If you haven’t started your children or teens off with a kids checking account optimized for their needs, you’ll want to help your college student open a checking account before they begin school.
Opening a checking account for your child can teach them about money management and financial responsibility, along with providing them an easy way to make debit card purchases. It’s never too late to get started.
One advantage to helping your young adult open their first student checking account is they have more options than they might have when they were 16 or younger. Students over 18 can open a bank account with few restrictions.
But choosing a student checking account may give them access to higher interest rates and added features and benefits, along with fee-free checking, no monthly maintenance fees, and no minimum deposit to open an account.
12 Best Student Checking Accounts
Not surprisingly, many of the best student checking accounts come from banks that also offer some of the best checking accounts for any age. However, the products below – in most cases – are tailored for young adults from the ages of 18 to 24, with the features this age group desires most, including an intuitive mobile app and low or non-existent minimum deposit requirements.
1. Best for Students under 18: Capital One MONEY Teen
Most of the student bank accounts on our list exclude children under the age of 17 or 18. Capital One MONEY Teen checking is available to children ages 8 and up. It comes with all the benefits and security of a big bank, providing peace-of-mind. This includes access to Capital One branches and Capital One Cafes for in-person service. This account also serves as a great tool to teach your young adult the basics of banking.
Capital One MONEY Teen checking is a joint account with no monthly fee, no overdraft fees, and access to 70,000 ATMs with no fees. Plus, earn 0.10% on all balances, including those in checking.
You can link Capital One MONEY Teen checking to any other bank account through any bank or neobank, making it easy to transfer money to your teen while they are away at college. Plus, you can keep tabs on their spending with their linked account in the Capital One mobile app.
When they graduate, your teen can hold onto their MONEY account or transfer the funds into a top-rated Capital One 360 Checking account of their own.
2. Best for Working Students: Chime
Chime is not a bank. It’s a financial technology company and mobile app backed by Stride Bank, NA, and The Bancorp Bank. Many features make it perfect for working students. First, you can receive your paycheck up to two days earlier than you might at other banks with ACH deposit.
Plus, you can set up automatic transfers to your linked Chime Savings account, helping you to establish good financial habits early on. Simply set up Chime to transfer a percentage of your paycheck into your Savings Account every time you receive a direct deposit.
When you use your debit card for purchases, the “Save When You Spend” program rounds up your purchase and transfers the difference directly into savings. That small change can really add up, whether you’re saving for your first apartment after college, a new car, or your next tuition bill.
For working students looking to build their credit, Chime gives account holders access to a Credit Builder Secured Visa, with no annual fee, no credit check, and no security deposit required. Instead, the credit account is secured by your Chime checking account with monthly direct deposits.
Like many of the best student bank accounts on this list, Chime has no overdraft fee, no monthly service fee, no ATM fee for in-network ATMs, and no minimum balance requirements.
3. Best Account Opening Bonus: Chase College Checking
Chase Bank has been handing out student account opening bonuses like they hand out lollipops at their branches lately. College students ages 17 to 24 can snag a $100 bonus when they open an account online or at a local branch (students age 17 will need to visit a branch). You’ll just need to make 10 qualifying transactions within the first 60 days of opening the student bank account.
What’s a qualifying transaction? Virtually anything, according to the Chase website, including debit card purchases, online bill payments, Chase QuickDeposits, Zelle transfers, and ACH credits. Bank as you normally would, and you should easily earn that $100.
In addition to the generous sign-up bonus, Chase College Checking has no monthly fees for college students for up to five years, access to 16,000 ATMs and 4,700 branches across the U.S., and zero liability protection for unauthorized debit card purchases.
Chase Overdraft Assist covers purchases that exceed your account balance. You’ll pay no overdraft fee if you’re overdrawn by $50 or less at the end of the next business day.
4. Best for Yield: Ally Interest Checking
Ally Bank is the first bank on our list not designed specifically for students, but the vast array of features in this interest bearing checking account makes it ideal for young adults.
Ally Bank offers an APY of 0.25% on checking account balances and 4.00% APY on balances in a linked Ally Bank savings account. Neither account has any monthly fees.
Ally offers several features to help those on a tight budget manage their money. You can organize your money into spending and saving buckets, which can help you see exactly where your money goes each month. Ally will also review your bank accounts and help you find opportunities to save, and shuttle that extra money into your high yield Ally savings account.
Customers who have deposited $100 or more into their Ally checking account, or $250 via direct deposit, gain access to Ally’s CoverDraft service after 30 days. This protection covers up to $100 or $250 in charges that would overwise overdraft your account. Some purchases, including Zelle transfers, or ATM withdrawals, may be declined if they would put your account into overdraft.
Ally has no monthly maintenance fee, no overdraft fees, no ATM fee for in-network ATM transactions and no minimum balance requirement.
5. Best for Referrals to Earn Extra Cash: GO2bank
GO2bank, the digital bank associated with the top financial technology company Green Dot, offers an easy, straightforward money account with overdraft protection up to $200 with eligible direct deposits. The linked savings account pays a high 4.5% APY, with no fees for qualifying customers and no minimum balance requirement.
You can get regular ACH deposits from your job or side gigs up to two days earlier than most traditional banks. If you receive government benefits, such as Social Security, you can receive those deposits up to four days early.
Your GO2bank account will have a monthly service fee that costs $5 per month, unless you have a qualifying direct deposit that month. You will also pay fees for transfers from a linked debit card from another bank or fintech, mobile check deposits, and cash deposits.
If you are the type of person with friends who come to you for advice, you can earn $50 for each friend you refer to GO2bank who signs up with direct deposit. Your friend will also earn $50. You can use this offer for up to 30 friends, yielding $1,500 annually. This makes a GO2bank account great for social media influencers or college students with a large friend group.
6. Best for Full-Service Banking: Bank of America Advantage SafeBalance Banking
Bank of America Advantage checking accounts offer options for people in various stages of their financial life. College students might be best to start out with Bank of America Advantage SafeBalance banking, a straightforward money account with no overdraft fee and no checks.
The account has no monthly fee for students under the age of 25 or customers under the age of 18. Preferred Rewards customers also receive free checking. There is a $25 minimum deposit to open an account.
New Bank of America customers can earn a $100 account opening bonus when they open an account and set up direct deposits of $1,000 or more within 90 days.
7. Best for Comprehensive Money Management: PNC Virtual Wallet Student
Money Magazine named the PNC Virtual Wallet on its best banks for students list three years running. PNC Bank divides this mobile account into three separate accounts for everyday spending, “reserve,” or short-term savings, and “growth” for long-term savings.
The account has no monthly service fee for students for up to six years, along with all the benefits of a regular PNC Virtual Wallet. Additionally, students receive a courtesy refund of your first overdraft fee on your Spend account, one free incoming domestic or international wire transfer per statement period, and free paper statements if you opt in to receive them.
Once six years have passed or you are no longer a student, your account converts into a regular PNC Virtual Wallet, which may have associated monthly fees. Check the PNC website at that time to determine the fees and how you can waive them.
Your PNC Virtual Student Wallet pays a 0.01% APY on money in your Reserve account, and .02% on account balances up to $2,499 in your Growth account, with .03% APY on balances over $2,500. These may not be the best rates available, but the reputation of PNC Bank, along with the money management features in a Virtual Wallet Student account, make this an account worth considering for students just learning to budget.
8. Best for Establishing Savings Habits.: Wells Fargo Clear Access Banking
As one of the Big Four banks in the U.S., Wells Fargo offers a reliable and safe place to store your money, plus access to thousands of branches nationwide.
The Wells Fargo Clear Access banking account is great for teens and college students, since it’s available for account holders ages 13 to 24. Anyone under the age of 18 will need to open their account in a branch and anyone younger than 17 must have an adult aged 18+ as a joint account holder. The account has no monthly maintenance fee for anyone 24 or younger. A $25 minimum opening deposit is required.
Wells Fargo Clear Access banking is a simple, straightforward money account with no checks and personalized service at Wells Fargo branches. There are no overdraft fees with the account, but also no overdraft protection. Transactions that exceed the account or minimum balance amount will be declined, which helps put teens and young adults in charge of their money.
You can link your Clear Access bank account to a Way2Save Savings account and earn a 0.15% APY. You can establish good money habits by setting up automatic savings. Wells Fargo will transfer $1 from your Clear Access account into your checking account each time you use online bill pay or use your debit card for a one-time purchase. You can also transfer as little as $25 per month or $1 per day into your account to see your savings grow even faster.
9. Best for Cash Back: Discover Cashback Debit
The Discover Cashback Debit account may not be marketed to teens and students, by name. But, it’s enticing to anyone looking for a standard checking account with no monthly service fees and 1% cashback on debit card purchases, up to $3,000 per month. It’s highly unlikely for most college students to max out that free money (unless they are putting housing, tuition, and car expenses on their card).
Discover Cashback! debit card offers many of the benefits you’d expect from these top-rated money accounts, including early direct deposit, 60,000+ no-fee ATMs, and overdraft protection from your linked Discover Savings with no fees. Discover charges no fees for insufficient funds, bank checks, regular checks, or expedited delivery of a replacement debit card.
These features make it one of the most convenient accounts you can hold. Plus, you don’t have to worry about “aging out” of the account and facing fees for a non-student bank account. Your Discover Cashback Debit account will be free no matter your age. Link it to a Discover Savings Account to earn 4.0% APY with no minimum deposit required.
10. Best for Unlimited Out-of-Network ATM Fee Reimbursement – Axos Bank Rewards Checking
Another bank account not marketed to students but meeting all their needs is the Axos Bank Rewards Checking account. This account has no monthly fees. It also reimburses ATM fees for out-of-network ATMs nationwide, which is great for students who travel domestically or who don’t have ATMs in their network on campus.
Pay no overdraft fee or non-sufficient funds fees with this account. Best of all, earn an APY of 0.40% on your checking balance if you receive monthly direct deposits of $1,500-plus. Young investors can ramp up their interest rate by 1% with an average daily balance of $2,500 in an Axos Invest Managed Portfolio Account, plus another 1% by holding $2,500 in a self-directed trading account. If you take out a loan through Axos, you can add another 0.60% to your APY.
