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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Sacramento, California, USA – February 25, 2011: Facebook.com’s homepage displayed in a Firefox browser on a computer monitor. Facebook is the world’s most popular social networking website.
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.
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.
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.
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.
Apply NowRead the Review
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
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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.
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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.
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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.
Many aspiring credit card users face a chicken-and-egg problem. You need a credit score, and a decent credit score in most cases, to qualify for most credit cards. But it’s hard to establish and build credit without a credit card.
The Petal® 2 “Cash Back, No Fees” Visa® Credit Cardoffers a way around that. It’s an unsecured cash-back credit card that doesn’t require a FICO score as a condition of approval. That means it’s an ideal first credit card for applicants who don’t want to tie up their money in a secured credit card.
The Petal 2 card isn’t right for everyone, though. Consider the whole package before you apply.
What Is the Petal 2 Card?
The Petal 2 “Cash Back, No Fees” Visa Credit Card is a rewards credit card designed for first-time credit card users and others who’ve had difficulty qualifying for unsecured credit cards in the recent past. If you’re new to credit or your credit history is limited enough that you don’t yet have a FICO score, you may still qualify for this card based on income and other noncredit factors.
Petal 2 has a straightforward cash-back rewards program that earns up to 1.5% back on everyday purchases and up to 10% back on purchases with select merchants. It has no annual fee and very few other fees.
Petal 2 does have a high regular APR and no 0% intro APR promotion, so it’s important to pay off purchases in full each month.
What Sets the Petal 2 Card Apart?
It should already be clear that Petal 2 is not your typical credit card. It stands out from most others in several key ways:
Doesn’t require a FICO score for approval. If you have a credit score, Petal considers it when you apply. But if you don’t, that’s not a deal-breaker. Petal simply uses noncredit factors to assess your application, like your income and employment status.
Up to 10% back on eligible purchases. Petal 2 caps cash-back earnings at 1.5% on most purchases, but it partners with select merchants (and more all the time) that offer 2% to as much as 10% back on eligible purchases.
Potential for a high credit limit. For an entry-level credit card, Petal 2 has an unusually high maximum credit limit — up to $10,000. Your specific credit limit depends on your income and employment status, but if you earn good money, you have a lot more leeway with this card than with most of its close competitors.
Regular cash-back earnings based on payment history. You earn 1% cash back on most purchases to start. As you build up a history of timely payments and responsible use, your regular cash-back rate increases to 1.5%. That’s a clear incentive to use this card wisely.
Is the Petal 2 Card Legit?
Yes, the Petal 2 Card is legitimate. Though most people aren’t familiar with the Petal name, Petal 2 is backed by WebBank, an FDIC-insured U.S. financial institution that has been in business for years. The card works like any other credit card backed by a U.S.-based bank.
Key Features of the Petal 2 Card
Petal 2 has a lot in common with other rewards credit cards: a cash-back program with rules it pays to learn, a credit limit based on users’ capacity to repay purchases, and a simple fee schedule. Its application standards throw some curveballs, but they’re easy enough to understand.
Cash-Back Rewards
Petal 2 earns 1% back on all eligible purchases. After 12 months of timely payments and responsible credit use, meaning you stay within your credit limit, the rate bumps up to 1.5%. There’s also bonus cash back on purchases with select participating merchants. The bonus rate ranges from 2% up to 10%, depending on the merchant. The lineup is always changing, but some very popular brands participate, including Costco and Adidas.
After each statement closing date, Petal automatically redeems your cash-back rewards to your connected bank account. You don’t have to initiate the redemption process.
Ongoing APR
From the day you open your account, all purchases you don’t pay off by the due date accrue interest at 17.74% to 31.74% (variable) APR. That’s a higher ongoing APR than most competing credit cards, so it’s even more important that you pay off your Petal balance in full each month.
Important Fees
Petal 2 has no annual fee, late fee, returned payment fee, or foreign transaction fee. Other fees may apply for specific actions like balance transfers, but there’s no ongoing cost to use this card.
Credit Limit & Increase
Petal 2 bases your initial credit limit on your credit score (if you have one) and your ability to pay your statement balance, which depends on your income. Initial limits range as high as $10,000, though most new cardholders get approved at much lower limits — a few hundred to a couple thousand dollars.
If your initial limit is low, Petal 2 offers a clear path to a higher credit limit through its Leap program. The deal is simple: You earn a credit line increase after six months of qualifying on-time payments.
