Best Bank Accounts in 2024 (for Max Interest on Cash)

00:00:00.000 | If you're not already earning 5% on all your cash,

00:00:03.840 | including your checking account,

00:00:05.320 | then by the end of this episode,

00:00:06.920 | I hope you have everything you need

00:00:08.740 | to stop leaving money on the table

00:00:10.640 | and simplify your finances.

00:00:12.520 | Almost every regular checking account,

00:00:14.480 | Wells Fargo, Bank of America, Chase,

00:00:17.600 | they have all the features

00:00:18.960 | and all of them pay about 0% interest

00:00:21.880 | and are not directly connected to an account

00:00:24.240 | that pays any meaningful amount.

00:00:26.120 | If you're wondering whether it's really worth switching,

00:00:28.120 | I guess it depends a little bit

00:00:29.200 | on how much cash you have,

00:00:30.520 | but they're actually our accounts.

00:00:32.200 | They have almost every feature of a checking account

00:00:34.720 | and earn 4% to 5% interest.

00:00:36.880 | So what are these magical accounts?

00:00:39.400 | Hello, I'm Chris, and this is All The Hacks,

00:00:41.880 | a channel about upgrading your life, money, and travel.

00:00:45.080 | And today we're focusing on bank accounts.

00:00:47.840 | Now, there are thousands of checking

00:00:49.880 | and savings accounts out there.

00:00:51.480 | I've looked at and even signed up

00:00:53.220 | for dozens of the best ones as research for this episode

00:00:56.760 | so that I can help you earn the most interest,

00:00:59.320 | have a great bank account to operate your life out of,

00:01:02.280 | keep things simple, and have a great banking experience.

00:01:05.880 | And it's not purely altruistic.

00:01:07.520 | I did a lot of this because I also wanted

00:01:09.760 | to find the best bank account for me.

00:01:12.320 | And the reason this is so hard

00:01:14.160 | is that most checking accounts

00:01:15.640 | pay almost 0% interest everywhere.

00:01:18.840 | And if there was a high-yield checking account

00:01:21.200 | that paid 4% to 5% interest,

00:01:23.260 | this would be a really easy conversation.

00:01:25.800 | There actually are plenty of accounts that say they do this,

00:01:29.000 | but they're all filled with crazy requirements,

00:01:31.320 | caps on earnings, and other gotchas.

00:01:33.860 | For example, Fitness Bank is gonna give you 6%

00:01:36.960 | on your checking account

00:01:38.040 | as long as you average 10,000 steps a day

00:01:41.200 | and have 15 debit card transactions a month,

00:01:44.280 | meaning not earning your credit card points,

00:01:46.560 | and that rate only applies

00:01:48.160 | to the first $25,000 in your account.

00:01:51.280 | If you can't hit your step goal

00:01:52.760 | or the card transaction goal, or you go over the limit,

00:01:55.880 | you're dropped down to almost nothing.

00:01:57.940 | Also, I found this bank, Primus, that claims around 5%

00:02:01.240 | and touts all these amazing things on the website.

00:02:03.880 | But if you go read reviews online,

00:02:05.840 | they're filled with rate drops after a few weeks,

00:02:08.600 | caps on withdrawals, funds getting held up,

00:02:11.360 | and customer service phone numbers that never get answered.

00:02:14.480 | So we're gonna skip banks like that

00:02:16.640 | and narrow the landscape down

00:02:18.080 | to my top three recommendations.

00:02:20.400 | But I'm also gonna share how I evaluate accounts,

00:02:23.140 | the ways that you can set up your accounts

00:02:24.780 | for maximum interest earning, and simplicity.

00:02:27.840 | And at the end, I'll share my tips

00:02:29.620 | for automating your entire financial life.

00:02:32.040 | I'm also gonna run through a few other accounts

00:02:34.380 | that didn't make the top three,

00:02:36.040 | but that you might already have,

00:02:37.640 | and how you can tweak your setup with them to earn more.

00:02:40.340 | If you like what you hear, please give us a thumbs up

00:02:42.640 | or hit the subscribe button

00:02:43.880 | to help us out with the algorithm.

00:02:45.320 | And also, feel free to comment with a question,

00:02:48.000 | and I'll do my best to reply to all of them.

00:02:50.480 | Thank you so much in advance.

00:02:51.940 | Let's get into it right after this.

00:02:54.140 | So let's start with the features

00:02:56.000 | that you should be looking at

00:02:57.040 | when it comes to picking a primary bank account.

00:02:59.920 | Some of these might be obvious,

00:03:01.360 | some you might not have thought of,

00:03:02.920 | and some might matter to me, but not matter to you.

00:03:05.760 | But the first one that I think is important to everyone

00:03:08.880 | is trustworthiness.

00:03:10.480 | I need a financial institution that I can trust.

00:03:13.520 | So to me, that doesn't just mean

00:03:15.640 | that money is protected by the FDIC or SIPC insurance.

00:03:19.640 | It also means that I can trust that the bank's

00:03:22.080 | not just gonna randomly shut down my account,

00:03:24.320 | hold my funds, and do the kinds of things

00:03:26.780 | that after reading thousands of posts on Reddit,

00:03:29.120 | I think a lot of new banks do.

00:03:32.000 | So when it comes to actual features,

00:03:34.600 | here are the things that I think are required

00:03:36.520 | to make any bank account your primary bank account.

00:03:39.420 | You need to get access to ACH account and routing numbers.

00:03:44.640 | Those are absolutely necessary if you wanna go pay bills,

00:03:47.840 | whether it's property tax or your credit cards.

00:03:50.300 | If you don't have an account and routing number,

00:03:52.080 | you can't operate this like a primary bank.

00:03:54.520 | Next is an ATM or debit card.

00:03:56.940 | Now, I don't use the ATM that much, but when I'm traveling,

00:04:00.500 | I think it's absolutely the best way

00:04:02.600 | to get out foreign currency

00:04:04.280 | instead of trying to exchange money at the airport,

00:04:06.640 | carry cash, or anything like that.

00:04:08.960 | So I need a card that I can take money out of overseas,

00:04:12.200 | ideally with those fees reimbursed, but not necessarily.

00:04:16.620 | As for a debit card, I don't use my debit card that much,

00:04:19.960 | so it's not that important to me,

00:04:21.900 | but there is one cool thing that I sometimes like to do,

00:04:24.960 | and that's if you purchase something on a credit card

00:04:27.060 | and you're returning it,

00:04:28.320 | and the merchant lets you return that to a debit card

00:04:31.460 | instead of a credit card,

00:04:32.720 | sometimes I'll do that so that the points I earned

00:04:35.040 | the first time don't get clawed back.

00:04:36.980 | Next is some ability to send checks.

00:04:40.920 | Now, that could be somewhere online

00:04:43.600 | where I could fill out a payee,

00:04:45.880 | and I could send money online,

00:04:47.240 | and a check would get mailed to them.

00:04:48.880 | It could be that I just get a checkbook,

00:04:50.700 | and I can write checks the old-fashioned way.

00:04:53.080 | Either one works, I just need a way to send a check.

00:04:56.200 | I don't have to do it that often,

00:04:57.860 | but if I do have to do it,

00:04:59.400 | there's usually not another option,

00:05:01.080 | and I just need to have that option.

00:05:03.120 | Next, because I'm married,

00:05:04.800 | I need to have some type of joint access to the account.

00:05:08.160 | Now, many banks offer joint accounts,

00:05:10.480 | but some banks don't, but they do offer joint access,

00:05:13.320 | meaning a way for another person

00:05:15.380 | to get a debit card or an ATM card,

00:05:17.760 | to log in, to send transfers, and all those things.

00:05:20.760 | So whether it's a joint account or not

00:05:22.880 | might be a requirement for you,

00:05:24.660 | depending on your relationship,

00:05:26.320 | but it's not absolutely necessary for me.

00:05:29.580 | I also need the ability to do mobile deposit.

00:05:31.760 | Every now and then, I get something like a tax refund,

00:05:34.580 | or a check in the mail,

00:05:35.880 | and if I couldn't deposit that check in from my phone,

00:05:38.680 | then I don't know what I would do,

00:05:40.200 | so I absolutely need that feature.

00:05:42.920 | Next is reasonable limits.

00:05:44.640 | There are some accounts out there that I looked at

00:05:46.880 | that on the surface look great,

00:05:49.020 | except they might have limits like $5,000 a day,

00:05:52.160 | or $10,000 a month,

00:05:53.960 | and if I'm not able to make the payments I need to regularly,

00:05:57.260 | withdraw money as I need it, send it as I need it,

00:05:59.760 | it would be a real big problem for me,

00:06:02.080 | so reasonable limits are necessary.

00:06:03.880 | Next is wire transfers.

00:06:05.800 | Now, not everyone will have this requirement.

00:06:08.640 | It's not something I do day-to-day, week-to-week,

00:06:11.160 | or even month-to-month,

00:06:12.460 | but a few times a year,

00:06:13.760 | I need the ability to make a wire transfer.

00:06:16.360 | It might be related to business,

00:06:17.840 | it might be related to an investment.

00:06:19.600 | I've had to do it a few times when we've bought a home,

00:06:22.280 | and so that's absolutely something

00:06:24.040 | that I need access to do for my account.

00:06:26.420 | Some banks charge a fee for it, some don't.

00:06:29.240 | I'll get to, in a few seconds,

00:06:30.860 | about why the fees aren't as important to me at this point,

00:06:33.800 | but being able to send a wire transfer is important.

00:06:36.500 | And then the last is I need some way

00:06:38.880 | to make recurring transfers to third parties.

00:06:41.840 | So for us, we pay our au pair every week on Friday.

00:06:45.360 | I need some way to automate that process.

00:06:48.040 | I wanna be able to send money to her,

00:06:50.360 | or if you have a gardener, or a cleaner,

00:06:52.480 | or any other type of nanny or childcare,

00:06:54.560 | and you wanna be able to make that payment regularly,

00:06:57.300 | and the person you're paying

00:06:58.440 | doesn't have any type of automated billing system,

00:07:01.120 | that's something that I really want.

00:07:03.380 | I have had an account that had this service

00:07:05.300 | called PopMoney associated with it.

00:07:07.600 | A lot of people use Zelle for this purpose.

00:07:10.340 | And then there's other banks that have ways

00:07:13.080 | to set up recurring transfers.

00:07:14.800 | Now, the important thing here is that it's to a third party.

00:07:17.680 | There are many bank accounts

00:07:19.080 | that will let you set up recurring transfers

00:07:20.880 | between accounts titled in your name,

00:07:23.300 | but they won't let you set those transfers up

00:07:25.280 | to people whose names aren't titled on the account.

