PenFed Credit Union $200 Checking Bonus

Posted on May 12, 2020 // 15 Comments

Update: This promotion appears to have ended early.

Pentagon Federal Credit Union has a $200 bonus promotion for opening their new Access America checking account. You must deposit a minimum of $1,200, and make 5 debit card purchases within 90 days of account opening. They market this as a way of “adding $200” to your $1,200 stimulus check (not a requirement). Offer expires 6/14/20.

In order to avoid a $10 monthly fee with this account, you must maintain a $500 daily balance OR a monthly direct deposit of $500 or more. I would just keep at least $500 in the account until the bonus posts. With interest rates quickly heading back to 1% APY or lower, these bank bonuses are starting to look more appealing. For example, it would take $20,000 earning 1% APY for an entire year to make $200 in interest.

PenFed offers a variety of other financial services. With this account, you also become eligible for their 2% cash back credit card and their $250 bonus on car loan refinances. They’ve also been competitive on mortgages in the past. Unfortunately, their bank CD rates haven’t been great recently.

PenFed’s membership eligibility includes affiliated military and Federal employees, but anyone can join if they are a member of a partner organization. I have been a member for years after joining the National Military Family Association for $17. The website also states that being a previous Red Cross blood donor or volunteer makes you eligible. I recommend going through the PenFed application process and letting them guide you.

Offer valid from 5/4/2020 – 6/14/2020. Must receive at least $1200 in deposits in your checking account within 90 days of account opening and make 5 debit card purchases in the first 90 days. Only available to new personal checking members who do not have an existing checking account and qualify for an Access America Account. Once the criteria is met, the bonus will be credited to the new personal checking account no later than 120 days from account opening. Account must remain open, active and in good standing (no negative balance) at time bonus is distributed. PenFed will issue an IRS form 1099 reporting the value of the bonus. One bonus per member.

Filed Under: Banking, Deals & Offers //

Refinance Your Car Loan Due To Ultra-Low Interest Rates?

Posted on May 10, 2020 // Leave a Comment

Many interest rates are at all-time lows right now. This means that if you have any sort of debt, you should explore refinancing. The goal is to lower your interest rate and monthly payments while paying minimal upfront costs and fees.

Did you know that you can refinance your existing car loan? While I advise avoiding car loans because they turn a painful $1,500 in optional features into “only” $20 a month, I also know that most people do end up taking out a loan. Experian says that 85% of new cars and 55% of used cards are financed as of Q4 2019.

I’ve long recommended a good credit union for a new or used car loan. Below are one refi-centric rate comparison and several national credit unions that offer competitive rates on refinancing existing car loans – down to as low as 2% APR. For credit unions, don’t be afraid to use the alternative paths listed to join. There should be no loan application fee, although you will have to undergo a credit check. You should get multiple quotes to compare, including at least one credit union.

MyAutoLoan.com Refinance

  • This one is not a credit union, it is like LendingTree for auto loan refinancing. Open to everyone, you submit one application and they will give you multiple quotes from different private lenders.
  • They offer an interest rate estimator tool with no credit check based on your overall credit profile.
  • No application fees.
  • Refinance for as low as 2.04% APR for 36 months. They seem to specialized in refi, as their listed refinance rates are lower than their new/used car purchase loan rates.
  • No payments for up to 90 days for qualified borrowers.

Pentagon Federal Credit Union

  • Membership open to active, honorably discharged, or retired military, Federal employees, or select membership groups. This includes being a Red Cross blood donor or volunteer. You can also join the Navy League for $25. I recommend just going through the PenFed application process and let them guide you.
  • Currently, they are offering a $250 bonus when you refinance an auto loan with them.
  • Refinance a 2019/2020 model year car for as low as 2.14% APR for 36 months.
  • Refinance a 2018 or older model year car for as low as 2.99% APR for 36 months.

Navy Federal Credit Union

  • Membership open to active military, veterans, and family members of veterans.
  • Refinance a 2019/2020 model year car for as low as 2.29% APR for 36 months.
  • Refinance a 2018 or older model year car for as low as 3.89% APR for 36 months.