Credit Required
Petal’s underwriting standards are relaxed. If you have a FICO score, you’ll likely qualify with a score as low as 600.
If you don’t have a FICO score, Petal doesn’t consider your credit history at all, instead using noncredit factors like income and employment status. The higher your income and the longer your employment history, the better your chances of qualifying without a credit score.
Advantages
Petal 2’s biggest advantages flow from its appeal to rookie applicants and its relatively generous rewards program. For example, it:
Requires no credit score to get approved. Petal 2 is one of the few unsecured credit cards that requires no credit score to get approved. In fact, all else being equal, it’s easier to qualify for this card if you have a steady job and no credit score than if you have a steady job and a very low credit score.
Requires no security deposit. As an unsecured credit card, Petal 2 requires no security deposit as a condition of account opening. If you’re still living paycheck to paycheck or close to it, this undoubtedly heightens Petal 2’s appeal.
Has potential for a high initial credit limit. Petal 2 is unusual among credit cards marketed to first-time users for offering high initial credit limits to qualified applicants. If your income and employment status allow, you could qualify for a credit limit as high as $10,000 right out of the gate with Petal 2.
No annual fee. Petal 2 has no annual fee. It costs nothing to keep this card in your wallet, no matter how infrequently you use it.
Up to 10% cash back with select merchants. Petal partners with select merchants to offer up to 10% cash back on Petal 2 purchases. Some partners are quite popular, among them Costco and Sam’s Club.
No late or returned payment fee. Petal 2 charges no fees for late or returned payments, though repeatedly missing or bouncing payments could lead to account closure.
No foreign transaction fees. Petal 2 charges no fees for international transactions. That’s good news for users who travel outside the United States regularly.
Disadvantages
Petal 2’s downsides include its high cost to carry balances and a lack of any promotions for new cardholders.
High ongoing APR. Petal 2’s variable APR (currently 17.74% to 31.74%) is higher than most competing cards. If you plan to carry a balance from month to month, look for a low-APR credit card instead.
No sign-up bonus. Petal 2 has no sign-up bonus for new cardholders. There are plenty of entry-level credit cards that do, so that’s a notable downside.
No 0% intro APR promotion. Petal 2 also has no 0% intro APR promotion for purchases or balance transfers. Combined with the high ongoing APR, that makes Petal 2 appropriate only for people who plan to pay off their balances every month, beginning in month one.
Low baseline cash-back rate. Petal 2’s baseline cash-back rate tops out at 1.5%, and only reaches that threshold after a year of responsible use. The Citi Double Cash Card, another no-annual-fee cash-back card, has a flat 2% return on spending.
How the Petal 2 Card Stacks Up
Your powers of deduction have no doubt led you to conclude that Petal 2 is not the only card in the Petal family. And you’re correct — there’s also a Petal 1, known officially as the Petal 1 “No Annual Fee” Visa Credit Card.
Petal 1 has a fair amount in common with Petal 2, and both are appropriate for people with limited credit histories. But they’re different enough to warrant a detailed head-to-head comparison.
Petal 1
Petal 2
Ongoing Rewards
None
Up to 1.5%
Bonus Rewards
Up to 10%
Up to 10%
Credit Limit
Up to $5,000
Up to $10,000
Annual Fee
$0
$0
Secured
No
No
Requires FICO Score
No
No
Final Word
The Petal 2 Card is one of the best entry-level cash-back credit cards on the market. Notable benefits include the opportunity to earn up to 10% back on select purchases, a nontraditional framework that requires no FICO score, and the potential for high initial credit limits.
Petal 2 isn’t perfect, though. It has no sign-up bonus or 0% intro APR promotion for new cardholders, mediocre-at-best 1.5% base cash back, and a high ongoing APR. If you’re looking for an above-average return on everyday spending or a generous incentive to make big purchases during your first months as a cardholder, you can do better elsewhere — if you can qualify for a more generous card. If not, Petal 2 is your stepping stone to get it.
The Verdict
Our rating
Petal® 2 “Cash Back, No Fees” Visa® Credit Card
Regular Cash-Back Rate: Up to 1.5%
Bonus Cash-Back Rate: 2% to 10% with participating merchants
Annual Fee: $0
Ongoing APR: 17.74% to 31.74% APR
Credit Needed: Limited credit is OK
Initial Credit Limit: Up to $10,000
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.
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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.