College students likely won’t regret opening an Axos Bank account to take them through adulthood, especially with options for investing, low mortgage rates, car loans, and more.
Plus, earn a welcome bonus when you open an account and have direct deposits of at least $1,500 within a single calendar month during the first three months of account opening.
11. Best Credit Union: Alliant Credit Union Teen Checking
Alliant Credit Union offers a teen checking account for minors ages 13 to 17. The account is insured up to $250,000 per account holder by the National Credit Union Administration (NCUA). The adult account holder must be an Alliant Credit Union member. But it’s easy to join by depositing $5 into an Alliant Credit Union saving account. Alliant Savings earns an APY of 0.25%.
The teen checking account has no overdraft fees or non-sufficient funds fee. It also has no monthly fees or minimum balance requirements. Account holders gain access to 80,000+ fee free ATMs nationwide plus $20 per month in ATM fee reimbursement for out-of-network ATM use. This is an interest earning checking account which also pays 0.25% APY on all balances as long as you have at least one deposit, via ACH direct deposit, mobile check deposit, or transfer from another bank or credit union, each month.
12. Best for Young Shoppers: Varo Bank
Varo Bank is another account not necessarily marketed to college students but definitely optimized for their needs. The Varo Bank debit card delivers up to 6% cash back, with money deposited into your Varo account as soon as you accrue $5 in rewards.
Like many of the best student accounts on this list, Varo has no monthly fee, no minimum balance requirements, and no overdraft fee. If you need money before payday, you can use Varo Advance, an interest-fee program that allows you to borrow up to $250 and pay it back within 30 days. You will not pay fees to borrow less than $20. Borrowing up to $250 comes with fees that can be as high as $15, depending on the amount of cash advance you need.
Varo Bank uses the Allpoint network of ATMs, with fee free access to 55,000+ ATMs nationwide. Using other bank ATMs could result in charges up to $3 from Varo and fees charged by the other banks, as well.
It pays to open a linked Varo Bank savings to take advantage of a high 3% APY. Account holders with direct deposits equal to $1,000 per month and a positive balance in their Varo checking and savings can earn up to 4% APY.
One of the best things about a Varo account is it can grow with you. You won’t pay additional fees as an adult out of college, so you can keep the same bank account you started with for your entire life if you want.
Methodology: How We Select the Best Student Checking Accounts
To find the best student checking accounts, we evaluated the monthly maintenance fees, ATM fees, minimum deposit requirements, features, benefits, banking services provided, along with customer service and mobile app access at several of the biggest and most well-known banks and credit unions.
ATM Network
Most banks have ATM networks or partner ATM networks of 20,000 or more ATMs nationwide where you can use your debit card with no ATM fees. You might be surprised to learn that even online banks and financial technology companies that are not a bank provide access to thousands of ATMs nationwide through partner programs.
Nationwide availability (physical locations or mobile access)
College students often split time between their college campus and the home where they grew up. Finding a bank with physical locations in the areas they live or an online bank that provides a mobile banking app with fee free mobile banking from anywhere is important.
Fees and minimum requirements
Bank fees no longer have to be a way of life for today’s young adults. We chose financial institutions with no monthly maintenance fees or easy ways to waive maintenance fees.
Benefits such as high APY, cash-back rewards, or other additional perks
Student checking accounts today are more than just “bare bones” places to store your cash. Many student bank accounts offer perks, benefits, and high-yield savings or an interest bearing checking account to provide added value.
Overdraft fees
Cash management mistakes happen, especially when young adults first start learning to budget and manage their finances. Many banks have no overdraft fees and some offer overdraft protection to help out in a pinch.
How to Choose the Best Bank for College Students
We’ve offered 12 solid options to help you choose the best student checking account. Before you open a student bank account, it’s a good idea to think about what you need in your primary checking account and a linked savings.
The list below makes it easy to review your must-haves and nice-to-haves when you choose your first bank account as a college student.
Best student checking account interest rates
If you’re looking to earn interest on your standard checking account, many banks offer this feature. Review annual percentage yield (APY) figures for your top choices.
Remember, a higher savings interest rate might benefit you more, since money in your checking account tends to fluctuate based on paychecks, bills, and expenses. The best checking account may not pay interest, but can save you money in other ways.
Annual Percentage Yield (APY)
Likewise, you can put money in your pocket with an account with linked savings offering a high annual percentage yield (APY).
Mobile Check Deposit
If you get paid via paper checks, you’ll want to find an account with a mobile app that offers mobile check deposit. Find out how fast deposits clear, and if mobile banking services are fee free.
No Monthly Maintenance Fees
Many banks today make it easy to find a free checking account with no maintenance fees. If you have to pay a monthly maintenance fee, find out exactly what you’re getting for your money. Find out if the perks and benefits, such as a cash back debit card or reimbursement of ATM fees make the maintenance fees worthwhile.
Minimum Deposit and Minimum Balance Requirements
When you’re just getting started, cash may be tight. It’s important to find an account with no minimum deposit to open.
Banking Services Provided
Accounts should have customer service online, by phone or in branches, plus an easy-to-use mobile app and a debit card with no ATM fees.
FAQs About Student Checking Accounts
Read what people are asking about the best student checking accounts, including minimum deposit requirements and benefits of a student checking account.
What are the benefits of a student bank account?
A bank account tailored for students gives young adults a head start on their financial future and learning how to manage money. For students who work, they can receive direct deposits in their student account, pay bills online, and send money to friends and family using Zelle.
How to get a student checking account bonus?
Several student checking accounts, including Chase, provide sign-up bonuses. Make sure to read the fine print and complete the requirements, which may include setting up direct deposit or making a minimum opening deposit, to collect the bonus.
Can I open a student checking account without a deposit?
To open a student checking account without a minimum deposit amount, simply look for a bank account, like Varo, that has no minimum opening deposit.
Are there any downsides to opening a student checking account?
When you open a student checking account, you’ll want to make sure you won’t pay monthly maintenance fees. Some student checking accounts convert to a regular account once the student graduates, and there may be fees associated with the regular account.
Is there an age limit on a student checking account?
Most student checking accounts are open to students from the age of 18 to 24 without a joint account holder. Customers under the age of 18 may be able to open an account with a joint owner.
Can minors open student checking accounts?
Accounts like Capital One Money Teen are available to children ages 8 and up with a joint account holder. Some other accounts require students to be 18 or older.
What happens to your student checking account when you graduate?
Many of the student bank accounts on this list won’t change when you graduate college. Others offer the option to convert your account to one of the bank’s regular checking products. A Chase College Checking Account has no monthly fees for your first five years in college, but if you graduate or exceed that time frame, you might pay a $6 monthly maintenance fee unless you meet other requirements.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
The information related to the Chase United Business Card has been collected by Money Crashers and has not been reviewed or provided by the issuer of this card.
As a small-business owner, you’re leaving money on the table if you don’t use the credit card that offers the most valuable rewards and benefits available. And when you’re also a regular traveler, the right travel rewards card can give you tremendous value.
If you regularly fly with United but don’t have a massive business travel budget, the United Business Card might just be that card. Just be sure to understand its shortcomings before you apply.
What Is the United Business Card?
The United Business Card from Chase is the least expensive small-business credit card in United’s co-branded lineup, but it still packs plenty of compelling features.
As a new applicant, you start off with a very attractive sign-up bonus whose spend requirement should be manageable for most business owners. You also earn double miles not just on United Airlines purchases but also at restaurants, gas stations, office supply stores, and on local transit and commuting purchases.
This card also offers a wide range of benefits, even more than most airline cards in this price range. You start off with a free checked bag for yourself and a companion, as well as priority boarding. This card also features a $100 United travel credit after qualifying flight purchases, and 5,000 bonus miles each year when you have both a United personal and a business card.
If you’re trying to earn elite status, this card speeds up the process by giving you 500 Premier Qualifying Miles (PQP) for every $12,000 you spend on purchases with your card, up to 1,000 PQP in a calendar year. And when you’re waiting for your flight to depart, you can relax by using one of your two United Club one-time passes each year. You even get 25% off of in-flight purchases each year, plus expanded access to economy class award seats at the lowest mileage levels.
Other cardmember benefits include auto rental collision damage waiver coverage, baggage delay insurance and lost luggage reimbursement of up to $3,000 per passenger. If you have to cut short or cancel a trip, then you can be reimbursed up to $1,500 per person and $6,000 per trip for your pre-paid, non-refundable passenger fares. If your travel is delayed by more than 12 hours, or overnight, then you can be reimbursed for meals and lodging, up to $500 per ticket.
Finally, you also receive purchase protection and extended warranty policies on certain nontravel purchases.
There’s a $95 annual fee for this card that’s waived in the first year. This card charges no foreign transaction fees either.
What Sets the United Business Card Apart?
This card has several features that help it distinguish itself from other airline credit cards.
5,000 mile anniversary bonus. If you already have a personal United credit card, such as the United Explorer Card or United Club Card, this card gives you 5,000 bonus miles each year on your account anniversary.
$100 United travel credit. After you make seven qualifying flight purchases of $100 or more, United will give you a $100 credit.
Outstanding travel insurance benefits. At a time when many card issuers have eliminated all of the travel insurance policies that used to be standard, the United Business Card still has you covered for most kinds of problems.
United Club access. You get two free United Club (airport lounge) passes a year. That’s not much if you fly United every month. But if you don’t travel with United very often, this could be enough to use during an occasional long layover or delay.
Waived first year’s annual fee. By waiving the $95 fee in the first year, United and Chase are effectively saying, “Give this card a try at no cost to you.”
Key Features of the United Business Card
The United Business Card has a strong sign-up bonus, a relatively generous rewards program, and plenty of perks for regular United flyers.
