account Fee and close your account.

Getting money into a Live Oak Bank savings account from an external bank account can take a little bit of time depending on how you do it. If you request the money through Live Oak Bank’s online portal, the funds won’t be available for up to five or six business days. But if you opt instead to send the money to Live Oak Bank from your current bank, the money will be available as soon as it’s received. Your Live Oak Bank savings account will start earning interest as soon as the money posts to your account.

You can easily withdraw your money at any time via ACH transfer. Simply log into your Live Oak Bank savings account and electronically transfer it to whichever bank account you wish. It’ll be available in two to three business days.

You are limited to making just six withdrawals per month with this savings account. That’s not a Live Oak Bank thing; that’s a federal regulation imposed upon savings accounts in the U.S. If you absolutely can’t wait until next month to make another withdrawal past your allotted six per month, you’ll be charged a $10 transaction fee for each additional action.

Live Oak Bank CD rates

Live Oak Bank also has some of the best CD rates with a decent deposit amount.

Term

APY

Minimum Deposit

6-month CD

2.25%

$2,500

1-year CD

2.75%

$2,500

18-month CD

2.80%

$2,500

2-year CD

3.00%

$2,500

3-year CD

3.05%

$2,500

4-year CD

3.10%

$2,500

5-year CD

3.15%

$2,500

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • CD terms that are less than 24 months — 90 days’ interest penalty
    • CD terms that are more than 24 months — 180 days’ interest penalty

Live Oak Bank currently offers the highest CD rates. This bank’s minimum deposit requirements also seem to be right on par with other bank’s minimum deposit requirements. Currently, the best CDs out there have minimum deposit requirements both above and below Live Oak Bank’s $2,500 benchmark.

Only U.S. citizens and permanent residents are eligible to open these accounts. It’s a relatively straightforward process to open a CD: Simply complete the forms online, provide any needed documentation (such as your current bank account details), and wait for an account approval. Once your account is open, you can transfer over your deposit, where it will be held for five days before officially launching your CD.

If you need to take out your deposit early, bad news: As with many CDs, you’ll face an early-withdrawal penalty at Live Oak Bank. If your original CD term was for six months, one year or 18 months, you’ll be charged 90 days’ worth of interest. If your original CD term was for longer than that, you’ll be charged a higher rate of 180 days’ worth of interest.

If you are able to resist the urge to withdraw your money early, congratulations! Your CD will automatically renew into a second CD with the same term length. However, don’t panic if that’s not what you want: You have up to 10 days after the CD has matured to withdraw your money penalty-free and park it in your own bank account (whether it’s with Live Oak Bank or not).

It’s easy to overlook Live Oak Bank for other larger, more established consumer banks like Ally or Discover Bank. But Live Oak has some of the best CD rates around, and the best savings account available on the market today.

Lest you be scared away by its smaller name, consider this: This tiny-but-growing bank is getting rave reviews from customers and employees alike. It carries an “A” health rating, and has a top-notch online banking portal. About the only thing missing is a checking account to let you seamlessly do all of your daily banking with this great company.

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

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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Strategies to Save

How a Joint Bank Account Works — And Why You Might Want One

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

What is a joint bank account?

A joint bank account is an account owned by two or more people allowing each of the owners to make deposits, withdrawals and other decisions. This could help make it easier to manage shared bills, meet a bank’s minimum account balance requirement, qualify for a higher interest rate or help reach a joint savings goal.

You don’t have to be married or even related to have a joint account depending on the type of account you choose. In this story, we’ll explain all the different types of joint bank account options you have, the rules you should know about and how to choose the right account for your needs.

Types of joint bank accounts

In most cases when you open a joint account you will have to select the subtype, which some banks may refer to as “titling.” A subtype dictates how the account will be handled when an owner dies, gets divorced or can’t make decisions on their own.

Many of the joint account types work similarly in that each owner has equal access to the funds. The key differentiator is what happens when one of the account owners dies — most importantly, and whether or not the funds avoid the probate process. Probate is the legal process of winding up a person’s estate after his or her death, said Atlanta-based attorney, Sydnee Mack, Esq.

Probate can be a lengthy and costly process, and one that most people try to avoid. According to the American Bar Association, the probate process could take six to nine months to settle, with larger more complex estates taking longer.

Below are some of the subtypes you may run into, what they mean and the differences between them:

Joint Tenants with Right of Survivorship (JTWROS)

This account can be opened for two or more people and is the most common joint account option. Most banks, credit unions and even investment firms offer this option. Usually the account holders are married but this is not a requirement to open or maintain this type of account. This option is also common for adults taking care of their aging parents. When an account holder dies, the remaining portions pass on to the other account owner(s) and do not go to probate.

