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Does a Will Override a Trust? | SmartAsset.com

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Wills are an essential part of estate planning, leaving instructions for how to distribute your assets and possessions after you die. Trusts are a common tool in estate planning as well, serving as a way to manage assets both before and after your death. If your will conflicts with a trust that you have set up, the trust will typically prevail. This is because, in most cases, the assets in a trust don’t technically belong to your estate any longer. They are legally owned by the trust itself, so the terms of your will don’t affect them. For help with estate planning, consider working with a financial advisor.

Will Definition

A last will and testament is a legal document that directs how to distribute your assets after your death. Among other issues, a will establishes:

  • Who will take possession of your cash, investments, belongings and other property
  • How to pay any remaining debts or obligations
  • Any long term or ongoing plans that you would like to make
  • The care and distribution of any real estate you own

Wills are an essential part of estate planning. When you die, everything that you own is collectively known as your estate, which then gets distributed among your heirs.

If you leave a will, your estate is distributed according to your wishes and that process is overseen by someone you select, known as the executor. If you die without a will, known as dying intestate, your estate is distributed according to the inheritance law of your jurisdiction. That process is overseen by someone appointed by the probate court, known as an administrator.

Under typical circumstances a will is managed through and by probate courts. Your executor will file your will with the court which in turn oversees the entire process of settling your affairs and distributing the estate’s assets. For most estates, the probate process is largely a formality. The court makes sure that your will is legal, that your estate pays its debts and that your executor has the access they need to distribute your assets.

The same process occurs if you die without a will. In that case, the probate court appoints an administrator and the court then ensures that the administrator distributes your assets according to the local inheritance laws.

Trust Definition

A trust is a legal entity created to hold, manage and oversee property. Every trust has four main components:

  • Contributor – The person who created the trust and contributed assets to it
  • Assets – The cash, property and other assets owned by the trust
  • Trustee – The individual or firm that manages the trust’s assets
  • Beneficiary – The person or persons who receive assets from the trust

When you create a trust, you put assets in its name. Once you do that the assets belong to the trust itself, not you. This is the same as with any other property transfer. The trust is a legal entity capable of owning assets, paying taxes and making distributions, so once you put something in its name that property legally belongs to the trust itself, not you.

In creating a trust, you also establish its terms. You name the trustees and the beneficiaries, and set out the terms for how the trustees should manage the trust and its assets. This includes instructions for what assets the beneficiaries will receive, along with how and when. For instance, you can leave instructions for your trustee to distribute your funds equally among your children after you die.

Can a Will Override a Trust?

There are two main circumstances in which a will can conflict with a trust. First, a will might give instructions that conflict with the terms of a trust that already exists. For example, your will might include language that leaves the family home to your children, while earlier in life you placed that house in a trust for tax purposes. Second, a will might give instructions that conflict with the terms of a trust that doesn’t exist yet, or which hasn’t yet received its assets. For example, your will might include language that distributes your investments among your children, while another section of the will might include language that places your investments in a family trust.

In the first case, the terms of the will have no authority. A will cannot override a trust that already exists, nor can it distribute or manage property already held in an existing trust. If a trust exists and holds its assets, those assets belong to the trust itself. They are not part of your estate and, as a result, are not subject to the terms of your will.

If your will gives instructions that conflict with the terms of a trust, your will’s terms will apply to the assets in your estate and the trust’s instructions will apply to the assets in the trust. The designated beneficiaries will receive their assets according to the terms of the trust.

In the second case, your will is not actually conflicting with any existing trust. Instead, it is internally contradictory and will be resolved according to local inheritance law. You can leave instructions in your will to put assets in trust. This can apply to a trust that already exists, where your will puts assets into a trust that you created earlier. It can also apply to a testamentary trust, where your will instructs the executor to create a new trust and put assets into it.

In both cases, these assets belong to your estate when you die. This means that the terms of your will govern how those assets are distributed. If one section of your will conflicts with the section of your will which creates or contributes to the trust, then the issue is that your will is internally contradictory. The trust itself is not in question, just the will.

In that case the probate court and your executor will have to determine the exact nature of the internal conflict in your will. They will then resolve that conflict according to state and local inheritance law.

Your will still cannot supersede how an existing trust manages its assets. But conflicts in your will can prevent new assets from being added to the trust. This is why, if you plan on making or managing a trust, it’s wise to have a lawyer help you write these documents.

When Should You Use a Will vs. a Trust?

Wills and trusts are, generally, the two most significant vehicles for estate planning. Broadly speaking, if you are looking to leave assets to your heirs, you will likely use one or both of these. While a full exploration of the subject is beyond the scope of this article, there are some good rules for when you should use a will vs. a trust. Wills and trusts are not mutually exclusive; their control over specific property is. Any given asset can either be put in trust or distributed by a will – but not both. However, you can manage your estate in general by putting some assets into a trust and distributing others through a will.

Wills – Good for mid-sized estates, simple transfers and instructions

In general, wills have the benefit of simplicity.

While wills do not have the tax and probate benefits of a trust, the truth is that these concerns are frequently overstated. The federal estate tax only applies to large estates, beginning at $12.92 million at time of writing. And the probate process can take some time, but it typically is only lengthy and complex for particularly large or contentious estates. If you have an ordinary scope of assets, the odds are good that neither taxes nor probate will be a burden for your heirs.

Yet, at the same time, wills are one-shot instruments. This makes good for making simple distributions and leaving direct instructions. But once the terms of the will have been carried out, the estate is closed.

The result is that wills are often a good choice when you want to leave someone an asset in its entirety, such as leaving an amount of cash or a home to one single heir. They are also good for small and mid-sized estates, as a trust would impose additional costs and complications in order to solve tax and probate issues that these estates likely will not have. Finally, wills are good for leaving instructions beyond the scope of assets, such as arranging for the care of minor children and pets.

Trusts – Good for larger estates, ongoing wishes and contestation

In general, trusts have the benefit of third-party management.

When you put money into a trust you legally hand it over to a third party. This creates costs and complications that a will does not have. The trust will require instructions and terms, and you will need to pay for a trustee to oversee the trust’s assets.

This same process, however, means that your estate moves out of your name. You can do this before death, through a living trust, after death, through a testamentary trust, or in totality, through what is known as a pour-over will. This last is a will which bequeaths all of your property to a trust, so there is no risk of accidentally leaving any assets to the probate process.

Moving assets out of your name makes trusts good for estates that are large enough to trigger tax and probate concerns, such as if your estate is worth more than $13 million at time of writing. They are also good for people who want to leave ongoing instructions after they die, for example, if you would like to ensure that a piece of property remains in the family without being sold. Finally, trusts are good for people who anticipate contested issues, as the trust will avoid the probate process that opens the door for heirs and debtors to challenge the estate.

When you’re trying to decide whether to leave assets in a will or a trust, a good rule of thumb is this:

Wills are a good choice when you have a simple transfer to make. If you want to leave someone money or property to own outright, and you are not a multimillionaire, a will may be your best option. Trusts are a good choice when you have a large or complex issue of inheritance. If your estate is worth several million dollars, or you want to ensure that your assets are transferred and managed in a specific way, a trust may be your best option.

Bottom Line

A will cannot override the terms of an existing trust. Once assets belong to a trust, they are not part of your estate and your will has no authority over them. However, if your will has terms to put assets into a trust, internal contradictions can prevent that transfer from taking place.

Estate Planning Tips

  • Depending on your estate and your wishes, writing your will can be a complicated process. Make sure you take the time to educate yourself about the intricacies of the process before you get started.
  • A financial advisor can help you with estate planning. Finding a financial advisor doesn’t need to be hard.  SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/courtneyk, ©iStock.com/monkeybusinessimages, ©iStock.com/fizkes

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

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How to File for Student Loan Bankruptcy – MintLife Blog

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credit score significantly. Depending if you file for chapter 7 or chapter 13, bankruptcy will stay on your credit report for seven to 10 years. You should also be aware that when you file for bankruptcy, all of your financial information becomes available to the public. The court may also decide on how and when you can spend your money, as well as who you must repay first.

Something else that you can try instead of filing for bankruptcy is checking if you are eligible for an income-driven repayment plan. This allows you to repay your student loan debt at an affordable monthly rate based on your income. Another option is to see if you are eligible for a forbearance. A forbearance puts a temporary hold on your loan payments if you are approved. To get approved you must show that you have some kind of outstanding medical expense or financial obligation. You can also get approved for military or AmeriCorps service. One thing to consider with a forbearance is that your loans still build interest when you don’t pay them.