00:07:28.100 | And so if you set up this account with a partner,

00:07:30.600 | and those kinds of transfers are important,

00:07:33.400 | then it might be really important to have a joint account

00:07:36.260 | that allows both people to be on the title,

00:07:38.140 | so you can make those transfers.

00:07:39.380 | For us, that's not a problem.

00:07:41.000 | Now, there are a ton of bank accounts

00:07:42.920 | that offer all of those features.

00:07:44.380 | In fact, most of the bank accounts you'll find do.

00:07:47.160 | So what do we optimize for amongst all of them?

00:07:51.020 | What I'm looking for is my net after-tax yield.

00:07:54.380 | Now, I could just say,

00:07:55.700 | what's the amount of interest I'm earning?

00:07:57.540 | Is it 5%, 3%, 0%?

00:07:59.980 | And the reason I say net after-tax yield

00:08:02.980 | is two important things, the net and the after-tax.

00:08:06.520 | So the net means subtracting fees.

00:08:09.560 | If a bank had a really high interest rate,

00:08:11.600 | but charged money for overseas ATM withdrawals,

00:08:14.520 | charged money for wires and transfers,

00:08:16.520 | charged money for deposits or anything like that,

00:08:18.680 | or had a monthly fee,

00:08:20.160 | well, then that extra percent or two of yield

00:08:22.680 | doesn't really matter.

00:08:24.120 | And then separate from that is after-tax.

00:08:27.480 | And that's somewhat important

00:08:29.000 | because there are ways to earn interest on your cash

00:08:32.520 | that may, depending on what states you live in,

00:08:35.200 | give you a better tax advantage result.

00:08:37.700 | So for example, if you invest some of your cash

00:08:40.760 | in US treasuries or ETFs or mutual funds

00:08:43.460 | that invest in those treasuries,

00:08:45.120 | the income from that might actually be state tax-free.

00:08:48.880 | So the ability to invest my cash

00:08:50.440 | in something that would be state tax-free

00:08:52.280 | is certainly an advantage,

00:08:53.640 | which is why I'm gonna compare things as such.

00:08:55.900 | Now, if there are some accounts

00:08:57.360 | that have all those features,

00:08:58.480 | they have the best interest rates

00:09:00.000 | and they're all pretty comparable,

00:09:01.360 | what are some tiebreakers that you might wanna consider

00:09:03.560 | when you're looking for an account?

00:09:05.280 | So one is simplicity.

00:09:07.000 | I love keeping things simple.

00:09:08.840 | The ability to have a bank account

00:09:10.840 | at the same place as your brokerage account,

00:09:12.920 | your retirement accounts, your 529, HSA,

00:09:16.200 | credit cards, mortgage or auto loans,

00:09:18.600 | any of those things is great.

00:09:20.560 | It's not a requirement,

00:09:22.120 | but man, if it's neck and neck

00:09:23.800 | and one of them is more simple

00:09:25.140 | and I already have an account there, that'd be great.

00:09:27.500 | Next is a good user experience.

00:09:29.600 | That's like web UI, UX, does it feel modern?

00:09:32.320 | Do they have a good mobile app?

00:09:34.440 | Is it a good experience using the product?

00:09:36.840 | That's really important.

00:09:37.840 | Not a requirement, but really important.

00:09:39.760 | Similar to that is whether the account

00:09:41.640 | actually works with aggregator sites.

00:09:44.440 | So for example, there are a few services

00:09:46.240 | like Plaid, Yodlee, Finicity, MX,

00:09:49.400 | which is how you link your bank accounts

00:09:51.440 | to third-party services.

00:09:53.320 | And so I use Copilot to track all of our finances

00:09:56.480 | and all of our spending.

00:09:57.540 | I wanna be able to link my accounts to those services

00:10:01.460 | so that I can pull in those transactions

00:10:03.220 | without having to manually do that.

00:10:05.580 | I would suggest trying to see if your account has this,

00:10:08.380 | if it works, and if it stays linked for a week

00:10:11.420 | before transitioning to any new bank account,

00:10:13.780 | it's really important.

00:10:14.860 | Might not be a requirement for you

00:10:16.220 | if you don't use any of those services,

00:10:17.780 | but I'm always testing out new products.

00:10:19.940 | And so having that is really important to me.

00:10:22.240 | Not a deal breaker if it's a bad bank account,

00:10:24.400 | but something I'd love.

00:10:25.820 | Next is the ability to title your account in a trust.

00:10:28.900 | Now, a lot of people set up revocable trusts

00:10:31.700 | so that they're able to give a little bit more control

00:10:34.100 | over where their assets go, where they'd pass away.

00:10:36.820 | And also because if you have money

00:10:39.060 | over a certain threshold in a lot of states,

00:10:41.580 | your estate goes through probate,

00:10:43.720 | which is effectively a type of court

00:10:45.380 | where a judge is assigned

00:10:47.140 | and gets to determine where things get allocated,

00:10:49.940 | oftentimes aligned with your intent from your will

00:10:53.460 | or something like that.

00:10:54.620 | But it's just a process that costs money and takes time

00:10:57.500 | and in many states, a public record.

00:11:00.300 | So I'd love to avoid that.

00:11:01.980 | So if you have more assets

00:11:03.700 | than whatever your limit is in your state,

00:11:05.420 | I think in California, it's about $185,000.

00:11:08.460 | You might want a trust account.

00:11:10.340 | However, keep in mind, and I am not a lawyer,

00:11:12.960 | but if the majority of your assets are titled in a trust

00:11:16.540 | and just one account that is under that limit

00:11:18.980 | is not in the trust,

00:11:20.420 | you will usually be just fine avoiding probate courts.

00:11:23.380 | And there's something called a pour-over will

00:11:25.220 | that would basically say anything

00:11:26.720 | that I didn't title in my trust, allow it to transfer over.

00:11:29.800 | Now, these kinds of trusts,

00:11:31.260 | these revocable trusts that I'm talking about,

00:11:32.900 | these are not these fancy kinds of trusts

00:11:35.060 | that people set up for asset protection or tax avoidance.

00:11:38.520 | They're very different.

00:11:39.580 | I did a whole episode on trusts.

00:11:41.620 | You can go back and listen to.

00:11:42.700 | We did go into some of these kind of unique trusts

00:11:45.140 | that are usually not revocable.

00:11:46.860 | They're irrevocable,

00:11:48.220 | but that's just something to keep in mind.

00:11:49.940 | Next, I mentioned the ability to send checks,

00:11:52.420 | but if all things are equal

00:11:53.500 | and I could also get a checkbook for the one or two times

00:11:55.940 | that it might come in handy, great, not a hard requirement.

00:11:59.300 | I guess the backup to that would be

00:12:00.740 | if you really need to send a check,

00:12:02.140 | you could go get a money order without having a bank account.

00:12:04.860 | Another feature that I really like,

00:12:06.380 | but I'm not gonna put in the required bucket

00:12:08.420 | is the ability to set up savings buckets.

00:12:11.000 | So the ability to create different areas

00:12:13.500 | for different types of cash.

00:12:14.860 | So maybe you're setting aside money for tuition

00:12:17.260 | or an emergency fund or to pay off a certain loan,

00:12:21.080 | the ability to kind of virtually set that up

00:12:23.140 | or spin up other accounts to segregate that money

00:12:25.940 | would be really a feature that I would like to have,

00:12:28.140 | but I don't need.

00:12:29.700 | Automation is another one,

00:12:30.940 | just ways that you can automate more in your financial life.

00:12:33.940 | Next is a high FDIC insurance limit.

00:12:36.540 | Now, this usually doesn't matter

00:12:37.920 | because most financial institutions,

00:12:40.060 | if not all of them that are registered

00:12:41.980 | as banks in the United States have a $250,000 limit

00:12:45.500 | that actually is per person on the account.

00:12:47.500 | So if it's a joint account with two people,

00:12:49.300 | it would actually go up to 500,000.

00:12:51.320 | I don't know about you guys,

00:12:53.200 | but I usually don't keep that much money in cash at all,

00:12:56.320 | but it could be relevant

00:12:57.920 | if you're saving for something large,

00:12:59.400 | like a down payment for a home or something like that.

00:13:02.440 | And so if an account had a higher FDIC limit,

00:13:04.920 | that'd be great.

00:13:06.080 | And then last, Zelle is a feature

00:13:08.920 | that I don't use that often.

00:13:10.760 | I have used it in the past.

00:13:12.680 | If a bank had Zelle, it would be a bonus for me.

00:13:15.760 | Though there is a hack that I'll share,

00:13:17.560 | which is that the Zelle app lets you use a debit card

00:13:20.860 | of a bank that doesn't support Zelle

00:13:23.180 | to send payments with Zelle.

00:13:25.060 | It does have lower limits

00:13:26.580 | and it can't set up recurring payments.

00:13:28.780 | But if you do need to send money over Zelle

00:13:31.020 | and you don't have Zelle built into your bank,

00:13:33.380 | you can use it in that way.

00:13:35.420 | So that's a lot of features, I know.

00:13:37.960 | I actually have a table that I'm looking at right now,

00:13:40.700 | and it has all these features across 39 different rows,

00:13:44.220 | 20 different accounts that I narrowed down to.

00:13:46.580 | And I'm gonna reference some of the things in this table

00:13:49.040 | as I go through this conversation.

00:13:51.120 | But I recently got a few requests

00:13:52.880 | from all the Hacks members

00:13:54.500 | to share more of this kind of research

00:13:56.560 | that I'm doing with members.

00:13:58.580 | So starting with this episode,

00:14:00.080 | I'm gonna do two new things

00:14:01.600 | every time I do a solo deep dive.

00:14:04.120 | And I'm gonna, one, share that spreadsheet.

00:14:06.520 | I'm gonna share the research with members

00:14:08.520 | that I use to organize all of my research.

00:14:10.960 | And two, I'm actually gonna schedule a call

00:14:13.120 | with all of our members where people can go deeper,

00:14:16.060 | ask me questions on anything I've covered today,

00:14:18.320 | or maybe even didn't cover.

00:14:19.760 | If you're interested in becoming All The Hacks member,

00:14:21.480 | you can do that at allthehacks.com/join.

00:14:24.440 | Okay, now let's jump into the accounts,

00:14:26.880 | and there are a few different types.

00:14:28.480 | So a couple that I'm gonna say

00:14:30.100 | are worth mentioning briefly because they do exist,

00:14:33.160 | but are not eligible for this conversation

00:14:35.160 | because they just don't have the features

00:14:36.700 | to be your primary bank account.

00:14:38.080 | The first are accounts focused just on savings.