Joint Tenants in Common (JTIC)

Similar to JTWROS, the joint tenants in common account option gives multiple users equal to access to the account. The key difference here is what happens when one of the account owners die. Instead of the account automatically being split among the other owners, the deceased account owner’s portion will go to their estate and could be subject to the probate process.

If you’re looking to avoid any estate and probate issues, you could add a payable-on-death option. This will allow the funds to avoid probate and go directly to named beneficiaries.

Tenants by the Entirety (TBE)

Tenancy by the entirety is a Joint Tenants with Right of Survivorship account but with additional protection, explained Courtney Richardson, a Philadelphia-based tax attorney and founder of The Ivy Investor. The tenants by the entirety option is only available for married couples.

“It’s meant to protect the marital assets from outside creditors because each spouse completely owns the property,” she said.

Because each spouse individually owns 100 percent of the property, as opposed to a 50/50 split like JTWROS, it is generally exempt from judgments, liens and other collection methods when one spouse is sued. When one spouse dies, the property goes directly to the other spouse without going through probate.Tenants by the entirety, however, may not be available in every state.

Joint bank account rules

The various rules between each account type can vary depending on the state and in some cases your bank. Generally speaking, with every account type, each joint owner has equal right to the entire account balance. Any account owner can withdraw or deposit as much as they like, even without the approval of the other joint owner. It is important to check with your state’s local laws; as mentioned earlier, not every state offers tenants by the entirety option.

Also, if you’re married and live in a community property state,  the rules could be very different. In most cases, if you have a divorce in a community property state with a joint account, the money is divided evenly, regardless of how much each person contributed. One of the only ways to circumvent this in a community property state is to keep the accounts separate and enter a prenuptial agreement. In both cases, you should contact an attorney in your area.

Here are some questions you should get answered before you open a joint account.

Questions for the bank:
What happens if I no longer want to be on the account with the other person(s)?
Are there any additional fees for holding a joint account?

Questions you should ask yourself and the other joint owner(s):
What are our goals for this account?
What are the rules for spending and withdrawing from this account?

Opening a joint bank account

The process for opening a joint bank account is nearly identical to opening an account for yourself. You will need the basic account opening information for all account owners such as Social Security numbers, physical address and email address. Most banks also require that each account owner is present to sign any documents. This process generally applies no matter which account title you choose.

Joint bank account pros and cons

Pros:

  • Joint bank accounts may help simplify your finances. If you and your joint owner are splitting multiple expenses, both of you could deposit the money into one account and pay the bills from that new account.
  • A joint bank account may also help you save on fees. Many banks require a minimum balance or a monthly direct deposit to waive monthly fees. Combining your funds may allow you to stay above the minimum balance easier; if you don’t have direct deposit but the joint owner does, this may qualify you to avoid the fee.
  • Also adding joint owners also increases your FDIC coverage. The FDIC covers up to $250,000 per person, per bank, and per deposit type. If you have a joint account with someone, you are granted $250,000 per co-owner. A joint account with two people would have an FDIC limit of $500,000.

Cons:

  • Having a joint account could also cause some problems. If you feel your co-owner doesn’t put in their fair share, it may cause tension in the relationship. For example: If you put in 80 percent of the money into the account and the other owner puts in only 20 percent, that co-owner can legally spend 100 percent of the money and you may have very little recourse if they spend in a way that you disagree with.
  • Additionally, if you enjoy financial privacy to buy gifts or spend money on personal items, know that the co-owner will have access to see and monitor everything that is going on in the account.

Finding the best joint bank account

Joint bank accounts often have the same benefits as individual accounts at most banks. Very rarely will you see a benefit such as no ATM fees or no monthly maintenance fees simply because the account has an additional owner. The easiest way to find the best account option is to look for the best individual account and open it as a joint account.

As with any account, you’ll want to look for a bank that charges very few fees (if any) with benefits that help you accomplish your goals. For most people, this includes free bill pay, no ATM fees, a large number of ATMs, online account access and a low minimum balance requirement. If you’re looking to open a joint savings account, you might also look for a high interest rate. You can begin looking for the best bank accounts here.

Closing a joint bank account

The process for closing a joint bank account will vary by bank, though it is typically straightforward. However, if you are married and you’re closing the account due to divorce, the process could be different, especially in a community property state.

Most banks will allow one joint owner to close the account while others may require all account owners to be present to dissolve the account. Just like a regular bank account, you’ll want to make sure there aren’t any pending automatic bills that are still attached to the account or any outstanding checks. These could trigger the account to stay open, and you could be hit with a fee as well. How the money is split between joint owners should be discussed in advance to avoid any confusion and strain on the relationship.

