Chase Unveils Sapphire Banking; It is Worth a Look for Those with $75,000

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Here at BestCashCow, we’ve always been big proponents of earning the highest possible interest on your cash accounts (savings, CDs, checking).   We are also big proponents of maximizing your credit card travel rewards by using the most valuable cards for your spend.(hyperlink /credit-cards)

We’ve noted as recently as yesterday that Chase is simply not competitive with the leading online banks when it offers 0.01% interest.   It is remarkable that some customers continue to deposit large sums with Chase at that rate.   It simply makes no sense.

Those who follow our credit card section know that we also value Chase’s Ultimate Rewards points – earned through the Sapphire Reserve Card and the Sapphire Preferred card – at around 2.05 cents.   While Chase enables Reserve cardholders to redeem these Ultimate Rewards points directly for travel credits at 1.50 cents per point on its travel portal (and Preferred cardholders at 1.25), we think that they are worth much more than that when transferred to, and redeemed through, a partner like Hyatt, United or Singapore Airlines.

60,000 Chase Ultimate Rewards points transferred to Hyatt, for example, will get you 2 nights at the Park Hyatt Vendome in Paris or the Park Hyatt in New York (50,000 will get you two nights at the Churchill in London).   Redeemed in this way, the 60,000 points achieve more than 2.05 cents in value and dramatically more than $468.25.  

Where is the $468.25 number coming from?   $468.25 is the interest you are going to earn on $75,000 if you were to deposit it in an online bank over the next 3 months at 2.50% (the highest online rate currently available).   But, if you use that money to try out Chase’s Sapphire Banking over the next three months, they will give you the 60,000 Sapphire Points.  We think that makes good sense.   In fact, it makes sense even if the $75,000 is sitting idly in Chase for the next three months.

You can sign up for Chase’s Sapphire Banking directly on Chase’s website, but to receive the 60,000 points you need to be a current holder in good standing of either the Sapphire Reserve or Sapphire Preferred cards.   It is also possible that, unlike with the sign-up bonuses for those cards, you will receive a 1099 for the 60,000 Ultimate Rewards points, as in this case the points are an interest alternative and not necessarily tax free as they have been ruled as a reward for credit card spend.  But, even if you receive a 1099, the value is still there (the $468.25 that you are foregoing would also be fully taxable on a 1099).

This marks the first time since 2013 when it has made any sense for depositors to consider something other than cash interest for their savings.

Check online savings rates here.


Finally Online Banks Are Highlighting Low Rates At Money Center Banks

One of the most amazing things over the last years has been the huge difference between interest that could be earned from savings and CDs in online banks as compared with that earned at the major brick-and-mortar banks (Chase, Bank of America, Wells Fargo and Citibank to name a few).  Equally amazing has been the fact that few in the mainstream media have noted this difference.  Still more incredible, until recently, even the online banks have been somewhat reluctant to aggressively highlight the fact that the major money center banks are still giving the public 0.01% or 0.06%.

Online sites, such as BestCashCow and RatesAndInfo.com, have, of course, religiously listed the online banking rates, but even they have been relatively unable to generate much excitement about earning larger returns on your cash in online banks as other assets (equities) have appreciated much more quickly.    (These sites also cover brick-and-mortar rates and since some of the smaller banks are competitive, there is a hesitancy to paint all brick-and-mortar banks with the same brush).

But, even as rates are rising, some people are simply unwilling to make the effort to move their money away for the major money center banks.   The most amazing thing about all this is that the far better income earned online is absolutely as safe and as protected by FDIC insurance as interest at brick-and-mortar places.  There is, in other words, absolutely no reason whatsoever, for one to park cash in anything other than the online highest paying banks.

Finally, the online banks, themselves, have realized their incredible competitive advantage and are just beginning to shout about it from the rooftops. 

As an example, this morning wrapped around my copy of the New York Times, delivered to my doorstep, was a huge (2x1 foot), slick advertisement by a major online bank announcing:

THE BIGGEST BANK HEIST IN HISTORY IS TAKING PLACE RIGHT UNDER

YOUR NOSE.  IT’S PAYBACK TIME.

BANKS HAVE BEEN KEEPING BILLIONS OF DOLLARS OF YOUR INTEREST.

MOVE YOUR MONEY TO AN ONLINE SAVINGS ACCOUNT AND START

GETTING THE INTEREST YOU DESERVE.

So, it’s about time.  It’s actually a wake up call to all of us that old habits can make us loose big money. 

See the best online rates here.    Compare these rates with the local brick-and-mortar rates where you live here.


Should I Deposit Over FDIC Limits in XYZ Bank?