00:14:41.240 | And so there are a handful of banks out there

00:14:43.280 | that have either high-yield savings accounts only,

00:14:46.000 | or banks like M1 or Titan or Public

00:14:49.260 | that have savings accounts that earn high interest,

00:14:52.180 | might even have really high FDIC insurance,

00:14:55.180 | but they don't give you all the functionality

00:14:58.020 | to make them your primary bank.

00:15:00.420 | M1 is another one,

00:15:01.940 | and then the Vanguard Cash Plus account is another one.

00:15:05.100 | It actually does give you the ACH numbers you need

00:15:07.460 | to direct deposit and pay bills, but that's it.

00:15:09.580 | There aren't all the other features

00:15:10.980 | that you need for a primary bank.

00:15:12.720 | Now, if I did need an account just to earn interest on cash,

00:15:15.660 | I probably wouldn't go with any of these.

00:15:17.140 | I'd probably just go with a brokerage account

00:15:18.900 | where I can invest in treasury ETFs or index funds,

00:15:21.680 | or even treasuries themselves,

00:15:23.420 | and get an even better after-tax return

00:15:26.020 | because of the state tax advantage,

00:15:27.760 | at least for me living in California.

00:15:30.200 | Or I'm pretty intrigued

00:15:31.620 | with the Wealthfront Automated Bond Ladder

00:15:33.460 | they just launched.

00:15:34.500 | I have not gone deep on it, so I can't talk in much detail,

00:15:38.040 | but at a minimum,

00:15:39.180 | it's worth checking out the calculator they've built,

00:15:41.740 | even if you're not interested in the product,

00:15:44.080 | because what they do is they take your income,

00:15:46.280 | they take your state, your tax filing situation,

00:15:49.380 | and they show you what an amount of treasury interest

00:15:52.560 | would need to match from an account

00:15:54.580 | that didn't have that tax advantage.

00:15:56.340 | So for example, they show that earning 5.21%

00:15:59.940 | in treasury interest for someone in California

00:16:03.420 | earning a lot of money is about the same

00:16:05.740 | as earning 6.17% in fully taxed interest,

00:16:09.800 | which by the way, is higher than every single account

00:16:12.860 | I'm going to mention today.

00:16:14.340 | So if you have a very large amount of cash

00:16:17.220 | that you're saving,

00:16:18.300 | that you want to be earning interest on,

00:16:20.460 | that is the path I would take

00:16:21.940 | over any high-yield savings account or anything similar.

00:16:25.220 | Also, one other thing to keep in mind broadly

00:16:27.760 | when it comes to interest rates

00:16:29.340 | is that usually most of these banks

00:16:31.860 | are changing their interest rates

00:16:33.300 | relative to the effective federal funds rate.

00:16:35.900 | And when that rate goes down at a different Fed meeting,

00:16:38.940 | they might decide to cut rates

00:16:40.500 | or cut the guidance for rates,

00:16:42.240 | banks will drop their rates accordingly.

00:16:44.140 | Now they don't all drop them at the exact same day,

00:16:47.060 | and you might find that some accounts

00:16:48.900 | look like they're earning a little bit more

00:16:50.440 | for a little bit longer.

00:16:51.860 | I just want to point out that the time in transit

00:16:54.980 | between banks, you're usually not earning any return.

00:16:58.020 | And so we actually did some analysis

00:17:00.100 | when I was working at Wealthfront,

00:17:01.260 | and they found that if someone were rate chasing

00:17:03.160 | throughout the year,

00:17:04.000 | trying to get the highest rate at a given point in time,

00:17:07.080 | they actually would have lost about 13% of their return

00:17:10.460 | due to the fact that they were spending so many days

00:17:12.640 | uninvested because they were moving their money

00:17:15.000 | between institutions.

00:17:16.300 | So finding a bank that consistently pays high rates

00:17:19.200 | and not bouncing around can often be a much better outcome.

00:17:23.640 | Okay, so that's high yield savings accounts.

00:17:25.420 | Not something we're gonna cover,

00:17:26.800 | not something you can operate out of.

00:17:28.680 | The other account that I wouldn't suggest,

00:17:30.760 | but you can operate out of that doesn't meet my criteria

00:17:33.880 | is almost every regular checking account.

00:17:36.440 | Now I've had ones at Wells Fargo, Bank of America,

00:17:39.720 | Chase, even JP Morgan, First Republic,

00:17:42.420 | SVB, which is now First Citizens.

00:17:44.800 | I've had the chance to have some of those

00:17:46.400 | at the bank's private bank practice,

00:17:49.040 | and then some of them are just regular accounts,

00:17:50.960 | and they're pretty much all the same.

00:17:52.600 | They have all the features I talked about,

00:17:54.460 | checkbooks, account routing numbers, debit ATM cards,

00:17:57.280 | bill pay, most of them have Zelle,

00:17:59.320 | and all of them pay about 0% interest

00:18:02.800 | and are not directly connected to an account

00:18:05.200 | that pays any meaningful amount of interest.

00:18:08.340 | The only advantage I can give you for these banks

00:18:10.880 | is that they do have branches.

00:18:12.160 | So if you need to go into a branch, you can.

00:18:14.440 | Sometimes on the higher end side,

00:18:16.280 | what I've seen from private banks

00:18:18.000 | is you get a lot more support.

00:18:19.900 | If you're looking for someone to help give you guidance

00:18:22.000 | or set up complicated tax or investment strategies,

00:18:25.320 | they can often be very helpful.

00:18:27.160 | They usually have no fees and fee reimbursements

00:18:29.340 | at higher limits.

00:18:30.560 | But when it comes to earning yield

00:18:31.940 | on a cash operating account, like a checking account,

00:18:35.440 | I have never seen one at a regular financial institution

00:18:38.420 | that has banks around every corner,

00:18:40.300 | at least not in their primary checking accounts.

00:18:42.740 | Now, if those accounts don't make sense,

00:18:44.540 | what does make sense?

00:18:45.920 | Now, at the very beginning of this episode,

00:18:47.780 | I said, unfortunately,

00:18:48.820 | I couldn't find a high-yield checking account

00:18:51.260 | that didn't have caps or all these problems

00:18:54.260 | or issues with holding accounts.

00:18:56.460 | So you can't just find a high-yield checking account.

00:18:59.580 | That would make our lives too easy.

00:19:01.820 | So the general idea of what makes this super optimal

00:19:06.080 | is operating out of a savings account

00:19:08.800 | that has as many checking features as possible

00:19:11.840 | or can link directly

00:19:13.800 | with some type of overdraft protection

00:19:15.840 | to a checking account.

00:19:17.020 | Now, one thing important to understand

00:19:18.540 | is that the Federal Reserve used to have this rule

00:19:20.720 | called Regulation D.

00:19:22.280 | And that rule limited the withdrawals and transfers

00:19:24.740 | from savings accounts to six per month,

00:19:27.440 | which made it really difficult

00:19:28.900 | for you to use a savings account as a primary account.

00:19:32.000 | Now, that was there to ensure

00:19:33.720 | that banks maintained adequate reserves,

00:19:36.360 | but when the pandemic happened,

00:19:38.200 | they temporarily lifted this limit.

00:19:40.760 | And then by the end of 2020,

00:19:42.440 | they actually removed it entirely.

00:19:44.400 | Now, individual banks can still choose

00:19:47.400 | to enforce these limits,

00:19:48.920 | but they are not required at a federal level.

00:19:51.960 | So what you can do is you can find a savings account,

00:19:55.400 | and I'm gonna talk about all the ones that work,

00:19:57.760 | where you can operate completely

00:19:59.180 | out of that savings account,

00:20:00.400 | where you can earn interest on all the cash at a high rate

00:20:03.940 | and get most of the features you need,

00:20:06.160 | some form of bill pay, account routing numbers,

00:20:08.780 | and all of those things,

00:20:10.520 | but have a checking account set up

00:20:12.420 | at that same institution that's connected

00:20:14.740 | with overdraft protection,

00:20:16.620 | which would allow you to keep

00:20:17.740 | that checking account balance at zero,

00:20:20.180 | but be able to overdraw it

00:20:21.920 | by however much money is in your savings account.

00:20:24.540 | So it's not a perfect all-in-one solution,

00:20:26.840 | and I'm actually gonna get

00:20:27.780 | to a few of those solutions after this,

00:20:30.180 | but it's a really good solution

00:20:31.620 | that works at a lot of different institutions.

00:20:34.020 | Now, keep in mind, a lot of institutions,

00:20:36.300 | but not all institutions.

00:20:38.180 | So for example, Betterment, UFB, Laurel Road, and Amex

00:20:42.180 | all have high-yield savings accounts

00:20:46.180 | connected to a checking account,

00:20:47.780 | but there's no overdraft protection.

00:20:49.540 | So if you wanted to pay a bill

00:20:50.980 | or if you wanted to take money out of an ATM

00:20:52.780 | or spend your debit card,

00:20:54.060 | you would have to leave a balance in your checking account

00:20:56.660 | to be able to cover that.

00:20:57.960 | And so it doesn't allow you to operate entirely

00:21:00.520 | out of a savings account.

00:21:02.280 | And why is this important?

00:21:03.600 | Well, if you have to leave a bunch of money

00:21:05.440 | in an account earning no interest,

00:21:07.120 | it really can cost you.

00:21:08.740 | So if you don't wanna leave $1,000 on the table,

00:21:10.800 | assuming that's the balance that you keep,

00:21:12.660 | you wanna find an account that has these overdraft features.

00:21:16.280 | Now, the only other account that I'll mention

00:21:17.720 | that doesn't have them,

00:21:18.880 | that I have heard some people talk about is Acorns.

00:21:22.040 | And the reason why it's a little bit interesting

00:21:23.840 | is that they do have 5% savings

00:21:26.000 | and 3% checking.

00:21:27.480 | So you're not earning nothing on checking.

00:21:29.520 | So you could argue that maybe this is a good fit.

00:21:31.800 | However, it's missing so many features.

00:21:34.000 | There are no wires in and out.

00:21:35.340 | There's no checks, no joint accounts, no overdraft.

00:21:38.980 | It costs $60 a year,

00:21:40.920 | has very, very low transfer limits.

00:21:43.480 | $7,000 in and out a day and 50,000 in and out a month,

00:21:48.240 | $5,000 cap on mobile deposits and a $500 limit on ATMs.

00:21:52.560 | So I went in thinking that could be an option.

00:21:55.360 | I left thinking it is definitely not a good option,

00:21:57.600 | at least for my use case.

00:21:59.200 | As for the banks where there is a good option,

00:22:01.400 | there are four that are very, very similar.

00:22:04.120 | SoFi, Capital One, Discover and CIT.