Sign-Up Bonus
Earn 50,000 bonus miles after you spend $5,000 on purchases in the first 3 months your account is open. This offer might not be available if you’ve received a new cardmember bonus for the United Business Card in the past 24 months.
Earning Rewards
With this card, there are plenty of purchases that qualify for double miles:
United Airlines purchases
Dining purchases, including eligible delivery services
Gas station, office supply store, and local transit and commuting purchases
All other purchases earn 1 mile per $1 spent.
Redeeming Rewards
You can redeem your accumulated miles for award flights operated by United and its partners.
Exactly how much value you get from them is less clear. United no longer publishes an award chart, and in the past, it has changed redemption values without notifying anyone.
In general, you’ll need 80,000 to 100,000 miles for a one-way, business class ticket to Europe. You’ll need about half that if you travel in economy, and even fewer for economy flights within North America.
Valuable Travel Perks
Beyond rewards, travel perks and benefits are the real reason to have an airline card. These include:
A free checked bag for you and a companion
Priority boarding
25% back on United in-flight purchases
Earn 500 Premier Qualifying Points (PQPs) after spending $12,000 in a calendar year (up to 1,000 PQPs or $24,000 spent)
These perks come on top of numerous travel insurance and purchase protection policies:
$1,500 per person in trip cancellation/interruption insurance
$500 per person in trip delay reimbursement
An additional $3,000 in lost luggage coverage
Anniversary Award Flight Credits
You can also earn two 5,000 mile anniversary awards so long as you have both this card and a United personal card, such as the United Explorer Card.
Important Fees
This card has a $95 annual fee for this card that’s waived the first year, and no foreign transaction fees.
Credit Required
This card requires good or better credit to qualify. If your FICO score is much below 700, or your personal credit history is limited, then you’ll likely have trouble being approved. However, this is pretty standard for a premium business travel credit card.
Pros & Cons
The United Business Card has some clutch upsides and a few downsides worth noting.
Strong sign-up bonus
Surprisingly generous travel perks
United has lots of customer-friendly policies
United miles’ redemption value can be low
$100 annual flight credit comes with restrictions
2x miles category doesn’t cover everything
Pros
This card has lots of advantages, especially for regular United business travelers.
Strong sign-up bonus. Earning 75,000 miles after spending $5,000 on new purchases is a competitive bonus.
Generous travel perks. The $100 annual travel credit will outweigh the costs of this card’s annual fee, if you earn it. The 5,000 mile annual flight credit is also very valuable for anyone who also has a personal card. And it’s always nice to enjoy priority boarding, and a free checked bag for you and a companion.
Broad bonus categories. Many airline credit cards only offer 2x miles for ticket purchases, but this card also offers 2x at restaurants, gas stations, office supply stores and on local transit and commuting.
MileagePlus partners and policies. You can redeem your United miles for flights on its numerous Star Alliance and non-alliance partners. United also eliminated change and cancellation fees on awards, so you’re free to book a ticket when you find a good deal and cancel it later if it doesn’t work out.
Cons
This card has a lot going for it, especially at its price point. But it still has a few flaws:
United devalues its miles. United eliminated its award charts several years ago, which means that it can always charge more miles for awards whenever it feels like it. For example, United recently started charging up to 50% more miles for many of its award flights to Europe — without any prior notice. Transatlantic travelers were understandably upset by this. So don’t count on the price you see now being available when it comes time to redeem your miles.
Restrictions on its $100 annual flight credit. You have to read the fine print to find out that you only get it if you make seven transactions of $100 or more. You could split your round-trip tickets into one-ways for each traveler, but that’s a bit of a hassle.
No across-the-board 2x miles category. There are some travel rewards cards that now offer 2x everywhere. Offering 2x miles for only certain purchases is so 1995.
How the United Business Card Stacks Up
This card’s closest competitor is probably the CitiBusiness® / AAdvantage® Platinum Select® World Elite Mastercard®. Here’s how the two cards compare.
United Business Card
CitiBusiness® / AAdvantage®Platinum Select® World Elite Mastercard®
Annual Fee
$95, waived the first year
$99, waived the first year
Rewards Rate
Up to 2x
Up to 2x
Travel Insurance
Yes
No
Purchase Protections
Yes
No
Foreign Transaction Fee
None
None
Credit Needed
Good or better
Good or better
While these cards are pretty similar, the United Business Card has a slightly lower annual fee after the first year and offers some travel and purchase protections that the CitiBusiness / AAdvantage Platinum Select card doesn’t. Its 2x bonus categories are broader as well, and its frequent flyer benefits more generous. So all in all, it’s the better option unless you rarely fly United.
Final Word
The United Business Card is a strong offer for small business owners who fly United. It appeals to new applicants with an impressive sign-up bonus and a waiver on the first year’s annual fee. It then continues to offer value with double miles on many purchases, and numerous travel benefits.
The only place that you might stumble isn’t this card’s fault, exactly. When it comes time to redeem your miles, you might discover that United has devalued its miles — and that the award you were hoping to redeem now costs much more than it used to. But when you’re earning double miles on so many purchases, and enjoying so many benefits, this might not matter too much.
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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Jason Steele is one of the nation’s leading experts in credit cards and travel rewards since 2008. Jason is also the founder and producer of CardCon, which is The Conference for Credit Card Media. Jason lives in Denver, Colorado where he enjoys bicycling, snowboarding and piloting small airplanes.
Editor’s note: This is a recurring post, regularly updated with new information and offers.
Capital One VentureOne Rewards Credit Card overview
The no-annual-fee Capital One VentureOne Rewards Credit Card (see rates and fees) offers the same great redemption options as its sister cards, the Capital One Venture Rewards Credit Card (see rates and fees) and the Capital One Venture X Rewards Credit Card (see rates and fees) — but with a lower rewards rate and fewer perks. The miles earned on the card can be transferred to Capital One’s 15-plus airline and hotel partners or redeemed directly as a statement credit on eligible purchases. Card Rating*: ⭐⭐⭐
*Card Rating is based on the opinion of TPG’s editors and is not influenced by the card issuer.
No matter which card from the Capital One Venture family you choose, all three options offer simple earnings structures, 17 airline and hotel transfer partners and easy-to-use rewards.
For those who like a straightforward option for earning and redeeming rewards, you can also use your miles to “pay” back travel purchases charged to your card in the past 90 days.
If you’re on the fence about paying an annual fee, you’ll want to take a look at the Capital One VentureOne Rewards Credit Card.
Capital One VentureOne welcome offer
The Capital One VentureOne comes with a sign-up bonus of 20,000 bonus miles once you spend $500 within the first three months from account opening. Based on TPG valuations that peg Capital One Venture miles at 1.85 cents apiece, this sign-up bonus is worth $370.
That’s significantly less than the Venture card’s bonus, which is currently at up to 75,000 miles after you spend $4,000 on purchases within the first three months of account opening, and valued at $1,388 by TPG.
However, the 20,000-mile bonus is still higher than what many other no-annual-fee cards offer. Additionally, the spending requirement for the VentureOne card’s bonus is much easier to meet than the Venture card, with it requiring just $500 in spending.
Earning miles on the Capital One VentureOne
The VentureOne earning scheme is similar to the $95-a-year Venture card but with a slightly lower return on everyday spending.
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You’ll earn a flat 1.25 miles per dollar on everyday purchases, which equates to a solid 2.33% return using TPG valuations. While decent, it isn’t the best return for everyday spending. However, the benefit of an unlimited earning rate is that you don’t have to keep up with multiple bonus categories — exchanging simplicity for maximizing value.
Plus, if you are booking hotels and rental cars through the Capital One travel portal, you’ll earn 5 miles per dollar on those reservations — a solid 9.25% return.
Redeeming miles on the Capital One VentureOne
You have a few options when it comes to redeeming Venture miles.
The most straightforward way is to use them to pay for eligible purchases as a statement credit. This allows you to sign in to your Venture Rewards online account and redeem miles at a flat 1 cent apiece for a statement credit against eligible travel purchases you’ve made with the card in the last 90 days.
This includes many travel expenses that traditional miles won’t cover, from Uber rides to Airbnb stays. There are no award charts, blackout dates or minimum redemption amount.
Related: Use your Capital One Venture miles to stay at these 10 stunning Airbnb homes
However, to get more value from your sign-up bonus, you should try the more advanced redemption option — maximizing Capital One’s transfer partners. Capital One has 17 airline and hotel partners to which you can transfer your miles, including Avianca LifeMiles, British Airways Avios, Etihad Guest and Turkish Airlines Miles & Smiles.
This redemption option is slightly more advanced than just redeeming against charges at a fixed value, but it’s not as difficult as it sounds. We have plenty of guides that will teach you how to best redeem your miles using transfer partners:
Capital One VentureOne benefits
The VentureOne card comes with the standard suite of World Elite Mastercard travel and shopping benefits, including:
In addition to these World Elite Mastercard perks, the VentureOne is among the few no-annual-fee cards with no foreign transaction fees, making it a great option to use outside of the U.S. Benefits are only available to accounts approved for the World Elite Mastercard card, and terms apply.
Which cards compete with the Capital One VentureOne?
If this card sounds pretty appealing, know that there are actually several no-annual-fee cards that compete with the VentureOne, plus its older sibling:
For additional options, check out our full list of the best no-annual-fee cards.
Read more: The power of the Chase Trifecta: Sapphire Reserve, Ink Preferred and Freedom Unlimited
Is the Capital One VentureOne worth it?
The VentureOne is a solid no-annual-fee option for those who still want a healthy sign-up bonus, reasonable perks and the ability to transfer points and miles directly to travel partners. However, you can get a higher earn rate on everyday purchases by getting a Venture card with an annual fee.
Bottom line
In addition to its perks and sign-up bonus, the Capital One VentureOne Rewards Credit Card also beats other no-annual-fee cards for perks such as purchase protection and no foreign transaction fees. It’s a budget-friendly option for Capital One fans and frequent travelers alike.
Official application link: Capital One VentureOne
For Capital One products listed on this page, some of the above benefits are provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply.