Having been running BestCashCow for many years now, this is the most common question that I receive.    The question comes from people I know well and people I know casually and people who I don’t know at all.   It comes fast and furious when rates are rising (as they are now) and when the stock market corrects (which it may also be doing now).

This is a question that I do not like to answer in the affirmative.   Anyone who was awake and conscious in 2009 knows that banks can fail hard and quickly.   With the benefit of hindsight, I believe that there will not be another systematic failure of the banking system in our lifetimes, but that another failure like Lehman Brothers could easily happen again.   If we have retained nothing else after 10 years we should remember to always expect the unexpected.

And, when you do that, you realize that the risk in going over FDIC (or NCUA limits) for most people will outstrip the rewards.   Quite simply, there are now many, many competitive online banks with competitive savings rates.   If you consider short-term CDs, you will find more online banks that work for you.    And, by adding local banks and credit unions, you will find even more.   Since it takes only five minutes to open these accounts, the answer that I give to most people is to open another account rather than put your assets at risk.   The risk to get an extra couple of hundred dollars at a higher interest rate simply isn’t worth it.  

As a general rule of thumb, I believe you can find at least 12 accounts to open.   If you cannot find 12, then you should go back and look again and open more accounts.

Here is BestCashCow’s list of the best savings rates.

Here is BestCashCow’s list of the best one-year CD rates.

Therefore, if you have under $3 million as an individual assigned to cash and CDs (or $6 million as a couple), this really is not a question you should be asking me or anyone else.  

I recognize that many of the site’s users have more than that amount, or have particular reasons for wanting to be more concentrated (primarily estate planning issues).   For these users, BestCashCow has significant resources which you can use to judge the viability of any bank, credit union or online bank.

It is also for these users that we highlight programs, such as Massachusetts’ DIF, that may provide addition insurance above FDIC limits.   Ultra high net worth depositors may also want to consider CDARS.

However, for the majority of people, the answer to the question is definitively “no”.


October 2018 Update – Five Online Savings Accounts to Consider as Rates Rise

Rate information contained on this page may have changed. Please find latest savings rates.

Following the Federal Reserve’s hike in the Fed Funds rate in September, we have seen interest rates of all durations move up in the first week in October.   Savings rates too have risen, causing the best rates in BestCashCow’s table of online rates to shuffle.

Here are 5 accounts you may want to consider:

  1. EBSB Direct – 2.50% savings account on balances over $5,000

EBSB Direct is the online banking division of East Boston Savings Bank and a familiar name to many who have followed the online deposit account space for the last few years.   The 2.50% savings rate is above other nationally available rates and is likely to remain competitive if the Fed raises interest rates again in December.  

EBSB Direct is playing a bit of a game with earlier depositors.  They remain in the “Money Market 3” account earning 1.80% unless they contact customer service and add new money to their account (this is something we don’t like).  On the plus side, EBSB Direct has great customer service according to its reviews on BestCashCow.  The 2.50% rate is good on deposits up to $1 million. While only the first $250,000 is covered by FDIC insurance, East Boston Savings Bank is a Massachusetts-chartered bank and a member of that State’s Depositors Insurance Fund (DIF) that insures balance above FDIC limits.  BestCashCow’s financial analysis shows that the bank is very sound.

Note: EBSB withdrew this offer on November 1, 2018.   It is no longer nationally available to new depositors.

  1. MySavingsDirect – 2.25% Savings Rate, No Minimum Balance

MySavingsDirect is a division of Emigrant Bank.   Emigrant operates three online divisions (MySavingsDirect, Dollar Savings Direct and Emigrant Direct).   Rather than raise the rates in all of the accounts as rates rise, Emigrant has developed a practice of only making their savings rates competitive in one division at a time.   As a result of this practice, customers are being forced to flip accounts in order to maintain market rates (Dollar Savings Direct’s rate seems to be stuck at 1.80% and Emigrant Direct’s rate is 0.50%) and these divisions end up with mixed reviews on BestCashCow (see here how frustrated Dollar Savings Direct customers became when they stopped raising rates).  

Emigrant’s practice is definitely something for new depositors to think about before opening an account.  As rates continue to rise in 2019, you can expect that you will need to move your assets out of MySavingsDirect in order to stay competitive.  That’s an OK strategy so long as you make a plan to check the latest online savings rates on BestCashCow frequently.   Emigrant’s divisions make accounts easy to open and fund (although you cannot link by ACH with all banks).

  1. Marcus – 1.95% Online Savings rate for balances over $1

Marcus has outstanding customer reviews and its lightening fast ACH transfers..  Since Marcus is part of Goldman Sachs, depositors, especially those inclined to deposit over FDIC limits, can always sleep well at night.   Importantly, as rates have risen through 2018, Marcus has proven  to be faster to raise rates than the other most recognized online banks (Amex, Barclays and Ally).  While it may not always sit on top of BestCashCow's online savings table (or those of our competitors), depositors with Marcus can anticipate that they will remain competitive, and know that they will be free from the games that the banks listed above may play.