00:22:07.840 | Now, all of them are paying between 4% and 5% interest.

00:22:11.480 | And they all have all the main features you need,

00:22:14.320 | sending checks, depositing,

00:22:16.320 | being able to open a joint account,

00:22:18.880 | using Zelle,

00:22:19.840 | which actually just got launched to SoFi a couple days ago.

00:22:23.200 | And so on the surface,

00:22:24.460 | these are all really, really good options.

00:22:26.800 | Where are they different though?

00:22:28.280 | So obviously the interest rates are different.

00:22:29.960 | At the time of publishing, CIT is at 5%,

00:22:32.520 | SoFi is at 4.6, Capital One and Discover are both at 4.25%.

00:22:37.520 | So where things are a bit different,

00:22:39.200 | I'm gonna take a look at the spreadsheet,

00:22:40.520 | is when it comes to wires.

00:22:42.120 | So, SoFi, for example, has $0 wires,

00:22:45.000 | but they only let you wire money for home purchases.

00:22:47.380 | So you can't send money to other people.

00:22:49.240 | Capital One has wires, they cost $30.

00:22:52.160 | Discover has $30 wires,

00:22:53.760 | but you need to give them two to three days notice.

00:22:56.160 | CIT will give you wires for $10 or $0

00:22:59.520 | if your balance is over 25,000.

00:23:02.100 | But you need to upload a form,

00:23:03.820 | and I have no idea how long that would take.

00:23:05.880 | Another place that was a little bit different

00:23:07.520 | was transfer limits.

00:23:08.760 | Most of them are pretty similar.

00:23:10.320 | They have plenty of room for ATM withdrawals

00:23:12.840 | and daily in and out transfers.

00:23:15.000 | However, SoFi, I'm looking at my notes here,

00:23:17.840 | I just did a transfer where I didn't even complete it.

00:23:20.240 | I just typed in an amount

00:23:21.520 | and it told me how long it would take.

00:23:23.440 | And so I put in $25,000 to see what it would say.

00:23:26.800 | And it said that $4,900 would come today,

00:23:29.720 | $3,000 would come in four days,

00:23:31.960 | and the rest would come in five days.

00:23:34.080 | So I'm not sure if that's just because it was a new account

00:23:37.400 | or what would happen.

00:23:38.280 | I couldn't find any publishing

00:23:40.400 | of all of the details of those transfer limits.

00:23:43.200 | So I just say like slight, you know,

00:23:45.200 | yellow flag there for the SoFi account.

00:23:47.640 | They also have a maximum $5,000 for bill pay.

00:23:50.800 | So if you're regularly sending checks,

00:23:53.000 | that could come into a problem

00:23:54.560 | if you need to send checks over $5,000.

00:23:57.040 | Otherwise, the accounts were pretty similar.

00:23:59.200 | CIT and Capital One looks like they allowed you

00:24:01.920 | to open up a trust account, which was cool.

00:24:03.960 | When it comes to FDIC limits,

00:24:05.480 | SoFi was the only one of those four

00:24:07.240 | that had higher than $250,000 limit,

00:24:09.900 | but you had to manually go into the settings page

00:24:12.920 | and enable it.

00:24:14.120 | You couldn't just get it by default,

00:24:15.600 | which is just kind of annoying.

00:24:17.260 | Also CIT, when it came to reviews,

00:24:20.080 | is one that I would say proceed with caution

00:24:22.740 | and do your homework.

00:24:23.720 | It seemed like there were a lot of negative reviews

00:24:26.440 | and positive reviews,

00:24:27.800 | as opposed to mostly positive everywhere else,

00:24:31.160 | mostly around account suspensions and holds.

00:24:33.400 | So I'd wanna dig a little deeper

00:24:34.680 | if I were gonna go that path.

00:24:35.960 | Finally, when it comes to transfer limits,

00:24:38.640 | SoFi was very explicit.

00:24:39.880 | They said, "We do not have a transfer limit

00:24:42.120 | on our savings account," which was nice.

00:24:44.140 | Capital One and Discover, on the other hand,

00:24:45.920 | in a lot of messages, people keep getting notices

00:24:48.420 | that they're over six transactions a month

00:24:50.460 | in their savings account,

00:24:51.720 | but so many people said they've been getting these notices

00:24:53.760 | for a few years and it's never been enforced

00:24:56.240 | that I feel reasonably confident

00:24:58.000 | that they're not gonna just start enforcing it

00:24:59.760 | all of a sudden,

00:25:00.880 | but they don't explicitly call out

00:25:02.760 | that they don't have those limits.

00:25:04.840 | So that's a bit of the differences.

00:25:06.280 | There's a couple others in this bucket

00:25:08.080 | that I think are worth calling out,

00:25:09.520 | but they're a little bit different.

00:25:10.920 | Ally is one that is very popular

00:25:13.080 | amongst a lot of people I talk to.

00:25:15.200 | They have a savings account at 4.2%

00:25:17.280 | and a checking account at 0.25%.

00:25:20.140 | And it's very close to being able to do

00:25:21.860 | what we've talked about,

00:25:22.800 | except that those overdrafts from checking to savings

00:25:25.740 | are limited to 10 times per month.

00:25:28.180 | And people I know with Ally accounts

00:25:30.100 | get a lot more aggressive notes

00:25:31.940 | about using their savings account to pay bills.

00:25:34.940 | And so if you have a lot of transactions

00:25:37.260 | coming in and out of your accounts,

00:25:39.000 | I feel like this could become a problem for you.

00:25:41.500 | That said, they do have joint trust accounts and Zelle

00:25:44.220 | and some really great savings bucket features.

00:25:47.040 | So I think it's an option,

00:25:48.780 | but that limiting overdraft

00:25:50.460 | is a little bit of a problem for me.

00:25:51.940 | And at 4.2%, I'm still wondering

00:25:54.260 | where is the magic account that can get you 5%.

00:25:56.980 | And I'm about to talk a few that will.

00:25:58.140 | So Robinhood is gonna give you 5% on savings

00:26:01.200 | and 0% on checking.

00:26:03.060 | Now, the reason this is slightly separate

00:26:04.860 | is it's a lot different than the ones I mentioned before.

00:26:07.820 | So first off, if you remember,

00:26:09.180 | Robinhood used to have a cash management account

00:26:11.580 | that paid interest and gave you checking features.

00:26:14.060 | Well, they got rid of that

00:26:15.140 | and now they have an investing account

00:26:16.700 | and a spending account.

00:26:18.140 | And the investing account earns you 5%

00:26:20.100 | on your entire balance.

00:26:21.700 | You do need to have Robinhood Gold

00:26:23.340 | to get that interest rate, so it's $50 a year.

00:26:26.360 | You get 2.25 million in FDIC coverage

00:26:29.100 | and some of the features of a checking account.

00:26:31.420 | You've got an ACH account and routing number

00:26:33.540 | so you can pay bills and deposit money from your paycheck.

00:26:37.080 | You've got bill pay, you can send wires,

00:26:39.420 | but you don't get an ATM card.

00:26:41.420 | They do have a spending account that earns no interest,

00:26:44.140 | but does give you an ATM card.

00:26:46.340 | And funny enough, you can only overdraw the spending account

00:26:49.860 | with ATM and debit transactions.

00:26:51.900 | So if you were to hit that spending account

00:26:54.100 | with a bill pay for your credit card bill,

00:26:56.580 | it is going to bounce,

00:26:57.820 | even if you have enough money in your savings account.

00:27:00.420 | They also have a pretty low limit at $510 for ATM withdrawals.

00:27:05.420 | Now, I noticed a lot of these new banks

00:27:07.620 | had a $510 ATM limit, even some of the other older banks.

00:27:11.940 | And I believe the reason for that

00:27:13.500 | is that they wanna make sure that they say,

00:27:14.940 | you can take out 500, the $10 is to cover the ATM fees.

00:27:18.780 | The one feature they're missing is there's no mobile deposit.

00:27:21.900 | So it's a little messy

00:27:23.340 | in that you've got to operate these two accounts

00:27:25.140 | and there's some rules about how you use them

00:27:27.540 | and a low ATM fee, but on the bonus,

00:27:30.940 | the investing account does earn 5%

00:27:33.860 | and lets you invest that money in a brokerage account.

00:27:36.420 | Now you might want that to be separate.

00:27:37.900 | You might want your brokerage account separate

00:27:40.000 | from your cash account, which I think I would.

00:27:42.900 | So for me, this would be a little bit messy,

00:27:44.760 | but it does get you up to that 5% interest here,

00:27:48.100 | which I think is better

00:27:48.940 | than all of the ones we just talked about,

00:27:50.740 | except CIT, which has its fair share of issues.

00:27:53.660 | But then again, you've got to decide

00:27:54.980 | whether Robinhood has those issues for you also

00:27:57.720 | based on how you feel about that institution.

00:28:00.660 | I know there are a lot of people

00:28:01.580 | that have some strong feelings there.

00:28:03.820 | Also, I think it's important to mention

00:28:05.260 | that the Robinhood investing account is not a bank account.

00:28:08.400 | It is a brokerage account.

00:28:09.840 | And the FDIC is what backs up bank accounts.

00:28:13.260 | CIPIC or the Securities Investor Protection Corporation

00:28:15.920 | is what backs up your brokerage account,

00:28:18.580 | but it doesn't back up all of the securities.

00:28:20.480 | It usually just backs up the cash in the account,

00:28:22.780 | but has similar limits, usually at around $500,000.

00:28:26.380 | Now, a few things that are a little bit different

00:28:28.340 | between these two, because for a lot of people,

00:28:30.700 | they're kind of one in the same,

00:28:32.040 | but I did see a lot of people chiming in online about,

00:28:35.740 | "No, no, no, you need your money in a bank."

00:28:37.900 | One of those reasons is that banks

00:28:39.400 | are just more heavily regulated than brokerage firms.

00:28:42.100 | So they have higher reserves.

00:28:43.540 | You can file complaints with the CFPB for banks,

00:28:46.220 | but I don't think you can for brokerage firms.

00:28:48.740 | But one thing that kind of at least resonates with me

00:28:52.060 | is that if you have all of your money in a bank

00:28:55.100 | and there were major problems and a major bank went under,

00:28:58.700 | FDIC is ultimately backed up by the US government.

00:29:02.340 | The FDIC does have a fund to back up,

00:29:05.380 | but it is not enough that if all banks collapsed,

00:29:07.620 | it would be there to protect everyone.

00:29:09.340 | Now, if your money that is sitting in your brokerage firm

00:29:13.060 | as cash is invested in US government securities,

00:29:16.780 | then you're also just relying on the full faith and credit

00:29:19.500 | of the US government, just in a different way.