USAA

  • Membership open to those with the military affiliation: active duty, Guard or Reserve, a veteran, an eligible family member, or a cadet or midshipman. USAA is the most strict about their membership if you are not military, but they usually have very competitive rates.
  • No application fee.
  • No payments until 60 days after your loan is approved.

Hanscom Federal Credit Union

  • Membership open to active or retired military as well as other partner organizations. If you don’t otherwise qualify, anyone can join the Nashua River Watershed Association for a one-time $35 fee.
  • Hanscom FCU offers a 0.25% discount for loans on new and used vehicles (excluding motorcycles) to current active duty members in the U.S. Military.
  • No application fees or title transfer fees.

Why multiple quotes? If you apply for a car loan, they will run a credit check and provide a specific rate quote on your credit report data. (Check your credit reports for free once a week until April 2021.) Thus, I wouldn’t only go by which place advertises the lowest “as low as” rate unless you have a perfect credit score. You should apply to multiple lenders and compare as they may target differed borrower profiles. If you make these credit checks within a short period of time (Experian suggests 14 days or less), the credit bureaus should automatically recognize that you are comparison shopping and only count one hard inquiry against your credit score.

Filed Under: Banking, Credit Cards, Debt //

Best Interest Rates on Cash – May 2020

Posted on May 6, 2020 // 8 Comments

The Federal Reserve is buying everything in sight (even junk bonds apparently), so it has been rate drops all around. Bank accounts now offer much higher available rates than Treasury bonds. I’d also recommend checking on your brokerage money market sweep fund as most are back to very low rates.

Here’s my monthly roundup of the best interest rates on cash for May 2020, roughly sorted from shortest to longest maturities. I track these rates because I keep 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 5/6/2020.

High-yield savings accounts
While the huge megabanks make huge profits while paying you 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Marcus has a 7-month No Penalty CD at 1.55% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 1.50% APY with a $25,000 minimum deposit. CIT Bank has a 11-month No Penalty CD at 1.40% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Comenity Direct has a 12-month CD at 1.70% APY ($1,500 min).

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are NOT FDIC-insured and thus come with a possibility of principal loss, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 0.57% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund which has an SEC yield of 0.40%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.00% SEC yield ($3,000 min) and 2.10% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.47% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.48% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months. Note that the higher yield come partly from a drop in net asset value during the recent market stress.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes. Right now, this section probably isn’t very interesting as T-Bills are yielding close to zero!

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 5/6/2020, a new 4-week T-Bill had the equivalent of 0.09% annualized interest and a 52-week T-Bill had the equivalent of 0.16% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 0.57% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 0.14% SEC yield. GBIL appears to have a slightly longer average maturity than BIL. Expect that GBIL yield to drop significantly as it is updated.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2020 and October 2020 will earn a 1.06% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2020, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore.

  • Consumers Credit Union Free Rewards Checking (my review) still offers up to 4.09% APY on balances up to $10,000 if you make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. The Bank of Denver has a Free Kasasa Cash Checking offering 3% APY on balances up to $25,000 if you make 12 debit card “signature” purchases and at least 1 ACH credit or debit transaction per statement cycle. If you meet those qualifications, you can also link a savings account that pays 2% APY on up to $50k. Thanks to reader Bill for the tip. Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • The Federal Savings Bank has a 5-year certificate at 2.05% APY ($10,000 minimum). Early withdrawal penalty is 365 days of interest.
  • Pen Air Federal Credit Union has a 5-year certificate at 2.20% APY ($500 minimum). Early withdrawal penalty is 180 days of interest. Their other terms are competitive as well, if you want build a CD ladder. Anyone can join this credit union via partner organization ($3 one-time fee).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Vanguard and Fidelity both have a 5-year at 1.00% APY right now. Be wary of higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as a hedge against prolonged deflation (again if you can hold on for 20 years). As of 5/6/2020, the 20-year Treasury Bond rate was 1.16%.

All rates were checked as of 5/6/2020.