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You’ve probably heard of values-based investing. Whether your religious beliefs, environmental goals or personal ethics are guiding your investment strategy, the wide array of investments available today allows you to build a portfolio that aligns with your values. Halal investing is just one form of values-based investing designed for people of the Islamic faith. Let’s take a look at what halal investing means and what it might look like.
If you’d like help designing an investment portfolio that meets your needs, consider working with a financial advisor.
What Does “Halal” Mean?
According to the American Halal Foundation, “halal” is an Arabic word meaning “lawful” or “permitted.” Muslims use this word to designate products and practices that are allowed in the Islamic religion. You might already have heard this word used to describe certain kinds of foods or a diet but it extends to a wide variety of things in life, including investing.
It’s also helpful to know what “haram”—the Arabic word for “unlawful” or “not allowed”—means in the context of investing. Some types of financial dealings or investments are off-limits or unlawful to Muslims because they’re explicitly forbidden by the Islamic religious texts.
Halal and haram are guiding principles for Muslims that cover everything from what you may eat and drink to how much risk you may take on when investing.
Halal Investing Basics
According to the American Halal Foundation, halal investing is based on four Islamic principles.
No profiting from interest on debt or loans. Debt and paying or charging interest are both generally unlawful for Muslims, so many forms of debt and loans—or profit from debt or loans—are off-limits. The Accounting and Auditing Organization for Islamic Financial Institutions has a standard that allows a minimal amount of interest income from investments, including the stipulation that income from prohibited sources (such as interest) shouldn’t exceed 5% of the total income. Additionally, companies that have a significant amount of debt are usually not allowed for halal investors.
No high-risk investments. Islamic laws forbid gambling, so investments with a high risk component are not allowed.
No investing in haram companies. Some industries are simply off-limits to halal investors, including alcohol, pornography, gambling and pork products.
Donate profits from haram investments to charity. Remember the 5% rule mentioned above? While the commonly used standard says that 5% or less of investment income can come from haram sources, halal investors are often encouraged to take any money that comes from haram investments and donate it to charity.
So for many Muslims, halal investing means taking part in secure, low-risk investments that don’t fund or benefit from unlawful industries or products, then donating the small portion of your investment income that does end up coming from unlawful sources to charity.
What Halal Investing Might Look Like
Given the above rules for halal investing, let’s take a look at what a halal investment portfolio might include. Many stocks, index funds, ETFs, REITs and other traditional investments are allowed, while others are not.
Halal investors can buy stocks as long as they’re not from companies operating in prohibited industries or in a prohibited way. For example, buying stock in a liquor company such as Pernod Ricard would not be allowed, as alcohol is not permitted for Muslims. Buying shares in a company with significant debt would be considered risky, so also not permitted. However, stocks from a financially stable company selling a halal-compliant service or product would be allowed.
Funds, including mutual funds, ETFs and index funds are allowed as long as they match up with halal principles. It can be challenging to find funds in which all the components are halal, but there are shariah-compliant funds out there to simplify the selection process.
Real estate is also a good halal investment, as long as you’re not profiting from the interest charged on mortgages. Profiting from rent, on the other hand, is fine, so REITs can be a good choice for halal investors. Halal investors also often put their money in gold and other precious metals.
Besides stocks, funds and real estate, your halal investment portfolio might include sukuks, which are investments specifically intended for Muslim investors. While they’re often called bonds, that can be misleading—sukuks are investments in a business venture that generate profits if the venture is successful. So instead of receiving a guaranteed interest percentage, like a Treasury bond might generate, sukuks will dole out a percentage of the profits from the venture. While sukuks could technically not generate any income and leave you high and dry, the Muslim prohibition against gambling and high-risk investments come into play here and sukuks are usually only offered for ventures with a high likelihood of success.
The Bottom Line
Like many forms of values-based investing, halal investing allows Muslim investors to support companies that align with their beliefs.
Even when avoiding haram companies, risky investments and profiting from interest on debts, halal investors can build a diversified portfolio that works for them and fits their value system.
Investing Tips
If you’re wondering what type of investing strategy is right for you or if you simply need help implementing it, you may find it helpful to talk 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.
Not sure what the right mix of investments is for your portfolio? This asset allocation calculator can help you make the right choices for your portfolio based on your risk tolerance.
Recently my wife and I decided that we wanted to get a laptop computer so that we could check emails, do work and otherwise surf the web while the other spouse was on our main desktop computer. We no longer wanted to deal with the “are you done on the computer yet?” exchanges. (Yes, it was usually me hogging the computer time, I admit it.)