00:29:21.800 | So between your cash position being covered by CIPIC

00:29:25.820 | and if you're invested in US treasuries,

00:29:28.340 | you're kind of in a situation where you're also just backed

00:29:31.320 | by the US government in a different method.

00:29:33.500 | One more thing that I know someone will mention

00:29:35.440 | is that when your money is sitting in a brokerage account,

00:29:38.220 | if it's being held at money market funds,

00:29:40.340 | it is possible for the value

00:29:42.300 | of those money market funds to drop.

00:29:44.440 | Now, it's called breaking the buck

00:29:46.420 | and it actually happened in 2008 and people did lose money.

00:29:50.340 | Now, it looks from my research like everyone got back

00:29:53.220 | somewhere between 97 and 99% of their money,

00:29:56.420 | so it wasn't a massive loss.

00:29:58.260 | So having your money in a money market fund

00:30:00.060 | is not a guarantee, but those money market funds

00:30:03.440 | were not solely invested in US government securities.

00:30:06.460 | The reason that they lost money is that they were holding

00:30:09.380 | a financial instrument called commercial paper

00:30:11.860 | and they were holding Lehman Brothers commercial paper,

00:30:14.140 | which ultimately is why they lost value,

00:30:16.240 | because the value of Lehman Brothers went to zero overnight.

00:30:20.020 | So I think if you are invested in a money market fund

00:30:23.060 | that is solely invested in US government securities,

00:30:25.620 | you're probably in a better financial situation.

00:30:28.300 | But again, I am not a financial advisor, a CPA, a lawyer,

00:30:31.900 | so this is just my own opinion and my own personal thoughts.

00:30:35.800 | So I just wanted to cover that

00:30:37.140 | because there are a couple more options

00:30:38.620 | that I think are focused on brokerage

00:30:40.760 | that are really interesting.

00:30:41.840 | And one of the most loved accounts, when you look online,

00:30:45.120 | when you talk to people about amazing bank accounts,

00:30:48.500 | people consistently talk about the Schwab checking account.

00:30:51.620 | And the primary reason is that it seems like Schwab

00:30:54.620 | pioneered reimbursing ATM fees worldwide.

00:30:57.900 | And so for those people who travel internationally,

00:30:59.980 | who know that withdrawing money from an ATM

00:31:02.180 | is usually the best way to get a good conversion rate

00:31:06.340 | and get foreign currency easily,

00:31:08.440 | people love the Schwab account.

00:31:10.260 | Now, the downside is that it only earns 0.48%

00:31:14.520 | in your checking account.

00:31:16.220 | Now, the majority of people with a Schwab checking account

00:31:18.580 | probably also have a Schwab brokerage account,

00:31:21.100 | which is probably where most assets at Schwab

00:31:23.820 | are being held.

00:31:24.860 | So you do have a place that you can earn higher yield.

00:31:28.180 | It's not a simple higher yield

00:31:29.960 | in that you just put money in the account and it earns,

00:31:32.660 | you need to invest that money in something,

00:31:35.060 | whether that's a money market fund

00:31:36.580 | invested in US treasuries or something else.

00:31:40.460 | It could be municipals to try to get even more tax advantage.

00:31:42.900 | It could be stocks,

00:31:44.180 | but you do need to have that money invested.

00:31:46.700 | And it is linked,

00:31:48.240 | but there's not really any overdraw protection.

00:31:51.400 | So it kind of doesn't meet the requirements that I have

00:31:54.940 | of being able to have an account that earns high yield

00:31:57.820 | and being able to operate out of that account.

00:32:00.280 | Now, the only reason I include it is because one,

00:32:03.240 | people seem to love it.

00:32:04.200 | It also gives you a checkbook, Zelle, joint trust accounts.

00:32:08.260 | Technically, they do have overdraft.

00:32:10.440 | So I felt like I needed to include it in this list,

00:32:13.080 | both because of its popularity

00:32:14.520 | and because technically you can overdraw

00:32:16.560 | that checking account.

00:32:17.400 | So you could leave the balance at zero.

00:32:19.640 | However, instead of overdrawing

00:32:22.000 | and selling your cash position

00:32:24.340 | or selling your cash-like money market funds,

00:32:27.260 | they draw on margin against your brokerage balance

00:32:31.160 | and they take out a loan

00:32:32.720 | that you need to transfer money back to pay off.

00:32:35.440 | Now, if that money is only borrowed for a couple of days,

00:32:38.160 | then it probably isn't a massive amount of interest,

00:32:41.140 | but it's just, in my opinion, pretty messy, right?

00:32:43.840 | Every time you wanna hit your checking account,

00:32:46.040 | you're ending up drawing a margin line,

00:32:48.160 | then you're paying off the margin loan

00:32:49.680 | and transferring money.

00:32:50.680 | It's not automated at all.

00:32:52.720 | Now, they do also charge for wires at $15

00:32:55.240 | unless you have a balance over 100,000.

00:32:57.240 | In which case you get three free per quarter

00:32:59.460 | or all your wires are free over a million dollars.

00:33:02.040 | So as much as I think people love the Schwab account,

00:33:04.720 | I think there are some way better options.

00:33:07.000 | Okay, I'm saving the best for last

00:33:08.800 | in this group of savings accounts

00:33:11.320 | that you can operate out of with a link checking account.

00:33:13.880 | And this is Mercury.

00:33:15.960 | And Mercury's historically focused all on business accounts,

00:33:18.520 | but they just launched personal accounts

00:33:20.520 | and I've had a chance to use it for the past month

00:33:22.640 | and it's really, really impressive.

00:33:24.680 | And what they've done that's so unique

00:33:26.420 | is that they've added a lot of the features

00:33:28.200 | of a business checking account

00:33:29.940 | to a personal checking account.

00:33:31.720 | So that means you can spin up multiple users,

00:33:34.280 | you can give access to a bookkeeper,

00:33:36.080 | you can give access to your assistant,

00:33:37.960 | you can spin up multiple cards.

00:33:39.800 | So you could even create a virtual card

00:33:41.960 | or a physical debit card for a nanny.

00:33:44.680 | You could even lock that card to specific merchant.

00:33:47.520 | So you could say, here is a card

00:33:48.720 | that only works at Whole Foods up to $500 a month.

00:33:51.920 | They also have a lot of other features

00:33:53.240 | when it comes to sending and receiving money.

00:33:55.880 | One of which is really important to me

00:33:57.140 | is to be able to set up recurring transfers to third parties.

00:34:00.100 | So our au pair was able to say,

00:34:01.640 | here's my account routing number at Chase.

00:34:03.920 | And I was able to set up a recurring weekly transfer

00:34:06.520 | to pay her.

00:34:07.520 | To make that easy, they can also generate a URL

00:34:09.960 | that you can send someone

00:34:11.380 | that allows them to fill out banking information

00:34:13.680 | so that they can either send you money

00:34:15.800 | or so that you can receive money to them

00:34:17.640 | or push money to them.

00:34:19.540 | Lots of options there.

00:34:21.300 | You can also upload bills.

00:34:23.080 | So let's say you're working on a home renovation project

00:34:25.480 | and a contractor sends you a bill, you can upload it.

00:34:28.320 | They'll OCR it, figure out the amounts

00:34:30.280 | and they can mail a checkout for that bill.

00:34:32.400 | They also reimburse ATM fees.

00:34:34.240 | You get up to $5 million of FDIC insurance,

00:34:36.680 | free same day transfers with ACH, free wires.

00:34:40.360 | And best of all, that savings account earns 5%.

00:34:43.800 | And they actually have this feature

00:34:45.240 | on the business account called Mercury Treasury

00:34:47.760 | where you're able to move money to another account

00:34:51.100 | that earns yield on US treasuries.

00:34:54.400 | And so I've been told

00:34:55.760 | that they're gonna be launching that feature soon,

00:34:58.000 | which would give you another savings bucket

00:35:00.000 | that you could use to potentially get a higher

00:35:02.240 | and taxed advantage to yield.

00:35:04.320 | So really excited about that.

00:35:06.360 | And the last unique feature that they have

00:35:08.220 | is a lot of different types of automations

00:35:10.040 | where you can set up specific rules

00:35:11.560 | and have things happen every single day.

00:35:13.620 | And one of those is to leave a target balance in an account.

00:35:17.280 | So I mentioned that most of these accounts have overdraft

00:35:20.440 | between checking and savings.

00:35:22.180 | This account does not, but they do have automation.

00:35:25.240 | And so what I've done is I've set up,

00:35:27.360 | hey, leave my checking balance at $400,

00:35:30.140 | which earns 0%, but cost me about $20 a year.

00:35:34.160 | And anytime that balance goes down or up,

00:35:38.300 | just level it off using the money in my savings account

00:35:40.960 | back to 400.

00:35:42.400 | What this does,

00:35:43.520 | because I don't actually use the checking account

00:35:45.200 | for really anything other than a potential ATM withdrawal,

00:35:48.640 | it allows me to be able to use my ATM card just in case

00:35:52.580 | if I need cash and then top that back up to 400.

00:35:56.660 | So it doesn't have that overdraft functionality,

00:35:59.300 | but because you can pay all your bills

00:36:00.940 | from your savings account,

00:36:02.040 | because you can deposit your paycheck

00:36:03.580 | to your savings account,

00:36:04.760 | you don't really need the checking account

00:36:06.860 | for anything more than ATMs or debit cards.

00:36:09.260 | And I'm not really using my debit card,

00:36:10.660 | so it's just kind of an ATM issue.

00:36:12.500 | And if I were needing to withdraw more than $400,

00:36:16.140 | it would probably take me 20 seconds in the app

00:36:18.860 | to move some extra money over.

00:36:20.620 | And because that automation runs daily at night,

00:36:23.180 | it's not something that's instantly gonna get moved back.

00:36:25.840 | So if I needed to take out $1,000,

00:36:28.100 | I could transfer over 600, withdraw 1,000,

00:36:30.980 | and that night it would get topped back up to $400.

00:36:33.900 | So what's the downside?

00:36:35.260 | The downside is that Mercury is charging a $240 annual fee

00:36:39.020 | for their personal banking product.

00:36:40.980 | Now, even for me, I was like, what?

00:36:44.340 | How are you possibly charging a fee?

00:36:46.260 | None of these other banks charge fees,

00:36:47.940 | especially these banks that offer lots of premium services.

00:36:51.440 | But at the end of the day,

00:36:52.540 | I really would love this product to exist,

00:36:54.620 | so I kind of understand it.

00:36:56.420 | And they're offering 5% interest,

00:36:58.660 | which is better than almost every other bank out there.