Filed Under: Banking, Deals & Offers, Investing //

Bank of America Paycheck Protection Program (PPP) List of Required Documentation

Posted on April 8, 2020 // 3 Comments

As a follow-up to my initial post on the Paycheck Protection Program (PPP), there has been a some speculation as to the specific documentation required to prove your eligibility and payroll numbers. Each lender may have some discretion as to exactly what they require, but here is what Bank of America has listed as required documentation to submit:

Organizations with employees who file Tax Form 940:

  • Tax Form 940 from 2019
  • Bank of America Paycheck Protection Program Loan Amount Template
  • Bank of America Paycheck Protection Program Application Addendum
  • Tax form 941 or Payroll processor records for the period including Feb 15, 2020

Documents for Sole Proprietors or Self Employed, who do not file Tax Form 940:

  • 1040 Schedule C, if filed for 2019 OR
  • Draft 1040 Schedule C for 2019 if not filed
  • Bank of America Paycheck Protection Program Application Addendum

Documents for All Other Small Businesses:

  • Form 1099-MISC for 2019, for services rendered as an independent contractor
  • Bank of America Paycheck Protection Program Application Addendum

As far as I can tell, the BofA Application Addendum contains the same certifications and questions as the paper PPP application.

Hopefully, this will help you get your documents in order ahead of time so that you can get your applications approved more quickly.

Filed Under: Banking, Deals & Offers, Entrepreneurial, Self-Employment //

Paycheck Protection Program (PPP): Forgivable SBA Loans For 2.5x Monthly Payroll

Posted on April 5, 2020 // 15 Comments

If you are a small business impacted by COVID-19, including self-employed and independent contractors, you have hopefully been following the developments of the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Emergency Advance (EIDL) being rolled out by the Small Business Administration (SBA) and U.S. Treasury. Details are still being ironed out, but PPP could cover up to 2.5 months of your payroll costs. Here are some general highlights from the Treasury PPP overview PDF along with some details from the Bank of America PPP application:

Loan Amount = 2.5 times Average Monthly Payroll. “The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.” In the Bank of America PPP application, two possible options given were to use 2019 payroll or 2019 1099-MISC totals, and then multiple the average monthly payroll by 2.5. So if you averaged $6,000 per month, you can ask for a loan for $15,000. Income over $100,000 annually per employee isn’t covered. Here are some details:

For purposes of calculating “Average Monthly Payroll”, most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee. For seasonal businesses, the Applicant may elect to instead use average monthly payroll for the time period between February 15, 2019 and June 30, 2019, excluding costs over $100,000 on an annualized basis for each employee. For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.

Fully Forgiven. “Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.”

In my Bank of America, the details are given that it is a 2-year loan at fixed 1% interest. As noted, payments are deferred for the first 6 months. If you use the money in an eligible manner (see below), it is fully forgiven and not treated as taxable income.

Must Keep Employees on the Payroll—or Rehire Quickly. “Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.” In other words, this is supposed to encourage companies to keep employees and is separate from unemployment insurance.

All Small Businesses Eligible. “Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.”

Businesses are limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at the Small Business Administration (SBA) to prevent multiple loans to the same entity. Owners with more than one business may apply for a separate loan for each entity.

Application Dates and Details. “Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap. […] You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.”

While technically you can apply at any SBA 7(a) lender, as of 4/5 many of them don’t even have any formal application process at all! Bank of America started accepting applications early, but first required both an existing BofA business checking relationship AND a BofA loan relationship as of 2/15/20. They later relaxed the rules to require at least an existing BofA business checking relationship as of 2/15/20. Most banks are limiting the applications to existing clients, but I’ve tried to list a few that don’t have such a restriction.

In addition, the US Treasury now has a paper application that you can submit to any eligible lender. I have no idea what will be the best. Small local bank? Mega bank? I would assume that if you have an existing relationship with a bank, they would be able to just deposit the money into your primary business account. But I’ve learned to stop making assumptions in 2020!

The funds are supposed to go out first come, first served, although they may expand the amount available. I’m sure that is not helping the chaos. No documentation was required upfront for BofA, but I would get your payroll documentation ready to submit as soon as they ask for it.