At first we looked at a wide range of regular sized laptop computers. We looked at everything from some nice looking Dell laptops all the way to the fashionable and slick Apple Macbooks. The laptops were all extremely nice, and would do everything that we needed them to, but they all had one thing in common that wasn’t something we were excited about. The price.
Looking For A Cheaper Alternative
After talking with a friend about their new MSI Wind U120 netbook computer, and how much they loved it, we decided to look into getting a netbook. After all, they were in fact a lot cheaper than some of the laptops we were looking at buying.
Everything I had heard about netbook computers up until that point really hadn’t been that great. I had an image of these tiny little computers, too small for my big hands, that would lack the processing power to do much of anything. Getting one really didn’t sound that appealing.
After trying out our friend’s netbook, however, my opinion started to change. Not only did the little machine run a stripped down version of Windows XP, it ran it very well. It had 1 gig of memory, plenty of processor power, a 160 gig hard drive, and really wasn’t as underpowered as I had expected. It was great for checking email, writing word documents, surfing the web, and doing a whole host of other every day computing tasks.
Researching Available Netbooks
After deciding that a netbook might be right for our situation, and knowing that it would definitely fit better into our budget, we began looking at what was available. We found quite a wide range of available units. It seems that netbooks are all the rage right now!
After reading reviews, and checking out several models at local stores, we ended up narrowing it down to several models.
All the units were in the $300-350 price range, right where we wanted to be. In addition, they had almost identical specs:
10 inch screen
160 GB hard drive
1 GB memory
webcam
Intel Atom Processor
After considering the options, and trying out all three units at our local Micro Center store, we decided on the MSI Wind U100 netbook, for a variety of reasons.
First, the unit had received good reviews from many different review sites. Second, it was compact and attractive looking, and we liked the ergonomics of the netbook. It was also the lowest priced unit we found as it was on sale for just under $300 at our local store.
The Wind U100 is able to do just about any basic computing task that we throw at it, minus things that are graphics intensive like video editing or anything else that needs some serious memory and CPU. Since my wife mainly uses it to check email and facebook, that’s not an issue.
The other netbooks we looked at were nice as well, but the Wind won out because of it’s combination of good price, features and good reviews.
Conclusion
While buying a new computer is hardly ever a truly frugal undertaking, there are ways to make it a bit more reasonable. We found that since we wouldn’t be using our new portable computer for much more than checking email and facebook (or twitter!), we wouldn’t need one of the more expensive and feature laden laptop computers. Instead we were able to get something that was considerably cheaper, but still offered everything that we needed in portable computing.
While we are completely happy with our new computer, netbooks do have their drawbacks. For example, a 10 inch screen isn’t really big enough for all applications. Some webpages are too wide for the small screen, and trying to view photos in applications like Picasa isn’t as easy as on a larger screen. I have also have found that the smaller keyboard on the netbook isn’t as suited for larger hands like mine – there have been a few frustrating moments when trying to type on this netbook. Beyond those things, however, we have found that netbooks are a lot more capable and advanced than we had first realized.
If you’re looking for a cheap alternative to buying a $500-700 laptop, and you won’t be needing to do CPU and processor intensive operations, I think netbooks are a great alternative that you should check out. We’re glad we did!
What things have you bought that you were able to find a cheaper alternative for? Was the cheaper alternative inferior, or did it end up being a wise purchase? Tell us about it in the comments. (as well as if you have a netbook, and what you think of it.
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In recent months the FDIC has managed two of the largest bank failures in U.S. history. The collapse of Silicon Valley Bank (SVB) and Signature Bank happened shockingly fast. And First Republic wasn’t far behind. Consumers have plenty of questions, as the banking sector looks shakier than at any point since the 2008 recession. But perhaps the biggest is also the most basic: is my money safe? The good news is, yes. The federal government acts to protect bank deposits in a number of ways. The two most important, and effective, are insurance and liquidity. For help managing your money and preparing for potential future bank failures, consider working with a financial advisor.
The Federal Government Insures Deposits
The most direct way that the government acts is through depository insurance. For banks, this is managed by the FDIC (Federal Deposit Insurance Corporation). For credit unions, which operate similarly to banks, deposit insurance is managed by the NCUA (the “National Credit Union Administration”).
In both cases, the government insures each depositor at each institution for up to $250,000. This means that if the bank fails and its assets are wiped out, the government will reimburse you for any and all lost money up to $250,000. It periodically updates that amount for inflation.