Joint bank account alternatives

Due to different spending habits and financial responsibilities, joint accounts aren’t for everyone. If a joint account does not work for you, you may want to consider a linked account. Linked accounts are tied together at the same bank but owned individually. This allows funds to be transferred between people more quickly while still maintaining your independence. You will need to check with your bank for their specific rules on which accounts can be linked and how many can be linked at one time.

A convenience account may be a fitting option for those who may be taking care of older family members. Convenience accounts grants someone the ability to write checks, pay bills and perform other banking functions for the account holder, according to the legal, regulatory and business company LexisNexis. These accounts do not offer a survivorship option and the additional person added to the account is not a co-owner. When the account owner dies, the money goes to the estate and not the convenience signer. The option isn’t common and is not available in every state. If it is an option in your state, you may want to speak directly with the bank manager since these accounts are so rare.

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

Kevin Matthews II
Kevin Matthews II |

Kevin Matthews II is a writer at MagnifyMoney. You can email Kevin here

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Strategies to Save

Saving for a Baby: How Much it Costs to Have a Baby and How to Start Saving

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Saving for a Baby
iStock

The topic of money can cause stress when planning to start, or expand, a family. According to the most recent report from the U.S. Department of Agriculture, it’ll cost $233,610 to raise a child born in 2015. The big-ticket expenses detailed in the report are housing, food, child care and education, although this doesn’t include the cost of college.But before you get sticker shock and decide not to have a family, read on. Early financial planning can help you manage the costs of raising a child.

How much does it cost to have a baby?

How much does it all cost is the million-dollar question for expecting parents. The answer can vary due to your circumstances.

“Getting ready to have a baby has really taught me that anything and everything can happen,” said Stanton Burns, a CFP and owner of Oakview Wealth Solutions in St. Charles, Mo. Stanton is expecting his first child and said the biggest cost at the beginning is medical bills, especially if there are complications.

Young families who are experiencing other major life events such as getting married or buying a home can find medical bills particularly cumbersome.

“Nobody shared with me the cost of having a baby from pre-pregnancy to afterbirth. That was all very surprising to me for baby No. 1,” said Angela Furubotten-LaRosee, a CFP and founder of Avea Financial Planning. To avoid any surprises, Furubotten-LaRosee, based in Richland, Wash., recommends asking questions and staying informed throughout pregnancy and delivery.

Here’s a breakdown of common costs you should be aware of when saving for a baby. Insurance may help you cover some of these expenses.

The cost of childbirth

Before-birth costs: There are prenatal appointments, ultrasounds and other health-related expenditures for the mother and child that may come up as they’re needed. In vitro fertilization (IVF) and other fertility treatments may be necessary as well. The average cost of IVF is $12,400 per cycle, according to the American Society for Reproductive Medicine. Beyond health care, there are items such as cribs, car seats and bottles you may need to buy.

Birthing costs: The cost of birthing a child may range from $2,000 to more than $20,000 depending on where you’re giving birth, the type of birth site (birthing center, hospital or somewhere else) and if there are complications during delivery. A 2015 study by the International Federation of Health Plans found the U.S. average for normal deliveries to be $10,808. Healthy pregnancies with normal deliveries generally cost the least amount of money. Cesarean sections with complications can cost more. Some of the cost may be covered by insurance.

Afterbirth costs: After the birth, follow-up appointments, immunizations, formula, diapers and child care costs are ones to factor into your budget. These costs will also vary depending on the health of the mother and baby.

The cost of adoption

Adoptions can cost relatively lower if you adopt from foster care. Expenses may be reimbursed through federal and state adoption assistance services in this scenario. If you opt for a private adoption agency, the cost could range from $20,000 to $45,000. This may include fees for counseling, child care during the transition, legal fees and other expenses for preparation and placement.

The cost of child care

Child care is an expense you should plan for very early, even before delivery, because of the logistics and costs. “Some places have a waiting list [of six months to a year], which is something you need to get ahead of if you plan to send your children to day care,” Burns said. According to the annual Care.com Cost of Care survey, “the average weekly cost for an infant child is $211 for a day care center, $195 for a family care center and $580 for a nanny.”

Start looking for options early to compare costs and secure your child a spot at a place you trust. To help with expenses, you may be able to claim the child and dependent care credit. The tax credit ranged from 20% to 35% of eligible care expenses. You may also be able to take advantage of a dependent care flexible savings account (DCFSA) option, which is an account with tax perks offered by some employers. A tax professional can help you devise a tax plan that’s most beneficial given your household size and income.