Next, you can check to see if you meet the requirements for Public Student Loan Forgiveness (PSLF). To qualify you must have made at least 120 qualifying monthly loan payments under a qualified plan while working full-time for a qualified employer.

Some last things to consider before you decide to file are the costs and time it takes to get your loans discharged. Getting student loans discharged is very uncommon, so you will want to be certain you will qualify before you try. If you plan on filing, you should be ready for filing fees and attorney fees — attorney fees average over $1,400 and filing fees are typically around $300. This can be a lot, especially for someone who is looking to file for bankruptcy. That is why it is important to fully understand where you stand with your finances. Many people do not realize what it costs to file for bankruptcy. For some people this is a burden that damages their finances even more. This is why you must be certain that you can do things like pay your rent and buy groceries after filing. If this is too much, then you might want to consider other options.

How to Demonstrate Undue Hardship

Proving that your student loans will cause you undue hardship is not an easy task. You will have to demonstrate that paying back your student loans will cause a significant negative effect on you and those who depend on you.

There is no set way to determine or ask someone to demonstrate undue hardship. Courts have the discretion of what methods they use to determine your hardships. A common method used by many courts to prove undue hardship is the Brunner test. To prove undue hardship, you must meet all three factors of the test:

  • Poverty – You can’t afford to pay your loans with your present earnings and spendings, and maintain a minimal standard of living afterwards.
  • Persistence – Your present financial struggles will carry on for a considerable amount of time while you repay your loans.
  • Good Faith – You have made efforts in good faith to repay your loans and arranged for an affordable payment plan

Some courts use a different method of testing for undue hardship known as the Totality of Circumstances Test. For this test the court will review all of your applicable financial assets, future earnings, and expenses. Based on what they find they might rule for undue hardship. This test is different from others because it looks at all aspects that could have an effect on the person, rather than just one or two factors.

Filing for Student Loan Bankruptcy

Discharging your loans comes at the end of bankruptcy, and you might run into some tough questions along the way. There are a few things you can do to help you understand and complete the process.

1. Talk to a Financial Advisor or Lawyer

As mentioned, getting your loans discharged can be very challenging, especially for someone who is unfamiliar with the process. This is why you will want to seek assistance from a bankruptcy lawyer who is practiced and has been in these situations before. Their professional knowledge will be very useful when it comes to filling out the correct forms and procedures.

2. File for the Correct Type of Bankruptcy

When you try to discharge your student loans, you will first have to file for bankruptcy for either chapter 7 or chapter 13. Chapter 7 might discharge your loans if they deem you unable to pay because of undue hardship. Chapter 13 bankruptcy will not get rid of your loans, rather restructure the payments so they are affordable.

Chapter 7

  • You must show the court that you cannot afford the cost of your loans.
  • If you are eligible, all loans can be cleared and you will no longer be personally liable.
  • You must meet with and be questioned by your appointed trustee and creditors.
  • This process can take 4 to 6 months, but can completely discharge your loans.

Chapter 13

  • You can prove that you can repay some of your debts, but finishing your current payments will cause undue hardship.
  • Rather than being discharged, loans are restructured. You will hold onto assets and debts will be discharged after the case.
  • You must create a payment plan for the court and all creditors to view.
  • Payment plans can take 3 to 5 years.

3. Start the Adversary Process

An adversary proceeding is a lawsuit filed in bankruptcy and basically means that you are making a complaint in court. This is required for bankruptcy because your complaint is your inability to pay your student loans. When you file this proceeding you will need to have proof that you cannot make your loan payments due to undue hardships. This means verifying your income and proving that dependents rely on you, making it impossible to pay your loans.

So can you file for bankruptcy on student loans? The answer is yes, but you should look into other options first and establish an affordable payment plan. Now that you know what it takes to discharge your student loans this way, and you understand the difficulty and costs that come with proving undue hardship, you can take your next steps. Use a debt-to-income ratio tool to help you plan your payments by determining your ability to afford and pay a loan.

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I can’t believe the Grow Your Dough Throwdown is over!

It’s been an exhilarating ride, and I wish I could say that I was excited to share the results.

Alas, my portfolio got its butt kicked, while my wife’s portfolio, on the other hand, did rather well.

In fact, I think everyone kicked my butt.

Oh, well; life goes on…..

The exciting thing is that the Grow Your Dough Throw Down 2.0 is ready to launch, and I will have details at the end of this post.

Until then, let’s take a look at how I did.

TD Ameritrade – My Lousy Portfolio

If you recall, previously I had purchased five different stocks with my initial portfolio with TD Ameritrade. Two of my stocks have performed horribly: EHealthInsurance.com and Yahoo.com. My other three were doing okay, but not great. Those were Fidelity Guarantee and Life (an insurance company IPO), Dunkin Donuts, and Bank of New York. After three quarters of the year, my portfolio was down almost $100, and I knew there was no way that I would catch the leader, so I thought to myself, “Why not go big or go home?”

I sold all of my positions, then purchased RIG, which is Transocean, an offshore drilling contractor. I read about Transocean from another stock picker and he absolutely loved it, and I thought with a 17% dividend and a potential to buy on a dip, I might have a chance to walk away with the Grow Your Dough Throwdown title.

My hope fell short. Really short.

As oil continued to drop, so did Transocean’s stock price. My total account value is down to $551.73, for a net return loss of 45% for the year. In case you haven’t figured this out yet, that is not how you Grow Your Dough, not in the very least. I went from having a balanced portfolio to becoming a speculative investor, which is basically what I warn all my clients against.

Luckily, it was only for $1000, and the stock still could come back… ha, ha because you heard that one before. Either way, I definitely did not win the Throwdown, but I don’t think I took last.

Is there a trophy for next to last? 🙂

Ally Invest – The Blue Chippers

Ally Invest , then Tradeking, was the brokerage firm that I used to build a Blue Chip portfolio. The stocks I selected were General Electric, Coca-Cola, McDonalds, Microsoft, and Verizon. For the year, the account didn’t do as great as I had hoped, having a total value of $1032.41 at year-end. Three of the stocks ended up being down for the year – General Electric, McDonalds and Verizon – with the other two being up. Either way, we are still up, so I can’t be too unhappy about that.

Motif – The New Kid on the Block

Motif, which you will hear more about in a sec, was the investment platform that I was least familiar with. The more Motif investing reviews I read and how it is structured, the more I like it, especially for those who are wanting to invest in a specific period over a sector in the market.


I purchased three different Motifs: the Onward Online Ad’s Motif, the Cleantech Everywhere Motif, and the Obamacare Motif. For the end of the year, my portfolio value is $1032.18, barely beating out the Blue Chip portfolio at TradeKing. Once again, I will share more about Motif here at the end of the post.

Betterment – So Easy

Out of all of the investment platforms I opened an account with, Betterment was no question the easiest one to get my money funded and then invested. It’s even easier than opening an account at Capital One 360.

For the year, my total account balance is $1060.82. With how Betterment investing works, I just selected my target goal, and then they constructed a portfolio that consisted of 90% stocks and 10% bonds, which are predominantly invested in ETF’s. I’m still a big fan of Betterment, especially for those who know little about investing and want a super slick interface to get started.

 Lending Club

The two peer-to-peer platforms in Prosper and Lending Club fared well for the last part of the year as well. Lending Club has a new feature where you can see your account returns, and you can also adjust that for past-due notes. Basically, this feature is for those that make defaults on their loans. For the net annualized return, with Lending Club it was 6.75%, with an adjustment account value of $1050.93.

These notes are currently past due and haven’t defaulted yet, so if those happen to pay my net annualized return for the year, they would be 12.24%, with an account value of $1090.41. Considering how low interest rates are, and having made money off your CDs, even the 6.75% is nothing to sneeze at.


Prosper

With Prosper, they currently don’t have the adjusted return, so the total value is $1086.51 for an 8.64% return.

The Winners

It definitely became a neck and neck race for who was going to win the Grow Your Dough Throw Down. Barely squeaking a victory by less than $14 was Phil Taylor from PTMoney.com. His total value was $1327.05. Below is a screen shot of some of his holdings for the year.

In a very close second place was Rob Berger from Doughroller.net. His account value year-end was $1313.55. Rob went the Tesla, AT&T, and Apple approach to yield his return.

Congratulations fellas, you both did well and definitely take down this CFP®.

Grow Your Dough ThrowDown 2.0

I am excited to announce we are going to continue the Grow Your Dough Throw Down into 2015. This time, we are going to have 20 different personal finance bloggers participate.