00:37:01.460 | So it seems like for the set of features and the interest,

00:37:04.260 | there is no other account that offers this.

00:37:06.460 | So maybe you could argue that fee is justified.

00:37:08.940 | If it saves you even a couple of hours a year,

00:37:11.900 | then I guess you could say it's made up for in that reason.

00:37:14.660 | Or if you look at how many dollars

00:37:16.820 | that you would need to have earning 5% interest

00:37:19.780 | relative to 0%, it's about $5,000,

00:37:23.220 | and you'd pay the annual fee right away.

00:37:25.300 | So if you're leaving $5,000

00:37:27.500 | just in a Chase checking account earning zero,

00:37:30.000 | well then I guess earning 5% in the Mercury Savings account

00:37:32.620 | would do better than that.

00:37:34.380 | Few other cons, there's no joint accounts yet.

00:37:38.080 | Right now it says coming soon.

00:37:40.020 | Because you can spin up a login for your spouse,

00:37:42.620 | because you can create a debit card for your spouse

00:37:44.860 | and let them set up transfers and do all those things,

00:37:47.800 | I'm not sure how big of a deal that is.

00:37:50.300 | Like I mentioned, there's no Overdraft and there's no Zelle,

00:37:52.900 | but I have used my Mercury debit card with the Zelle app,

00:37:55.220 | so that works there.

00:37:56.380 | So the idea of having a savings account to operate out of

00:37:58.940 | and a checking account with a few hundred dollars

00:38:00.980 | or even zero dollars just in case you need to use an ATM card

00:38:04.620 | is a pretty compelling solution.

00:38:06.780 | However, wouldn't it be great if you could have one account?

00:38:09.620 | Well, I said there is no perfect

00:38:11.100 | all-in-one high-yield checking account,

00:38:12.900 | but there actually are three accounts,

00:38:15.560 | none of which are checking accounts,

00:38:17.220 | but that function almost just like one.

00:38:19.940 | They have almost every feature of a checking account

00:38:22.460 | and earn 4% to 5% interest.

00:38:24.700 | So what are these magical accounts?

00:38:26.960 | Well, there's actually a fourth one

00:38:28.380 | and it didn't quite meet all the requirements,

00:38:30.460 | but I just wanna mention it in case anyone listening

00:38:32.740 | sends a lot of money internationally.

00:38:34.700 | And that's that Wise, which used to be called TransferWise,

00:38:37.740 | has an account that earns 4.85% interest,

00:38:41.820 | gives you an account routing number, ATM cards,

00:38:43.900 | huge transfer limits,

00:38:45.740 | and makes it really easy to send money overseas

00:38:49.020 | to lots of different currencies.

00:38:51.140 | Downside, really low limits on the ATM card

00:38:53.980 | before paying fees, I think it's like $100 a day,

00:38:56.420 | there's no bill pay or mobile deposit,

00:38:58.520 | and even every transfer has a fee,

00:39:00.640 | but probably only relevant

00:39:02.000 | if you send a lot of money overseas.

00:39:03.700 | So let's jump into the three all-in-one accounts.

00:39:07.000 | Let's start with the one that I've been using

00:39:08.740 | for a long time,

00:39:09.640 | and that's the Wealthfront Individual Cash Account.

00:39:12.140 | Right now it's paying 5% interest,

00:39:14.180 | has $8 million of FDIC insurance,

00:39:16.980 | they have automated savings,

00:39:18.500 | they have savings buckets called cash categories

00:39:21.300 | where you could separate money, you can send checks,

00:39:23.760 | got same day ACH, seven days a week,

00:39:26.500 | 365 days a year if you need to withdraw money

00:39:28.980 | to another account,

00:39:30.500 | you get an ATM card, account routing numbers,

00:39:32.580 | everything works from this account

00:39:34.300 | like you would expect with a few small things.

00:39:37.360 | One, if you opt to open a Wealthfront Cash Account

00:39:40.960 | that is a trust or a joint account,

00:39:42.480 | you don't get any of these checking features.

00:39:44.560 | So the checking features are tied solely

00:39:46.520 | to an individual cash account.

00:39:48.200 | Two, there are wires,

00:39:49.680 | but you can only wire money to yourself

00:39:52.240 | or to an escrow or title company

00:39:54.040 | for the purchase of a home.

00:39:55.080 | So if you do need to wire money to make an investment

00:39:57.520 | or to someone else, it's not gonna be possible.

00:39:59.920 | Transfer limits are pretty good,

00:40:01.560 | but I will note that the transfer out limit for ACH pulls,

00:40:06.220 | meaning if you were to make a payment online to the IRS

00:40:08.580 | or a credit card is at $50,000.

00:40:11.100 | So if you are making really large payments to the IRS,

00:40:14.140 | you might have some problems here.

00:40:15.820 | Otherwise, it's been an amazing account to operate out of.

00:40:19.540 | They don't reimburse ATM fees,

00:40:22.140 | but you are earning 5% interest.

00:40:24.140 | You can even earn 5.5% interest if you make a referral

00:40:28.340 | or you're referred to the product.

00:40:30.640 | And so I've used this account for a handful of years.

00:40:33.340 | The automation in it,

00:40:34.380 | I'm gonna talk about at the end of this episode

00:40:36.300 | when I talk about automating your finances,

00:40:38.540 | and it's really been a great account.

00:40:40.180 | The lack of the ability to have two logins or two ATM cards

00:40:43.300 | could be a really big deal breaker

00:40:44.700 | for someone operating their finances with a partner.

00:40:47.300 | Next is the U.S. Bank Elite Money Market Account.

00:40:50.460 | Now it pays 4.25% interest.

00:40:52.940 | Seems they have ATM reimbursements.

00:40:54.820 | You get a checkbook, debit card.

00:40:57.580 | They even have a checking account

00:40:59.300 | that will overdraft into this account,

00:41:00.760 | but it's not clear why you would need it

00:41:02.260 | because it seems like you could do everything you want

00:41:04.560 | out of this account.

00:41:05.400 | You get routing numbers, you can send wires,

00:41:08.200 | all of those things.

00:41:09.280 | The only downside is that there just aren't

00:41:11.540 | that many details about it.

00:41:13.160 | I looked online, I searched Reddit,

00:41:15.160 | I went as far as to almost open the account,

00:41:17.500 | and I did not do that yet, so that is one caveat.

00:41:20.600 | But I couldn't find details on transfer limits

00:41:22.800 | and nuances about a lot of things.

00:41:24.820 | And the only reason I didn't keep going

00:41:26.480 | is 'cause at 4.25%, it just didn't seem worth it.

00:41:29.800 | It is a great all-in-one account.

00:41:31.600 | I guess if you want a bank that has branches

00:41:34.360 | and you live near U.S. Bank,

00:41:36.080 | then maybe it could be a great option

00:41:37.860 | if you need to go to a branch

00:41:39.200 | and you just want one account at one institution,

00:41:41.640 | or maybe you're already using U.S. Bank for other things.

00:41:44.440 | Otherwise, I would love to optimize for an account

00:41:46.880 | where I'm earning closer to 5% than 4%.

00:41:49.560 | And the last is an account that I think a lot of people

00:41:52.360 | on the internet seem to all know about,

00:41:54.280 | but almost everyone I talk to in real life

00:41:56.840 | has never heard of,

00:41:58.260 | and that is the Fidelity Cash Management account.

00:42:00.760 | And with this, you get an account

00:42:02.280 | that has pretty much everything you need.

00:42:04.440 | Free wires, ATM reimbursements worldwide,

00:42:07.000 | joint trust accounts, checkbooks, high transfer limits,

00:42:10.380 | all the other things, bill pay,

00:42:12.320 | account routing numbers, everything.

00:42:14.080 | And all of your cash

00:42:15.400 | in the Fidelity Cash Management account earns interest,

00:42:18.200 | and you get to choose your core position.

00:42:20.520 | Now, as of recording, the only fund that you can choose

00:42:23.280 | for the cash management account earns less than 3%.

00:42:27.520 | However, they have announced that on June 15th, 2024,

00:42:31.040 | which will be before this episode even comes out,

00:42:33.620 | you'll be able to choose SPAXX,

00:42:36.260 | which is a Fidelity government money market fund.

00:42:38.400 | I'm looking at it right now.

00:42:39.800 | It's held mostly in treasury bills,

00:42:42.760 | U.S. government repurchase agreements,

00:42:44.440 | and agency floating rate securities.

00:42:46.560 | So it's all government-backed.

00:42:48.360 | Current yield is about 4.95%,

00:42:51.760 | is at least today's seven-day yield.

00:42:54.400 | And that change is coming soon.

00:42:56.320 | Now, if you have a Fidelity brokerage account,

00:42:58.480 | you can already choose SPAXX as your core position.

00:43:02.360 | In fact, all of the features that this account has

00:43:05.140 | are pretty much neck and neck the same,

00:43:07.560 | whether it's a brokerage account

00:43:08.680 | or a cash management account,

00:43:10.340 | with the only difference

00:43:11.960 | that if you are using a brokerage account,

00:43:14.480 | you don't get your ATM fees reimbursed

00:43:16.980 | unless you have over $250,000 in the account.

00:43:20.720 | And even then, you need to go and request

00:43:22.920 | that some special flag be added to your account.

00:43:25.700 | What's the downside here?

00:43:26.680 | 'Cause this actually seems like it can do everything.

00:43:29.280 | The starting ATM limits are about $500,

00:43:31.720 | but I've read that you can request an increase.

00:43:34.580 | There is no Zelle access,

00:43:37.000 | and there are no ability to set up recurring transfers.

00:43:40.080 | Now, they do have electronic funds transfer,

00:43:43.980 | which is effectively an ACH push,

00:43:46.280 | which means you can get the routing number,

00:43:48.520 | account number, and name of someone

00:43:50.960 | and set their account up

00:43:52.220 | and be able to send payments to them.

00:43:55.000 | So if I wanted to pay my au pair every week,

00:43:57.500 | she could give me all that information

00:43:58.860 | and I could send her money every single week.

00:44:01.320 | However, there is no way to make that recurring.

00:44:04.600 | Now, that'd be an easy feature to add.

00:44:06.280 | And if they did,

00:44:07.100 | they would check every single box on my list.

00:44:09.780 | Obviously, they don't have all the features

00:44:11.480 | that Mercury created

00:44:12.600 | that are a little bit more like business account features

00:44:14.480 | for personal accounts.

00:44:15.800 | But again, those weren't requirements for me.

00:44:18.080 | But the ability to set up a recurring transfer

00:44:21.120 | is really, really important, at least for my use case,

00:44:23.720 | because alternatively,

00:44:24.780 | it means I need to remember every single week

00:44:26.880 | to log into the Fidelity app

00:44:28.520 | and spend a couple minutes to send a transfer.

00:44:30.760 | Layer that on 52 weeks.

00:44:32.360 | I know I'm gonna forget one week.

00:44:33.960 | I know I'm gonna pay her late.

00:44:35.440 | She's gonna be disappointed.

00:44:37.000 | That's gonna take time.

00:44:38.300 | And so that is a big downside

00:44:40.000 | that I wish there was a way to solve

00:44:41.580 | with the Fidelity account.

00:44:42.680 | One other really cool thing

00:44:43.820 | is that that core position has, as I mentioned,

00:44:46.700 | about 32% in treasuries,

00:44:49.040 | which means depending on your state,

00:44:50.520 | you might actually get a better after-tax yield

00:44:53.440 | because of those US government investments.

00:44:55.920 | One more thing I like

00:44:56.960 | is that you can actually buy other positions

00:44:59.560 | in money market funds in your account,

00:45:01.880 | and Fidelity will sell them

00:45:03.360 | in case you need to cover a bill pay, a transfer,

00:45:06.840 | maybe made a credit card payment or withdrew money.

00:45:09.400 | So that's really cool.

00:45:10.600 | And you can actually put them into things

00:45:12.380 | that might have better tax advantage

00:45:14.080 | for the state you live in.

00:45:15.400 | So like I mentioned earlier,

00:45:16.800 | some of these US government money market funds

00:45:19.040 | that are entirely in treasuries

00:45:21.480 | could earn a seven-day yield of a little over 5%.

00:45:25.300 | But if you factor in what is the equivalent yield

00:45:27.620 | of something that doesn't have that tax advantage,

00:45:29.800 | it could be closer to 6%.

00:45:31.600 | And so obviously that depends on what state you live in.

00:45:34.120 | You can't automatically buy those.

00:45:35.800 | So when you deposit money into the account,

00:45:37.440 | it's not gonna automatically buy those other things.

00:45:39.680 | You can't make them your core position,

00:45:41.920 | but they will get liquidated.

00:45:43.160 | Or you could use them as a savings bucket.

00:45:46.040 | Let's say you had an emergency fund.

00:45:47.740 | You could say, I'm just gonna use this

00:45:48.920 | and buy a different money market fund

00:45:50.880 | and kind of segregate it that way.

00:45:52.980 | Now, a few other small downsides is,

00:45:55.640 | one, it doesn't matter to me,

00:45:57.360 | but I have seen people talk about

00:45:58.760 | how the Fidelity accounts monthly statements

00:46:01.000 | are more brokerage statements than checking statements,

00:46:03.440 | and they can be hard to read.

00:46:05.400 | I think you could probably get used to it,

00:46:06.720 | but if that's really important to you, it could be an issue.

00:46:09.360 | And then two, Fidelity is still an old school institution.

00:46:12.560 | And so I had a few experiences

00:46:14.880 | because I recently opened up this account.

00:46:16.680 | I opened a brokerage and a cash management account.

00:46:19.040 | I set it all up.

00:46:19.880 | I got it all features working.

00:46:21.520 | I set up some transfers to see how it worked.

00:46:24.000 | And it was pretty great.

00:46:25.140 | But when I had to do a few things,

00:46:27.900 | I was just reminded at Fidelity being an old school company.

00:46:31.080 | So I closed one account.

00:46:33.000 | I didn't even realize I had.

00:46:34.560 | And they said, hey, we're gonna mail you

00:46:35.920 | a $0 check for this account.

00:46:38.840 | Obviously, you don't need to do anything with it,

00:46:40.880 | but it's just something we have to do.

00:46:42.800 | And then one time when I did close that account,

00:46:45.060 | after the fact, someone said,

00:46:46.400 | hey, I did forget to get you verified.

00:46:48.960 | So they went through an identity verification process

00:46:51.480 | after they closed the account,

00:46:53.200 | which just seemed like things were a bit more manual

00:46:55.320 | and at human discretion.

00:46:56.560 | Whereas in the Mercury account, everything is online.

00:46:59.380 | And so everything is protected by two-factor auth

00:47:02.200 | and all this stuff, and you're in control.

00:47:04.080 | Fidelity, I did have to call for a lot of these things.

00:47:07.080 | And the phone password login situation is so frustrating

00:47:11.020 | because they ask you to type in your password

00:47:13.520 | using the numbers, like two would be ABC

00:47:16.240 | and that kind of thing,

00:47:17.200 | which is great if you're the kind of person

00:47:18.880 | that has the same password for everything.

00:47:21.040 | But if you have a 20-character string of numbers,

00:47:23.840 | uppercase, lowercase, and symbols,

00:47:26.320 | remembering that is impossible.

00:47:28.060 | And so you're jumping between one password

00:47:30.440 | and your phone to dial in the password.

00:47:32.780 | And it's so complicated, you end up skipping it.

00:47:35.240 | And now you have to go through further verification

00:47:37.720 | when a rep answers.

00:47:39.340 | So don't love that.

00:47:41.480 | Other thing I do love though,

00:47:42.600 | is Fidelity is so active on Reddit.

00:47:44.620 | I would challenge you to find a post

00:47:46.440 | in the Fidelity subreddit where people aren't

00:47:49.600 | asking questions and someone from Fidelity

00:47:52.000 | isn't chiming in with an answer

00:47:53.920 | that's really thoughtful and helpful.

00:47:55.400 | So I love that.

00:47:56.240 | Also, I'll set up allthehacks.com/fidelity

00:47:59.560 | to forward to the Fidelity Cash Management account

00:48:02.000 | with any offer I can get from them.

00:48:03.840 | I'm gonna email and see what happens.

00:48:05.320 | So check that out.

00:48:06.760 | So that's a lot of accounts.

00:48:08.400 | I probably went through at least seven or eight

00:48:11.080 | in a lot of detail.

00:48:12.640 | What is the best bank account?

00:48:14.520 | I will give you three answers.

00:48:16.520 | First, the Wealthfront Cash account.

00:48:18.920 | Amazing UI/UX.

00:48:20.400 | Great automation that I'll talk about in a second.

00:48:22.840 | Consistently high rates.

00:48:24.840 | All the features you need of a checking account,

00:48:26.760 | except that you can't wire money to third parties

00:48:29.520 | unless it's for the purpose of buying a home.

00:48:31.560 | You get no joint access or a joint account

00:48:35.360 | and there are no automated recurring transfers.

00:48:38.120 | So if you're interested in that,

00:48:40.040 | I think it's a great option.

00:48:41.120 | It's paying 5% right now.

00:48:43.240 | 5.5 if you want a referral link.

00:48:45.800 | If you go to allthehacks.com/wfcash,

00:48:49.480 | it's a rotation through all of our member referral links.

00:48:52.320 | So all of our members will get an extra half a percent.

00:48:55.080 | You'll get an extra half a percent.

00:48:56.840 | And obviously if you join the membership,

00:48:58.160 | you can add your link to that rotation.

00:49:00.240 | I know a few members have pointed out

00:49:01.760 | that each referral can extend up to a year

00:49:05.000 | for three months each.

00:49:06.240 | So I have a few members who've said

00:49:07.440 | they've already bumped up.

00:49:08.320 | They're earning an extra half a percent for the next year,

00:49:10.520 | which is awesome.

00:49:11.360 | Next is Fidelity.

00:49:12.680 | Honestly, this account has everything,

00:49:14.880 | including some tax advantage and even more tax advantage

00:49:18.720 | if you buy other money market funds.

00:49:20.880 | The only downside is it's an old school user experience

00:49:23.720 | and there's none of those automated recurring transfers,

00:49:26.000 | which might be really nuanced to me

00:49:27.960 | and might not matter to you, but worth flagging.

00:49:30.800 | The other thing that was really nice is

00:49:32.520 | there is the ability to go all in on Fidelity.

00:49:36.120 | So there's this post on Bogleheads

00:49:38.000 | called the Fidelity One-Stop Shop,

00:49:40.080 | where someone points out that you could have

00:49:41.780 | the cash management account as your bank account,

00:49:43.760 | your brokerage account.

00:49:45.120 | You could do a Fidelity 529.

00:49:47.120 | You could put all of your Roth IRAs.

00:49:49.720 | You could do your solo 401k, your HSA.

00:49:52.700 | And you could even,

00:49:53.540 | if you wanted to use the Fidelity credit card,

00:49:55.540 | which is 2% cash back on everything.

00:49:57.360 | So you could use Fidelity as your simple one-stop shop

00:50:01.080 | for absolutely everything financial.

00:50:02.960 | And I think if that's important to you,

00:50:04.760 | I couldn't imagine a better solution.

00:50:06.900 | And then the last is Mercury.

00:50:08.560 | If the idea of having some of these business-like features

00:50:11.480 | in your account would simplify your life,

00:50:13.720 | being able to send wires on demand online,

00:50:16.560 | being able to spin up multiple accounts

00:50:18.760 | and multiple cards for other people.

00:50:21.000 | I even found that when I was looking

00:50:22.560 | at a service called Greenlight,

00:50:23.880 | which would allow you to set up a debit card for your kids,

00:50:27.040 | that Mercury actually would let me create a login,

00:50:29.800 | create a separate checking and savings account

00:50:31.980 | for my daughter.

00:50:32.860 | It would all be legally in my name

00:50:34.560 | and I could get her a debit card and send it to her.

00:50:37.120 | And so she could operate out of it.

00:50:38.500 | I could transfer money in and out of it.

00:50:40.300 | I could set limits and rules

00:50:41.900 | on how she spends on her debit card.

00:50:43.800 | So effectively, I could get all of the features

00:50:46.080 | of opening up a Greenlight account.

00:50:47.620 | Maybe not all of them.

00:50:48.560 | I haven't looked in too much nuance

00:50:50.280 | at the details and the features of Greenlight.

00:50:53.020 | She'd earn 5% on her savings account though.

00:50:54.960 | So that's cool.

00:50:56.080 | And I wouldn't have to pay an annual fee for Greenlight.

00:50:59.280 | So there are some features

00:51:00.320 | that might even make it more compelling

00:51:01.720 | and worth that $240 annual fee.

00:51:03.960 | And if they can add joint accounts,

00:51:05.960 | which is on the list, they've committed to do it.

00:51:08.160 | And if they add that treasury feature,

00:51:10.680 | which would let you put money into a fund

00:51:12.880 | that hopefully has some tax advantage,

00:51:14.820 | I think it would be a really, really compelling alternative

00:51:17.480 | to the Fidelity account.

00:51:18.920 | So is it worth it?

00:51:20.160 | Really depends on your circumstance.

00:51:21.920 | I don't have any invites, but I have asked for them.

00:51:24.760 | And if I get them, I'll put them up

00:51:26.960 | at allthehacks.com/mercury.

00:51:29.400 | So I hope all that was helpful.

00:51:30.920 | Now, if you're wondering whether it's really worth switching,

00:51:34.160 | I guess it depends a little bit on how much cash you have.

00:51:37.320 | But I would say the average person listening

00:51:39.560 | to this episode who's using an account at a regular bank

00:51:42.960 | is probably missing out on at least $1,000 a year

00:51:46.320 | of interest by using the wrong bank account.

00:51:49.080 | If you keep $25,000 in your checking account,

00:51:51.960 | missing out on 5% is about $1,250 a year.

00:51:55.940 | Now, keep in mind that this interest is taxed,

00:51:58.520 | unlike credit card points or cash back.

00:52:00.920 | So that might take you below the $1,000 threshold.

00:52:03.580 | Now, maybe $1,000 isn't important to you.

00:52:05.920 | Maybe it's super meaningful.

00:52:07.480 | I have a feeling that if it's not important,

00:52:09.280 | you probably also keep a lot more money in checking account.

00:52:11.340 | So maybe that number will be a lot higher for you.

00:52:14.000 | If you do have 50, $100,000,

00:52:16.340 | or maybe you're even saving for a down payment,

00:52:18.580 | or you're making regular tuition payments,

00:52:21.040 | missing out on 5% is gonna be thousands of dollars a year.

00:52:24.240 | And even if the alternative isn't zero,

00:52:25.840 | but it's 0.48% like you're getting at Schwab,

00:52:28.880 | or 0.25% like you're getting at the Ally checking account,

00:52:32.880 | it's still close to $1,000 a year.

00:52:35.000 | So to me, that's worth it,

00:52:36.920 | especially when some of these products

00:52:38.640 | are such a better experience.

00:52:40.920 | Last, before I talk about automation,

00:52:42.800 | I wanna talk about a few reasons

00:52:44.080 | you might not wanna do this.

00:52:45.560 | First, if you get a mortgage discount

00:52:47.840 | by keeping your checking account

00:52:49.040 | at that financial institution,

00:52:50.760 | then moving to another one

00:52:51.800 | might cost you a lot more in mortgage interest

00:52:53.920 | than you'll earn in interest on your account.

00:52:56.100 | Now, you could automate this

00:52:57.640 | and use an account that regularly

00:52:59.720 | just moves the amount for your mortgage payment

00:53:01.840 | into that account and leaves it there.

00:53:03.660 | Or you could send a message to your bank and say,

00:53:05.680 | "Hey, can I move which account I pay my mortgage out of?"

00:53:08.720 | And if that works, great.

00:53:10.080 | Or if you have a bank that has really cool features

00:53:12.680 | that make it worth being there even for less interest,

00:53:15.460 | that could make sense.

00:53:17.200 | All the Hacks member Andy mentioned

00:53:18.880 | that his bank will actually adjust down his interest rate

00:53:22.080 | if mortgage rates drop

00:53:24.120 | for just a couple hundred or thousand dollars,

00:53:26.440 | which is really compelling

00:53:27.880 | if you're someone who currently is sitting

00:53:29.360 | on a 7% interest rate

00:53:31.200 | and wants to be able to lower that in the future.

00:53:33.320 | So I can't speak to all the situations.

00:53:34.880 | Those are a couple that came to mind.

00:53:36.680 | But the last thing I wanna cover

00:53:38.200 | is automating your entire financial life.

00:53:40.520 | And it's something I actually wanted

00:53:41.840 | to do an entire episode on,

00:53:43.480 | but I realized with just a few simple moves,

00:53:46.120 | you can automate your entire financial life

00:53:48.120 | from saving to investing.

00:53:49.640 | So I don't think we need to spend an hour talking about it.

00:53:52.360 | And I want is to end you up in a place

00:53:54.560 | where you don't have to think about money

00:53:55.800 | on a regular basis,

00:53:56.720 | and you can have the peace of mind

00:53:58.200 | that everything you want is happening in the background.

00:54:00.880 | So here's the way I do it.

00:54:02.960 | First, I set all bills up on autopay.

00:54:05.800 | That doesn't mean you don't have to review

00:54:07.000 | your credit card bills.

00:54:07.960 | It just means you don't review them

00:54:09.220 | and manually make the payments.

00:54:11.200 | So all of them are getting auto paid

00:54:13.560 | out of my primary account,

00:54:14.880 | the account that's earning interest.

00:54:17.000 | For a couple of bills like our property tax bill

00:54:19.440 | that aren't automated,

00:54:20.340 | I just set up a calendar reminder so I don't forget,

00:54:22.900 | and I pay it out of the same account.

00:54:24.540 | So all the bills are getting paid automatically.

00:54:27.400 | Because the cash is earning interest,

00:54:28.880 | I don't have to worry about moving money around at all.

00:54:31.120 | So what if you don't want everything in cash?

00:54:32.560 | What about investing?

00:54:33.440 | So there are a few ways to automate this.

00:54:35.160 | So assuming you have a brokerage account somewhere,

00:54:37.540 | one way is through your payroll provider,

00:54:39.740 | you can actually split your direct deposit.

00:54:41.480 | So you could say, if I get $1,000 per pay period,

00:54:44.720 | I could put 800 in checking and 200 in my brokerage account.

00:54:47.760 | If your brokerage account supports that, that's an option.

00:54:50.140 | If not, you could just set up a recurring transfer,

00:54:52.700 | say every month, I wanna move $500 from my savings account

00:54:57.560 | into my investment account.

00:54:59.860 | Now, unfortunately,

00:55:01.040 | unless you're using an automated investment platform

00:55:03.440 | like Wealthfront or Betterment,

00:55:04.980 | where the money deposited gets automatically invested,

00:55:08.160 | then once that money's there,

00:55:09.500 | you do actually have to think about it.

00:55:10.920 | You have to log in and you have to go in

00:55:12.880 | and buy and sell securities,

00:55:14.620 | which is more work than I wanna have to think about.

00:55:17.280 | That's why I love the Wealthfront product,

00:55:19.040 | because I could just send money into the account

00:55:21.080 | and it's automatically invested.

00:55:22.760 | Now, full disclosure, I worked at Wealthfront.

00:55:24.920 | I do hold some stock in the company,

00:55:26.760 | but I also use them for my investing.

00:55:29.380 | The other way to do this is to use a feature

00:55:31.000 | that I helped build at Wealthfront.

00:55:32.820 | When we built it, it was called Autopilot.

00:55:34.580 | I think it's called Automated Savings now.

00:55:36.400 | And the way it works is you can monitor a cash account

00:55:39.760 | or a checking account,

00:55:40.780 | and it doesn't even have to be at Wealthfront.

00:55:42.080 | And say, anytime there is more than X number of dollars

00:55:45.020 | in that account, I want you to take that money

00:55:47.660 | and go through this process.

00:55:49.040 | And you create an automated savings plan.

00:55:51.200 | And what it will do is you can go in and say,

00:55:53.680 | first, I want you to fill my cash account

00:55:56.580 | with $20,000 of an emergency fund.

00:55:59.000 | And then once that's full,

00:56:01.020 | then I want you to put up to the annual limit

00:56:04.920 | into my Roth IRA.

00:56:06.480 | After that, I want you to put up to,

00:56:08.420 | let's call it $5,000 in my children's 529.

00:56:12.040 | And after that, invest in my taxable brokerage account.

00:56:15.080 | And you can edit your plan anytime you want.

00:56:17.360 | And it just sweeps money from your checking

00:56:20.000 | or cash account into all of those places.

00:56:22.580 | So I'm really proud of that product.

00:56:25.100 | I think it does exactly what I would want to do

00:56:27.420 | to automate my finances.

00:56:28.580 | And since a lot of my accounts are at Wealthfront,

00:56:30.040 | I can use it in that way.

00:56:31.360 | But if you aren't using Wealthfront

00:56:33.080 | for your brokerage account,

00:56:34.200 | you can set up recurring transfers

00:56:35.800 | and automate that as well.

00:56:37.320 | You just have to remember to regularly log in

00:56:39.500 | and actually buy the securities

00:56:41.320 | so you're not leaving cash in your brokerage account.

00:56:43.680 | So I hope this episode helps you save a ton of time

00:56:46.320 | and energy.

00:56:47.160 | And for everyone,

00:56:48.080 | I hope it helps you earn a lot more interest in your cash

00:56:50.820 | and helps you find a great bank account

00:56:52.780 | that you can use to operate your life out of.

00:56:55.440 | Couple of quick reminders,

00:56:56.780 | allthehacks.com/wfcash

00:56:59.080 | if you want a referral link to get the extra half a percent.

00:57:02.160 | allthehacks.com/mercury

00:57:04.360 | if you want an invite.

00:57:06.080 | I can't promise that there will be anything there,

00:57:07.980 | but I'm going to try my best.

00:57:09.600 | And finally, allthehacks.com/bankbonus.

00:57:13.200 | We set up a page here

00:57:14.760 | that showcases all of the different bonuses

00:57:17.240 | various banks are offering when you open up accounts.

00:57:19.840 | So if you are looking for an account to open,

00:57:22.460 | whether it's for the bonus

00:57:23.560 | or just because you want an account,

00:57:25.020 | definitely check that page

00:57:26.400 | to see if there's any special promotions

00:57:28.780 | to earn a few hundred dollars

00:57:30.240 | or even a few thousand dollars

00:57:31.520 | when you open up a new account.

00:57:32.960 | And finally, allthehacks.com/fidelity

00:57:35.280 | if we can get a special offer

00:57:36.620 | for the cash management account,

00:57:37.880 | I will put it there.

00:57:38.720 | If not, I will just redirect you to the Fidelity site.

00:57:41.920 | Links to everything we discussed are in the show notes.

00:57:44.000 | If you want to ask questions or go deeper on this episode,

00:57:47.000 | consider joining the All The Hacks membership

00:57:48.800 | and joining our live call

00:57:50.840 | where I'm going to take questions for members.

00:57:52.720 | That's allthehacks.com/join.

00:57:54.920 | If you have feedback on this episode or any questions,

00:57:57.600 | feel free to leave it down in the comments.

00:57:59.160 | I'll do my best to reply.

00:58:00.760 | If you want to join the member call

00:58:02.700 | where I'm going to go through all of this

00:58:03.960 | and take questions live,

00:58:05.560 | you can join the All The Hacks membership

00:58:07.120 | at allthehacks.com/join.

00:58:09.600 | That's it for this episode.

00:58:11.040 | I will see you next time.

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