Understand how much your insurance will cover

The medical expenses listed above for you and the child may be offset by insurance depending on your health care plan. Reviewing your coverage should be at the top of your priority list.

Know the type of plan you have. Understand what’s covered (prenatal and postnatal) and know how your copays, deductibles and coinsurance work. Your provider may be able to give you a rough estimate of how much birth will cost given your health, delivery plan and medications.

Make appointments with the right doctors. Double-check that the providers you plan to use are covered by your insurance plan. Some plans only cover a specific group of doctors. Other plans allow you to see doctors out of network, but it costs you more.

Know how a high-deductible health plan (HDHP) impacts your wallet. High-deductible plans are ones that offer lower premiums. The trade-off is that you have to pay more before insurance kicks in. “If you end up racking up [medical] expenses, you may be paying a lot more out of pocket than you could have with a traditional plan that has a higher premium and lower deductible,” Burns said.

Burns recommends considering your insurance options before having a baby to see which type of plan will benefit you the most. Look at traditional plans to see if there are potential savings. If you have a HDHP, putting money away for medical bills is something you should also prioritize for out-of-pocket expenses. You can use a health savings account (HSA) to save for medical bills. We’ll talk about the HSA below.

What if you don’t have insurance? You may be able to qualify for health care through the marketplace at HealthCare.gov. Families who earn between 100% and 400% of the federal poverty level may qualify for subsidized costs. You can find out if you qualify here. Families who meet low-income limits may also be eligible for Medicaid and the Children’s Health Insurance Program.

Review your savings options

There are several accounts you can consider when saving for a baby. You’ll want to save up for prenatal costs, delivery expenses and other baby needs as they grow. Some of these saving methods even have tax benefits.

Put away cash in an HSA if you have an HDHP. HSA accounts are only for high-deductible insurance plan holders. HSAs are triple tax-exempt, according to Burns. “You can put money into this account tax-free, it can grow tax-deferred and you can take money out of it without paying taxes either,” Burns said.

Your account must be used for qualifying medical related expenses such as prescriptions, medical care and dental care. You can carry over a balance in your HSA from year to year. Funds can be used for you, your spouse and dependents. The maximum you can deposit into an HSA for 2018 is $3,450 for individuals and $6,900 for families. Learn more about HSA accounts here.

Save in a medical flexible spending account (FSA). FSAs are accounts typically established by your employer to help pay for medical costs. Money contributed to the account by you or your employer is not taxed. Money from the account is meant to reimburse you for eligible medical expenses. The 2018 contribution limit for the FSA is $2,650 per year. Unlike the HSA, there’s a use-it-or-lose-it policy for the year unless your plan has a grace period or carryover provision. Learn more about the medical FSA here.

Use a DCFSA. The DCFSA is another account offered by some employers where you can put in pretax dollars to cover eligible child care expenses for children younger than 13. Eligible expenses may include before- and after-school care, baby-sitting and nanny expenses, day care and summer camp. If you are married and filing a separate return, you may be able to contribute up to $2,500 per year in this account. The contribution limit is $5,000 per household.

Open up a high-yield savings account. For other savings, a simple high-yield savings account could be the right place to put money away. A regular high-yield savings account doesn’t have the same tax perks, but you can get a higher return on your cash.

“The interest rates of most brick-and-mortar banks that you’ll have in your town aren’t that great. [An interest rate of] less than half a percent is what I’ve seen, but there are some online savings account options that offer higher,” Burns said.

Here are some of the best savings accounts to consider while you’re saving for a baby:

Institution
APY
Minimum Deposit Amount
High Yield Savings from Synchrony Bank
Synchrony Bank

2.05%

$0

LEARN MORE Secured

on Synchrony Bank’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations
Online Savings Account from Barclays
Barclays

2.05%

$0

LEARN MORE Secured

on Barclays’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations
Online Savings Account from Ally Bank
Ally Bank

1.90%

$0

LEARN MORE Secured

on Ally Bank’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

You can check out some of the other best online savings accounts here. Account APYs on some of the highest yield savings accounts range from 2.05% to 5.12%.

Make a family leave plan with your employer

Coming up with a family leave plan is another factor to consider when weighing your financial options. You need to know how long your job will allow you to be on leave and how much you’ll get paid.

“[Some employers] say they’ll give you family leave of, let’s say, three months, but they’re only going to pay you for the first three weeks,” Burns said. Having a spouse go unpaid after having a baby can cause financial strain. Adjust your budget beforehand and bump up your savings to make up for any loss in income you may experience.

Save for education costs

Education costs may not be at the top of your mind when you’re waiting for the water to break, but the earlier you plan, the less financial burden you’ll encounter when it’s time for your children to go off to school. “Every dollar saved is one less dollar borrowed,” Furubotten-LaRosee said.