Motif, which I mentioned above, has agreed to be a sponsor for the event. They are going to create a custom leader board where you will be able to track my Motif, including the other 19 participant Motifs, to see how we are doing on a daily basis. I’m so excited that Motif was pumped about the Grow Your Dough Throw Down this past year, and when they approached me about creating the custom leader board and being a part of it, I was definitely all ears.

More to come!

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Source: goodfinancialcents.com

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The Big I Bond Letdown Comes With a Silver Lining | SmartAsset.com

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The interest rate on Series I savings bonds bonds for the last six months has been an impressive 6.89%. But investors looking to jump into new issue bonds are in for a letdown. According to the Treasury, the rate for I bonds has reset to 4.3%.

The new annualized rate went into effect May 1 and includes a 0.9% fixed rate and a 1.69% six-month inflation rate. If you’re interested in investing in I bonds or other fixed-income instruments, consider working with a financial advisor.

A Silver Lining to the Lower Interest Rate

Sure, I bonds are now paying less than they were in recent months. But, as always, things could be worse. The new rate is higher than previous estimates that were made based on known inflation data, which had pegged the rate below 4%. On the other hand, the rate paid on I bonds from May to November 2022 was a whopping 9.62%.

As of March, the annualized inflation rate was 5%, down from 6% in February and much lower than the March 2022 rate of 8.5%. The Federal Reserve’s Open Market Committee has forecast inflation for 2023 to come in between 2.8% and 4.1%, with a median prediction of 3.3% for the year.

The I bond rate is made up of two components: a fixed rate set by the Treasury as well as an added inflation rate that’s adjusted with each auction. Once set, the fixed rate is good for the life of the bond, while the inflation rate is adjusted in May and November. Interest is compounded twice per year.

Because of the lifetime fixed-rate component, buying and holding I bonds when inflation is high can be a profitable strategy once inflation drops. I bond holders who bought between May and November 2001 maintain a fixed rate of 3%, giving them an annualized rate of 6.43% for the next six months.

The highest rate being paid now on previously issued I bond is 7.04% for bonds purchased between May and November 2000. The lowest return is 3.38% being paid on several issues of bonds made when inflation and interest rates were low, with the fixed rate at 0%.

How to Buy I Bonds

Individual investors can buy up to $10,000 worth of I-bonds each calendar year, as well as an additional $5,000 in paper I-bonds using their tax refund, which they can then convert to their digital account.

I bonds can be purchased only from the TreasuryDirect.gov website. Buyers need to create an account, a process many investors have criticized as complicated and clunky. Besides your personal information, you’ll need to enter your bank account and routing numbers, along with setting up a password and security questions. The bonds are issued electronically, and the minimum purchase amount is $25.

Investors can purchase up to another $5,000 in paper bonds using their federal income tax refunds, or $10,000 for a couple filing jointly. The purchase can be made only when you file your return, using IRS Form 8888, Allocation of Refund.

I bonds can be purchased for children by setting up a “minor account” linked from the purchaser’s own TreasuryDirect account. The account is custodial and can be accessed only by the purchaser. I-bonds also can be purchased as a gift for anyone with a Social Security number, as long as the total of bonds purchased and credited to that Social Security number doesn’t exceed $10,000 that year.

Interest income from the bonds is credited to the value of the bond, rather than being directly paid out to the bondholder. Interest is tax-free at the state and local level but is taxable on your federal income tax return. The tax can be paid when the bonds are redeemed or as the interest is credited during the life of the bond. Bonds sold to pay for qualified educational expenses can be redeemed tax-free.

Bottom Line

The rate on new I bonds is lower than the previous issue but still higher than expected. The base rate is higher than before giving investors additional returns if they hold the bonds during periods of lower interest rates.

Tips for Investing in I Bonds

  • If you’re unsure how much of your portfolio should be devoted to bonds, use our asset allocation calculator. Based on your risk tolerance, this free tool will provide a recommendation for how much of your portfolio should be kept in stocks, bonds and cash.
  • A financial advisor can help integrate I-bonds into your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/DNY59, ©iStock.com/AsiaVision, ©iStock.com/Charday Penn

Brian J. O’Connor

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Some traditional banks still offer truly free checking accounts, but it gets more difficult every year to find one. More often, you have to jump through annoying hoops to get those monthly maintenance fees waived.

Good thing traditional banks — and tradition-minded online banks — aren’t the only game in town anymore. Dozens of fintech apps like Current have stepped up in recent years to offer banking services for free with no strings attached.

What Is the Current App?

Current is a financial technology app that offers basic banking services through Choice Financial Group, member FDIC. It offers a checking account with a Visa debit card that earns rewards on select purchases and connected savings accounts that earn variable interest.

Current charges no monthly maintenance fee and has no minimum balance requirements. Notable banking features include early direct deposit with qualifying payers, optional overdraft protection, a broad fee-free ATM network, and mobile check deposit. 

Current also has a crypto investing platform, but it’s totally optional to use and you don’t have to keep any of your funds in crypto if you don’t want to.

What Sets Current Apart?

Current has several features that distinguish it from other bank accounts and fintech apps:

  • Open to kids as young as 13. You can open a Current account as soon as you turn 13, though teen accounts only work when connected to a parent account, meaning a Current account owned by someone 18 or older.
  • Generous rewards on eligible purchases. You can earn up to 7x rewards on eligible debit card purchases with Current. That’s far more generous than most rewards debit cards, though not all spending earns rewards.
  • Competitive yield on eligible balances. Current offers an impressive yield on eligible savings: 4.00% APY on Savings Pods balances up to $2,000 in each pod. You can have up to three Savings Pods, for a total of up to $6,000 in interest-bearing balances across all pods.
  • No gas holds. Current automatically and immediately removes debit card holds placed by gas stations. These holds lower your available balance, which can be a big problem if you have little or no buffer in your account.

Key Features of Current

Current is basically a mobile-friendly checking and savings account package with a crypto investing platform attached. Overall, it works like any other online bank account, but it has a few features that set it apart.

Earning Rewards on Debit Card Purchases

Eligible debit card purchases earn rewards through the Current Points program. However, you don’t earn points on as many purchases as you would with a typical credit card.. According to Current, about 14,000 locations participate.

You can find eligible Current Points locations using the app’s rewards map. For each location, the map shows how many points you can earn per $1 spent — as little as 1x or as much as 7x, depending on the merchant. You have to activate each offer to earn points, which adds a step to the process but is easy enough to do in the app.

You can redeem points for cash or credits against future Current purchases. There’s no limit to how many points you can earn overall.

Early Direct Deposit

Eligible private direct deposits hit Current accounts up to two days early. Most private employers qualify. If you receive government benefits by direct deposit, your funds may come up to four days early.

Savings Pods & Interest on Savings Balances

You can set up as many as three savings subaccounts within your Current account. Known as Savings Pods, these are goal- or purpose-driven buckets that keep your funds separate as you work toward specific future plans.

Savings Pod balances earn 4.00% APY on the first $2,000 in each pod. That means you can earn interest on up to $6,000 in your Savings Pods.

You can save faster by taking advantage of Current’s Round-Ups feature. After you opt in, this automatically rounds up each debit card purchase to the nearest dollar and deposits the difference in a designated pod.

Overdraft Protection (Overdrive)

Current offers fee-free overdraft protection on checking balances through its Overdrive feature. You must set up direct deposit to qualify, then opt in — protection isn’t automatic.

Overdrive protection tops out at $25 to start, meaning Current allows transactions that would result in negative balances as large as $25. It ranges up to $200 per instance based on Current’s assessment of your risk of nonpayment. Generally, your limit increases over time, but Current has no set schedule for increases.

ATM Access

Current has a network of more than 40,000 fee-free ATMs. ATM withdrawals outside this network may still incur surcharges Current can’t control.

Gas Hold Removal

If you use your Current debit card at a gas station that normally puts a hold on the account until the transaction settles, Current removes it with no action needed on your end. That frees up any cash that would have been tied up by the hold — up to $50 in many cases.

Spending Insights

Current’s Spending Insights feature helps you track your spending and saving patterns over time. Based on your activity, Current may suggest positive changes that can free up room in your budget or increase your savings pace.

Mobile Features

Current is a mobile-friendly app. Notable mobile capabilities include:

  • Fee-free mobile check deposit
  • Instant transfers to external bank accounts and linked Current accounts, including teen accounts
  • Chore assignments with custom payment amounts for linked teen accounts
  • Real-time notifications when a teen user swipes their debit card
  • Customizable spending controls for teen accounts, including the ability to block specific merchants or merchant categories

Crypto Investing

Current has a built-in crypto investing platform where you can buy and sell popular coins like Bitcoin and Ethereum. It’s only available for adult accounts at the moment. And crypto pricing is extremely volatile, so be cautious if you choose to use this feature, and never invest more than you can afford to lose.