Filed Under: Banking, Deals & Offers, Entrepreneurial, Self-Employment //

Best Interest Rates on Cash – April 2020

Posted on April 2, 2020 // 4 Comments

The Federal Reserve further cut their target Fed Funds Rate to zero in March, so we continue to see a steady stream of rate drops on cash savings. I hope that some of you got a nice rate locked-in if you tried to refinance your mortgage.

Here’s my monthly roundup of the best interest rates on cash for April 2020, roughly sorted from shortest to longest maturities. I track these rates because I keep 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 4/2/2020.

High-yield savings accounts
While the huge megabanks make huge profits while paying you 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Marcus has a 7-month No Penalty CD at 1.70% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 1.55% APY with a $25,000 minimum deposit. CIT Bank has a 11-month No Penalty CD at 1.70% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • CIT Bank has a few competitive term CDs at similar rates: 12-month CD at 1.86% APY ($1,000 min), 13-month at 1.82% APY, and 18-month at 1.85% APY.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 1.07% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund which has an SEC yield of 0.68%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.08% SEC yield ($3,000 min) and 2.18% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.57% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 3.16% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months. Note that the higher yield came from a drop in net asset value during the recent market stress.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes. Right now, this section probably isn’t very interesting as T-Bills are yielding close to zero!

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 4/2/2020, a new 4-week T-Bill had the equivalent of 0.09% annualized interest and a 52-week T-Bill had the equivalent of 0.14% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.42% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 0.88% SEC yield. GBIL appears to have a slightly longer average maturity than BIL. Expect these yields to drop significantly as they are updated.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2019 and April 2020 will earn a 2.22% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-April 2020, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore.

  • Consumers Credit Union Free Rewards Checking (my review) still offers up to 5.09% APY on balances up to $10,000 if you make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Elements Financial has dropped to 2% APY on balances up to $20,000 if you make 15 debit card “signature” purchases or other qualifying transactions per statement cycle. Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Pen Air Federal Credit Union has a 5-year certificate at 2.20% APY ($500 minimum). Early withdrawal penalty is 180 days of interest. Their other terms are competitive as well, if you want build a CD ladder. Anyone can join this credit union via partner organization ($3 one-time fee).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Vanguard and Fidelity both have a 5-year at 1.60% APY right now. Be wary of higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. Vanguard has a 10-year at 1.50% APY right now. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 4/2/2020, the 20-year Treasury Bond rate was 1.04%.

All rates were checked as of 4/2/2020.

Filed Under: Banking, Deals & Offers, Investing //

Special Coronavirus Relief: Paid Leave, Mortgage Payments, Student Loans, Credit Cards, and Unemployment

Posted on March 22, 2020 // 2 Comments

Wow. I thought that I was prepared, but I must admit that I was still shaken by last week. For those facing severe financial emergencies right now, so I have tried to collect information and links to where you can hopefully find some help. Be prepared advocate for yourself; many of these will only be given to those who ask and are persistent. Everything is in flux as well, so if you don’t find success try again later. There will be more government stimulus coming.

Paid leave for small/mid-sized business employees, including part-time workers and self-employed. Eligible employees can receive up to 80 hours of paid sick leave and expanded paid child care leave for 12 weeks when employees’ children’s schools are closed or child care providers are unavailable. Business must have less than 500 employees (52% of workforce). This is done via refundable payroll tax credits. DOL press release. NYT article.

The act provided paid sick leave and expanded family and medical leave for COVID-19 related reasons and created the refundable paid sick leave credit and the paid child-care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.

Unemployment insurance. Many states are expanding their eligibility rules for unemployment benefits. You might be eligible if you have to stay at home to care for children. You may not have to officially quit your current job (i.e. your employer temporarily shuts down). You might be eligible if you are under quarantine or have to take care of someone under quarantine or infected. Please visit the Department of Labor for your specific state. CNBC article. DOL.gov/coronavirus.

Mortgage payments. Contact your mortgage or home-equity loan servicer directly to ask about mortgage payment deferral options. Fannie and Freddie Mac have instructed their loan servicers to suspend mortgage payments for up to 12 months if borrowers suffer hardship. In New York, the impacted can defer mortgage payments from any servicer for 90 days. Bank of America is allowing deferrals on a case-by-case basis, with the waived payments being added to the end of their loan term. CNBC article.

Student loans. President Trump announced that federally-held student loans would be set to 0% interest for at least 60 days in addition to being able to request forbearance for 60 days, but there has been a lot of difficulty in actually making the requests with loan servicers as they have cut back on call center hours. There will also be an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent. Press release. ED.gov. Studentaid.gov.

Credit cards and auto loans. Chase, Citibank, American Express, US Bank, Discover, Ally Bank, and Apple have all announced some sort of accommodation for coronavirus. The offers are often vague, but it can’t hurt to call and ask for details. For example, Discover says it won’t report late payment to credit bureaus, but what about late fees and penalty APRs? Chase says they might waive fees or extend payment due dates, but only on a case-by-case basis. Apple (if approved) will allow you to skip your March credit card payment without incurring interest charges. Ally Bank will allow deferral of auto loan payments for 120 days, but finance charges will still accrue. Some of these are rather lame, like offering up credit line increases that were always available anyway.

Filed Under: Banking, Credit Cards, Deals & Offers, Real Estate //

Ally Bank New Deposit Promo 2020: Up to $250 Cash Bonus

Posted on March 15, 2020 // 23 Comments

Ally Bank has a new cash deposit bonus that is offering a 1% cash bonus (up to $250) on new deposits on top of their existing interest rates. Valid for both new and existing customers. Given the holding period, this roughly equates to the same total interest paid as a 3-month bank CD at 5%+ APY. Here’s how it works:

  • Enroll by 3/20/20. You must enroll or you won’t get the bonus. Existing customers must enroll with the same e-mail as linked to their Ally bank account.
  • Fund account by 3/31/20. This means your account has to be approved, opened and funded by this date. Move at least $1,000 from another financial institution to a new or existing eligible Ally Bank account. Remember, transfers can take up to 3 business days.
  • Maintain funds through 6/30/20. Your funds need to remain in an eligible Ally Bank account through 6/30/20. Any withdrawals made during this time may reduce your bonus.
  • Get cash bonus on 7/30/20. Get a 1% cash bonus back on the money you moved, up to $250. That means $25,000 would max out this bonus.

Ally had a similar bonus in 2018, but with higher deposit limits. Note the following regarding which are eligible Ally accounts:

What accounts are eligible?
New or existing Ally Bank Online Savings Accounts, Money Market Accounts, and CDs are eligible for the cash bonus. If you have more than one of these accounts, we’ll consider all of them when calculating your bonus. Remember, the total maximum bonus you can receive is $250.

What accounts are not eligible?
Interest Checking accounts, Individual Retirement Accounts (IRAs), accounts owned by a trust, custodial accounts, Uniform Gift to Minors Act (UGMA) accounts, and Uniform Transfers to Minors Act (UTMA) accounts aren’t eligible for the cash bonus. New money you add to these accounts, or money you move from these accounts to your eligible accounts, won’t qualify for the bonus.

Rough math. The current rate on the Ally Online Savings account is 1.50% APY, and the 11-month No Penalty CD is 1.75% APY on $25k+ balances (as of 3/15/20). Given that you can an additional 1% bonus in 3 months, the bonus itself works out to the equivalent of a 4% annualized yield. 1.5% plus 4% = 5.5%, but given the recent market volatility, the savings rate may be cut down to 1% in the coming months. However, the No Penalty CD at 1.75% would be locked in. So you’re looking at the equivalent of a 3-month CD at roughly 5% – 5.75% APY for new money deposits between $1,000 and $25,000.

Should I move money out of Ally and back in to qualify? No, it won’t make any difference as Ally has already thought of that. All new funds added after 3/13/20 will count as new money for this promotion. They’ve already set the start date in the past, so you gain nothing by delaying your enrollment.

Existing customers. As a longtime Ally accountholder, I’m happy again to see that this offer includes existing customers, even if it has to be new money.

Bottom line. Ally Bank has a new promotion to attract new money (or bring back old money). You get a 1% cash bonus (up to $250) on new deposits on top of their existing interest rates. For their savings account, this works out to a 3-month holding period paying roughly 5% annualized interest. You must enroll soon by 3/20/20 and your account must be opened and fully funded by 3/31/20 at the very latest.

Filed Under: Banking, Deals & Offers //

Best Interest Rates on Cash – March 2020

Posted on March 4, 2020 // 9 Comments

The Federal Reserve just cut their target Fed Funds Rate by 0.50% in response to the market volatility brought on by the coronavirus. This will likely result in many rates drops this month for savings accounts and certificates across the board. (Lower rates may also make it a good time to refinance your mortgage with rates at all-time lows.)

Here’s my monthly roundup of the best interest rates on cash for March 2020, roughly sorted from shortest to longest maturities. I track these rates because I keep 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 3/4/2020.

High-yield savings accounts
While the huge megabanks make huge profits while paying you 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Marcus has a 11-month No Penalty CD at 1.90% APY with a $500 minimum deposit. My eBanc has a 11-month No Penalty CD at 2.00% APY with a $100,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 1.90% APY with a $25,000 minimum deposit. CIT Bank has a 11-month No Penalty CD at 1.70% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Andrews FCU has a special 13-month certificate at 2.15% APY. Anyone can join this credit union via partner organization. Ally Bank has a special 13-month certificate at 2.10% APY. CIT Bank has a 12-month CD at 2.06% APY ($1,000 min).

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 1.60% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund which has an SEC yield of 1.49%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 1.89% SEC yield ($3,000 min) and 1.99% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 1.77% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.00% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 3/3/2020, a 4-week T-Bill had the equivalent of 1.12% annualized interest and a 52-week T-Bill had the equivalent of 0.73% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.46% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.38% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2019 and April 2020 will earn a 2.22% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-April 2020, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore.

  • Consumers Credit Union Free Rewards Checking (my review) has up to 5.09% APY on balances up to $10,000 if you make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Elements Financial has 3% APY on balances up to $20,000 if you make 15 debit card “signature” purchases or other qualifying transactions per statement cycle. Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Hiway Federal Credit Union has a 5-year certificate at 2.61% APY ($25k minimum) and 2.50% APY with a $10,000 minimum. Early withdrawal penalty is 1 year of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • Navy Federal Credit Union has a special 17-month CD at 2.25% APY ($50 minimum + add-on feature up to $75k), but you must have a military affiliation to join (includes being a relative of a veteran).
  • Andrews FCU still has their special 84-month certificate at 3.05% APY. They also have a 55-month at 2.60% APY. $1,000 minimum to open. Anyone can join this credit union via partner organization.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. The rates are not competitive right now. Be wary of higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. I don’t see anything noteworthy. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 3/3/2020, the 20-year Treasury Bond rate was 1.44%.

All rates were checked as of 3/4/2020.

Filed Under: Banking, Deals & Offers, Investing //

Simple Bank Bonus: $400 Bonus + 1.75% APY for $20,000 New Deposit

Posted on March 3, 2020 // 19 Comments

Bonus back again 3/3/20. Simple is one of many fintech startups adding fancy tech and smartphone app sprinkles to your vanilla checking account. They were acquired by the big European-based bank BBVA in 2014. They just updated their $200 and $400 new customer bonuses with new expiration dates.

$200 Bonus Details ($10,000+)

  • Open a new Simple Account by 3/15/2020 at 4:59 PM PT.
  • Deposit(s) totaling $10,000 or more must post to the new account by 4:59PM PT within 15 calendar days after the account is opened.
  • Maintain a balance of at least $10,000 through 5/31/20 4:59 PM PT.
  • The combined balance between your Simple Account and Protected Goals Account counts towards this bonus. The Protected Goals account currently pays 1.75% APY while the primary checking only pays 0.01% APY, so I would recommend opening one of those as well. Note that balances in *Shared* Accounts and *Shared* Protected Goals Accounts do not toward this bonus.
  • Qualifying customers will receive the bonus credit into the eligible Simple account by 6/15/2020 at 4:59pm PT.

$400 Bonus Details ($20,000+)

  • Same as above, except you’ll need to deposit $20,000+ within 15 calendar days of opening, and you’ll get a bigger $400 bonus.

This works out to a 2% bonus after 60 days, which makes it roughly 12% APY annualized. The bonus is on top of the variable interest rate of their Protected Goals account, currently 1.75% APY (as of 3/3/20). That is a pretty good return on FDIC-insured cash in this current rate environment.

Note that this offer is for new accounts only. They’ve been running this on and off since July 2019 (thus the old comments below) so many of us are no longer eligible. Here is their full fee schedule.

Note that for some reason Simple limits ACH transfers to/from an external account to $5,000 cumulative during the first 30 days, when initiated on the Simple website. However, you can simply initiate a transfer from another bank (Ally Bank, Marcus, CIT, etc.) and there are no transfer limits.

Bottom line. Simple is offering a $200/$400 bonus on $10,000/$20,000 of new money into a new account. This works out to a very high APY for a 60 day holding period. Currently, there are also new deposit bonuses from CIT Bank and CIBC Bank. Compare with my most recent roundup of best interest rates.

Filed Under: Banking, Deals & Offers //

Orion FCU Premium Checking Review: 1% APY (Up to $10k) w/ New Activity Requirements

Posted on March 1, 2020 // 22 Comments

(Update April 2019. The interest rate on this account has dropped to 1% APY. In addition, instead of 8 debit transactions per month, you must now spend at least $500 on your Orion debit or credit card each month. All signature and PIN based purchases count. They seem to have given up the idea of being a top rate. I have not updated the review below yet.)

Orion Federal Credit Union (FCU) has a Premium Checking account that offers 1% APY on balances up to $10,000 if you meet certain direct deposit and debit card transaction requirements. However, if you don’t meet the requirements, you’ll get basically no interest and be charged a monthly fee. Their membership is now open nationally. Details below.

Membership eligibility. Orion FCU is based in Memphis, Tennessee and has a field of membership open to nearby residents and employers of local companies. However, you can also join as a “volunteer” for one of their affiliated nonprofit organizations:

Volunteers for Orion Gives Back organizations are eligible for membership in Orion. You can qualify as a volunteer fundraiser simply by choosing an organization and asking us to make a $10 donation.

Yes, you read that right – they will even make the donation for you! Choose from Habitat for Humanity Greater Memphis, Hope House, Porter-Leath, Ronald McDonald House, and Wolf River Conservancy.

You will need your Social Security number and Driver’s License number. In addition, reader Bill reports that they will perform both a ChexSystems inquiry and a hard credit check through Equifax.

Premium Checking requirements. To qualify for the 3% APY on balances up to $15,000 and up to $10 in ATM fee rebates per month, you must have the following:

  • Electronic deposits totaling at least $500 per month. Electronic deposits include: direct deposit, mobile deposit, and electronic transfers from another financial institution.
  • Spend at least $500 on your Orion debit or credit card per month. All signature and PIN based purchases will count toward the $500 minimum.

Note that amounts in excess of $25,000 but under $100,000 will earn 2.01%. If you meet these requirements, there is no monthly fee. If you don’t, then there is a $5 monthly fee and your rate goes down to 0.05% APY.

It is nice that the deposit requirement is not restricted to “payroll direct deposits”. You can set up an automated monthly transfer from another bank account.

Worth it? Like many other such “rewards checking” accounts, you have to be ready for continuous changes. These financial institutions are constantly tinkering to see how they can get you to make this your main checking account, but not lose too much money on the perks.

Previously, you just had to make any 8 debit-card purchases per month. You might just make a bunch of $2 purchases at the convenience store. Some people who were making many small purchases will balk at the new $500 total requirement, but others might like the simplicity of the new terms.

Let’s make some rough calculations. An online savings account earning 2% would earn $300 of interest on a $15,000 balance. At 3% APY, you would earn $450 instead. That’s a difference of $150 per year in extra interest ($12.50 per month). Missing out on 2% cash back on credit card purchases of $500 per month works out to $10 per month. But the bank interest is taxable, while the credit card rewards are not. If you keep significantly less than $15,000, you might even come out behind with Orion.

Note: Some grocery stores allow you to get up to $200 cash back when making a purchase with a debit card with a PIN. However, this would depend on your cash needs as you’d still be missing out on credit card rewards if you are spending cash instead. You could technically deposit this cash back into a bank somewhere, but that also takes time and effort.

Bottom line. Orion FCU has a Premium Rewards checking account available to anyone nationwide that pays 3% APY on balances up to $15,000 if you meet certain direct deposit and debit/credit card transaction requirements. However, if you don’t meet those requirements, you will earn virtually no interest and be subject to a $5 monthly fee. The latest change replaces the 8 debit card transactions with a least $500 in monthly spending on an Orion debit/credit card.

Filed Under: Banking, Deals & Offers //

Fort Bragg Federal Credit Union Certificate Deal: 5-year at 2.99% APY

Posted on February 19, 2020 // 2 Comments

Fort Bragg Federal Credit Union has some solid rates on their term share certificates, most notably the 5-year jumbo certificate at 2.99% APY ($25,000 minimum) and 2.89% APY ($5,000 minimum). Available both in regular taxable and IRAs. These are even “step-up” CDs where you can bump up the rate once if the advertised rates rise. NCUA-insured. Found via DepositAccounts.

This is a relatively small credit union, so this rate probably won’t last very long. I would also expect it to require a little effort to be opened if you don’t live near their branches in North Carolina. Even their 2.99% APY is a bit odd. When it’s a loan where you pay interest, you always see APRs of 2.99% or 9.99%. When it’s a bank account where you get paid interest, you always see APYs of 2.00% or 2.05%. It’s almost like they don’t want people to notice that they have the highest 5-year CD rate in the country by a decent margin.

Membership eligibility. Credit union membership is open to:

  • Active-Duty or Retired military service member
  • Family member of primary member
  • Regularly works on Fort Bragg
  • Most persons who live, work, worship, or attend school in, and businesses and other legal entities in Cumberland County, NC
  • Members of the Braxton Bragg Chapter of AUSA

The last option makes membership open to anyone nationwide. Here is the PDF application which shows the cost of $40 for a 2-year membership, but you may wish to try and apply over the phone at 855-246-6269. Be sure to join the Braxton Bragg Chapter. You will need your AUSA membership number before they can finish your credit union application.

Many credit unions do a hard credit pull upon joining, but I’m not sure about Fort Bragg.

Early withdrawal penalties and limitations. Please note the following language taken from the Full membership agreement (PDF). The penalty is short (3 months), but there may be restrictions for early withdrawals.

Early Withdrawal Penalties – All Term Share Certificate Accounts. You have agreed to leave the principal of this account on deposit for the full term stated in your Certificate. If all or part of the principal is withdrawn before the maturity date, the Credit Union may charge you a penalty. Withdrawal of the principal amount of your Certificate may be made only with the consent of the Credit Union. Unless stated otherwise, owners of non-IRA Term Share Certificate accounts shall forfeit an amount equal to three (3) months dividends on the amount withdrawn. Owners of IRA Term Share Certificate accounts shall forfeit an amount equal to three (3) months AND assessed an Administrative Fee, refer to Term Share/IRA Certificates Rates for current fee. The penalty may be calculated at the rate paid on the deposit at the time of the withdrawal. The penalty will, if necessary, be taken from the principal amount of the deposit.

Bottom line. Fort Bragg FCU has a 5-year share certificate at 2.99% APY. As of 2/19/2019, a 5-year Treasury bond currently yields only about 1.4%. The SEC yield of the Vanguard Total Bond Market ETF (BND) is only 2.14% and it has a longer duration. This margin means this rate won’t last very long. The possible credit check and $40 entry fee make it better for high balances to make it worth the trouble.

I am skipping this one as I don’t have any CDs maturing soon. Still, this is another example of smaller credit unions offering up a very high rate for a limited-time. Such opportunities only available to motivated individual investors and not big institutions.

Filed Under: Banking, Deals & Offers //
« Previous Page
Next Page »