Savings may not cover the entire cost of tuition or college, but at least it’s something. “You could save in a traditional brokerage account. Because it’s long term, you have 18 years to invest in some blend of stocks and bonds that you’re comfortable with,” Furubotten-LaRosee said.

Here are a few accounts to consider:

Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts: The UGMA and UTMA are both custodial accounts you can use to invest money for your child. Accounts may be made up of mutual funds, stocks and bonds. UTMA accounts can also be used for real estate. You can generally contribute up to $15,000 per year per child without worrying about the gift tax. Couples can contribute up to $30,000 per year per child. The child typically gets access to the funds when they’re between 18 and 21, depending on the state where the account is opened. The money doesn’t have to be used just for school.

529 plan: A 529 plan lets you prepay tuition or set up an investment account with tax benefits for education expenses. Depending on your state, the contributions you make into the savings account may be tax deductible. The withdrawals may also be tax-free as long as the money is used for eligible education expenses. Eligible education expenses include tuition, computers and equipment, room and board, and fees. Up to $10,000 per year from a 529 plan may also be used to pay for tuition at a public, private or religious elementary or secondary school.

Each state has different programs, so you should educate yourself on the type of program offered and its tax perks, Furubotten-LaRosee said. Unlike the UGMA and UTMA account, there are penalties if your child doesn’t use the money for school. The child may pay state and federal taxes on the money, plus a tax penalty of 10%.

There’s a lot to think about when saving for a baby. Adding another person to the family is a lifestyle change. Take a look at your spending and budgeting habits to make room for upcoming expenses for the child, and review the options above to make a smooth transition.

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

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Reviews, Strategies to Save, Uncategorized

American Express® Personal Savings Account and CD Rates Review: A Solid Choice for Online Banking

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Year Established1989
Total Assets$114.2B
If you’re working hard to stay disciplined and stash away a portion of your income, you’ll want to earn the highest interest rate possible on your money. Unfortunately, that’s difficult as bank savings accounts earn an average of 0.08% in interest annually, according to September 4, 2018 data from the FDIC. Our advertiser, American Express National Bank, offers a rate on the American Express Personal Savings high yield savings account that is nearly 20 times that rate. It's currently advertised (as of 9/5/2018) at 1.90% annual percentage yield (APY). What’s better, the high yield savings account does not require a minimum deposit or charge fees, so you don’t need anything but your personal information on hand to open the account.
American Express National Bank’s Most Popular Accounts

APY

Account Type

Account Name

3.00%

CD Rates

American Express National Bank 60 Month CD

on American Express National Bank’s secure website

Member FDIC

2.60%

CD Rates

American Express National Bank 24 Month CD

on American Express National Bank’s secure website

Member FDIC

2.50%

CD Rates

American Express National Bank 18 Month CD

on American Express National Bank’s secure website

Member FDIC

1.90%

Savings

American Express National Bank High Yield Savings Account

on American Express National Bank’s secure website

Member FDIC

American Express Personal Savings Account

This account is a great option for anyone who wants the flexibility of earning a high interest rate without the withdrawal restrictions that come with a CD.

APY (%)

1.90% Variable

Minimum Deposit Amount

$1

Account Minimum

$1

Permitted Monthly Withdrawals

6

Annual Fee

$0

FDIC Insured?

Yes

Mobile App?

No

Transfer Time

Deposits will be available within five business days.
Transfers from savings to a checking account
take one to three business days.

In an American Express® Personal Savings account, your money earns 1.90% variable APY. It’s currently one of the best rates you can earn from an online savings account. The account does not have a monthly fee and they don’t require a minimum deposit, which makes it an affordable account to open. You will have to fund your account within 60 days of applying, and the FDIC insures your deposits up to full legal limit.

How the American Express Personal Savings account works

The American Express savings account compounds daily at a variable 1.90% APY, and interest earned is credited to your account on your monthly cycle date. The rate is variable, so American Express can raise or lower the interest rate at any time without notice to you before or after the savings account is opened.

Account holders must fund the account within 60 days, which you can do by setting up a bank transfer or direct deposit to the savings account, as well as by sending a check.

What we like about the American Express Personal Savings account

  • High interest rate The 1.90% variable APY is better than what you would earn putting your money in the accounts most brick-and-mortar banks offer. While there are higher rates to be had, American Express has a good offer.
  • Automatic savings It’s easy to make saving automatic when you have an online savings account. With the American Express Personal Savings account, you can easily set up a recurring deposit to pull funds from an external savings or checking account. To make it even easier to resist touching your savings, you can even have a portion of your paycheck directly deposited to the account.
  • Discourages spending With your money in an online account like the American Express Personal Savings account, you can only get your cash after making a transfer to an external checking account to which you have debit card access. The inconvenience makes it that much more difficult to spend your savings.