Advantages of Current

Current ticks many of the boxes you’d hope an entry-level checking and savings package would.

  • No monthly service charge. Current has no monthly service charge, regardless of your balance or transaction activity. It costs nothing to open and maintain your account.
  • Fee-free overdraft protection. Current’s Overdrive feature is a fee-free overdraft protection program that covers negative balances up to $200. Many fintech apps also have overdraft protection, but a fee-free option is rare.
  • Competitive interest rate on eligible balances. Current’s Savings Pod yields are on par with the best high-yield savings accounts on the market. Many fintech apps don’t pay interest at all, and those that do often can’t compete with top yields.
  • Early direct deposit with eligible payers. If your employer qualifies — and most do — you can get paid up to two days early with Current. That’s Wednesday instead of the usual Friday payday.
  • No need to wait until you’re 18 to open an account. Current is open to kids as young as 13 as long as they link their accounts to an adult account owned by someone 18 or older. With built-in chore and allowance features, it’s an ideal first bank account for older kids.
  • No gas holds. Current releases gas station holds as soon as the station imposes them. That can free up as much as $50 (and sometimes more) immediately without the customary two- to three-business-day wait.
  • Strict parental controls for teen accounts. Current’s parental monitoring and control features include real-time debit card transaction alerts, customizable payment blocks on merchants or transaction categories, and a chore management interface that lets you assign chores and then mark them complete. If your teen is ready for more freedom and flexibility but still needs financial training wheels, Current has your family covered.

Disadvantages of Current

Current has some meaningful downsides, including a relatively low maximum balance to earn interest and significant limits on the rewards program.

  • Many Current purchases don’t earn rewards. Current only earns rewards on certain debit card purchases. To find participating merchants and see how much you can earn at each, you need to use the Current Points map. That adds time and friction to the process — and even with careful planning, Current can’t match the efficiency or earning potential of a general-purpose rewards credit card.
  • Must activate offers in the app to earn rewards. Current purchases don’t earn rewards automatically. You have to activate each opportunity in the app. While the app is user-friendly enough, that adds another step that’s easy to forget.
  • Only $6,000 in savings balances eligible to earn interest. Savings Pod balances only earn interest on the first $2,000, and you can only have three Savings Pods at once. That means the biggest balance you can earn interest on is $6,000.

How Current Stacks Up

Current isn’t the only mobile-friendly checking and savings solution on the market. Chime is a popular alternative — one that shows up in multiple product comparisons on Current’s website. So before you go to open an account with Current, see how the two stack up.

Current Chime
Monthly Fee $0 $0
Debit Card Rewards Up to 7x at eligible merchants None
Savings Yield 4.00% APY on up to $6,000 2.00% APY on all savings balances
Early Direct Deposit Yes, two days early Yes, two days early
Overdraft Protection Yes, up to $200 Yes, up to $200
Deposit Insurance Yes, up to $250,000 Yes, up to $250,000

Final Word

Current has a number of advantages over traditional bank accounts, including no monthly service charge, fee-free overdraft protection, early payday with qualifying direct deposit, a potentially generous rewards program, and a very competitive savings yield. That makes it an ideal bank account for people who live paycheck to paycheck and younger folks transitioning into the workforce after finishing school.

It’s also useful for teens and their parents thanks to a teen-friendly account with parental monitoring and controls.

Current does have some drawbacks, though. Many purchases earn no rewards at all, and you need to activate offers before each transaction, which adds friction to the process. Current has a relatively low maximum balance to earn interest as well — just $6,000 across all eligible savings subaccounts. 

For most would-be users, Current has more to like than dislike. But before you rush out to apply, make sure it fits your needs.

The Verdict

Our rating

  • Minimum Balance/Deposit: $0
  • Maximum Balance: None
  • Monthly Fee: $0
  • Rewards: Up to 7x points
  • Yield (Interest Rate): 4.00% APY on eligible balances
  • Additional Benefits: Early direct deposit, overdraft protection, mobile check deposit
  • Banking Services By: Choice Financial Group, member FDIC
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com

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What Happens When a Bill Goes to Collections? – MintLife Blog

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credit score. You will then be contacted by phone and in writing regarding the details of the charge-off.

In this guide, we’ll explore what happens when a bill goes to collections as well as what to expect during the payoff process. You can still redeem your credit score by paying down your debt as quickly as possible and staying diligent with your other accounts.

What Is a Collection? 

The original lenders—such as the credit card company, mortgage lender, or doctor’s office—turn to collection agencies when they no longer expect to receive your payment. Collection agencies either act as a middleman to retrieve the debt or purchase the debt from the lender for a fraction of the original amount. The lender then writes the amount off as a loss to their business and passes responsibility off to the agency. 

Collection agencies purchase your debt for a smaller percentage of the original amount since they take on the risk that the money will not be repaid. This percentage varies based on a series of details, including the age and type of debt. Often, the higher the risk the debt will not be repaid, the less the agency pays.

When does a bill go to collections? A lender will typically sell the debt between 30 and60 days of delinquency, though they may not tell you that this occurred until after the transfer. Medical bills will not be transferred until they reach 180 days of delinquency due to the National Consumer Assistance Plan.

Once a lender sells the debt to a collections agency, you will receive a phone call alerting you of the change. Within five days of the initial notice, you will receive a physical letter that outlines the amount owed and how to pay or dispute the bill. Agencies do not have the right to collect fees or interest on the amount, nor are they allowed to threaten or intimidate you to pay the bill. The debt collectors can continue to pursue the amount depending on your state’s statute of limitations. The length varies between three to ten years depending on the laws of your state.

How Can a Bill in Collections Affect My Credit?

Payment history is one of the top contributing factors to your credit report, accounting for over a third of your credit score. Lenders want to be able to see that you’ve managed your finances in the past. Missed and lapsed payments that have gone to collections could be seen as a sign of financial instability. The effect on your credit score comes down to how late the payment is, the amount due and the type of debt.

When unpaid bills are sold to collection agencies, the negative mark can stay on your credit score for up to seven years. The starting date is determined by the last time the bill was brought current. For example, notes on defaulted bills can remain on your credit for seven years after the last time you made a payment on the loan in question. 

It is important to look at your credit report on occasion to ensure these negative marks do not appear by accident. If the collections agency or lender made a mistake in reporting the information, you can dispute the debt to have your report updated or the note removed.

As we mentioned earlier, the National Consumer Assistance Plan keeps medical debt from appearing on your credit report before 180 days of delinquency. This allows patients to negotiate with their doctors and insurance companies, many of which will offer payment plans when the bill is too high to pay in full.

How to Handle Accounts in Collections

Understanding what happens when your debt goes to collections can be daunting. Remember that you must receive all the details in writing within five days of first receiving notice. Once this arrives, verify the details with your own payment history and accounts. Review the Fair Debt Collections Practice Act if you’re concerned your collection agency is overstepping their bounds. Collectors are not, for example, allowed to intimidate you or call at unreasonable hours.

If all information is confirmed, you can approach the payoff in several ways. Set up a payment plan with your collection agency by determining a practical timeline with your own finances. If you can afford $50 a month for the next year, speak to your agency about this option and request any agreement in writing before proceeding. Avoid giving your bank account number or setting up automatic debits with the collection agency and clearly state how you plan to pay off the amount.

Dispute any inconsistencies within 30 days of collections notification. Collections does not have the right to list the debt on your credit report during the investigation. The Consumer Financial Protection Bureau has prepared sample letters for disputing or requesting clarification from a collection agency.

Once you’ve done your due diligence of requesting a payment plan and paying down the debt to your ability, the statute of limitations laid out by your state determines how long a collection agency can pursue you. A collection agency can sue you for unpaid debt, but you may have a case to have the lawsuit dismissed with legal assistance if the debt is outside the statute of limitations.

If a bill goes to collections, you do have options. Keep yourself informed about your rights as you work with collections agencies and be sure to request all agreements in writing. You can also track your credit as you make a plan for paying down your debt. This allows you to regain control after a temporary moment of financial instability.

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    Apache is functioning normally

    How Rising Rates Affect Bank Stock

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    Rising interest rates can be good or bad news for bank stocks — sometimes both at the same time. Banks can earn more money when they can charge more for loans, but borrowers may want fewer loans, which can depress profits. Also, banks must pay more when they borrow funds. Finally, banks’ portfolios of bonds usually decline in value when interest rates rise, which can harm the bank’s balance sheets and cause investors to shy away from them. Individual banks may do better or worse when rates rise, depending on their specific markets and business model.

    To figure out how bank stocks could fit into your plans, consider working with a financial advisor. 

    Recent Bank Stock Performance

    A little more than a year after the Federal Reserve began hiking interest rates on March 16, 2022, one broad-based measure of bank stocks showed how rates can negatively affect shares of banking companies. The S&P Banks Select Industry Index, which tracks shares of 94 banks and other financial services institutions with market caps that range from less than $1 billion to $382 billion, was down 28.86% in the year ending March 30, 2023. While this was a challenging period for stocks in general, the S&P 500 Index of 500 large firms in diverse industries was down a more modest 9.29% for the same period.

    This poor showing by bank stocks during a year of rate hikes contrasts with a positive annualized return of 11.51% for the previous three years. That period includes two years of stable interest rates and relatively good price performance before the rate hikes started.

    This general trend is in addition to the singular failures of two large institutions, Silicon Valley Bank and Signature Bank, which were shut down by regulators during March 2022. These banks were victims of runs by depositors who rushed to withdraw funds after concerns about the banks’ stability arose.

    How Interest Rates Affect Bank Stocks

    The interplay between bank stocks and interest rates is not perfectly straightforward, however. Higher rates can both benefit and imperil banks. Here are some major factors affecting how bank stocks respond to interest rates:

    • Higher lending profits. Banks make money by lending money and their profit margins may rise when they can charge more to borrowers, which naturally helps buoy banks shares.
    • Less loan demand. When loans costs more, borrowers are less interested in borrowing, which can depress bank shares. Also, rate hikes tend to depress overall economic activity, which can further reduce loan demand.
    • Higher borrowing costs. Banks don’t just lend money. They also borrow from various sources, including the Federal Reserve, which manages overall rates by increasing the rate it charges to member banks for borrowing from it. Depositors, too, want higher rates on savings accounts and certificates of deposits, so banks have to pay more to remain competitive.
    • Bond portfolios. Banks can’t lend out all the money they have. They must hang onto some of their total capital as a reserve. These reserves are typically invested in bonds, which tend to decline in value when rates rise – especially if those bonds are hold-to-maturity fixed-income securities. If the value of these reserves declines enough, it can make banks vulnerable to customer withdrawals, trigger regulatory scrutiny and, potentially, being shut down. Investors who see declining reserves often unload bank stocks, causing prices to fall. The problems at Silicon Valley Bank, Signature bank and First Republic, for example, were caused in part by steep declines in the value of their portfolios of bonds, which limited their ability to raise money to pay off depositors when bank runs gathered momentum.

    Interest rates aren’t the only economic factors that affect banks. For instance, central banks tend to increase rates when economies are strong, because strong economies tend to bring about inflation. Loan demand tends to be strong when the economy is, so for a while at least when rates rise some banks may enjoy continued good demand for their relatively high-priced loans.

    Also, much depends on the circumstances of individual banks. For example, Silicon Valley Bank failed while nearly all other banks survived the challenging economic climate, in part, because it had as customers a higher-than-average percentage of venture capitalists. At the same time shares in the more-diversified JPMorgan Chase & Co., the nation’s largest bank, were down only about 4% during the year after the rate hikes started.  That’s much less than the S&P bank index and better than the overall stock market performance.

    The Bottom Line

    Banks and interest rates have a complex relationship that includes the opportunity to earn more profit from lending when rates rise, but only if they can overcome the obstacle of higher borrowing costs for their own funds. The round of rate hikes that began in March 2023, along with other influences, has led to a steep decline in the value of the typical bank stock. This suggests that most banks, in the eyes of investors, are not being helped by higher interest rates. However, broad characterizations of the impact of rising rates on bank stocks may be inaccurate in the case of individual stocks.

    Investing Tips

    • To better understand how investing in banks and financial services companies can play a role in your portfolio, consider talking to a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
    • Interest rates affect far more than bank stocks. The SmartAsset guide to interest rates shows how rate trends impact many aspects of your personal financial life, from the cost of a new mortgage to the return on your savings account.
    Mark Henricks
    Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.

    Related Posts

    Read next article

    About Our Investing Expert

    Have a question? Ask our Investing expert.

    Categories

    Source: smartasset.com

    Apache is functioning normally

    How Rising Rates Affect Bank Stock

    Close thin

    Facebook

    Twitter

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    Linked in

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    arrow-right-sm

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    Tap on the profile icon to edit
    your financial details.

    Rising interest rates can be good or bad news for bank stocks — sometimes both at the same time. Banks can earn more money when they can charge more for loans, but borrowers may want fewer loans, which can depress profits. Also, banks must pay more when they borrow funds. Finally, banks’ portfolios of bonds usually decline in value when interest rates rise, which can harm the bank’s balance sheets and cause investors to shy away from them. Individual banks may do better or worse when rates rise, depending on their specific markets and business model.

    To figure out how bank stocks could fit into your plans, consider working with a financial advisor. 

    Recent Bank Stock Performance

    A little more than a year after the Federal Reserve began hiking interest rates on March 16, 2022, one broad-based measure of bank stocks showed how rates can negatively affect shares of banking companies. The S&P Banks Select Industry Index, which tracks shares of 94 banks and other financial services institutions with market caps that range from less than $1 billion to $382 billion, was down 28.86% in the year ending March 30, 2023. While this was a challenging period for stocks in general, the S&P 500 Index of 500 large firms in diverse industries was down a more modest 9.29% for the same period.

    This poor showing by bank stocks during a year of rate hikes contrasts with a positive annualized return of 11.51% for the previous three years. That period includes two years of stable interest rates and relatively good price performance before the rate hikes started.

    This general trend is in addition to the singular failures of two large institutions, Silicon Valley Bank and Signature Bank, which were shut down by regulators during March 2022. These banks were victims of runs by depositors who rushed to withdraw funds after concerns about the banks’ stability arose.

    How Interest Rates Affect Bank Stocks

    The interplay between bank stocks and interest rates is not perfectly straightforward, however. Higher rates can both benefit and imperil banks. Here are some major factors affecting how bank stocks respond to interest rates:

    • Higher lending profits. Banks make money by lending money and their profit margins may rise when they can charge more to borrowers, which naturally helps buoy banks shares.
    • Less loan demand. When loans costs more, borrowers are less interested in borrowing, which can depress bank shares. Also, rate hikes tend to depress overall economic activity, which can further reduce loan demand.
    • Higher borrowing costs. Banks don’t just lend money. They also borrow from various sources, including the Federal Reserve, which manages overall rates by increasing the rate it charges to member banks for borrowing from it. Depositors, too, want higher rates on savings accounts and certificates of deposits, so banks have to pay more to remain competitive.
    • Bond portfolios. Banks can’t lend out all the money they have. They must hang onto some of their total capital as a reserve. These reserves are typically invested in bonds, which tend to decline in value when rates rise – especially if those bonds are hold-to-maturity fixed-income securities. If the value of these reserves declines enough, it can make banks vulnerable to customer withdrawals, trigger regulatory scrutiny and, potentially, being shut down. Investors who see declining reserves often unload bank stocks, causing prices to fall. The problems at Silicon Valley Bank, Signature bank and First Republic, for example, were caused in part by steep declines in the value of their portfolios of bonds, which limited their ability to raise money to pay off depositors when bank runs gathered momentum.

    Interest rates aren’t the only economic factors that affect banks. For instance, central banks tend to increase rates when economies are strong, because strong economies tend to bring about inflation. Loan demand tends to be strong when the economy is, so for a while at least when rates rise some banks may enjoy continued good demand for their relatively high-priced loans.

    Also, much depends on the circumstances of individual banks. For example, Silicon Valley Bank failed while nearly all other banks survived the challenging economic climate, in part, because it had as customers a higher-than-average percentage of venture capitalists. At the same time shares in the more-diversified JPMorgan Chase & Co., the nation’s largest bank, were down only about 4% during the year after the rate hikes started.  That’s much less than the S&P bank index and better than the overall stock market performance.

    The Bottom Line

    Banks and interest rates have a complex relationship that includes the opportunity to earn more profit from lending when rates rise, but only if they can overcome the obstacle of higher borrowing costs for their own funds. The round of rate hikes that began in March 2023, along with other influences, has led to a steep decline in the value of the typical bank stock. This suggests that most banks, in the eyes of investors, are not being helped by higher interest rates. However, broad characterizations of the impact of rising rates on bank stocks may be inaccurate in the case of individual stocks.

    Investing Tips

    • To better understand how investing in banks and financial services companies can play a role in your portfolio, consider talking to a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
    • Interest rates affect far more than bank stocks. The SmartAsset guide to interest rates shows how rate trends impact many aspects of your personal financial life, from the cost of a new mortgage to the return on your savings account.
    Mark Henricks
    Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.

    Related Posts

    Read next article

    About Our Investing Expert

    Have a question? Ask our Investing expert.

    Categories

    Source: smartasset.com

    Apache is functioning normally

    The rise of cryptocurrencies has led to a significant shift in the financial landscape. As crypto gains popularity, many financial institutions are adapting to this change by offering specialized banking services to accommodate crypto transactions.

    This article explores the best crypto-friendly banks, explaining why they are considered top choices in the ever-evolving crypto space.

    15 Best Crypto-Friendly Banks

    Here are the top crypto-friendly banks and banking services providers, each offering a unique set of services tailored to the needs of cryptocurrency enthusiasts.

    1. Cash App

    Among its many features, Cash App allows users to buy Bitcoin and instantly withdraw funds to personal wallets.

    Partnerships with banks such as Sutton Bank and Lincoln Savings Bank enable Cash App to provide banking services. This collaboration between Cash App and crypto-friendly banks ensures that customers have a convenient and secure way to manage their crypto transactions.

    Sutton Bank also issues the Fold Visa® Prepaid Card, which allows you to earn Bitcoin on every purchase.

    See also: How Does Cash App Work?

    2. Revolut

    Revolut is a UK-based fintech company that was founded in 2020. It has quickly become a major banking player in the UK, Europe, and the US, as well as a top crypto-friendly bank. Their user-friendly mobile app lets customers easily buy cryptocurrencies like Bitcoin and manage their digital assets. The app also features automatic buy orders that activate based on certain market conditions, making the crypto investment process even smoother.

    What sets Revolut apart from competitors is the variety of crypto-related services they offer. Customers can stake select crypto assets, make off-chain transactions between users, and pay bills using crypto through automatic conversion to fiat currency.

    With over 50 cryptocurrencies on the platform and plans to expand, Revolut is dedicated to staying ahead in the digital currency world. Although there are transaction fees for crypto payments, users can reduce these fees with account upgrades. Revolut’s upcoming launch of its native coin, RevCoin, highlights their commitment to providing a diverse and dynamic crypto banking experience for their growing customer base.

    3. Quontic

    Quontic is the first online bank to offer a rewards checking account that allows you to earn Bitcoin. With its innovative Bitcoin Rewards Checking account, users can easily integrate crypto into their everyday banking experience. Quontic only supports Bitcoin. However, its unique offering makes it a top choice for those looking to capitalize on the increasing prominence of digital currencies.

    The Bitcoin Rewards Checking account offered by Quontic stands out due to its 1.50% rewards on all Point of Sale (POS) transactions made with the associated debit card. These rewards are paid out in Bitcoin, allowing users to accumulate the popular cryptocurrency as they make everyday purchases. Furthermore, the account acts as a secure wallet for users to store their Bitcoin, providing a seamless banking experience for crypto enthusiasts.

    This FDIC-insured bank account requires a minimum opening deposit of $500 and is not available in Hawaii and North Carolina.

    4. SoFi

    SoFi is an innovative financial institution that has embraced the crypto revolution. Through its SoFi Invest platform, customers can trade crypto and access educational resources to learn about digital currencies.

    With just a $10 minimum investment, users can start trading Bitcoin, Ethereum, Dogecoin, Cardano, and over 20 other coins on a platform available 24/7. Users can trade cryptocurrencies alongside stocks, fractional shares, and ETFs within the SoFi app, making it an all-in-one investment platform.

    SoFi takes security seriously and offers a range of tools to protect your crypto holdings from theft. These include two-factor authentication, SSL encryption, partnering with trusted exchanges like Coinbase for transactions, and not sharing personal information with trading partners or custodians. This ensures that your investments are safe and secure on the platform.

    The SoFi app also provides a wealth of educational resources, such as their Crypto Guide for Beginners, Crypto Glossary, and Guide to Crypto Staking, to help you make informed investment decisions. Keep in mind that due to its volatility, crypto carries a higher degree of risk compared to traditional investments.

    Crypto trading on SoFi Invest is subject to a 1.25% markup on crypto transactions, which is added to the market price from the exchange. While there are no plans to allow transfers between SoFi Invest accounts and external wallets at this time, the platform’s focus on security and convenience makes it an attractive option for those interested in trading crypto.

    5. Vast Bank

    Vast Bank has made history as the first full-service national bank to provide customers with the ability to buy, sell, and hold cryptocurrencies. Through an intuitive mobile banking app, users can access both a checking account with a competitive 2.65% annual percentage yield (APY) and a dedicated crypto account.

    As a nationally chartered and federally regulated U.S. bank, Vast Bank ensures a high level of security and reliability for its customers. By using the Vast Crypto Banking app, users can easily deposit USD into their checking account, purchase cryptocurrencies, and safely store their crypto alongside their fiat funds.

    This crypto bank currently supports a wide range of popular cryptocurrencies. Among them are Bitcoin (BTC), Ethereum (ETH), Filecoin (FIL), Cosmos (ATOM), Chainlink (LINK), Cardano (ADA), Litecoin (LTC), Aave (AAVE), Bitcoin Cash (BCH), Orchid (OXT), Tezos (XTZ), and Algorand (ALGO).

    Vast Bank offers the convenience and safety of traditional banking, such as FDIC insurance for checking accounts, a debit card with access to 56,000 free ATMs worldwide, account transfers, bill pay, and mobile deposits. However, it is important to note that digital assets held in the crypto account are not insured by any government entities, including FDIC or SIPC.

    6. Wirex

    Wirex is a standout in the world of crypto-friendly banks, offering users a seamless banking experience that supports both fiat currencies and cryptocurrencies. Available in 130 countries and boasting over 3.5 million users worldwide, Wirex provides a multi-currency account and a Visa card for convenient fiat payments.

    One of the main attractions of Wirex is its generous savings interest rates, which reach up to 6% for cryptocurrencies such as BTC, ETH, and LTC. For those who prefer to save in fiat currencies like USD, AUD, HKD, or DAI, an impressive 12% interest rate is available. Additionally, users can earn an extra 4% interest when saving in WXT, Wirex’s native token.

    Built on both Ethereum and Stellar blockchains, WXT offers exceptional performance and versatility within the decentralized finance (DeFi) sector. Wirex rewards its users with up to 4% WXT cashback each time they use their card for in-store or online purchases. The multicurrency card allows for hassle-free payments when traveling abroad, automatically converting to the local currency with no exchange fees, and offering savings of up to 3% on international transactions.

    Beyond being a Bitcoin-friendly bank, Wirex offers a wallet app that supports over 100 coins and includes DeFi and NFT capabilities. This combination of features makes Wirex an excellent choice for those seeking a comprehensive and crypto-friendly banking experience.

    7. Ally Bank

    Ally Bank is an online bank that has embraced the crypto revolution, offering an array of services to support digital assets. Some notable features from Ally’s website include:

    • Crypto trusts: Ally offers private trusts that invest in and track the price of specific cryptocurrencies, allowing customers to indirectly trade them as they would a stock.
    • Bitcoin futures: Ally provides access to exchange-traded funds (ETFs) that invest in the purchase of bitcoin futures contracts. This allows customers to gain exposure by speculating on the future price of Bitcoin without directly owning it.
    • Crypto stocks: Ally enables customers to invest in publicly traded companies that buy and hold cryptocurrency. Buying shares of these stocks provide indirect exposure to crypto.

    Ally Bank’s crypto trading services on the Ally Invest platform, integration with popular cryptocurrency exchanges, and digital asset storage and management make it a top choice for crypto enthusiasts seeking a crypto-friendly bank.

    8. BankProv

    BankProv is a forward-thinking US financial institution that provides a range of services, including business banking, cash management, personal banking, and cryptocurrency offerings. Embracing modern technologies, this crypto bank utilizes API banking, the ProvXchange network, and specializes in lending.

    Its support for various digital assets ensures that customers can access a diverse range of investment options, making it a strong contender among crypto banks. Customers can enjoy real-time transactions through the ProvXchange network, while the API integration allows for seamless interaction with various platforms and software solutions.

    BankProv provides crypto-backed loans and credit lines for organizations secured by Bitcoin or Ether, as well as equipment and infrastructure loans for crypto mining operations. Additionally, Bitcoin ATM operators can take advantage of secure cash vault services, expedited money transfers, and other perks tailored to businesses operating within the crypto sector.

    9. Juno

    Established in 2019, Juno is a fintech company offering a digital banking platform with hybrid accounts for managing both cash and cryptocurrencies. Despite not being a traditional bank, Juno’s exceptional services make it a top contender for cryptocurrency investments.

    Juno enables users to purchase a range of popular cryptocurrencies without fees, and provides two types of checking accounts: Basic and Metal. The Basic account is free with a $5,000 daily funding limit, while the Metal account, free with monthly qualifying deposits of $250 or more, offers a $25,000 daily limit and up to six times higher savings.

    Bonus rewards are a highlight of Juno’s offerings, with users earning up to 5% on cash deposits and yearly cashback for payments with cash or crypto. The JCOIN Loyalty Program allows customers to earn tokens and redeem them for exclusive discounts and cashback boosts. New users can benefit from a welcome offer, which includes bonuses for initial deposits, trades, and referrals.

    Free cash withdrawals are available at Allpoint and MoneyPass® ATMs, with additional out-of-network withdrawals for both account types. Juno’s mobile banking app is compatible with iOS and Android, supporting Apple Pay, Google Pay, Samsung Pay, and debit cards. The platform also offers the unique feature of converting paychecks into crypto through partnerships with over 500 payroll providers, allowing users to automate their investments seamlessly.

    10. Monzo

    Monzo is an innovative online-only bank that has gained popularity in the UK for its modern approach to banking. More recently, Monzo has expanded its services to accept applications from US customers, broadening its reach in the financial market.

    With a Monzo account, customers can manage all their bank accounts, including non-Monzo accounts, on a single dashboard through the Monzo app. While the bank itself does not support crypto trading, users can still invest their Monzo account funds into cryptocurrencies through crypto exchanges like Coinbase and Crypto.com. This feature provides Monzo users with indirect exposure to cryptocurrency while still enjoying the convenience and security of a modern bank.

    11. Axos Bank

    Axos Bank, a crypto-friendly institution, started providing its commercial banking clients with TassatPay access in May 2022. TassatPay is a private, permissioned blockchain-based digital payments platform that enables 24/7 real-time payment capabilities and has processed over $400 billion in transactions. This platform is endorsed by a primary bank regulator.

    Axos also offers exposure to various crypto-related exchange-traded funds (ETFs). These include the Bitwise 10 Crypto Index Fund (BITW), Bitwise Crypto Industry Innovation ETF (BITQ), ProShares Bitcoin Strategy ETF (BITO), and ProShares Short Bitcoin Strategy ETF (BITI), among others.

    12. Standard Chartered Bank

    Standard Chartered Bank has demonstrated a strong interest in cryptocurrencies and blockchain technology, regularly conducting research and sharing insights on digital currencies. Recognizing the growing demand in the market, Standard Chartered is launching a crypto exchange and brokerage service to provide its customers with access to digital assets.

    The bank’s direct crypto trading and investment services are still in development. However, their commitment to staying informed about the latest trends in the digital currency market and taking steps to launch new services indicates their growing involvement in the crypto space.

    13. USAA

    USAA, a financial institution dedicated to serving current and former military personnel and their families, provides a range of tailored financial products and services. Among these offerings is an integration with Coinbase, a leading cryptocurrency exchange.

    Through this partnership, USAA customers can conveniently link their Coinbase accounts to their USAA portal, enabling them to easily monitor their digital asset balances and track transactions. This feature streamlines the process of staying informed about one’s cryptocurrency holdings and activity, offering an added layer of convenience for USAA members.

    14. Fidor

    Fidor is a pioneering online bank headquartered in Munich, Germany. It offers innovative banking services designed to support digital assets. Its integration with popular cryptocurrency exchanges and crypto wallet services makes it an ideal choice for those looking for a crypto-friendly bank. Additionally, Fidor provides support for ICO and token sales, giving customers access to new and emerging cryptocurrencies.

    15. PayPal

    Although PayPal is not a bank, it offers various banking services and has expanded its support for cryptocurrency in recent years. PayPal enables users to buy, sell, and hold cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.

    By partnering with Paxos Trust Company, a regulated provider of cryptocurrency products and services, PayPal ensures a secure and compliant experience for its customers. While it does not offer the full range of services that traditional banks do, PayPal’s support for crypto makes it an appealing choice for those who want to manage their cryptocurrencies alongside other financial transactions.

    Bottom Line

    The increasing popularity of cryptocurrency has led to a growing number of crypto-friendly banks, offering a range of services to accommodate the unique needs of digital asset users. These banks provide an array of services, from crypto trading and custody to debit cards and loans backed by crypto.

    As the crypto industry continues to evolve, it’s crucial to stay informed and choose the best crypto-friendly bank to suit your needs. With so many crypto-friendly banks available, you can now manage your crypto alongside traditional banking services, providing a seamless and efficient way to navigate the world of cryptocurrencies.

    Frequently Asked Questions

    What makes a bank crypto-friendly?

    A crypto-friendly bank is one that supports and facilitates cryptocurrency transactions, storage, and trading. These banks typically offer a range of services tailored to the needs of digital asset users, such as integration with popular crypto platforms, crypto-backed loans, and the ability to spend crypto using a debit card.

    Can I store my cryptocurrencies in a traditional bank account?

    While some banks offer crypto-friendly services, cryptocurrencies are typically stored in digital wallets rather than traditional bank accounts. However, many crypto-friendly banks provide integration with popular crypto wallets and exchanges, allowing you to manage your crypto alongside your fiat currency.

    Are crypto-friendly banks safe and secure?

    Many crypto-friendly banks are FDIC-insured and follow strict regulatory requirements to ensure the security of your assets. It’s essential to research each bank’s security measures, such as two-factor authentication, encryption, and secure storage of crypto before choosing a crypto-friendly bank.

    How do I choose the best crypto-friendly bank for my needs?

    To choose the best crypto-friendly bank for your needs, consider the range of services offered, the bank’s reputation, and any fees associated with their services. You may also want to look for banks that provide educational resources, customer support, and a user-friendly platform for managing your crypto.

    Can I use a debit card to spend my cryptocurrencies?

    Some crypto-friendly banks and financial service providers offer debit cards that allow you to spend your crypto just like traditional fiat currency. These cards typically convert your cryptocurrencies to the local currency at the point of sale, making it convenient to use crypto for everyday transactions.

    Do crypto-friendly banks offer loans and credit products?

    Some crypto-friendly banks offer crypto-backed loans and lines of credit. These products allow you to leverage your crypto without selling it, providing greater financial flexibility for crypto users.

    Source: crediful.com

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    An impressive number of online banks offer relatively high yields on savings accounts, money market accounts, and even checking accounts. Yes, even when interest rates are low.

    And everyone needs a checking account. Why not choose one with a yield that rivals the best high-yield savings accounts?

    Best High-Yield Checking Accounts

    Many of these high-yield checking accounts are on our roundups of the best free checking accounts and best checking accounts with monthly maintenance fees. If you hate monthly service fees, know that most banks happily waive those fees when you meet minimum balance or monthly transaction requirements.

    Wealthfront Cash Account

    Our Rating
    The Wealthfront Cash Account earns 4.30% APY on all balances — one of the best cash account yields on the market. It links seamlessly with Wealthfront’s other core product, a low-cost robo-advisor.
    Account APY
    Minimum Balance
    Monthly Fee

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    Wealthfront pairs a low-cost investment management solution with an excellent high-yield checking account, the Cash Account.

    The Wealthfront Cash Account has a virtually nonexistent minimum opening deposit, high yields on all balances, no account fees, and a great lineup of value-added features, including Self-Driving Money™.

    Self-Driving Money™ is a powerful money management automation tool that effortlessly allocates deposits among near-term expenses, variable-term savings goals, and longer-term investment objectives, all while making sure your emergency fund is topped up and you’ve got enough left over to enjoy life.

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    Aspiration Spend & Save

    Our Rating
    Get up to 3.00% APY on the first $10,000 in your account and earn up to 10% back on purchases with select Aspiration partners.
    Account APY
    Up to 3.00% APY on the first $10,000
    Minimum Balance
    Monthly Fee
    $0 for a standard account, $7.99 for Aspiration Plus
    Our Rating
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    Aspiration Spend & Save is two accounts in one:

    • Aspiration Debit, a rewards checking account that pays up to 10% back on eligible purchases with Conscience Coalition partners, companies that have committed to helping the planet (and caring more about their bottom line in the process).
    • Aspiration Save, a high-yield savings account that links seamlessly to Aspiration Debit and earns up to 3.00% APY on the first $10,000 in the account.

    You need to pay $7.99 per month for an Aspiration Plus membership to earn 10% back and 3.00% APY. Otherwise, cash back maxes out at 5% and your yield is 1.00% APY on the first $10,000.

    The Aspiration Save Account’s up to 3.00% Annual Percentage Yield (“APY”) is variable, subject to change, and only available to customers enrolled in Aspiration Plus after conditions are met. Customers not enrolled in Aspiration Plus receive 1.00% APY after conditions are met. The Aspiration Spend & Save Accounts are cash management accounts offered through Aspiration Financial, LLC, a registered broker-dealer, Member FINRA/SIPC, and a subsidiary of Aspiration Partners, Inc. (“Aspiration”). Aspiration is not a bank.

    Go2Bank

    Our Rating
    Earn up to 7% cash back when you buy eGift cards in the app. Plus, earn 4.50% APY paid quarterly on savings balances up to $5,000.
    Account APY
    Minimum Balance
    Monthly Fee
    $5, waived with direct deposit

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    GO2Bank combines a rewards checking account and a high-yield savings account into one package. The savings side has an impressive yield on the first $5,000 (4.50% APY), while the checking side pays up to 7% cash back on eligible electronic gift card purchases (GO2Bank calls them “eGift cards”) made in the app.

    GO2Bank does have a monthly maintenance fee, but it’s waived with any qualifying direct deposit. Another highlight: the option to deposit cash at more than 90,000 retail locations nationwide.

    Active GO2Bank account required to receive an eGift Card. eGift Card merchants subject to change

    GO2Bank, Member FDIC. Interest paid quarterly on the average daily balance of savings during the quarter up to a $5,000 balance and if the account is in good standing. 4.50% Annual Percentage Yield (APY) as of April 2023. APY may change before or after you open an account. The average national savings account interest rate of 0.05% is determined by the FDIC as of 12/14/20. Visit https://www.fdic.gov/regulations/resources/rates/ to learn more. Fees on your primary deposit account may reduce earnings on your savings account.

    Direct deposit early availability depends on timing of payor’s payment instructions and fraud prevention restrictions may apply. As such, the availability or timing of early direct deposit may vary from pay period to pay period. The name and Social Security number on file with your employer or benefits provider must match your GO2Bank account exactly or we will decline your deposit.

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    Signature Federal Credit Union might not be as well-known as banking giants like Citi and Chase, but its high-yield checking account is definitely worth going out on a limb for.

    Meet the qualifying activity requirements each month and you can earn 4.00% APY on balances up to $20,000. That’s many times higher than the national checking account average.

    To qualify for the advertised yield in any given statement cycle, do all of the following:

    • Receive a direct deposits totaling $1,000 or more.
    • Enroll in electronic statements.
    • Use your debit card to make at least 15 eligible purchases online or in person.

    Apply Now

    M1 Spend

    Our Rating
    Earn 3.30% APY with no minimum balance when you upgrade to M1 Plus. Additional benefits include 1% cash back on debit purchases and up to 10% back on credit card purchases.
    Account APY
    Minimum Balance
    Monthly Fee
    $125 per year to earn interest (after year one)

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    M1 Spend is a free cash management account from M1 Finance, a digital banking, investing, and lending platform. But if you want to earn interest on your M1 Spend balances, you need to upgrade to M1 Plus, which costs $125 after the first year.

    It’s worth upgrading. In addition to 3.30% APY on all M1 Spend balances, M1 Plus gets you 1% cash back on debit card purchases and up to four ATM fee reimbursements each month. And that’s just on the checking side — M1 Plus comes with investing and borrowing benefits too.

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    Quontic High Interest Checking

    Our Rating
    Earn 1.10% APY on eligible balances when you make at least 10 qualifying transactions in a statement period. Plus, enjoy fee-free access to more than 90,000 ATMs across multiple networks in the United States.
    Account APY
    Minimum Balance
    Monthly Fee

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    Quontic High Interest Checking is a free checking account with an attractive yield for anyone able to clear the relatively low qualifying activity bar: making 10 or more qualifying debit card point-of-sale transactions valued at $10 or more within the statement cycle. Do this and you’ll earn 1.10% APY on all balances.

    Note that Quontic used to limit interest payments to the first $150,000 in the account. This restriction has been void for a while, but there’s always the chance it could come back.

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    Nationwide Advantage Checking

    Our Rating
    Earn up to 0.90% APY with qualifying activities — $1,000 or more in total direct deposits and at least 10 transactions per month.
    Account APY
    Up to 0.90% APY
    Minimum Balance
    Monthly Fee

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    Nationwide Advantage Checking has much in common with other interest checking accounts, albeit with a slightly less generous upper yield tier than some.

    In any given month, complete qualifying direct deposits (at least $1,000 total) and transaction requirements (at least 10 of $3 or more) to earn 0.90% APY (variable with prevailing rates). Do one or the other to earn half the advertised yield — and enjoy no monthly maintenance fees and expansive ATM network access even if you can’t do either.

    One catch: The debit card transactions must occur in-person to qualify. So early in the month, focus on those types of transactions rather than online purchases until you clear 10.

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    Methodology: How We Select the Best High-Yield Checking Accounts

    We evaluated dozens of checking accounts to build this list. We considered several key variables along the way. The accounts that made the final cut scored well on most or all of them.

    Account Yield (Interest Rate)

    Remember, these are high-yield checking accounts we’re talking about. Yield is a key selling point for the banks marketing them, which is why it’s the most important factor in our analysis.

    Monthly Fee & Waiver Options

    The best high-yield checking accounts are either truly free, meaning they don’t charge monthly fees under any circumstances. Unfortunately, truly free checking accounts aren’t as common as they used to be, so we make exceptions for accounts that make it easy to get monthly fees waived with a qualifying direct deposit or clearing a reasonable minimum balance.

    Bonuses and Rewards

    The best high-yield checking accounts tend to offer sign-up bonuses for new account holders, rewards programs that pay you back for eligible purchases, or both. It’s not a deal-breaker when high-yield checking accounts lack these features, but all else being equal, we prefer that they do.

    Balance Requirements & Limits

    We believe you shouldn’t have to save up a fortune to benefit from a high-yield checking account. Most of the accounts on this list have no minimum balance or very low minimum balances. A few do have maximum balances to earn interest, but those are high enough not to impact most users. 

    ATM Access

    Cash is less and less common these days, but ATM access is still important for many checking account users. And we believe you shouldn’t have to pay a fee to get your money. This is why, all else being equal, we prefer high-yield checking accounts with big fee-free ATM networks.

    Geographic Availability

    Some high-yield checking accounts have geographic restrictions, either because you have to open them in a branch or the banks offering them simply don’t operate in certain states. We exclude accounts with strict geographic restrictions and prefer 50-state coverage when possible.

    High-Yield Checking FAQs

    Choosing a checking account isn’t as simple as it sounds. You’ll almost certainly have some questions as you get into it, so we’ve preemptively answered some of the most important.

    How Much Interest Do High-Yield Checking Accounts Pay?

    It depends on the bank’s policy and prevailing interest rates. However, a good rule of thumb is that the best high-yield checking accounts pay interest on par with the top high-yield savings accounts.

    Are There Any Requirements to Earn Interest?

    Some high-yield checking accounts attach no strings at all to interest payments, but many do. The most common requirements include:

    • Setting up and maintaining a qualifying direct deposit
    • Meeting a monthly transaction minimum
    • Meeting a monthly or daily minimum balance

    What’s the Maximum Balance to Earn Interest?

    Many high-yield checking accounts pay interest on all balances, which is ideal if you keep a big financial buffer in your checking account. Others cap interest payments though. Usually, the cap is relatively high — $5,000 or more.

    How Much Do High-Yield Checking Accounts Cost?

    Ideally, nothing. And the best high-yield checking accounts are indeed free checking accounts. For accounts that do charge a monthly maintenance fee, we prefer easy waiver options, such as any direct deposit or a low minimum balance ($500 or below).

    Are High-Yield Checking Accounts Actually Savings Accounts?

    Sometimes. The line between checking and savings is blurrier these days because many banks and financial technology apps package checking and savings products into the same digital interface. Several of the accounts on this list are package deals.

    Final Word

    Like mortgage rates and CD yields, checking account yields rise and fall as benchmark interest rates change.

    During periods of economic uncertainty, when benchmark rates tend to be more volatile, these changes can occur with disorienting frequency. The yield you expect on that shiny new online checking account might not be the yield you actually receive.

    The silver lining is that competition for new checking account customers remains fierce, especially among online banks and smaller brick-and-mortar institutions without household name status.

    That means checking account yields will continue to entice new account holders, wherever interest rates go and irrespective of what happens on the savings account front.

    Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

    Source: moneycrashers.com