When it comes to borrowing money, building up your emergency fund, and performing financial transactions, you have more options than ever before. You can open an account with a traditional bank, set up an online bank account, or choose a neighborhood credit union. Best of all, you can have accounts with multiple institutions, maximizing convenience.
As you’re reviewing your options, you may see some claims that credit unions are better than banks. There’s no one-size-fits-all financial institution that works for every consumer on the planet, but there are some reasons you might want to choose a credit union over a brick-and-mortar or online bank.
Why is a credit union better than a bank for some people? Get the answer to this question, plus an overview of how credit unions work.
What Is a Credit Union?
A credit union is a nonprofit organization that provides a variety of financial services. Like banks, credit unions are heavily regulated financial institutions. They typically offer the following products and services:
Checking accounts. A checking account is a type of deposit account. Once you deposit money, you can spend it by writing checks, using your debit card, or making online transfers.
Savings accounts. Savings accounts make it easier to put away money for a rainy day. If you have an active account, you can deposit money and earn interest on it.
Certificates of deposit. A certificate of deposit, commonly known as a CD, is a special type of savings account. When you open a CD, you agree to keep your money in it for a certain period of time. In exchange, the bank pays a higher interest rate than you can get with a standard savings account.
Retirement accounts. Many credit unions offer IRAs and other retirement accounts, making it easier to save for the future.
Auto loans. If you don’t have enough cash on hand to buy a car, you can take out an auto loan from your credit union. An auto loan is a type of installment loan, which means you borrow the money and pay it back in equal monthly installments. The lender earns money by charging interest on the loan.
Mortgages. Most people don’t have hundreds of thousands of dollars in cash to buy a home. If you belong to a credit union, you may be able to take out a home loan. Some loans have fixed interest rates, while others have adjustable rates, giving you more flexibility.
Personal loans. If you need a loan to consolidate your debts, do expensive home repairs, pay for a wedding, or cover other major expenses, you may be able to take out a personal loan from a credit union. With a personal loan, you borrow a certain amount of money and pay it back in monthly installments.
Credit cards. Many credit unions also offer credit cards, which give you access to revolving credit. You use each card to make purchases and then pay back what you borrowed over time. If you don’t pay your full balance each month, you must make a minimum payment to keep your account in good standing.
Banks vs. Credit Unions: Major Differences
One of the biggest differences between banks and credit unions is that credit unions are nonprofit organizations owned by their members. In contrast, a bank is a for-profit institution owned by a group of shareholders.
Nonprofit and for-profit organizations have different purposes. Due to their nonprofit status, credit unions have cooperative structures. Board members and employees are concerned with the financial well-being of all members. Credit unions also have strong community roots.
The main purpose of a for-profit bank is to make money for shareholders. When there’s a profit motive in place, employees and board members tend to make decisions based on what’s best for shareholders instead of what’s best for customers or communities. For example, employees at Wells Fargo opened thousands of fraudulent accounts to boost the bank’s bottom line, hurting customers in the process.
Membership Requirements
Another major difference between banks and credit unions is that credit unions have strict membership requirements. Banks want to make as much money as possible, so they tend to offer accounts to anyone who meets some basic criteria. For example, a bank may open a checking account for any adult who doesn’t have a history of writing bad checks.
Credit unions are member-owned, so they have additional requirements. For example, some credit unions require their members to work for the federal government. Others are designed for members of the military or people who live in a specific geographic area. If you don’t meet the membership requirements, you won’t be able to open an account.
Banks and credit unions are both subject to federal regulation, but they’re not regulated by the same agencies. In the United States, the Office of the Comptroller of the Currency charters all banks and monitors their activities. The National Credit Union Administration oversees credit unions.
Both agencies work to ensure consumers receive fair treatment. Federal regulations also protect bank and credit union customers against deceptive business practices, giving you extra peace of mind.
Why Is a Credit Union Better Than a Bank for Some Consumers?
So, why is a credit union better than a bank in some cases? One of the main benefits is that credit unions operate for the good of their members. If you’re invested in the success of your community, joining a credit union can help you contribute to local development.
Credit unions also tend to offer slightly higher interest rates on certain savings and investment products. As of December 2023, credit unions were paying 2.93% on a five-year CD with a $10,000 deposit. In contrast, traditional banks were only paying 2.02%.
In some cases, a credit union also charges lower interest rates on credit cards and loans. The lower your rate, the less you pay in interest over time. At the end of 2023, credit unions charged an average of 12.72% on credit cards, while banks averaged 15%.
If you join a credit union, you may even save money on fees. Traditional banks need to maximize their profits, so they often charge monthly maintenance fees and fees for accessing certain services. You may also have to meet minimum daily balance requirements to avoid additional service charges.
Many credit unions charge no monthly service fees and have no minimum balance requirements. If you have to make a deposit to open your account, the minimum deposit may be just a few dollars. Credit unions may also offer free checks, free mobile banking, and other free services to their members.
Credit Unions vs. Banks: The Bottom Line
Banks and credit unions both have their place in the financial world. If you’re looking for personalized service, lower fees, and better interest rates, consider joining a credit union. You can always set up a traditional bank account if you want to access additional services.
To learn more about financial matters, check out Credit.com’s ultimate guide to personal finance.
Diversifying your assets is one of the best ways to create a sustainable, long-term investment strategy. And one of the ways you can do this is by buying gold.
Investing in gold and other precious metals is a great way to protect yourself against inflation. It also allows you to put your money in an asset that will likely continue to retain its value.
Despite the numerous benefits of investing in gold, many individuals remain uncertain about its viability as an investment and the process for getting started. In this article, we will outline a comprehensive guide on how to buy gold in 2024.
Why should I consider investing in gold?
With growing concerns of an impending recession, investing in gold has become increasingly relevant. This precious metal boasts a multitude of advantageous features that make it a valuable asset to any well-rounded investment portfolio. Here are four reasons why investing in gold is a wise choice:
Gold protects you from inflation: If you’re investing in the stock market, there’s a lot that’s outside your control. But gold is an asset you’ll always have some level of control over, regardless of what happens on Wall Street.