Additional reporting by Ryan Wilcox and Stella Shon.
Welcome to the vibrant city of Washington, DC, where history, culture, and excitement converge in every neighborhood. You may already be familiar with the iconic landmarks and bustling districts that define this captivating city. However, beyond the well-known attractions, lies a treasure trove of hidden gems waiting to be discovered.
In this article, we will take you on a journey to uncover the lesser-known pockets of charm and character that make “The District” a truly remarkable place to call home. We reached out to locals to share their favorite hidden gems in Washington, DC, from enchanting parks to unique dining experiences and thriving local communities. So, whether you are considering renting an apartment in DC, or are looking on Redfin and currently in the market to buy a house in the city, prepare to be captivated by the secrets this remarkable city has to offer.
1. Big Bear Cafe
“Our favorite hidden DC gem is Big Bear Cafe in Bloomingdale, explains Meredith Sheperd, founder of Love & Carrots, an urban farming and edible landscaping company. “The best thing on their menu is the wood fired pizzas, which taste even better eaten outside on their gorgeous garden patio that we’ve planted and maintained for over a decade. The vine-enclosed patio is surrounded by edible landscaping and gives the entire space a cozy secret garden feeling, making it especially great for hosting events. Big Bear has something for everyone to enjoy at almost any time of day, whether it’s a natural wine at an open mic night, or an early morning local cheddar biscuit and espresso with the neighborhood birdlife.”
2. Chaia Tacos
“Chaia Tacos is a farm-to-taco restaurant with seasonal local produce with one of the only gluten-free meal menus in the city,” explains Take Care Shop, offering natural skincare, beauty, wellness and spa services. “Their menu rotates based on what’s fresh and my current favorite is the collard and shishito pepper quesadilla. I love that it’s on the canal and right by the waterfront, making it so easy to grab your bites and go for a stroll.”
3. Al Tiramisu and Bistrot Lepic
“For Italian food, our go-to place is Al Tiramisu located just off Dupont Circle and close to our shop in Georgetown,” shares Louis Everard and Jennifer Nygard Owners of Everard’s Clothing, and upscale boutique in DC. “This hidden gem in DC is intimate, authentic, and perfect for date night or just a weeknight outing – think homemade pastas and fresh seafood. Favorite dish must include lobster of course, either the lobster linguine or lobster risotto.”
“For French food, we stay on our block, mere steps from our shop and head to Bistrot Lepic,” explains the Nygards. “Classic bistro food with some surprises including a fantastic curry chicken and a wild boar steak special. Also featuring live jazz music on certain weeknights in their upstairs lounge.”
4. Boulangerie Christophe
“Boulangerie Christophe is the absolute best French bakery,” states Natasha Sewell, owner of NPS Photography. The pastries and baked goods are delicious and the courtyard in the back is magical! You feel like you’ve been transported out of the city. It’s also dog friendly which is a major plus.”
5. Shops in Georgetown
Sewell also suggests a couple local shops to check out. “Storie Collective is the perfect shop to find a hostess gift or something unique for your home or kitchen. Sara Swabb, the owner, has such a keen eye and I never leave without buying something. In addition, Take Care DC is the best place for your skin care needs and especially a facial. Becky the owner is so knowledgeable about every product they carry. And Erin is my go to for the most incredible facial in town.”
6. Little Acre Flowers
“Another worthwhile stop is just around the corner from Cafe Cino at what will be the “Little Others” pop up collaboration between Little Acre Flowers and Others Coffee,” says Co-founder and Co-owner of Others Coffee, Brian Raupp. “Beginning the weekend of June 10th, Little Acre and Others will be transforming a beautiful space located at 1722 Florida Ave, NW, into a grab-and-go cafe/flower shop every Saturday and Sunday throughout the summer.”
7. As You Are bar
Personal Trainer Bianca Russo of Bianca Russo Fitness suggests As You Are bar. “This bar is an LGBTQIA+-owned establishment and is a space with resources centered around community care. The bartenders are sober-informed, so even the non-drinking patrons feel welcome to socialize over the chicken tenders and fries without judgment.”
8. Cafe Cino
“A must-visit hidden gem if you’re in the Adams Morgan area is Cafe Cino,” states Raupp. “Named after their eldest son, Cino, the cafe is a pop-up inside of a beautiful plant shop called PLNTR. Ron and Carolina, owners of Cafe Cino, have a great selection of coffees from around the world (including our coffee) and take tremendous pride in the preparation and presentation of everything they brew.”
9. Filene Center
“Washington DC’s best kept hidden gem is the Filene Center at Wolf Trap Center for Performing Arts,” states Sara Polon, CEO & Co-Founder Soupergirl, offering Vegan, plant-based, kosher, and gluten-free soups. “This beautiful outdoor venue located just outside the city is actually a National Park! Some of the world’s best artists play every summer at this intimate, peaceful, outdoor oasis. Sting, Ziggy Marley, Elvis Costello, and Trombone Shorty are just a few of the acts that routinely perform on this legendary stage. Bonus! Visitors are allowed (and even encouraged!) to bring in their own food and wine. Rose under the stars.”
10. Bitty & Beau’s Coffee Shop
“Bitty & Beau’s Coffee Shop is a conveniently-located coffee shop that will not only fill your stomach with impeccably crafted coffee, but inspire you with their mission to employ people with intellectual and developmental disabilities,” explains Kristina Han Founder of Own Your Wonder. “It’s not about charity. It’s about delicious food, drinks and service, all the while doing good for humanity. I love their tagline: ‘a human rights movement disguised as a coffee shop.’”
11. The Blind Whino
“The Blind Whino is a cultural house and historical landmark, shares Morgan Murray, blogger at Less or Morgan. “The building once stood as a church when it was built in 1886, but now stands as a center for art in the local community. Discover new artists, attend events, concerts, or enjoy the eclectic and colorful exterior of the building.”
12. Baked & Wired
Murray also recommends Baked and Wired, a local favorite bakery and coffee shop in Georgetown. “The cupcakes are my go-to sweet treat to enjoy. While you are there, try the Oreo cupcake.”
13. Billy Goat trail
“A must-visit place near Washington, DC, and one of my favorite hidden gems is the Billy Goat trail in Great Falls, explains Dalia Hidayat of Craving for Chocolate, a boutique chocolate atelier. “Whenever I need to unplug and get a few hours of peace, I walk the trail and take in the scenic waterfalls. On the way back there is a restaurant called Old Anglers Inn that I stop by and grab lunch. The restaurant is off the beaten path but on the road back from the park and has a lush and beautiful outdoor garden patio where I can grab an ahi tuna salad with a side of french fries. This is my go to escape for peace and tranquility.”
District of Clothing, a lifestyle brand encouraging progression, inspiring action, and supporting self-love also suggests checking out Billy Goat Trail. “There are so many great things to do in the DMV area during the summer time, but our top choices would be hiking the strenuous Billy Goat Trail (section A)–it’s a nearly 5 mile hiking trail that follows a path between the C&O Canal and the Potomac River. Second suggestion would be to have a salad, fries and rose at Summer House Santa Monica in North Bethesda.”
14. M.O.B Vintage
“M.O.B Vintage, located outside of DC on Kensington Antique Row, is a charming stretch of vintage and antique shops,” explains Hadiya Williams, founder of Black Pepper Paperie CO., a DC-based art and design studio. “As a lover of all things old, from homes to objects and clothes, visiting this area is always a delight. Owner Mike O’Bryant has expanded from one shop to four, with a dedicated area for Mid-Century Modern furniture and decor, which is a personal favorite of mine. My partner, who went to school with Mike in historic Shepherd Park, introduced me to this gem, and now it’s become our annual Christmas tradition.”
15. Blagden Alley in NW
“Blagden Alley in NW is my favorite hidden gem in DC,” shares Opare Densua, Founder and CEO of Elevated Tea Co. “This historic community was once home to 60+ African American families seeking refuge after the Emancipation Proclamation. The alley was also home to the second elected Black U.S. Senator Blanche K. Bruce. Now a vibrant commercial district, it boasts unique alley dwellings, chic restaurants, a coffee shop, and dynamic art murals. Causa/Amazonia, a two-part Peruvian restaurant with a rooftop and exceptional cocktails (try the Ocapa), is my personal favorite.”
16. Hana Market
Han also recommends Hana Market. “This unexpected and old-school Japanese supermarket looks like any old corner store from the outside. Once you’re inside, you’re treated to a wide array of all things Japanese and you’ll feel like you’re in the middle of Tokyo. Just to walk down each crowded aisle browsing a million noodles and spices is a fun way to take a break from the hustle and bustle of the outside.”
17. Purple Patch
“When I want to spend a night out, Purple Patch is my special spot that gives me so much joy and love,” shares Rose Nguyen, owner of Rose Ave Bakery, an Asian-American bakery offering pastries that are fun, inventive and damn delicious. “Chef Patrice exudes hospitality in everything she does, especially the food and service. The food is spectacular and represents Filipino culture so well.”
18. National Cathedral and grounds
“A favorite hidden gem of mine is the Washington National Cathedral and grounds,” says Joel Finkelstein, owner and roaster for Qualia Coffee located in the Petworth and Eckington neighborhoods of DC. “The building itself offers both a wealth of architectural details, not the least of which is a myriad of gargoyles carved into the stone work over the 100 years it took to complete, as well as an observation deck located at one of the highest points in DC. In the Bishops’ Garden, the grounds also feature one of the best picnicking and relaxation spots to enjoy a sunny day.”
19. Sospeso
“Sospeso is our go-to neighborhood restaurant for Mediterranean food on H Street NE,” says Seda & Suzy of Shopkeepers, a shop and cafe in DC. “For dinner, we always get the Mezze Platter with a bottle of wine. For brunch, their Turkish breakfast is great because of the balance of flavors and textures. The decor is cozy and the staff is friendly. Perfect spot to catch up with friends, especially on Mondays when a lot of restaurants are closed.”
20. The Peacock Room
“The Peacock Room at the Freer Gallery is a stunning sea of blue and green designed by James McNeill Whistler to showcase a Chinese blue-and-white porcelain collection,” explains Amy Rutherford, President of home furnishings and gift store, Red Barn Mercantile, and stationery store, Penny Post. “Marvel at its beauty and the feats of engineering it took to bring the room from London to Detroit to Washington, DC. Definitely worth the trip.”
Rutherford goes on to share, “Old Town Alexandria is an absolute gem. A trip to DC would not be complete without a stop in our little hamlet. History, shopping, dining, and nature combine for a lovely day trip across the river.”
Washington, DC, is a city that never ceases to amaze, offering a countless number of experiences from serene greenspaces to unique neighborhoods with local charm. Embracing these hidden gems in DC is the key to immersing yourself in the city’s delights and finding out why DC is a good place to live. Prepare to be captivated and forever connected to this remarkable city.
Last Updated: May 27, 2023 BY Michelle Schroeder-Gardner – 58 Comments
Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.
Recently, I published the article Reasons You’re Still in Debt. Like I said in that article, I think the first step in eliminating debt is to realize why you are in debt in the first place.
I believe that if you don’t know what your problem with debt to begin with is, then it would be hard to make a positive change.
Yes, it is great to just start attacking your debt, but you also don’t want to fall into the same cycle of going into debt over and over again.
After you realize why you are in debt (or why you keep going back into debt), the next step is to figure out how you will eliminate your debt. There are many different ways for you to attack your debt, and I prefer a mixture of everything.
Below are different ways to get rid of your debt.
1. Stop adding to your debt.
This sounds obvious, right? Like I said earlier, if you don’t know why you are in debt, then it would be hard to stop adding to your debt.
Also, if you’re eliminating debt but also adding to it at the same time then you won’t get anywhere fast.
Different ways that you could prevent yourself to stop adding more debt include:
Canceling your credit card.
Freezing your credit card.
Asking for your credit card limit to be lowered.
Don’t take out extra student loans that you don’t need.
Think it over before you buy something.
Avoid places like the mall altogether.
2. Create a budget.
Of course this is on my list. Why wouldn’t it be? If you don’t believe in a budget but you have a lot of debt, then you better start believing.
You should create a realistic budget so that you truly know how much you are spending. Then total how much you actually bring in each month. If you are bringing in less than you are spending then a change definitely needs to be made.
A budget can also help you see where your money is going so that you know what areas you need to work on. Maybe you never realized how much you spend on food each month, how much you spend on clothing or something else.
A budget really puts that in front of you so that you know what you can cut out of your spending (or at least lower your spending in that area).
3. Cut your expenses.
To continue with what I was saying above, you may have to cut your expenses in order to have a realistic budget so that you can pay off your debt.
If you have $100,000 in credit card debt, should you really still be spending $500 a month on clothing?
Probably not.
Depending on how quickly you want to get rid of your debt, there are different things that you may want to cut out. You could cut out Starbucks (I know, I know), lower your restaurant spending, find a cheaper way to workout, sell your car for something cheaper/more affordable, cook from scratch and so on.
There are many ways to cut down your spending. Below is a quick list for you to start with:
Lower your cell phone bill. Instead of paying the $150 or more that you spend on your cell phone bill each month, there are companies out there like Republic Wireless that offer cell phone service starting at $5. YES, I SAID $5! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. I created a full review on Republic Wireless if you are interested in hearing more. I’ve been using them for over a year and they are great.
Sign up for a website like Ebates where you can earn FREE cash back for spending like how you normally would online. When you sign up through my link, you also receive a free $10 gift card bonus to Macys, Walmart, Target, or Kohls!
Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free too) and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
Check out my recommendations page for a full list on money-saving websites.
4. Find a way to make extra money.
Making extra income is the main thing that helped me pay off my student loans so quickly. I worked like crazy in my spare time because I knew that I could make more money than I could cut out of my budget(don’t worry, I did do both).
There is a limit to how much you can cut, but you can always find different ways to make more money.
You could find a part-time job at a restaurant, retail store, and so on. You could freelance on the side. You could babysit, dog walk, sell your crafts and so on. The list is really endless for what you could possibly do.
Miscellaneous other things you should do:
Pay more than the minimum.
Put little amounts toward your debt. For example, whenever you get an extra $25 (such as by selling something), then you should just throw that extra money that you won’t miss towards debt.
Automate your payments if you can’t force yourself to make payments.
Put money towards debt right when you get paid so that you are “paying yourself” first.
How are you eliminating your debt? When do you think you will be debt free?
American Airlines is adding four new lines to its domestic route map.
Later this year, the Fort Worth-based carrier will start flying the following four routes, as first seen in Cirium schedules and later confirmed by the carrier.
Ronald Reagan Washington National Airport (DCA) — Fort Lauderdale-Hollywood International Airport (FLL).
DCA — Milwaukee Mitchell International Airport (MKE).
Dallas Fort Worth International Airport (DFW) — Albany International Airport (ALB).
Miami International Airport (MIA) — Portland International Airport (PDX).
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All of the new routes are interesting, but perhaps the most intriguing is the new service between Miami and Portland, Oregon.
Miami has historically been a fortress hub for American, acting as its key gateway to the Caribbean and Latin America with plenty of domestic feed for both the local and connecting markets.
So, despite the new route being one of the longest coast-to-coast flights in the American network, it may not necessarily be surprising to see the airline adding a new 2,700-mile service from Miami to Portland.
The airline shared in a statement that “American Airlines is pleased to announce new nonstop service from Miami (MIA) to Portland, Oregon (PDX) starting this November. The new nonstop service will complement American’s network of more than 140 destinations from MIA and opens convenient, one-stop access to the largest network of destinations in the Caribbean and Latin America from the United States.”
However, keen aviation observers will remember that it was just days ago when Alaska Airlines, which operates a hub in Portland, announced plans to commence flights to Miami later this year.
While American’s new route announcement could purely be a coincidence, the timing of when the service starts makes it pretty clear that this move is targeted at Alaska. American’s new Miami-to-Portland flight starts on Nov. 5, and Alaska’s will commence less than two weeks later.
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To recap, Miami is going from having no flights to Portland to having two daily flights in just a matter of days.
Though American and Alaska are Oneworld alliance partners and share a West Coast International Alliance, American’s competitive response is seemingly starting a turf war between the airlines.
More flight options are certainly better for travelers, especially since airlines like to match each other’s fares. While Alaska must now fend off a new competitor in Miami, the airline is no stranger to a turf war.
The Seattle-based carrier had a strong relationship with Delta Air Lines in the early 2010s that included a robust codeshare and frequent flyer alliance. By the middle of the decade, however, the partnership frayed as Delta moved instead to build its own hub in Seattle, ultimately competing head-to-head with Alaska on many of its most lucrative routes.
The partnership ultimately ended in 2017 amid an escalating turf battle for Seattle. Since then, Alaska’s been in growth mode — boosting the Seattle hub with new routes and elevating many elements of the travel experience, including new and expanded airport lounges.
Meanwhile, in San Diego, Alaska recently announced new service to Dulles International Airport (IAD), a key hub for United. A few days later, United retaliated by upgauging its route with the airline’s twin-aisle Boeing 777.
Since then, Alaska has been “trolling” United by switching its flight number to “AS 777” and offering select flyers 777 bonus miles for taking the new route.
American’s three other new routes are quite interesting as well. The flight from Washington, D.C., to Fort Lauderdale will go up against JetBlue’s flights in the same market.
While the Northeast Alliance between American and JetBlue may not be around for much longer, the two carriers are seemingly battling at DCA.
Meanwhile, the flight from Dallas to Albany will become American’s longest from the New York capital. The new route to Milwaukee will go head-to-head with Southwest Airlines.
“American is excited to offer more service to Reagan National Airport (DCA) with the additions of Fort Lauderdale and Milwaukee,” said Brian Znotins, American’s senior vice president of network planning. “These new markets join our robust DCA network of more than 85 destinations. We’re proud to serve these new in-perimeter markets without adding more congestion to the most heavily-utilized runway in the nation.”
How would you like $4,290,387? It’s easy! Just go back to 1972 and invest $100,000 into a well-diversified portfolio. Not enough money for you? Well, then, here’s how you can add $334,124 to that tidy sum: Simply rebalance this well-diversified portfolio annually.
Okay, despite my fondness for Marty McFly, there’s no way to travel back 38 years and open a brokerage account. But the past few decades may provide clues about the next few, especially regarding portfolio behavior and the value of rebalancing. Below, we’ll look at three common beliefs about rebalancing and explain whether they’re true or false — and why.
Reduce, Reuse … Rebalance? In case you’re new to the concept, rebalancing is the process of returning a portfolio to an investor’s predetermined appropriate allocation (for example, 65% stocks and 35% bonds). A balanced portfolio is key to ensuring steady, growing returns, but the movement of various investments over time can cause that initial, balanced allocation to change; assets that have done well become a bigger piece of the pie, while the laggards shrink to a smaller portion.
Historically, broad asset classes tend to (but don’t always) revert to the mean, which is a fancy way of saying that the best investments over the past several years will often be among the worst over the next several years, and vice-versa. By rebalancing a portfolio, you’re aiming to sell hot investments before they turn cold, then use the proceeds to buy investments that are warming up. Doing this ensures that every asset remains represented at the level you find appropriate.
Let’s examine the behavior of stocks since 1972, a period during which the market had its share of hard times. The decline of the “Nifty Fifty” stocks during the market crash of 1973 and ’74 was at the time the biggest drop since the Depression, and during the “lost decade” we’ve just experienced, U.S. stocks posted their worst 10-year return ever, including the Depression.
Would rebalancing have helped during that time? Let’s find out. Join me in the plutonium-powered DeLorean and travel back to the year Al Pacino’s horse head beat out Jon Voight’s pretty mouth for the Best Picture Oscar.
The Asset Allocation Under Inspection The investment portfolio we’re studying has the following assets:
U.S. large-cap stocks: 25%
U.S. small-cap stocks: 15%
International stocks: 15%
Real estate investment trusts: 10%
Intermediate-term government bonds: 35%
We’ll examine how this portfolio performed from 1972 (the first year with reliable numbers for each asset class) through the end of 2009, and compare the returns under two scenarios: one in which it is never rebalanced, and one in which it is rebalanced annually. We’ll then compare our back-tested portfolios to the S&P 500, since the typical American portfolio is dominated by S&P 500 stocks.
But first, let’s put our guinea-pig portfolio under the microscope to see what history has to say.
1972-2009
No Rebalancing
Annual Rebalancing
S&P 500
Annualized Return
10.4%
10.6%
9.9%
$100,000 Turned Into …
$4,290,387
$4,624,511
$3,622,187
Number of Calendar-Year Declines
7
5
9
Worst Calendar-Year Declines
(32.6%), (12.4%), (11.9%)
(20.4%), (13.1%), (10.4%)
(37.0%), (26.5%), (22.1%)
Source: My calculations using data from Ibbotson, MSCI EAFE, and NAREIT
Armed with these numbers, we can prove or disprove our three basic principles.
True or False: Rebalancing Always Significantly Improves Returns? At first glance, the extra return gained from rebalancing our case-study portfolio doesn’t appear extraordinary: a mere 0.2% a year. However, the rebalanced portfolio is worth $334,124 more than its counterpart — an amount that is more than three times the original investment. And who wouldn’t want an extra $330,000 for about an hour of work a year?
It just goes to show how earning a tiny bit more, compounded over decades, can really pay off. We see this even more when comparing the annually rebalanced portfolio to the S&P 500, which earned 0.7% less a year but grew to “just” $3,622,187. The diversified, rebalanced portfolio was worth $1,002,324 more — that’s a 27.7% increase. Shazam!
That said, if you rebalance out of an asset that’s on an upward trend, you can actually earn less. Let’s break down the returns from our non-rebalanced and annually rebalanced portfolios by decade:
Annualized Returns by Decade
1970s*
1980s
1990s
2000s
No Rebalancing
8.6%
16.8%
12.3%
3.9%
Annual Rebalancing
9.0%
17.5%
11.8%
5.2%
*1972-1979
The benefit of rebalancing during the ’70s, ’80s, and 2000s was higher than the 0.2% annual increased return observed over the entire 38 years. But the 1990s were a different story; during that time, rebalancing actually reduced returns. That’s because U.S. stocks, particularly large caps, were on a tear through most of the decade. Rebalancing in those years would have required investors to sell those asset classes before they had run out of gas, then buy lower-performing assets like international stocks and Treasuries — which posted less than half the return of U.S. stocks during the 1990s.
However, U.S. stocks got their comeuppance (actually, come-down-ance) in the 2000s. One reason the benefit of rebalancing has been greater over the past decade (1.3% per year, on average) is that the rebalanced portfolio entered the 2000s with lower exposure to U.S. large caps, meaning it was more protected when they reverted with a vengeance.
True or false? False. The boost rebalancing gives to returns is inconsistent — sometimes big, sometimes small, sometimes nonexistent, depending on market conditions. However, in the long term, you can expect it to add a smidge to your returns, which could add a not-insignificant amount to the portfolio’s final dollar value.
True or False: Rebalancing Is About Managing Risk? Look back at the table of our back-tested results, and you’ll see that the rebalanced portfolio was less risky. It had fewer “down” years — and the declines it did have weren’t as bad. A non-rebalanced portfolio is subject to “asset drift,” when winners grow to take up a bigger proportion of a portfolio. We can illustrate this by reviewing the allocations of our non-rebalanced portfolio at three points: (1) at the start of our study, (2) right before the dot-com bust that began in 2000, and (3) right before the “Great Recession” crash of 2008.
Time
Large Caps
Small Caps
International Stocks
REITs
Treasuries
Beginning of 1972
25%
15%
15%
10%
35%
End of 1999
34%
28%
8%
18%
11%
End of 2007
22%
36%
16%
16%
11%
In each case, the portfolio became considerably more aggressive, eventually coming to hold less than a third of its targeted allocation to bonds — right before two major stock-market corrections. Mazahs! (That’s the opposite of “Shazam!”) By the end of 1999, the portfolio’s largest holding by far was U.S. large caps — on the eve of their worst decade ever. And by the end of 2007, more than a third of the portfolio was in U.S. small caps, the most volatile asset class in our study.
A study by fund company Vanguard shows an extreme example of what can happen to a non-rebalanced portfolio. The researchers found that a portfolio created in 1926 with 60% stocks and 40% bonds would have ended 2009 with 97% of its assets in stocks. This is the opposite of the approach most investors should take; in general, your portfolio should get more conservative as you approach and enter retirement. By determining a proper asset allocation and regularly rebalancing, the investor — not the market — determines the level of risk in the portfolio.
True or false? True … usually. Rebalancing can move you out of highfliers poised for a fall. The degree to which that reduces your risk depends on what you’re rebalancing your portfolio into. Which brings us to our next point …
True or False: The Stock-Bond Split Is Key? If the investments in your portfolio tend to move together in the same direction and to similar degrees, rebalancing is less useful. Conversely, when those holdings don’t move in lockstep, rebalancing does a better job at managing risk.
In the investment world, that lockstep is known as correlation — the degree to which assets perform similarly in any given year. Broad categories of stocks — e.g., large caps and small caps, or U.S. stocks and European stocks — are at least somewhat correlated, often highly so. Stocks and bonds, on the other hand, are only mildly correlated, and most importantly, bonds tend to smell rosy when stocks stink. Thus, if the biggest reason to rebalance is to control risk (which is usually done by investing in bonds), then the most important allocation to monitor and rebalance is your stock-bond split.
Let’s return to our example portfolio but remove the bonds, instead adding 10% to large caps, small caps, and international stocks, and 5% to REITs. The results: The non-rebalanced portfolio posts an annualized return of 11.3% (turning $100,000 into $5,785,943), whereas the rebalanced portfolio returns an annualized 11.5% (ending with $6,328,103). Once again, we see a rebalancing bonus of 0.2% a year.
However, on the risk-reduction front, rebalancing added nada. Both portfolios experienced seven years of declines of similar degrees. The three worst calendar-year declines for the non-rebalanced portfolio were 38.1%, 23.2%, and 18.2%, and the three worst for the rebalanced portfolio were 38.6%, 23.0%, and 18.7%. The rebalanced portfolio earned higher returns in the 1970s, 1980s, and — interestingly — the 1990s. However, the bond-free rebalanced portfolio slightly trailed the bond-free non-rebalanced portfolio in the 2000s — the decade when risk reduction was needed most.
True or false? In general, true. Ensuring the right split between stocks and bonds can lower your risk of sharp declines — and of running out of money in the future.
Tips for Rebalancing Enough theory! Here are some practical considerations when it comes to rearranging your portfolio.
Account for taxes and other costs. If rebalancing results in big commissions or tax bills, the potential boost to returns could easily disappear. Whenever possible, rebalance in tax-advantaged accounts — such as IRAs or 401(k)s — and keep costs low by limiting transactions to no-load funds and discount brokerages. That said, don’t let the tax tail wag the investment dog. Plenty of people held onto stocks in the 1990s just because they didn’t want to pay the capital gains taxes. The market took care of that for them — by significantly reducing or eliminating the gains.
Rebalance with contributions and withdrawals. You can gradually rebalance your portfolio with strategic inflows and outflows. If you’re still working, use savings to buy more of underweighted assets (those that take up less of your portfolio than current market conditions warrant); retirees, on the other hand, should sell what’s become overweighted. An analysis by asset manager and author Phil DeMuth found that selling what has performed the best over the past year could prolong the life of a portfolio.
Rebalance annually — at most. Rebalancing more than once a year (e.g., monthly or quarterly) is more trouble than it’s worth. You’ll spend more in time, costs, and taxes to get a lower return. In technical terms, such behavior is known as “silly.” In fact, you’ll likely realize slightly higher returns and lower transaction costs if you rebalance even less frequently than annually — perhaps every two to three years. For example, you could rebalance once an asset class reaches a certain level — such as being 20% below your target allocation, or 20% beyond it. Thus, if your goal is that a certain asset make up 10% of your portfolio, you’d rebalance once that asset declined to less than 8% or grew beyond 12%.
In the end, it’s most important that you choose the strategy you’ll really do. For ease of implementation, it’s hard to beat annual rebalancing. As asset manager Rick Ferri wrote in All About Asset Allocation:
What is best for you is [a plan] you will actually maintain without procrastination. Annual rebalancing is simple and cost-effective, and it takes only a little time each year to implement, which means that you are more likely to get it done.
J.D.’s note: I had intended to tackle re-balancing myself next week, but Robert beat me to it. That’s okay. He knows more about it anyhow. Instead, I’ll chronicle the process as I try to rebalance my own portfolio.
Editor’s note: This is a recurring post, regularly updated with new information.
In the points and miles world, a mention of the infamous 5/24 rule is sure to follow whenever a Chase card comes up. In short, this refers to the unofficial rule that Chase won’t approve a credit card application for someone who has opened five or more new credit cards from any issuer in the past 24 months.
However, without any published policy from Chase, dissecting the 5/24 rule still relies heavily on crowdsourced data. There are outlier data points that can turn out to be false, as well as exceptions to what we generally believe to be true.
Here’s everything you need to know about Chase’s 5/24 restrictions.
What is the 5/24 rule?
In order to be approved for any Chase card subject to 5/24, you cannot have opened five or more personal credit cards across all banks in the last 24 months (more on business cards in a moment).
This means you actually need to be under 5/24 to be approved. The 5/24 rule only applies to getting approved for cards issued by Chase, but your 5/24 count includes credit cards from all banks.
Related: The best ways to use your 5/24 slots
Are all Chase cards subject to 5/24?
Most travel cards issued by Chase are subject to 5/24 for approval, including cobranded cards. The following are cards reported to be subject to the 5/24 rule:
*The information for these cards has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
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Reader reports also indicate that applying for too many Chase cards too quickly can lead to account scrutiny and shutdowns, regardless of your 5/24 status. Some online reports have noted that Chase will not accept you for more than two new accounts within 30 days.
Because of that, a general recommendation is to avoid applying for a new account more frequently than every three or four months.
Remember that 5/24 is not the only factor determining whether your Chase credit card application is approved — your credit score, income, debt levels and many other variables get considered. For business cards, Chase also sometimes requests documentation such as financial statements or articles of organization to show that you have a legitimate business or sole proprietorship.
Related: Clearing up the confusion: How to complete a Chase business credit card application
How do I check my 5/24 status?
We’ve found the easiest way to check your 5/24 status is to sign up for the free credit report service at Experian (make sure you don’t accidentally sign up for a paid service). Using the Experian app, you can view all of your accounts and sort them by the date they were opened. From here, count anything opened within the last 24 months. Chase only looks at whether an account was opened — it doesn’t matter if you’ve since closed it.
According to most recent data points, you will not technically be below 5/24 until the first day of the 25th month after your fifth account was opened. For example, if your fifth most recent account was opened on Oct. 17, 2021, do not apply for a new card until at least Nov. 1, 2023.
Related: How to calculate your 5/24 standing
What accounts add to your 5/24 status?
The following accounts count toward your 5/24 standing:
All personal credit cards opened with any bank in the immediate past 24 months (even if they’re now closed).
Business cards opened with Discover and TD Bank in the past 24 months, plus any Capital One small business card other than the Capital One Spark Travel Elite card and Capital One Spark Cash Plus accounts.
Authorized user cards from another person’s personal card opened in the past 24 months, as they’re reported on your credit report. However, you can call the Chase reconsideration line and ask for these accounts to not be considered.
Specific store cards opened in the last 24 months that are part of a national payment system and can be used elsewhere. Some data points suggest that even store cards that can only be used at a single establishment also now count. Assume that if it shows up on your credit report then Chase will count it.
The information for the Spark Travel Elite card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
The following accounts will not count toward your 5/24 standing:
Related: These business cards can help you stay under Chase’s 5/24 rule
What about card conversions and upgrades?
Depending on how a bank processes a card conversion or upgrade — also known as a product change — it might not be reported as a new account. Before completing an upgrade or product change, ask the bank if a hard credit pull will be completed. In addition, ask if you’ll receive a new account number after the switch.
If the answer to one (or both) if these questions is yes, that could be a sign the account will be considered new and add to your 5/24 standing.
Related: Do product changes and conversions count against Chase’s 5/24 rule?
Are the methods to bypass 5/24 all dead?
There used to be a handful of common ways to overcome 5/24 and get a card with the sign-up bonus you desire. But those avenues are no longer working.
However, there have been some instances recently where cardholders bypassed the 5/24 rule through targeted “Just for you” offers. To see if you’re targeted, navigate to “Just for you” under “Explore products” in the left-hand menu bar when you’re logged in to your Chase personal account.
If you desperately want a card now and are over 5/24, you can attempt a product change within the Chase Ultimate Rewards card family (assuming you’ve held the card you want to convert for at least a year). However, unless you’ve been specifically targeted for a bonus to upgrade a card, you will not receive a sign-up bonus for any product change.
Related: When should you ignore Chase’s 5/24 rule?
Chase 5/24 FAQ
Can I apply for two Chase cards on the same day when I’m 4/24 and get approved for both?
Historically, some data points suggested you can apply for two Chase cards on the same day when you’re at 4/24. However, one of the applications may be automatically declined in this case. If you then call the reconsideration line, the agent may see your new (approved) account, and this may make you ineligible for the second one (though you’d still have the second hard inquiry on your account).
In either case, remember that Chase may scrutinize customers applying for credit too quickly. Our recommendation is to only apply for one Chase card at a time.
I applied for a card on the exact day I went below 5/24 and was denied. What can I do?
Wait until the first day of the next month and call the Chase reconsideration line, or reapply after the first day of the next month.
I am at or over 5/24. Can I get a card from another bank?
Yes. Approvals for credit cards issued by banks other than Chase are not affected by your 5/24 score. Of course, each bank does have its own approval criteria.
Do Chase business cards count toward my 5/24 score?
No. If you are approved for a Chase business card, it shouldn’t add to your 5/24 standing. However, you must be below 5/24 to get approved for most Chase business cards.
What if I’m under 5/24 but have authorized user accounts on my credit report that make me appear at (or over) 5/24?
Your application may be outright denied or marked for further review. In either case, you’ll want to call the Chase reconsideration line and note which accounts are authorized user accounts. The agent will likely ask whether you are responsible for these accounts and may approve you if someone else is the primary cardholder. However, this is a manual process, and it may not work.
Instead, consider planning ahead and removing yourself as an authorized user at least a month before submitting your application.
Related: How TPG staffers with the most credit cards handle Chase’s 5/24 rule
Bottom line
Chase’s 5/24 is a firmly entrenched rule with no signs of disappearing any time soon. This means you need to be extremely strategic about your application and rewards strategy so you can maximize your five allowed Chase slots.
If you’re starting in the realm of credit card rewards and aren’t close to 5/24, you’ll want to prioritize getting Chase cards first. But remember not to try to fill your five slots with Chase cards quickly. Applying for that much credit so fast is a surefire way to invite unwanted attention from Chase and risk your long-term relationship with the bank. Take it nice and slow and be smart about which cards you apply for and when you do it.
For additional reading, check out our picks for the best credit cards.
Application link: Chase Sapphire Preferred, earning 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.
Application link: Chase Sapphire Reserve, earning 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.
Additional reporting by Emily Thompson, Stella Shon, Katie Genter and Madison Blancaflor.
For many travelers, our pets are part of our family. While we might not bring Fido along on a vacation, we don’t want to leave him behind for an extended stay or when we’re moving to a new place.
Checking a pet into the cargo area of a plane can cause anxiety — for both pets and their humans. So, the natural question many pet-owning travelers might have is: Can I buy my dog a seat on an airplane?
That answer depends on which airline you’re flying. Let’s take a look at airline policies on buying a seat for a pet, plus a workaround if the airline won’t let you buy your dog an airplane seat.
Size limitations for carry-on pets
Before we dig into specific airline policies, we need to address the biggest limitation of flying with pets: size requirements. Almost every airline restricts carry-on pets to a carrier that fits under the seat in front of you.
Additionally, airline policies generally require that there’s enough room for your pet to stand and turn around in their carrier. Plus, most airlines restrict which species can be carried on as pets.
Put together, these policies generally limit travelers to carrying on small dogs and cats.
There’s one notable exception, though. JSX lets you carry on medium-to-large dogs up to 79 pounds as long as you purchase an extra seat for them. Even better, JSX allows free travel for small-size cats and dogs that fit in a carrier under the seat in front of the owner.
Airlines that let you buy your dog a seat on an airplane
We could only find two airlines that will sell you an adjacent seat specifically for your pet: JSX and JetBlue Airways.
JSX
JSX passengers can bring up to a 79-pound dog on board with them after purchasing an additional seat.
Even better, the dog isn’t restricted to a carrier if you purchase an additional seat for them. You simply have to keep them leashed.
However, even though you bought the seat for your pet, your pet isn’t actually allowed to sit on the seat. Instead, they must sit in the floor space in front of the seat you purchased for them.
JetBlue
JetBlue also specifically allows travelers to purchase an extra seat for their pets, though the pet must still be small enough to fit in a carrier.
While your pet’s carrier must be stowed under a seat for taxi, takeoff and landing, JetBlue lets you place their carrier on your extra seat during the flight.
Alternative: Buy an extra seat
Although some airlines won’t let you technically buy an extra seat for a pet, you might be able to purchase an extra seat for yourself. These policies are typically intended for passengers looking for some extra space, comfort or privacy.
Here’s a brief list of airlines that let you purchase an extra seat and the terms the airline uses for this seat purchase:
Alaska Airlines: Comfort Seat.
American Airlines: Extra Seat.
Delta Air Lines: Extra Seat.
Even if you buy an extra seat for your pet, most airlines require that your pet stays in its carrier the entire flight. That means your dog won’t be able to sit directly on the airplane seat, even if you purchased that seat for them.
Still, buying an extra seat can let you stretch out a bit. You can place your pet’s carrier under the extra seat, or you can simply use the extra seat as a buffer from other passengers.
Earning miles for pet travel
At NerdWallet, we love earning and redeeming points and miles. So, we naturally need to address the question: Can your pet earn miles from travel?
We aren’t aware of any airline that rewards miles directly to your pet. However, some airlines reward humans for bringing their best friend along. For instance, JetBlue TrueBlue members get rewarded with 300 bonus points for a pet booking.
Overseas airlines are a bit more generous with rewarding pet travel. For example, Japan Airlines offers travelers 500 bonus miles per flight for their pets.
Meanwhile, the Korean Air Skypets program rewards travelers with stamps for purchasing pet travel. Those stamps can be redeemed for discounts on pet travel, up to a completely free flight for your pet.
You might also earn extra miles if you opt to purchase an additional seat for extra space. For example, Alaska Airlines passengers purchasing a Comfort Seat will earn miles for their own seat and the additional seat.
Likewise, Delta SkyMiles members can earn miles from an extra seat, but you’ll need to submit a request for mileage credit after travel. Just note that you won’t earn elite-qualifying miles from the extra seat.
Other considerations when flying with a dog
Confirm with the airline that your pet can be carried on your flight. Several types of airline seats don’t have adequate storage space for pets, particularly in premium cabins. Plus, many airlines limit how many pets can be carried onto the same flight. So, contact your airline to make a pet reservation and confirm your seat has appropriate storage for a carry-on pet.
Do your research before sedating your pet for travel. The American Veterinary Medical Association recommends against sedating your pet for travel in most cases. And several airlines won’t allow you to carry on a pet that’s been sedated or tranquilized.
Don’t show up at the last minute. Flying with a pet can make air travel even more difficult. You’ll potentially need to fill out or show paperwork at check-in, take extra time at security, plus don’t forget to work in one last bathroom break for your pet before boarding. Make sure that you arrive at the airport early enough that you have time for all of these steps.
Avoid grooming your pet during travel. Keep in mind that some of your fellow passengers may have pet allergies, and they likely wouldn’t have gotten notice that a pet is on their flight. Be considerate and avoid grooming your pet during travels to reduce the amount of dander put off into the airplane cabin.
More resources for traveling with dogs on planes
Different airlines have different policies with respect to traveling with dogs. Here’s a closer look at how pet policies vary across airlines:
If you’re considering flying with a dog
Most airlines only let travelers carry on small dogs and cats, and you’ll generally have to pay for the privilege of storing them under the seat in front of you.
If you want more space, some airlines let you buy an extra seat that you might be able to use to place your pet’s carrier on during the flight. However, your pet generally needs to stay in its carrier the whole trip.
JSX is the only airline we could find that lets travelers carry on a larger dog (up to 79 pounds) and travel outside a carrier. All you need to do is purchase an extra seat for your pet and keep them leashed at all times.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
U.S. Bank is one of the biggest banks in the United States, so it’s no surprise that it offers a dizzying array of CDs. The more important question — one you’re perhaps asking right now — is “are they any good?”
Without giving the game away entirely, U.S. Bank’s CD lineup is a mixed bag. Most of its CDs have yields too low to seriously consider, but it does have a few that pay competitive interest rates. Whether any of those fit your needs depends on how much money you can bring to the table, how long you want to keep your cash tied up, and what your plans are after the initial term ends.
U.S. Bank Certificates of Deposit
Three of the four U.S. Bank CDs have very low interest rates and aren’t worth considering. The special CD has far more competitive yields and is definitely worth checking out if you’re in the market for a new CD.
The minimum deposit is $1,000 for all but the standard CD, which you can open with just $500. All U.S. Bank CDs have FDIC insurance up to the statutory requirement of $250,000.
Special CD Terms & Yields
U.S. Bank has four short- to medium-term special CDs with competitive yields:
Term
Yield
Seven months
Up to 4.80% APY*
11 months
Up to 4.90% APY*
15 months
Up to 4.95% APY*
19 months
Up to 4.95% APY*
The minimum deposit is $1,000.
Note that the advertised rate varies by geographic location and is good for the initial term only. Unless you close the account and withdraw your funds, the CD automatically renews at maturity into a standard CD with the closest term length — and a much lower interest rate.
Other U.S. Bank CD Types
Their low yields take them out of contention unless you really don’t care about getting a return on your investment, but for posterity, these are U.S. Bank’s three other CD types:
Standard CD. Terms range from one month to five years. Yields range from 0.05% APY* on the shorter-term CDs to 0.25% APY* on the five-year CD.
Step-up CD. This is a 28-month CD that automatically steps up its interest rate every seven months. But that doesn’t get you very far. The starting yield is 0.05% APY* and the ending yield isn’t much better at 0.65% APY*.
Trade-up CD. This CD type offers 30-month or five-year terms. You can raise your interest rate once if U.S. Bank’s offered rate increases during your term, but there’s no guarantee of this. And again, the starting yields are frustratingly low: 0.10% APY* for the 30-month and 0.40% APY* for the five-year.
What Sets U.S. Bank CDs Apart?
U.S. Bank’s CDs stand out for a few reasons, not all of them positive:
Competitive yields on the special CDs. U.S. Bank’s four special CDs yield well above the average for big banks in the United States — up to 4.95% APY* on the 19-month CD.
Special CD yields only good for the initial term. The other side of the special CD coin is that their above-average yields are good only for the initial term, the longest of which lasts 19 months. After that, unless you close the account, the CD renews into a standard CD with a similar term length and a far, far lower yield.
Hefty early withdrawal penalties. U.S. Bank’s CD early withdrawal penalties involve some complicated math, but you pay a $25 penalty right off the bat and then forfeit some or all of the accrued interest. If you withdraw early in the term or cash out a shorter-term CD early, you could lose some of your initial investment.
Lots of junky options. Due to their low yields, the large majority of U.S. Bank’s CDs are barely worth discussing. Unless you don’t care about getting a competitive return on your cash, you can write off the standard CDs, Step Up CDs, and Trade Up CDs.
Key Features of U.S. Bank CDs
Before you apply for a U.S. Bank CD, understand how they work and how to make sure you get the most out of your account.
Opening & Funding a New CD
You can open your new U.S. Bank CD online in a few minutes. Once open, you can fund it with an inbound transfer from an external bank account or an instant transfer from an existing U.S. Bank checking or savings account.
If you’re funding your CD with external money, it might take one to three business days for the deposit to hit, and you’ll earn slightly less interest as a result.
Interest Calculation & Credit Schedule
U.S. Bank compounds interest daily and deposits it into your CD at the end of the year or the end of the term, whichever comes first. On CDs with terms under one year, you receive all accrued interest at once, when the CD matures.
Early Withdrawal Penalties
If you withdraw principal from your CD or close your account entirely before it matures, you must pay an early withdrawal penalty.
This penalty comes in two parts: a flat $25 fee that applies to all early withdrawals, and a variable penalty based on the CD’s term and size. U.S. Bank calculates the variable penalty as follows:
Terms of six months or less: The greater of all the interest you would have earned if you held to maturity or 1% of the amount withdrawn.
Terms greater than six months to one year: The greater of 50% of the interest you would have earned if you held to maturity or 1% of the amount withdrawn.
Terms greater than one year: The greater of 50% of the interest you would have earned if you held to maturity or 3% of the amount withdrawn.
Depending on how much cash you withdraw and how early in the term the withdrawal occurs, you could lose some of your principal (your initial investment) in addition to much or all of the interest you would have earned on the principal.
CD Maturity & Renewal
If you don’t do anything, your CD automatically renews at maturity into a fresh CD with an identical or similar term.
Importantly, special CDs don’t roll into new special CDs when they mature. Instead, they become standard CDs with much lower interest rates.
Closing or Making Changes to a Maturing CD
You have a grace period of 10 days from the maturity date to close your account or make changes, such as depositing more cash, withdrawing some but not all of your principal, or changing to a different term. You can do this online, by phone, or in a U.S. Bank branch.
Unless you’re not at all concerned about getting the best return on your money, it’s in your interest to cash out your special CD in full at maturity. If the special CD rates are still available and you have another source of cash, you can open a fresh special CD — an extra step, but well worth it.
Pros & Cons
U.S. Bank CDs have some upsides and some downsides. Here’s a summary of both.
Pros
U.S. Bank’s most notable CD advantages are that they have a few competitive CDs while still being relatively easy to interact with.
Yields well above average on the special CDs. U.S. Bank’s special CD yields are among the best on the market for the corresponding term lengths. Though they’re only good for one term, they’re worth pursuing.
Reasonable opening deposit. You need $500 to open a standard CD (which isn’t a good deal due to its low yield) and $1,000 to open other types of U.S. Bank CDs, including special CDs. That’s not as low as some banks, but it’s reasonable in comparison to many others.
Easy to open an account online. It takes just a few minutes to open a U.S. Bank CD online. There’s no need to visit a branch or pick up the phone.
Cons
U.S. Bank CDs have some important disadvantages. The common denominator is that most simply aren’t competitive with top competitors..
Below-average yields on most CDs. Other than the special CDs, U.S. Bank’s CDs have underwhelming yields. They’re just not worth it unless you really don’t care about getting a good return on your money.
Can only earn the special CD yield for one term. The special CD yield is good for only one term. When the CD matures, it rolls into a standard CD with a similar term length and a much lower yield. You can game the system by reopening a special CD with different funds, but there’s no guarantee the promotion will be available when the time comes.
High early withdrawal penalties. U.S. Bank CDs have high early withdrawal penalties. The math is complicated, but the bottom line is that there’s a good chance of losing all your accrued interest plus some principal.
No terms longer than five years. Five years is a relatively long time, but if you have a very long investment time horizon and don’t want to put your money in the stock market, it might not be long enough. Some other banks offer CDs with terms as long as 10 years.
How U.S. Bank CDs Stack Up
U.S. Bank has many competitors in the CD business. Some of them compare quite favorably, like Quontic Bank. Before you open a U.S. Bank CD, see how it stacks up against Quontic’s lineup.
U.S. Bank
Quontic Bank
Term Lengths
One month to five years
Six months to five years
Yields
Up to 4.95% APY*, but most are lower
Up to 5.15% APY
Minimum Deposit
$500 to $1,000, depending on type
$500
Penalties
$25 plus variable penalty
Up to 24 months’ interest
Renewal
Automatic
Automatic
Close or Change
Can do online
Must call in
Overall, U.S. Bank makes sense if you can live with a shorter-term special CD and don’t want to deal with a human at any point. Otherwise, Quontic Bank is the superior choice due to its high yields and no “special CD” funny business.
Final Word
U.S. Bank’s CD lineup has four different types spanning more than two dozen terms. Its four special CDs have legitimate appeal thanks to their high yields and reasonable opening deposit requirements. Unfortunately, the rest yield so little that they aren’t worth a second thought — not with so many other fantastic CD options on the market.
Even the special CDs come with frustrating strings attached, particularly the fact that the high promotional rate is only good for one term. If you already bank with U.S. Bank and you’re looking for a quick boost to your savings return, opening a special CD makes sense. Otherwise, look to an online bank with a better overall CD lineup.
*Rates vary by state and zip code. Please click “Open an Account” above to see your rate before applying.
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.
The Verdict
Our rating
U.S. Bank CDs
U.S. Bank’s special CDs are worth gunning for, particularly if you already bank with U.S. Bank. However, its overall lineup is mediocre at best. There are better places to park your money for any length of time.
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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.