What we don’t like about the American Express Personal Savings account

  • No ATM card Not having card access is great when you need to prevent yourself from spending your savings, but the hassle of setting up and making an ACH transfer from your online American Express Personal Savings account can be problematic in a pinch. (American Express says transfers will take one to three business days for funds to become available in your checking account.) If you’re worried about this, you can instead turn to an online bank like Synchrony Bank that makes it easier to access your savings by issuing an ATM card tied to your high yield savings account.
  • Variable interest rate The annual yield rate American Express is offering on this savings account is high at 1.90%, but the bank can change that rate at any time for any reason, as the rate is variable. If you’re looking for a more predictable rate of return, consider a certificate of deposit.
  • Limited withdrawals Because this is a high yield savings account, banks are limited by Federal Reserve Board Regulation D to a maximum of six withdrawals and/or transfers from your online savings account per statement cycle without penalty. With that in mind, before you decide how much you’ll put away each month, make sure it’s not more than you can afford to, so you aren’t repeatedly reaching into your savings.

How the American Express Personal Savings account compares

As indicated earlier, the American Express Personal Savings account offer is strong, but how does it compare to other savings accounts?
Institution
APY
Minimum Deposit Amount
High Yield Savings Account from American Express National Bank
American Express National Bank

1.90%

$0

LEARN MORE Secured

on American Express National Bank’s secure website

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Synchrony Bank – 2.05% APY and no minimum balance

Institution
APY
Minimum Deposit Amount
High Yield Savings from Synchrony Bank
Synchrony Bank

2.05%

$0

LEARN MORE Secured

on Synchrony Bank’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

With $0 to open the account, you can earn an annual yield of 2.05% on savings account balances through Synchrony Bank and there are no monthly fees.

Savings accounts through Synchrony interest is compounded daily and is credited to the account monthly. An ATM card is offered through this account and you can still easily transfer or deposit funds through an ACH transaction or online.

Goldman Sachs Bank USA – 2.05% APY* and $0 minimum to open

Institution
APY
Minimum Deposit Amount
High-yield Online Savings Account from Goldman Sachs Bank USA
Goldman Sachs Bank USA

2.05%

$0

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

Goldman Sachs Bank USA currently offers an APY of 2.05% on their Marcus Online Savings Account. You don’t need to deposit a minimum amount to open the account, but you will need to have a minimum balance amount of $1* to earn the APY. Interest on the Marcus Savings Account starts accruing the business day you deposit funds into the account. Goldman Sachs Bank USA doesn’t apply any service charges to their savings accounts.

Barclays Bank – 2.05% APY and no minimum balance

Institution
APY
Minimum Deposit Amount
Online Savings Account from Barclays
Barclays

2.05%

$0

LEARN MORE Secured

on Barclays’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

With $0 to open the account, you can earn an annual yield of 2.05% on savings account balances through Barclays. While there are no monthly fees, an account that has a balance that is less than $1 for 180 days or more may be closed by Barclays. Savings accounts through Barlcays will start accruing interest the day your initial deposit posts to your account, and interest is compounded daily. While an ATM card is not offered through this account, you can easily transfer or deposit funds through an ACH transaction or online through your account.

American Express CD Rates

These CDs are great for those who don’t have a lot of money to deposit, but the rates are slightly lower than the best CD rates available.

Term

APY

6 months

0.40%

12 months

0.55%

18 months

2.50%

24 months

2.60%

36 months

2.65%

48 months

2.70%

60 months

3.00%

CDs from American Express do not come with a minimum deposit amount. You’re free to deposit as little or as much as you want to begin earning interest on any of its CD terms. This is great for individuals who don’t have a lot of money to deposit in CDs offered by other online banks. The downside is that you won’t be receiving as high of an APY as you could at other online banks. While the rates aren’t terribly low, they just don’t compare to most of the best CD rates currently available.

How CDs offered by American Express work

American Express offers terms spanning from 6 months to 5 years. Interested is credited on a monthly basis and compounds until it matures. You can choose to have the interest transferred out of the CD and into the American Express Personal Savings Account on a monthy basis, transferred into a linked account, or mailed to you monthly, quarterly, or annually via a check. If you touch the principal, however, you’ll incur an early withdrawal penalty. The penalty is based on your CDs term:

  • For CDs with a term of less than 12 months: 90 days worth of interest
  • For CDs with a term of 12 months, but less than 48 months: 270 days worth of interest
  • For CDs with a term of 48 months: 365 days worth of interest
  • For CDs with a term of 60 months: 540 days worth of interest

If you’re able to keep your principal and interest within the CD, you’ll receive notice, either by mail or email, that your CD is about to mature in ten days. If you don’t tell American Express that you do not wish to renew your CD, they’ll automatically renew the CD with the same term unless they no longer offer that term. You can call American Express any time before your maturity date to tell them that you do not wish to have your CD automatically renewed.

Online banks vs. brick-and-mortar banks

Online banks have been having a moment not only because of the rise in mobile banking among consumers, but also because they can simply offer consumers more benefits because they don’t have to worry about as many overhead expenses as brick-and-mortar banks. An August 2017 study by DepositAccounts.com, another subsidiary of LendingTree, shows the annual percentage yield internet banks offer on savings accounts is more than four times what brick-and-mortar banks or credit unions offer. The same analysis shows annual percentage yields on internet bank savings accounts have surged 29 percent since January 2016.

Simply put, the main benefit of putting your money in an online savings account is your money does more for you. To show this, DepositAccounts provided an example, based on the average APYs in those savings categories: If a saver were to put $100,000 in a savings account and leave it alone for 10 years, they would earn $8,338.79 at an online bank versus $1,747.04 in a brick-and-mortar bank and $1,895.28 in a credit union, assuming a fixed APY.

Overall Review of the American Express Personal Savings Account and CDs

Overall, the American Express Personal Savings Account is a solid online savings option. The interest rate they offer is high and the features of the account are comparable to other online banks’ savings accounts. While there are certain aspects of the Personal Savings account that could use improvement, other online banks present the same obstacles. As was mentioned earlier, the American Express Personal Savings account is one of the best options available.

The CDs American Express offers, on the other hand, aren’t quite as good. The 6 and 12-month CDs are nowhere near the best rates offered by other online banks and the 18 – 60-month CDs fall short of the other rates offered. The only feature that makes American Express stand out from most of the other online banks is that this bank doesn’t require a minimum deposit to open an account or start earning interest. If you’re not quite ready to deposit a huge chunk of money into a locked account, you may want to start out with on of the CDs offered by American Express.

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

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Strategies to Save

Understanding How Overdraft Protection Works

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Understanding how overdraft protection works
Source: iStock

Have you ever written a check for an amount you didn’t have in your account and incurred a fee? Or have you ever been embarrassed by a declined debit card transaction? If the answer’s yes, you’ve had experience with overdrawn checking accounts.

You may have heard about overdraft protection and how it may help you pay for expenses when you lack the funds in your account. While this service has the potential to help you in times of need, it’s important to be aware of the drawbacks. In this post, we’ll discuss the ins and outs of the various types of overdraft protection, and how you can avoid overdrawing your account in the future.

Featured checking account with no overdraft fee

Institution
APY
Minimum Deposit Amount
Personal Account from nbkc bank
nbkc bank

1.00%

$0

LEARN MORE Secured

on nbkc bank’s secure website

Your deposit is FDIC-insured up to the maximum limit.

What is overdraft protection?

Overdraft protection is a way to fund an account that has been overdrawn. Without this service, you would most likely be charged an overdraft or non-sufficient funds (NSF) fee and have your transaction declined. The fees can add up every time your account is overdrawn, but this service can provide a safety net if you withdraw too much money.

How does overdraft protection work?

There are three types of overdraft protection that work in slightly different ways. While they ultimately transfer funds to your overdrawn checking account, the fees charged differ.

Here are the three options you may have for overdraft protection:

  1. Opt in for overdraft coverage for ATM and one-time debit card transactions. By opting in, you authorize the bank to pay any overdrafts from ATM and one-time debit card transactions. Beware banks often charge you high fees.
  2. Link your checking account to an eligible savings, secondary checking, money market account or line of credit like a credit card. If your account is overdrawn, funds will be transferred from your linked account. There is often an overdraft protection fee associated with the transfer of funds.
  3. Overdraft protection line of credit. If you overdraw your account, the line of credit transfers funds to cover the amount overdrawn plus any fees charged. The amount you overdraw is subject to a variable interest rate and a fee. Note, some banks may require a minimum annual income to open an overdraft protection line of credit.

Overdraft protection fees

If you have overdraft protection and overdraw your account, you will most likely be charged a fee. This fee is often a fixed amount that is charged per overdraft item and varies based on the protection you have.

Here are the fees associated with the options detailed in the previous section:

  1. Opt in for overdraft coverage for ATM and one-time debit card transactions: Typically $34 per overdraft item and an extended overdraft fee may apply if your account is overdrawn for a certain amount of days.
  2. Link your checking account to an eligible savings, secondary checking, money market account or line of credit like a credit card: Typically $10-$12 per transfer.
  3. Overdraft protection line of credit: Typically $10 or more per transfer, plus an APR of around 20% charged on the amount transferred.

While you can potentially be charged the fee multiple times in one day if you continue to overdraw your account, banks typically limit the amount of times you can be charged the fee in a day.

Understanding the overdraft protection law

In 2010, the Federal Reserve passed a law regulating overdraft practices for one-time debit card and ATM transactions. The law banned banks from automatically enrolling customers in overdraft protection for these transactions.

Prior to this law being passed, banks were allowed to process one-time debit card and ATM transactions in which consumers lacked the necessary funds and were charged an overdraft fee. But, the law changed that practice and required banks to allow customers to opt in or opt out of overdraft protection at any time.

If you opt in, the bank will process your one-time debit card and ATM transactions and charge a fee. While if you opt out, the bank will decline your transaction and won’t charge you an overdraft fee — but they may still charge an NSF fee.

The benefits of opting in to overdraft protection

Transactions are approved. This service may be helpful if you need a transaction to go through and can’t afford to have it declined in cases of emergencies or upcoming due dates on bills.

Less embarrassment when paying. If you’re someone who lives from one paycheck to the next, you may run into instances where you’re short of funds for needed expenses like groceries. It can be embarrassing to have your debit card declined due to insufficient funds, and this service may help you avoid those situations.

When can you benefit from overdraft protection?
You may benefit from overdraft protection if you find yourself in a situation where you don’t have the money to cover the cost of an unexpected emergency. For example, say you have a $0 balance in your account but your car broke down because of a flat tire. In this situation, you have your checkbook but don’t have the needed cash or credit card to pay for the tow and service on your card.

If you enrolled in this service and linked an eligible savings account that has the needed funds, you could write the check. Then, the bank would transfer the funds from your savings account to your checking account. You would be charged a $10-$12 overdraft transfer fee, but that’s minor compared to the typical $34 NSF you would be charged if the check bounced.

The drawbacks of using overdraft protection

Fees may still apply. If you enroll in overdraft protection, you may still be charged fees, such as an overdraft protection fee or an NSF fee. And you may incur multiple fees in one day.

High fees for overdrafts funded by credit cards. If you use a credit card to fund your overdraft, it is considered a cash advance which often comes with high APRs over 25% and a cash advance fee that is 3% or 5% of your withdrawal.

When is overdraft protection not worthwhile?
If you opt in for overdraft protection on ATM and one-time debit card transactions and make unnecessary transactions when you have a $0 balance, you can see fees add up quickly. For example, say your account charges a $34 overdraft fee up to four times a day. You’re unaware you currently have a $0 balance in your checking account.

You decide to go to the mall and use your debit card to make three separate purchases: pants for $20, a shirt for $10, and a hat for $8. In total you spent $38 on clothes, but incurred $102 in overdraft fees. That makes the effective cost of your clothing purchase an alarming $140. It’s pretty obvious that it would’ve been a better decision to opt out of the service for ATM and one-time debit card transactions so those transactions would’ve been declined.

Which type of accounts can be linked to a checking account for overdraft protection?

You can link several accounts to your checking account for overdraft protection, including: savings, secondary checking account, money market or line of credit like a credit card. Note that linkable accounts may vary by bank, so refer to your overdraft protection agreement for eligible accounts.

How to avoid overdrawing your account

If you want to prevent future overdrafts, the tips below may help you avoid overdrawing your account, and are general best practices when it comes to financial products:

  • Open a checking account with no overdraft fees. There are banks that offer checking accounts with no overdraft fees. So, instead of being hit with the average $34 fee, banks most likely will decline the transaction — if you aren’t opted into overdraft protection.
  • Don’t overspend. You may have trouble managing your spending, which may lead you to overdraw your account. You can create a budget to get a better picture of your finances and see where you can cut costs to avoid overdrawing your account. A good rule of thumb is don’t spend more than you can afford.
  • Set up low balance alerts. Many banks allow you to set alerts when your balance reaches a certain amount. This is a helpful feature that can make you aware when funds are running low and when you should minimize spending.
  • Review your account balances. It’s important to keep track of how much money is in your checking account. You can keep a register or log in to online banking to stay up-to-date on your account balance. This way, you know how much you can afford to spend.
  • Don’t write checks before you have the money in your account. You may run into issues if you write checks in advance of having the necessary funds in your account. While you expect to have the needed funds in your account when the check is cashed, things may change and result in you lacking the funds to fulfill the check.

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

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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