It retains its value: Because gold is much harder to obtain, it retains its value much longer. And you never have to worry about it decaying or losing its structure.
Gold is a high-demand product: There are many ways to use gold, and it tends to be a product that’s in high demand. This is especially true when economic conditions are tight.
Gold is an insurance policy: While some people purchase gold because they’re hoping to make a profit. Others like the security of owning gold and keep it as insurance in case of an economic downturn. Either strategy is an equally valid reason for gold investments.
How do I start investing in gold?
So now that you understand why gold is a good investment, it’s essential to know how to buy and sell gold, so you can get started. Listed below are five steps to make sure you get started on the right path.
Step 1: Decide What Type of Gold You Want to Buy
Start by deciding what kind of gold you would like to purchase. Each product will require a slightly different purchasing strategy, so you need to be clear on this right from the start.
Here are the main types of gold most people choose to invest in:
Gold bullion: When people think of owning physical gold, gold bullion is what usually comes to mind. It is a form of pure gold certified for weight and purity, typically in the form of bars.
Gold coins: A popular option for investors, gold bullion coins are easy to store due to their small size. They can be bought at a premium price and are readily available from reputable dealers.
Gold ETFs: For those not interested in directly owning gold, gold-based exchange-traded funds (ETFs) offer a convenient and cost-effective alternative. These shares can be bought and sold like stocks and are backed by a portfolio of gold-based securities.
Gold mutual funds: These mutual funds invest in companies involved in gold production, mining, and exploration. They may also invest in gold bullion, certificates, and derivatives.
Gold futures contracts: Gold futures are a type of futures contract allowing investors to buy or sell a specified amount of gold at a predetermined price and date in the future. They are best for experienced investors.
Gold jewelry: Accounting for 49% of global gold production, jewelry is a common form of gold ownership. However, it may not be the most profitable strategy, as retail jewelry prices come with substantial markups. Estate sales and auctions may offer better deals but require more time.
Gold mining stocks: With gold mining stocks, investors own a share in a gold mining company instead of the actual gold. These companies are large, global enterprises involved in the extraction and processing of gold ore. Investing in gold mining stocks is another way to profit from rising gold prices.
Gold IRAs: Similar to traditional retirement accounts, gold IRAs are backed by gold and other precious metals like silver, platinum, and palladium. They offer a unique investment opportunity for those looking to diversify their retirement portfolio. Here’s a list of the best gold IRA companies of 2024.
Step 2: Learn How Gold Prices Work
Before investing in gold, it’s essential to understand how gold prices work. The gold spot price, which reflects the cost of one ounce of gold, can fluctuate considerably based on market demand.
To ensure that you make wise investment decisions, research the market and stay up to date with its trends. In doing so, you’ll be poised to make the most of the opportunities presented by decreases in gold prices.
Step 3: Find a Trusted Seller
When investing in gold, you need to choose a trustworthy dealer. While purchasing gold online is convenient, be sure to exercise caution to avoid falling victim to scams.
To ensure that you purchase gold bullion or coins from a reputable source, consider consulting the U.S. Mint for a list of gold dealers in your area.
Once you have identified a potential dealer, make sure you evaluate their credibility. Gather information about their reputation through customer reviews and the Better Business Bureau.
It’s also a good idea to research the dealer’s buyback policies. Obtain a written copy of these policies and keep them in a safe place for future reference.
Step 4: Buy Physical Gold that You Can Sell
If you buy gold that is in demand, it will be easier when selling it at a later time. Stick to the most familiar gold coins and gold bars.
Gold Coins
The following are the most popular gold coins:
American Gold Eagle
Austrian Philharmonic
British Britannia
Canadian Maple Leaf
South African Krugerrand
Gold Bars
The most popular gold bullion bars include:
Credit Suisse
Perth Mint
Valcambi
Englehard
Johnson Matthey
PAMP Suisse
Step 5: Decide How You’ll Store the Gold
Finally, make sure you have a plan in place for storing your physical gold. Sticking several gold bars under your bed probably isn’t the wisest strategy. This puts you at greater risk of having your investment stolen.
Your best bet to store physical gold bars and coins is likely to purchase a safe for your home. You can also use a safe deposit box at a bank or rent a secure storage facility.
Conclusion
Investing in gold can be a rewarding journey, but only if you approach it with caution and foresight. First, decide the type of gold that aligns with your investment objectives, whether it be coins or bars, and make sure to source from a reputable dealer.
Additionally, consider the practical aspects of your investment strategy. For instance, if you opt for gold bars, consider the storage and security of your precious metal, and how you plan to sell it in the future. Gold bars can’t be easily divided, so take that into account.
Furthermore, you’ll need to factor in the rate of return on your gold investment. Ensure that the gold you purchase will not only keep pace with, but also surpass inflation, or you may end up with a loss in the long run.
And finally, avoid the common mistake of putting all your eggs in one basket, especially when it comes to gold investment. While gold and precious metals can be a lucrative component of your investment portfolio, they should never make up your entire investment strategy.
Frequently Asked Questions
Is gold a good investment?
Gold is a unique asset that doesn’t provide regular income in the form of cash flow, unlike other investments. However, owning gold can still have many advantages for your overall investment portfolio.
By including gold in your asset mix, you can diversify your investments and reduce your overall risk exposure. This is particularly important during times of economic uncertainty, such as a recession.
When other investments may perform poorly, gold has historically held its value, helping to protect and stabilize your wealth. This characteristic of gold makes it a useful tool for managing risk and preserving your wealth over the long term.
What is the best way to buy gold?
Acquiring gold can be a smart investment choice, but it’s essential to choose the right seller. Reputable sources include banks, investment firms, and online gold retailers.
To ensure you make a wise decision, do your due diligence and find a dealer with a good reputation, competitive pricing, and dependable customer support.
Furthermore, being aware of the current spot price of gold and market trends is crucial to making an informed purchase. Ultimately, the best form of gold to buy is the one that aligns with your investment objectives and needs.
How much gold should I buy?
Experts generally suggest investing 5% to 10% of your portfolio in gold. During economic downturns and periods of high inflation, some recommend allocating a larger portion.
The ultimate decision on how much to invest in gold should be based on personal financial objectives, comfort with risk, and available funds. As a diversification tool and a hedge against market instability, gold is a consideration worth making.
How much does gold cost per ounce?
Gold can experience significant price swings due to a multitude of factors. These include the ebb and flow of supply and demand, the fluctuation of currency exchange rates, and the instability of political climates.
The value of gold is expressed in U.S. Dollars and is most commonly reported in troy ounces, a unit equivalent to 31.1 grams. As of this writing, gold is priced at around $1875.00 per ounce.
What is the safest way to store gold?
For the ultimate protection of your gold investments, consider utilizing a secure depository, a bank safe deposit box, or an at-home safe.
Depositories provide comprehensive security and insurance coverage. They are an excellent option for safeguarding valuable assets.
Safe deposit boxes, located within banks, offer added protection with key-controlled access. An at-home safe, properly installed and maintained, can also provide a secure storage solution.
Editor’s Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.
Forex options, also called currency options, are contracts that give the purchaser the option to buy foreign currency from the exchange at a specific price on or before a specific date.
Like stock options, there are two different types of forex options: A call option gives the holder the right to buy currency at a specified price (the strike price), while the holder of a put option has the right to sell a currency at a predetermined price.
Those investing in foreign countries may use forex options as a way to hedge against unfavorable fluctuations of foreign currencies or to speculate on volatility.
What Is Forex Options Trading?
Like options in the stock market, currency options are a derivative instrument. In this case, the underlying asset is a foreign currency pair. Currencies (also known as FX or forex) are generally traded in pairs. One major currency pair, for example, is EUR/USD, which indicates the value of the euro against the U.S. dollar.
Foreign currency options are a way to invest in foreign currency markets without trading in the actual currencies themselves. 💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.
How Forex Options Trading Works
If you understand how to trade options in the stock market, currency options work in a similar manner. Buying a currency call option gives you the right (but not the obligation) to purchase a particular foreign currency at a specified price (the strike price) at any time before its expiration date.
A currency put option works in a similar way, except that the buyer has the right (but not the obligation) to sell a currency at a given price before the expiration of the option.
You can also purchase combinations of both put and call options at different strike prices and/or different expiration dates, depending on how you think the market will move. You can always close out your position before the options expire. Owning options gives you exposure to movements in the exchange rate without having to actually purchase the currency.
Types of Forex Options Available
The most basic currency options come in two types: so-called ‘vanilla’ calls and puts.
Vanilla Call and Put Options
A forex call option gives the holder the right (but not the obligation) to purchase a given currency at a specific price, any time on or before the option’s expiration date. You would generally buy a forex call option if you have a bullish outlook on a particular currency.
A forex put option works in the opposite manner. If you hold a put option, you have the right (but not the obligation) to sell a specific currency at a particular price before the options expire.
Purchasing a put option is something that you would do if you have a bearish outlook on the underlying currency.
SPOT Options
Another type of currency option is single payment options trading (SPOT). With a SPOT option, an investor and broker can set more detailed conditions for the option to pay out. These conditions are either met, or not. Because there are only two possible outcomes upon the option expiring, these options are sometimes called binary currency options.
Example of Trading Forex Options
If an investor expects the value of a currency will fall, they may choose to buy a put option to earn the right (but not the obligation) to sell the currency in question at a predetermined price during a set timeframe.
For example, if a U.S. investor expects the euro will fall in value against the U.S. dollar, they may buy a EUR/USD put option. Essentially, the option can help the option holder protect themselves against depreciation of a given currency. 💡 Quick Tip: Options can be a cost-efficient way to place certain trades, because you typically purchase options contracts, not the underlying security. That said, options trading can be risky, and best done by those who are not entirely new to investing.
Benefits and Risks of Forex Options Trading
Here are some of the pros and cons of trading forex options:
Benefits
Using forex options can be a cost effective way to potentially help hedge an investors’ portfolio against currency risk. For example, an investor who owns foreign stocks may consider investing in local currencies via options to reduce currency risk. Investors may want to weigh the option’s premium, as well as risk against possible outcomes.
Risks
Like any investment, trading currency options comes with a set of risks. Options are complex, high-risk instruments that require investors to understand how they work.
Currency values may fluctuate based on macroeconomic events, economic data, or political events. This means that FX options investors must bear in mind the risk profile of particular countries, as well as that of their own portfolio. Because currencies react to interest rates, trading currency options also bears interest rate risk. Traders who use leverage to potentially earn higher profits with less money, also risk losing more than their initial investment.
Benefits
Risks
Using forex options is a low-cost way to potentially hedge against adverse currency moves.
The price of currencies can be extremely volatile.
Using leverage, there is the potential for higher profits with less money invested.
Political risk as currency markets react to local governments’ policies.
You have many different ways to trade depending on your market outlook.
Options may be less liquid than the currencies themselves.
The Takeaway
Trading forex options can be a way for you to invest in the foreign currency market without actually owning the currency itself. You can use call options, put options, or a combination based on how you think the market will perform.
Qualified investors who are ready to try their hand at options trading, despite the risks involved, might consider checking out SoFi’s options trading platform. The platform’s user-friendly design allows investors to trade through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.
Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors.
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
What are some types of forex options?
The two kinds of forex options are call options and put options. A call option allows the holder to buy the specified currency at a given strike price, while a put option allows the holder to sell a given currency at a particular price. There are also SPOT, or binary currency options.
What is a forex call option?
A forex call option allows the holder to buy a specific currency at a specific price, on or before the expiration date.
How are forex options settled?
If you hold a currency option that is in the money at expiration, there are two possibilities for settlement. You can settle the option with cash or by a physical delivery of currency. If you are short an in-the-money option at expiration, you may need to deposit cash into your account to settle your account.
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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes. Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Series I Savings Bond rates are set to change on May 1, 2024, when the new rates will be announced. To give some perspective, for Series I Bonds issued from November 2023 through April 2024, the yield (composite rate) was 5.27% for six months after the issue date. So, is now a good time to buy I bonds?
Investors with a long-term savings outlook who are looking for a safe investment may want to consider investing in Series I Savings Bonds, commonly known as I Bonds. I Bonds are similar to most bonds in that they are essentially a loan to an entity (in this case the U.S. government), with the promise to return your money with interest. I Bonds are different in that they may offer some tax breaks as well. Here are nine important things to know before you invest in I Bonds.
9 Important Things to Know Before You Invest in I Bonds
1. I Bonds May Offer a Higher Rate, But Not a Fixed Rate
For those looking for low-risk investment returns, I Bonds may be a good option, but they are not traditional fixed-income securities. I Bonds are a type of savings bond offered by the U.S. Treasury and backed by the full faith and credit of the U.S. government. They are unique in that they offer two types of interest payments: a fixed rate and a variable rate, which together provide the bond’s composite rate.
The fixed-rate portion is determined when the bond is purchased, and remains the same for the life of the bond. The variable rate gets adjusted twice a year (i.e., May and November), based on inflation rates. Investors may hold I Bonds for up to 30 years.
In May 2022, when inflation was high, I Bonds paid up to 9.62%. But as inflation cooled, the variable rate dropped. As mentioned, I Bonds issued from November 2023 through April 2024 have a composite rate of 5.27% for six months after the issue date, until the variable rate changes again.
💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.
2. Your I Bond Principal Is Guaranteed
Because I Bonds are backed by the U.S. government they have a low risk of default and offer tax-advantaged interest income. Furthermore, the principal is guaranteed. This means (unlike traditional, non-government bonds) that the redemption value will never decrease. This is one of the advantages of savings bonds as a whole. As a result, I Bonds are considered low-risk investments.
3. I Bonds Offer Some Tax Breaks
Tax-efficient investors may want to consider certain I Bond features. Because I Bonds are exempt from municipal or state taxes, this can be a boon for some investors. That said, while federal taxes usually apply, they could be deferred until the bond is ultimately sold or matures; whichever happens first.
Additionally, I Bond investors may use the interest payments for qualified higher education expenses, and receive a 100% deduction (this is called the education exclusion). Some restrictions apply, including:
• You must cash out your I Bonds the year that you want to claim the education exclusion.
• You must use the interest paid to cover qualified higher education expenses for you, your spouse, or your dependent children the same year.
• You cannot be married, filing separately.
4. I Bonds Are Similar to E Bonds & EE Bonds
Investors who are familiar with the Series E Bond may also find I Bonds appealing. While Series E Bonds are no longer available from the Treasury, they can still be purchased from other investors who currently hold them. Historically, Series E bonds were also known as defense or war bonds.
Series E bonds were replaced by Series EE bonds (aka “Patriot Bonds”) in 1980. Today, like Series I Bonds, investors can buy EE Savings Bonds from TreasuryDirect .
An interesting feature of Series EE Savings Bonds is that, over a 20-year period, these bonds are guaranteed to double in value. And should the interest not be enough to double the value, the U.S. Treasury will top it up, giving the bond an effective interest rate of 3.5% per year during that period.
While I Bonds don’t offer the same guarantee, your principal is guaranteed and the bonds are designed to keep pace with inflation.
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5. I Bonds Are Easy to Purchase
Investors can purchase electronic I Bonds online through TreasuryDirect in denominations over $25. The maximum amount of electronic I Bonds someone can purchase is $10,000 per calendar year.
In paper format, investors may use their tax refund to purchase up to $5,000 a year.
6. I Bonds Are a Long-Term Investment
In general, the primary risks in buying bonds revolve around redemption. What if you need your money before maturity?
I Bonds are generally a long-term investment. To start with, investors must understand that they have their money locked up for one year. After that, investors who redeem their I Bonds before they’ve held the bond for five years will forfeit the last three months of interest. (You can redeem an I Bond after five years with no penalty.)
As a result, those looking for a shorter-term investment may want to consider investing in Treasury bills.
💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.
7. Other Investments Might Offer Better Returns
One possible advantage of investing in stocks, mutual funds, and ETFs is that investors could potentially make a profit if the stock or fund does well. For instance, historically, stocks have been shown to be one of the best ways to build wealth over time. However, there is also risk involved, and you could lose money if the investment performs poorly.
TIPS, or Treasury Inflation-Protected Securities, are also a type of government bond designed to protect investors from inflation. The principal amount of a TIPS bond will increase with inflation, while the interest payments remain fixed. I Bonds are similar to TIPS but offer additional protection against deflation.
8. It’s Hard to Predict an I Bond’s Return Over Time
To maximize your return on investment when purchasing I Bonds, it is essential to understand the differences between the two interest rate components of the bond, and how they can play out over time.
I Bonds offer a fixed interest rate, which remains the same for the life of the bond, and the inflation-protection component, which adjusts with changes in inflation rates twice per year.
So if you buy an I Bond, the composite rate would be the same for the first six months after the issue date. After that, your rate would adjust with the current inflation rate. If inflation goes up, so would the rate of return. If inflation goes down, the bond’s inflation rate would likewise decrease.
And if you hold onto your I Bond for 10, 20, or 30 years, you would likely see some years with higher inflation rates and some years with lower inflation rates.
9. You Must Meet Certain Criteria to Buy an I Bond
To be eligible to buy I Bonds you must be:
• A United States citizen, no matter where you live,
• A United States resident, or
• A civilian employee of the United States, no matter where you live.
Also, investors can only purchase I Bonds with U.S. funds. You cannot buy them with foreign currency.
The Takeaway
If you’re looking for a generally safe and reliable investment option, I Bonds may be worth considering. They offer tax breaks and other benefits that can make them a low- risk choice for your long-term savings goals. That said, because I Bonds come with a composite rate of return, it’s hard to predict how much your money will actually earn over time.
With I Bonds, your principal is guaranteed. If you buy a $1,000 I Bond, no matter what happens, you will get your $1,000 back.
If you’re interested in savings vehicles, there are alternatives to government bonds, including savings accounts with a higher APY (annual percentage yield). By exploring your options, you can choose the best option — or options — for you.
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4.60% APY SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
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SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Alternative investments, or alts, are assets like cryptocurrency, options, private equity, real estate and art. Alternative investments are typically defined as investments aside from stocks, bonds, mutual funds and other investments that traditionally make up the core of a portfolio.
While the “alternative investments” classification encompasses lots of very different types of investments, most share a few characteristics: Many alternative investments are less regulated by the U.S. Securities and Exchange Commission (SEC) than traditional investments, they tend to be more difficult to sell, and they may not have a high correlation with the stock market. That means if the overall market is down, it doesn’t make it more likely for your alternative assets to be down too.
Another commonality is that they tend to carry more risk than traditional investments. All investments should be approached with scrutiny, but alts deserve an extra degree of caution. One guideline is to invest no more than 10% of your overall investment portfolio into higher-risk investments.
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How to buy alternative investments
There are a handful of ways to invest in the alternative investments covered here, but buying alts typically boils down to one of three options: Buying the asset itself, investing in a company that invests in the asset or is involved in its production, or investing in a fund that holds lots of those companies. For example, you can buy raw gold, stock in companies related to gold, or a gold ETF.
If you want to buy alts themselves, it may be trickier than buying traditional assets. While some alts can also be purchased from a brokerage, others, like futures and forex, typically require a special account. Crypto can be found on crypto exchanges, real estate crowdfunding can be accessed through individual platforms, and collectibles are often purchased at auctions or private sales.
If you want to gain exposure to an alt through a stock or fund, you need to have a brokerage account to do so.
7 alternative investments to consider
Here are seven alternative investments that are worth exploring.
1. Derivatives
Derivatives are investments that are linked to an underlying asset, commodity or index. There are several types of derivatives, including futures and forex.
Investing in derivatives can often involve complex strategies. If you’d like to try out some advanced trading strategies, you can practice with paper trading before you risk your real money.
Futures
Futures are derivative contracts that outline an agreement to buy or sell a particular asset at a set date in the future for a particular price. Futures contracts may obligate the buyer to take physical delivery of the asset at the set date, so to avoid having a truck of corn show up on your doorstep, you may have to sell at a significant loss.
Forex
Forex trading is a speculative investment through which you buy and sell different currencies. For instance, if you believe the U.S. dollar will rise and the euro will fall, you could exchange euros for U.S. dollars. Most traditional brokerages don’t offer access to forex, so you’ll need to look into a forex broker if you want to start trading international currencies.
2. Digital assets
Digital assets, such as cryptocurrencies and nonfungible tokens (NFTs), are supported by blockchain technology.
Cryptocurrency
Cryptocurrency is a form of digital currency. There are many different crypto coins, such as Bitcoin or Ethereum. You can use crypto to pay for things, like you would with a regular currency, or you can use it as an investment by buying it in the hope that it will increase in value over time (like pretty much any other investment).
If you’re looking to purchase crypto directly, there are a few ways you can do it. Some online brokerages allow you to purchase crypto through them.
Some people may opt to store their crypto in a more secure fashion than an online exchange: a crypto wallet. Storing your crypto yourself makes you less vulnerable to security breaches, but comes with some risks. Learn more about how to buy cryptocurrency.
If you’re looking to get exposure to the crypto market without directly investing in crypto itself, you can consider crypto stocks. These stocks don’t include actual crypto, but rather companies that are involved in the wider crypto market, such as those that create equipment used to mine cryptocurrencies or operate crypto exchanges.
You can also look into Bitcoin ETFs. These ETFs track the price of Bitcoin by holding a large amount of the currency itself.
NFTs
Nonfungible tokens, or NFTs, let you have a record as being the owner of an original digital file. That file can be a piece of digital art or an item from a video game, and each NFT is unique. NFTs have largely declined in value since 2021 when they were making headlines.
» Learn more about NFTs
3. Precious metals
Unlike many of the investments in this list, precious metals, such as gold and silver, have been considered valuable since humanity’s early days. That’s particularly helpful because it provides a long track record to assess their values. Precious metals can also sometimes function as a hedge against inflation in a well-diversified portfolio.
There are several ways to invest in precious metals. You can buy the metal itself, typically in the form of bullion (think bars or coins) or jewelry. Bullion may be tempting — who doesn’t want a bunch of gold bars or necklaces lying around? But it’s difficult to store and sell. You can also invest in gold stocks or other precious metal stocks, or gold ETFs.
4. Collectibles
Investing in collectibles, such as wine or fine art, comes with many of the difficulties of investing in bullion: It can be difficult to secure and store, and it can be difficult to sell. Unless you’re well-connected in a particular collector’s industry, finding a buyer for your antique sculpture or vintage muscle car when you’re ready to cash in may be challenging.
5. Commodities
Commodities are raw, physical products such as oil, wheat, gold or corn. Investing in commodities may have some overlap with a few of the other categories listed here. For instance, you can invest in commodity futures, or you can purchase precious metals, which are technically commodities. You can also buy commodity stocks or commodity ETFs.
6. Real estate
There are several ways to invest in real estate, including REITs, or real estate investment trusts, utilizing a real estate investing platform or purchasing actual property.
REITs
REITs are similar to mutual funds in that they are companies, but they specifically own, operate or finance income-producing properties, such as apartment complexes that generate rent. REITs must pay out at least 90% of their taxable income to shareholders in the form of dividends, creating a potential revenue stream for investors. As with stocks, you can purchase publicly traded REITs through a brokerage account.
Real estate investing platforms
Real estate crowdfunding investment platforms have made investing in real estate far more accessible for the everyday investor. These platforms combine your money with other investors’ money so you can access private REITs and private property investments that historically have only been available to accredited investors (though some of these platforms are also only open to accredited-investors).
Actual property
If you have the capital, you can invest in actual real estate properties. This option may be attractive to those who can afford the startup costs (such as a down payment and any upgrades) and prefer to invest in something physical. The downsides include the risk of putting so much capital into one property, having to pay someone to manage and maintain the property, or having to do it yourself.
7. Private equity
Private equity is exactly what it sounds like — equity that comes from private investors. Typically, the only way to access private equity is through a private equity firm, and the investments are often only open to accredited investors who can meet a very high minimum investment.
Benefits and risks of alternative investments
Alternative investment pros
Diversification. Diversification helps spread your risk out across different industries, sectors and geographies. If the tech sector is up and the oil industry is down, and you’re invested in both, you can smooth out the highs and lows of each. Alternative investments provide investment diversification, especially because they may have lower correlation to traditional investments.
Potential reward. This is obviously one of the most attractive parts of alternative investments: They have the potential to bring in big financial gains. But in order to realize those large gains, you have to pick the right investment at the right time. And people, even investing professionals, often get it wrong and lose money.
Access. Until recently, alternative investments were only available to accredited investors or those with a high net worth. Now, there are more ways than ever for everyday investors to get access to some of these investments.
Markets, demystified
Register with NerdWallet or sign in to read our monthly stock market outlook, and keep up with the terminology, news and events investors should know about.
Alternative investment cons
High Risk. Alternative investments almost always carry more risk than traditional investments such as stocks or bonds.
Illiquid. With many types of alternative investments, you may not be able to get your money out right away.
Less regulation. Many alternative investments are less regulated by the SEC than traditional assets.
Storage. Some alternative investments, such as precious metals, crypto, and collectibles, come with the added difficulty of storing them.
Best alternative investment to stocks
The best alternative investment for you will depend on your existing portfolio. For most people, a well-diversified stock-based portfolio can help you build wealth over time. If your portfolio is already in good shape, and you’re looking for something more exciting to supplement with a small percentage, you can start to look at alternative investments’ historical returns in comparison to the standard market.
For example, the average stock market return, as measured by the S&P 500 index, is about 10% per year for the last 30 years. Some years are higher and some years are lower, but over time, S&P 500 index funds have returned about 10%, not accounting for inflation.
Knowing that, you can start to compare that to the performance of alternative investments. Since 1972, on average, the FTSE NAREIT All Equity REITs index has returned an 11.3% total annual return. That’s not to say that REITs always outperform the S&P 500, but it does show over fifty years of strong performance. If you were to add a REIT to your investment portfolio, it would also help diversify your holdings.
Since 1969, gold has had a median average closing price of about $384 per ounce, and in 2024, gold’s average closing price has topped $2,000 per ounce. That sounds great, but gold’s average annual return from the last 30 years was 6.7% — significantly less than either the S&P 500 or REITs. Gold can, however, serve as a hedge against inflation. Every investment has pros and cons. That’s why it’s so important to consider potential alternative investments against your existing portfolio.
The bottom line
Alternative investments can be exciting, and they can help diversify your portfolio, but they also come with particular challenges and risks. If you’re curious about alternative investments, it’s worth doing your homework to see how they might complement your existing investment portfolio. If you don’t already have an investment portfolio composed of more traditional assets, it may be better to focus on building that first.
Are you looking for ways to get paid to walk? Getting paid to walk is a side hustle with the benefits of getting daily exercise and even getting paid for it. There are tons of ways to get paid to walk including getting paid for steps, losing weight, and even picking up trash. I have…
Are you looking for ways to get paid to walk?
Getting paid to walk is a side hustle with the benefits of getting daily exercise and even getting paid for it. There are tons of ways to get paid to walk including getting paid for steps, losing weight, and even picking up trash.
I have personally been paid to walk, and it’s great!
How To Get Paid To Walk
Below are 19 ways to get paid to walk.
Recommended reading: 19 Ways To Get Paid To Workout
1. CashWalk
CashWalk is a free app that pays you to earn money just for running or walking outside or on a treadmill. You earn coins and can exchange them for gift cards to places like Amazon, Walmart, Apple, Starbucks, and more.
This pedometer app is designed to motivate you to achieve fitness goals and help build healthy exercise habits.
You won’t get rich with CashWalk, but it’s an easy way to make money by doing what you already do, which is walking.
You can sign up for CashWalk by clicking here. Also, you can get a free 100 points by using the referral code ESPU5.
2. Sweatcoin
Sweatcoin is a free app that helps motivate you to walk by rewarding your daily steps. This pedometer app only counts outdoor steps right from your phone (such as your iPhone or Android device), so if you’re a treadmill walker, those steps will not count in the app.
Once you accumulate enough coins, you can redeem them for products or donate to charity. The products that can be redeemed change regularly. You may see things such as Amazon credits, electronics, and other popular products. If you’re feeling generous, you can donate your earnings to charities like Save The Children, The African Wildlife Foundation, or Cancer Research.
3. Walk dogs
Rover is an app that connects you with pet owners who need help with pet sitting, dog walking, and drop-in visits. If you’re an animal lover, this is a great side hustle to try.
I was a Rover dog walker for several pet owners and it’s still one of my favorite side hustles to date. The app works on both Android and iOS devices.
How much money you earn on the Rover app varies on how many pets you’re walking, your experience, and what you set your rates at. Some pet sitters make $40,000 a year, while the top dog walkers in the field earn $100,000+. You can expect to earn between $15 and $25 per hour on Rover, with that rate being more depending on how many dogs you’re walking at one time.
Finding jobs is relatively easy because there are so many pet parents out there looking for a pet sitter or someone to walk their dog.
Click here to sign up for Rover.
Learn more at 7 Best Dog Walking Apps To Make Extra Money (another popular pet walking app that you can learn about is Wag!).
4. Get paid to pick up trash
A great way to help clean the environment, get exercise in, and get paid is by picking up trash. Many businesses want their property and parking lots to be clean so customers are shopping at a clean property.
Getting paid to pick up trash is a small business that you can start entirely on your own. Picking up trash can pay between $30-$50 an hour. There is a ton of trash to pick up in the world. Tools you will need include a broom, dustpan, and grabber tools.
You can learn more at Get Paid $30 – $50 Per Hour To Pick Up Trash.
5. Stepbet
Stepbet is a popular fitness app that pays you for walking. The app is user-friendly and even lets you connect your fitness tracker (such as your Fitbit, Google Fit, Samsung Health, or Apple Watch). Stepbet is a great way to stay motivated to complete your daily step goal and even get paid for doing this.
This is how the app works:
You choose a game to set your step goals
Bet a certain amount of money into the pot to join the game
If you meet the weekly step goal, you can split the pot with others who also completed their goals and get your bet back plus more.
6. HealthyWage
HealthyWage is a popular fitness app that pays you to lose weight. To get started, go to HealthyWage and enter how much weight you want to lose, how long you’ll have to complete the weight loss goal, and how much money you want to bet.
Let’s say I wanted to lose 30 pounds in 9 months or less and I bet $60 of my own money. The website shows my prize range would be between $588 and $1,116.
HealthyWage has weekly weigh-ins and support from other people who are also trying to lose weight. The purpose of HealthyWage is to motivate you to lose weight by using a financial incentive, which makes it more motivating to complete your weight loss goal.
7. DietBet
DietBet is a fun and unique app that makes fitness fun and motivating. DietBet works by you choosing a game/challenge to complete. For example, there are current weight loss challenges where you bet $40 and have to lose 10% of your body weight within 6 months to win the shared pot of money.
This is how it works:
You get started by choosing a challenge and betting money into the pot
Two days before the challenge begins, you must weigh in which involves taking two photos (one of you standing on the scale with lightweight clothing, and the second photo of the scale and weight)
The challenge will share how much weight you have to lose to win the pot of money at the end of the challenge.
8. Fit For Bucks
Fit For Bucks is an app that lets you earn rewards for being active. You can earn points by doing things like walking to the grocery store, hitting the gym, going for a hike, dancing, and more.
Rewards you can redeem include things like coffee, fitness classes, massages, haircuts, wine, and more. Using this app is a fantastic way to stay motivated to get more movement in while also getting rewarded for your hard work.
9. Charity Miles
Charity Miles is the app for you if you love giving back and being generous. Instead of giving rewards to you, the app lets you give your rewards to a charity of your choice. Every mile you walk earns a credit to be used as a donation to a charity.
One of my favorite charities, Save The Children, is on Charity Miles. So my daily walking that I already do helps me donate more money to my charity of choice.
10. Guided walking tours
If you’re an extrovert and have knowledge about your local town, you may want to become a walking tour guide. As a guided walking tour operator, you can create your own unique walking route and showcase special landmarks and sites to tourists. You must have in-depth knowledge of the area and provide excellent customer service.
I recommend researching what similar tours are charging to get an idea of what you should charge. You should also think about factors such as the duration of the tour, the experience you have, and any additional services you’ll include when deciding how much the walking tour will cost.
Having a website and/or social presence for your tour company is a great way to get new customers interested in your tours. Network with local hotels, travel websites, and tourism organizations to promote your tours. You may even want to offer a special discount or promotion to attract new customers.
11. Evidation
Evidation is an app that lets you earn points and rewards for actions like walking, sleeping, and more. Participating in this app helps contribute to research and new health findings that will benefit everyone.
For example, one of the current programs in the Evidation app gives you 300 points for joining a program focused on the flu. The app monitors your activity and can alert you when it sees a change that suggests you may be feeling under the weather.
You can connect all kinds of fitness electronics to the Evidation app, including but not limited to Fitbit, Garmin, Google Fit, and Dexcom.
12. MyWalgreens (Walgreens Balance Rewards)
MyWalgreens is a program run by Walgreens with the purpose of getting people to make healthier decisions.
You can earn points in the program by walking and tracking other fitness activities. You can even earn points for tracking your blood pressure, blood glucose, sleep, and other health markers.
13. Gigwalk
Gigwalk is an app that connects gig workers with quick tasks like going to a store, reviewing product displays, checking prices, availability of products, and conditions. You get to choose which gigs you choose and get to decide your schedule and how often you work.
Here’s how Gigwalk works:
First, you download the app on your phone.
Then, you look for gigs nearby.
Choose a gig that you like.
After you finish the job, you get paid.
Money is sent directly to your PayPal account and each gig pays differently. It typically can range anywhere from $3 to over $100 – the time to complete a gig can vary from 5 minutes to a few hours.
14. Runtopia
Runtopia pays you to get fit by providing a motivational incentive to get moving.
The app has benefits like letting you record activities with GPS, data analysis to improve your performance, connecting with friends, and getting rewarded for various activities.
15. PK Rewards
PK Rewards is an app that rewards you for tracking all kinds of workouts. Your workouts get converted into coins which can be redeemed for cool prizes from brands like Lululemon, Nike, Amazon, and more. You earn coins based on the effort you put in.
Workouts can include pretty much anything from going to the gym, cycling, dancing, walking, and more. You can set personal goals in the app, compete with friends, and track your progress all within the app. You can even see your effort over time as you use the app.
16. Instacart
Instacart is a platform that connects customers with Instacart Shoppers who grocery shop and deliver food to customers. This job requires a lot of walking and physical activity and allows you to control your schedule and how often you work.
Signing up to become an Instacart Shopper is straightforward. Download the Instacart Shopper app and apply as a Shopper. Once your application is accepted, you can use the app to find orders, pick an order you like, and go to the store and start grocery shopping for the customer. When you’re done grocery shopping, deliver the groceries to the customer.
You earn money with each delivery and the more you deliver, the more job opportunities you’ll have available. Giving great service to your customers can lead to better tips, so customer service is important.
You can click here to sign up to be an Instacart Shopper.
Learn more at Instacart Shopper Review: How much do Instacart Shoppers earn?
17. DoorDash
Working for DoorDash is an active gig job that requires you to deliver restaurant meals to customers. This side hustle can require a lot of walking and physical activity depending on how you’re delivering food. You may decide to deliver food by car or by bike.
The benefits of working for DoorDash include choosing the hours you work and deciding where you want to work. The app is user-friendly and allows you to take orders, where to go, and how to get there. Each delivery earns between $2-$10, plus tips.
Please click here to sign up for DoorDash.
18. Distribute flyers
A side hustle that requires a lot of walking is getting paid to distribute flyers. To find jobs distributing flyers, check online job platforms like Indeed or Craigslist, and also search for jobs in newspapers, and community bulletin boards. Search for jobs using the keywords “flyer distribution”, or “leaflet distribution”.
You can also create a profile on gig platforms like TaskRabbit, Gigwalk, or Thumbtack and post or search for flyer distribution jobs. Make sure to check local events, trade shows, and festivals as these events always need promotional material to be distributed.
Before accepting any jobs, make sure to clarify pay rates and the schedule from the employer. This job is likely going to take a lot of daily steps and physical activity.
19. Mystery shopping
Mystery shopping is a tool companies use to learn ways to improve their customer experience. Mystery shoppers can get jobs in person, online, or on the phone. Jobs are different and may require you to buy something, sit down at a restaurant and eat, or even get your hair done in a salon. If you are required to buy something, make sure to keep your receipts as you will need them to complete your questionnaire.
My sister was a mystery shopper and I got to go with her on one of her gigs. We got to visit a restaurant for free as long as she gave her honest opinion after. Mystery shopping also involves going to stores such as Best Buy, salons, car dealerships, movie theaters, makeup counters, and more.
BestMark is a popular mystery shopping website that connects you with opportunities to earn money while helping companies improve their customer service.
Recommended reading: How To Become A Mystery Shopper
Frequently Asked Questions
Below are answers to common questions about ways to get paid to walk.
Can I get paid for walking?
There are tons of ways to get paid for walking including via fitness apps like SweatCoin and CashWalk that reward you for meeting daily step goals or participating in walking challenges. Rewards include things like gift cards, discounts, cash, and free stuff.
Besides using fitness apps that reward you for walking, you can also make money walking by working as a gig worker for TaskRabbit and DoorDash. These jobs include tasks like delivering food, running errands, and other jobs that require walking.
One of my favorite ways to make money walking is working as a Rover dog walker. If you love spending time with animals, you should consider becoming a dog walker.
What is the best app that pays you to walk?
Many activity tracker apps pay you to walk and each has its pros and cons. The most popular walking apps include CashWalk, Sweatcoin, Charity Miles, and StepBet. Each of these apps is user-friendly, easy to use, and rewards people for their movement. You get to choose from many rewards including gift cards, fitness gear, or donating your money to the chosen charity of your choice.
Is Sweatcoin real money?
Sweatcoin is not real money, but instead digital currency used in the Sweatcoin app. Sweatcoin users earn Sweatcoins based on how much they walk per day. As you take steps, digital coins are accumulated and can be redeemed for different rewards in the app like products, services, and discounts.
Can you earn money with a Fitbit?
While you can’t earn any rewards or money on the Fitbit app, you can connect your Fitbit to fitness apps that reward you for daily movement. Programs and apps like MyWalgreens, StepBet, and others allow you to easily connect your Fitbit to the app.
Why do apps pay you to walk?
Apps pay users to walk because they make money from advertisements when users use their apps.
19 Ways To Get Paid To Walk – Summary
I hope you enjoyed this article on how to get paid to walk.
There are many ways to make extra money and get free stuff by walking, dancing, cycling, sleeping, and other health-related activities. Take advantage of these free apps and keep your motivation up by earning points and rewards toward free things like gift cards, fitness classes, food, and more.
The walking side hustles above have health benefits and even mental health positives, plus you may be able to earn an income, cash rewards, or even money for charity donations.
Have you ever tried any of these side hustles or walking apps that pay you for steps?
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In need of cash? Some apps can help — but they want to be your bank account, too.
Apps at banking fintech firms Dave and MoneyLion offer small, short-term cash advances to eligible consumers. If you open a bank account or set up direct deposit, the apps sweeten the deal with lower fees or larger borrowing amounts. Apps at other firms, such as Chime, Current and Albert, offer a similar perk for those with accounts: No-fee overdraft services that cover an expense when your account has nonsufficient funds.
But a single feature like extra cash between paychecks is likely not a good reason to wed yourself to a new bank account, says Adam Rust, director of financial services with the Consumer Federation of America, a nonprofit that represents consumer advocacy organizations.
Between banks and credit unions, consumers can choose from more than 8,000 federally insured banking institutions, he says. The flexibility to overspend may be one of many qualities you look for in a new bank.
Here’s how to think through these two separate financial decisions: Getting extra cash and choosing a bank account.
Extra cash: An enticing offer, but with strings
When you urgently need extra money, a hurdle like setting up a bank account — and potentially adding direct deposit — may seem easy to clear if it means getting the cash you need.
Dave’s fee for immediate funding is 5% of the advance amount for users with an external bank account, but just 3% for users with a Dave checking account. MoneyLion offers cash advances of up to $500 to users with external bank accounts, but increases the eligible advance amount to $1,000 if they set up direct deposit to a MoneyLion checking account.
The fee-free overdraft feature from Chime, Current and Albert will pay for certain customers’ transactions when they don’t have enough funds in their account, but only if they have a bank account that receives direct deposits. Chime requires at least $200 a month in direct deposits, and Current requires at least $500 a month. Albert requires direct deposits plus a subscription.
Apps with cash advances or overdraft coverage seem like helpful tools to bridge an income gap. They don’t check credit or charge late fees, and you can usually get a small amount of money — up to $250 covered for overdrafts and up to $500 from a cash advance app — on short notice. Your next paycheck or bank account deposit typically repays what you borrowed. And none of these apps have overdraft fees, which can be around $35 at banks.
But opening a new bank account just for a cash advance or overdraft feature might lead to unexpected inconveniences or worse. Switching banks is hard for a reason: You set up a relationship with a bank or firm, including using your bank account to pay your ongoing bills and subscriptions.
“That’s such a significant part of your financial life — it’s the foundation of your financial life — and to pick that because of a once-every-direct-deposit transaction seems, to me, like a risk of making a mistake,” