When Cash Earns Little Interest, Should You Aim for Rewards?

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These days, the returns available for cash and short term CD investments are so low, many are just giving up on seeking higher rates and writing cash off as a lost investment. But, there are other options.

The idea of opening an account with 1.30% with the likes of Sallie Mae or American Express's Bank should get you excited because these rates are competitive and risk free. But, if you need some sort of other incentive, there are other things out there.

For starters, you might want to look into an outfit called BankDirect which is owned by an FDIC-insured outfit called Texas Capital Bank is willing to give you 100 American Airlines miles for every $1000 in your account each month.

Let's do the math, $100,000 at Sallie Mae or American Express is going to produce $1,300 this year (assuming rates stay the same and neither rise nor fall). $100,000 at Bank Direct is going to yield 120,000 American Airlines miles (assuming they continue the program). That's not an unattractive proposition for those who travel often and are savvy about frequent flier programs who can probably figure out how to get more than $1300 in value out of the miles. However, you should be reporting the miles as income on your tax returns so that should factor into your equation.

Likewise, those people shopping for CDs are likely to find that the best rate today, according to BestCashCow.com, is 1.85% for a 2 year CD (at CNB Bank Direct), 2.25% for a three year CD (at EBSB Direct) and 2.50% for a five year CD (at Acacia Federal Savings Bank). Yet, those out for rewards might be intrigued by a website called GiftsforBanking.com which is owned by Flushing Savings Bank and also owns IGoBanking.com. That website is offering CD rates of 0.75% on a 2 year, 1.05% on a three year and 1.75% of a five year CD. A $5,000 deposit for a 2 year period will get you a Cross watch or a Nambe bowl (among other things), but a $100,000 deposit will get you a cruise or a 46 inch TV or a bicycle with a 2 year commitment, and 5 year commitment will get you a 7 night getaway for two to Hawaii or St. Thomas or a 65 inch TV or all new Whirlpool appliances for your kitchen.

Let's do the math on this one. $100,000 is going to produce close to $3,800 over two years with a CNB Bank Direct CD; your giftsforbanking.com CD will earn $1,500 during the same time and give you something that probably isn't worth the difference. $100,000 in a five year CD is going to earn about $13,100 at 2.50% whereas the same money at Giftsforbanking.com is going to earn about $4,000 during the same period. Equally, you probably aren't going to find something on the giftsforbanking.com website that is worth the $9,100 difference.   To boot, Giftsforbanking.com makes it very clear on their website that they are sending you a 1099 for the value of the gift.


WTDirect Offers Account Targeted Towards High-Balance Savers

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The WTDirect savings account is geared towards the investor who has $10,000 or more to invest. In exchange, the bank offers higher interest rates and exceptional customer service.

We’ve all seen online banks advertise great deals on saving account interest rates. The banks offer an extremely attractive interest rate, but in many cases, the offer is only valid up to a certain balance limit. Any deposited funds that exceed the balance limit earn a significantly lower interest rate than the higher advertised rate. So what do you do when you have higher amounts to invest but want liquidity? WTDirect offers a solution. 
 
WTDirect has a personal savings account geared towards higher balances of $10,000 or more. The current APY offered is 1.21%, and they advertise that their savings account rate is consistently in the top 5% of banks. Balances under $10,000 earn a mere 0.15%, so this account definitely isn’t for people who want to invest lower limits. However, the bank will honor the 1.21% interest rate on any account balance for the first 60 days, to give customers a chance to try their service before they commit to a large deposit. 
 
In addition to the higher interest rate on higher balances, the main benefit of WTDirect is their commitment to superior customer service. The company’s website states “WTDirect is not for everyone. Our Personal Online Savings Account is designed for savers in control of their finances who insist upon higher standards.” The bank provides a more flexible savings account and greater personal service in exchange for higher balances. As part of their pledge for higher customer service, the company boasts they have live representatives answer calls 7 days a week. Additionally, there are no fees for the account, no minimum deposit required to open an account, it offers free mobile banking, and an unlimited number of transfer links to other bank accounts. 
 
WTDirect, a division of Wilmington Trust FSB, launched in 2006, but Wilmington Trust Company has been around since 1903, providing a variety of banking and financial services in over 80 countries. 

Need Help Starting an Emergency Savings Account? US Bank's S.T.A.R.T. Account Program Could Help.

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US Bank's S.T.A.R.T program rewards savers with $50 for the first $1,000 saved, and another $50 if they're able maintain a $1,000 savings balance for a year.

It’s hard to set aside money for an emergency fund, especially during tough economic times. US Bank has a program that offers financial incentive for savers and rewards customers obtaining and maintaining a $1,000 savings account balance.

The bank’s S.T.A.R.T program works by requiring monthly saving account transfers via either specified monthly reoccurring transfers, or set transferred amounts per each US Bank Check Card or Credit Card. Once you reach $1,000 in your savings account, US Bank will reward you with a $50 US Bank Rewards Visa Card. After you maintain that $1,000 minimum balance for a year, US bank will give you another $50 Rewards Card. Additionally, you can chose to automatically transfer any cash rewards received through the US Bank FlexPerks Cash Rewards card into your savings account to accelerate savings.

To take advantage of this program, you must open and maintain a US Bank package, which includes a checking account and a money market savings account. A minimum of $50 is required to open a checking account, and a minimum of $25 is required to open a savings. Of course, you must also maintain the qualifying transfer schedule for the rewards as well.

US Bank Rewards programs can be added to any checking account. The FlexPerks Cash Rewards Check Card gives Gold Package customers 0.25% cash back on all non-PIN based purchases, and the FlexPerks Cash Rewards Credit Card gives all customers 1% cash back, with Gold Package customers receiving an additional 0.25% (for a total of 1.25%). Gold packages are free if you have direct deposit, AutoPay or AutoInvest. Otherwise, it will cost you $6 a month. Basic silver packages have no monthly fees.

The interest rates for the savings account vary by region and are minimal overall (0.05% APY for money market balances up to $999 and 0.10% APY for $1,000-$9,999 balances for account holders in the Boston area). As such, this account wouldn’t be ideal for someone who is already a disciplined saver, but the program could help someone who needs that extra boost to get started.


Youth Bank Products Provide Lessons on Fiscal Responsibility

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Fiscal responsibility is a lesson best learned early, as a few mistakes in early adulthood can have long-term consequences. USAA offers several youth banking products to help teach money management, while still giving parents financial control.

 

It seems every time we turn on the news today, we hear another story about fiscal mismanagement. In order to permanently fix the rampant fiscal mismanagement problems in today’s society, not only do we have to deal with the immediate problems facing us today, we also have to think long-term and begin educating our youth about good financial practices so they won’t repeat the mistakes of older generations. According to the National Foundation for Credit Counseling, the average high school senior only scored 52.4% on a survey that measured their knowledge about basic financial concepts. Teaching youth about financial literacy now can help prevent them from bad money mistakes in adulthood that could haunt them for years—or decades—to come. 

It’s important to talk to children early about budgeting, debt, saving, and overall financial management. It may also be beneficial to open up a youth banking account for them, so they can get first-hand practice at banking while still being under the watchful eye of a parent. USAA has several youth banking products to consider, including a savings and checking account. USAA even offers a youth pre-paid card, so teens can practice budgeting and also get used to the idea of spending and budgeting “virtual money.”

USAA’s Prepaid Card has no set-up fee, no reload fee, no inactivity fee, and no annual fee. It allows parents to set spending limits on the card, make allowance schedules, add money and track transactions online. The card is accepted anywhere Mastercard is accepted. 

The USAA Teen Checking account works similarly, only it also has free checks, free ATM fee refunds for up to the first 10 ATM withdrawals, and free debit card rewards (debit card rewards is another important education opportunity for youth). If you don’t happen to live near a USAA bank branch, you can make check deposits at a local The UPS Store through their Easy Deposits program. Since the parent will be a joint account holder, they will have full access to their teen’s account. 

USAA’s Youth Savings account also has no monthly fees and no minimum balance requirement, although $25 is required to initially open an account. It also refunds ATM fees, and it allows youth to see the benefits of interest income first-hand. Deposit account APY rates are available here.

USAA was originally founded to serve the U.S. military and their families, but their banking products are now available to the general public. For more information on USAA, click here.


Everbank Offering $75 Cash On Top of Bonus Rate Of 2.25% APY

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Everbank is offering up to a $75 bonus for customers who open a high-yield money market and FreeNet Checking account. That's on top of their 3-month guaranteed bonus rate of 2.25% APY. As the BestCashCow savings rate tables shows, that is the top rate in the country. After 3-months, the bonus rate drops to 1.25% APY for a blended 1-year APY of 1.51%. But even the 1.51% APY is the top rate.

To get the $75 bonus, you must open both a Yield Pledge Money Market and a FreeNet Checking Account. Both offer the 2.25% APY 3-month bonus rate. If you just open the money market, you receive $50 and if you just open the FreeNet Checking, you receive $25.

You must fund the Yield Pledge with a minimum of $20,000 and the Checking with a minimum of $10,000 and maintain the respective balance through 4 statement periods. The bonus cash will be deposited into the respective account during the 5th bonus period. So presumably five months after the account was opened.

In addition, Everbank pledges to keep your account at the top 5% of competitive accounts. The rate is locked at 2.25% for  three of the five months so you're pretty much guaranteed to receive a decent return.

Everbank has 4 out of 5 stars (Excellent) from Bauer Financial for its safety and soundness.


Capital One Offers Enticing Rate on InterestPlus Online Savings Account

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Capital One offers a great interest rate on its InterestPlus account, but only if you read the fine print and follow the rules.

If you have $1,000 or more to invest in your savings account, you may want to take a look at the Capital One InterestPlus Online Savings Account. The APY is 1.35%, which is currently one of the highest rates available, and Capital One states there are no fees for this account. You also get an extra 10% quarterly bonus on your interest earned, but to qualify for the extra 10% bonus you must have at least $15,000 in your account each month or have a Capital One credit card that you use at least once a month.

If you have excellent credit are interested in taking advantage of the InterestPlus 10% bonus but don’t have $15,000 to keep in your account every month, you may want to consider getting either the Capital One No Hassle Cash Rewards Card or the Capital One Platinum Prestige card. Both cards come with a 0% introductory APR until July 2011. After the introductory APR period is over, the APY of the No Hassle Cash Rewards card increases to 14.9% and the APY of the Platinum Prestige card increases to 11.9%. Neither card has an annual fee, which is great news for customers in a time when banks are commonly increasing fees in an attempt to maximize profits.

If you’re a Costco member, you can get an even better interest rate through the Capital One InterestPlus account. Costco members can take advantage of a 1.40% interest rate, but there’s a catch. To get the higher interest rate through Costco, you must have $5,000 in your account instead of $1,000. You can still get the extra 10% quarterly bonus, but only if you keep at least $15,000 in your account each month. Through the Costco program, you can’t get the 10% bonus by just using a Capital One credit card once a month. However, you are eligible for an additional Costco member incentive: $60 if you’re an Executive Member, and $20 if you’re a Gold Star and Business member. This additional incentive will be deposited into your first Direct Banking account opened through the Costco program with at least $5,000 deposited into the account in the first 30 days after opening.

For the best information on credit cards click on the "Credit Cards" tab above, for the best information on savings account rates click the "Savings" tab above.