Note: Marcus's savings rate has been raised to 2.05% at the end of the month.

Editor’s Note:  Marcus is an advertiser of BestCashCow.   Please read our Advertiser Disclosure here

  1. Citizens Access – 2.12% Savings Rate for balances over $5,000

Citizens Access is a recent addition to the online banking space with competitive CD products in addition to their online savings account.  The account is easy to open and it is the online banking division of a solid bank.   They entered the market over the summer of 2018 with a competitive 2.00% savings rate and were quick to raise their savings rate to 2.12% after the Federal Reserve moved in September 2018

Note: Citizens Access raised its online savings rate from 2.12% to 2.25% in the middle of October. 

  1. Purepoint – 2.15% Savings Rate for balances over $10,000

Purepoint is like CitizensAccess with a couple more years under its belt, a slightly higher rate at the moment, but also a higher minimum balance.  They should continue to be competitive and raise rates quickly as the Fed moves through 2018 and 2019.  MUFG Union Bank is Purepoint’s parent, and is itself owned by Mitsubishi UFJ Financial Group, one of the world’s largest banking groups.   Purepoint’s online portal is clearly aiming to attract people depositing millions.   While we strongly encourage depositors to stay within FDIC limits, BestCashCow’s analysis shows that the parent bank is financially sound.

Before opening an online savings or money market account, BestCashCow always urges depositors you to check local bank rates and local credit union rates.


Morgan Stanley is Offering its Customers 2.10% on Savings or 2.40% on a 6-Month CD

Rate information contained on this page may have changed. Please find latest savings rates.

Morgan Stanley is trying to get its large customer base to move some of their assets back to the bank from other institutions that may have offered better rates in the past.   They are doing this by offering an promotional savings rate of 2.10% or a 6-month CD rate of 2.40% so long as the capital is transferred from outside of Morgan Stanley.   These offers are available under December 7, 2018 and are subject to availability.  Certain conditions may apply.

Customers can deposit up to $2 million per product in each of two issuing subsidiaries – Morgan Stanley Bank, NA and Morgan Stanley Private Bank.   Each is separately FDIC insured.

The 2.10% savings rate is competitive versus online savings rates.    However, according to the terms of the offer, the rate will revert back to the non-promotional rate on March 1, 2019.

As of this publication, the 2.40% 6-month CD rate is above any nationally available online 6-month CD rate.  Locally available 6-month rates may be higher (check rates where you live here).

In the Spring, we suggested that these types of short-term promotional products offered by investment banks may become less attractive after depositors account for the loss of interest while transferring their money in (and presumably out, when the promotion ends).   You may also experience significant periods where your cash is sitting idle at the bank waiting for the bank’s next purchase date.   Read my earlier article here.  (

Additionally, the 6-month CD operates as a brokered CD, as cannot be made liquid with the payment of an early withdrawal penalty like most online CDs can so you better be awfully sure that you won’t need access to your money.  We’ve cautioned against brokered CDs many times (recently here) and you should be especially cautious in a rising interest rate environment like we are entering now.

Bottom line: You might be better off checking the best online savings rates here.


Federal Reserve Raises Fed Funds Target Rate to 2 - 2.25%

The Federal Reserve voted unanimously today to move the Federal Funds rate up by 25 basis points to 2 to 2.25%.

BestCashCow had predicted this move for some time.   By late last week, economists polled by various polling services had all moved to a position of over to 90% likelihood of this move.   It was very well telegraphed by Federal Reserve Chairman Jerome Powell. 

As a result of this move, we will see higher online savings rates.    You will also likely see more competitive local savings rates from banks and credit unions in your area.

We may also see a rise in CD rates, including online one-year CD rates and local one-year CD rates.

The Fed continues to be very hawkish.    We predict another rate move in December and several next year with 12 of 16 Fed members now forecasting this 4th hike for 2018.  

The Fed Funds’ long term target remains at 3.375% for 2020 and 2021.   Today, it raised its long-term "neutral" target to for years beyond 2021 to 3% from 2.90%.   Hence, we would continue to be very cautious about long-term CDs.

The Fed may need to move faster and harder than its now hawkish predictions.   Inflation is going to come as a result of Trump’s trade battles and China tariffs.   It isn’t just a premonition.  In fact, I saw a hawk today during my morning bike ride in Central Park.  In 20 years of riding my bike there, this was the first time seeing one on my morning ride.  It must mean something.  (He or she is shown on the picture).