This rule applies to each depositor, so the government won’t protect multiple accounts at the same bank. However it applies to each institution as well. So if you have three accounts with a single bank, you are only protected up to $250,000. However if you have accounts at three separate banks, your money at each institution is protected up to the limit. There are some instances in which you could have multiple accounts protected at one institution, if they are different types of accounts.
This also applies only to depository institutions, places which offer products like checking and savings accounts. It does not apply to investment banks. The government will reimburse you if your checking account is wiped out, but it won’t make you whole for stock market losses.
The Federal Reserve also has shown willingness to expand its footprint of protection. When Silicon Valley Bank collapsed, the government lifted this $250,000 cap. It guaranteed that it would reimburse all of the money that businesses and individuals had on deposit, including about $18 billion in uninsured cash. It did the same with Signature bank, guaranteeing about $1.6 billion in uninsured assets.
The FDIC and the Federal Reserve Backstop Liquidity
Depository insurance is the guarantee of last resort, and the government uses it very rarely. Before reimbursing consumers the FDIC and the Federal Reserve try to prop up a bank’s liquidity and keep it from failing. They do this in two main ways.
Lender of Last Resort
First, the Federal Reserve acts as a lender of last resort when banks need cash. This is the government’s preferred method of protecting deposits at healthy banks.
One of the major ways that a bank can fail is if too many depositors try to take their money out all at once. The bank might not have enough cash on hand to cover all of these demands, which can force it to sell off assets at a loss or even might bankrupt the institution altogether.
To prevent this, the Federal Reserve extends emergency loans to banks in need of cash. Banks can borrow money from the government to cover their immediate needs and make depositors whole. This is useful to solve cash flow crises, when an otherwise stable institution might be forced into insolvency by a short-term demand for money. The bank takes out a loan to meet its short-term demands and repays that loan with the returns on its long-term investments.
To cover particularly large liquidity issues, the Federal Reserve has recently created the Bank Term Funding Program. This was instituted in the wake of the SVB and Signature collapses, and it will act as a lender of last resort for large institutions.
Broker of Last Resort
As noted above, lending to banks can work well for a healthy institution that has cash flow issues. Any bank, no matter how well-managed, is vulnerable to a bank run and emergency loans can cover that short-term crisis.
Loans will not work for banks that are failing though. While the government will, typically, extend loans to try and shore up an immediate crisis (such as it did in the case of SVB and Signature), that is only a stopgap solution when the bank is going out of business. And that happens more often than most consumers realize. Banks may fail because they made bad investments, because they have lost too many customers or because their underlying business model has gone wrong in some way.
In this case, the Federal Reserve and the FDIC act as a broker of last resort to try and sell the bank to another, healthier institution. Their goal is to find a solvent bank that will take over the failing bank’s deposits and assets, effectively folding one institution into another.
When successful, the FDIC doesn’t need to reimburse depositors at all. Often, from the outside, this looks like a simple merger and individual consumers notice no change except for the name on the door. The new institution takes over the deposits and loans of the old one. This is particularly important because large depositors frequently have more than $250,000 on account with their banks. One estimate by the FDIC suggests that about 43% of all bank deposits are uninsured, so mergers are a critical tool for making sure that depositors are protected against bank failures.
Depositors Are Historically Well-Protected
Banking protections are an incredibly complicated issue, and the government has a wide range of regulatory and financial tools that it uses to protect depositors. For example, the Federal Reserve conducts regular oversight of banks to look for bad investments and risky assets that might cause a failure (although, as the case of SVB made clear, this system is far from foolproof).
The takeaway is this, though: As a depositor, your money is about as safe as it can be. Making sure that depositors feel like their money is secure is a huge priority for the government, and several different agencies and entities work to make sure of that. Banks are monitored to try and prevent failures, and the Federal Reserve acts to give them liquidity quickly and at need. When a bank does fail, the government moves quickly to find a buyer for those assets and deposits. And if all that doesn’t work, it simply cuts a check to reimburse depositors for cash that they’ve lost.
It’s not a perfect system, but depositors haven’t lost money to a bank failure in the United States since the 1930s.
The Bottom Line
Your money is as safe as it can be in the bank. Between depositor insurance, emergency loans and bank sales, the government works hard to protect what you have.
Banking Tips
In addition to traditional banks, online banks have become a new issue in finance, with many wondering if they are safe for consumers.
A financial advisor can help you plan to keep your money safe. 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.
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.
Which Savings Account Will Earn You the Most Money? – SmartAsset
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There are many types of savings accounts. Money market accounts can earn higher interest rates than traditional savings accounts. But CDs can often earn even higher rates. However, there are pros and cons to each type of account that goes beyond interest rates. Here’s what to know before you deposit your money.
If you have questions about how your savings account fits into your overall financial plan, consider working with a financial advisor.
High-Yield Savings Accounts
High-yield savings accounts are similar in many ways to traditional savings accounts and have many of the same advantages, including FDIC insurance on balances up to $250,000.
As their name suggests, high-yield savings accounts pay interest rates higher than traditional savings accounts. Interest rates change frequently, but generally, that equates to 10-20 times higher interest rates.
Other than interest rates, the biggest difference between high-yield savings accounts and traditional savings accounts is the presence of bank branches. Those that offer traditional savings accounts typically have them, while those with high-yield savings accounts don’t.
The latter is generally offered by online-only banks, and their lack of branches allows them to cut costs and offer better rates to their customers. However, the two are otherwise similar in most ways.
High-yield savings accounts, which at time of writing offered annual percentage yields above 4%, usually have a monthly transaction limit (typically six per month), and they often don’t have ATM access or check-writing privileges. Still, customers can access their money whenever they need it by transferring money electronically.
Money Market Accounts
Money market accounts are another type of saving product that offers higher interest rates than checking accounts and traditional savings accounts. The FDIC also insures balances up to $250,000.
In addition, these accounts sometimes have features like mobile check deposits and ATM withdrawals. Like high-yield savings accounts, there may be limits on the number of monthly transactions.
The best money market accounts generally have interest rates 10-20 times higher than traditional savings accounts. While some require a minimum deposit, several allow you to open an account with $0 to start.
However, some money market accounts may charge fees for maintaining a low balance or making too many withdrawals. Check the fine print and make sure you understand the terms before opening an account.
Certificates of Deposit (CDs)
Certificates of deposit (CDs) are another type of savings product that offers higher interest rates than traditional savings accounts. CDs, which are FDIC-insured, lock up your money for a certain period in exchange for a higher interest rate.
You will usually incur penalties if you want to withdraw your money before the end of the CD’s term. This makes CDs better for medium-term savings goals and for money you won’t need in the immediate future.
However, the best CD rates can be higher than rates on money market accounts or high-yield savings accounts, so keeping your money locked up could be worthwhile if you want the best rate. Plus, some CDs have no minimum to get started, so you can deposit as much as you want.
But unlike savings accounts, you often can’t make additional deposits to the account. Thus, they may not be the best choice if you don’t have a lump sum to deposit. Still, the interest rates CDs offer make them a good choice for those with funds to spare.
Comparing and Contrasting Savings Accounts
There are several things to keep in mind when deciding which type of savings account is right for you. Here are something things to keep in mind:
Interest rates: If you want to earn a return on your money, interest rates are the first thing to check. High-yield savings accounts, money market accounts and CDs can all offer high-interest rates today, with CDs having some of the highest rates. However, CDs require you to lock up your money for a certain period.
Fees: Some banks or credit unions might charge you maintenance fees or a fee if your balance falls below a certain level. These fees can eat into your earnings on the account, so it’s important to keep them in mind.
Minimum balance requirements: High-yield savings accounts, money market accounts and CDs can all have a minimum balance requirement to open an account, depending on the bank. Others might require a minimum balance to earn the highest interest rate.
Liquidity: The ease of accessing your money may vary depending on the type of account and the bank. For instance, money market accounts and some high-yield savings accounts may allow you to write checks or withdraw money from an ATM. In contrast, CDs usually require you to leave your money alone until the end of the term.
Each type of savings account has its own set of pros and cons. The best choice will depend on your savings goals.
Bottom Line
High-yield savings accounts, money market accounts and CDs can all have competitive interest rates that allow your money to grow. The best CDs offer some of the highest interest rates, but they require you to keep your money locked away to earn the best rate. Thus, it’s important to consider not only the interest rate but also factors like fees, minimum balance requirements and liquidity before deciding which type of savings account is best for you.
Tips for Opening a Savings Account
A financial advisor can help you work through your banking needs and put together a plan that works for your unique situation. 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.
The best savings accounts pay some of the highest rates and often do away with costly fees. See SmartAsset’s list of the best savings accounts to find one that’s right for you.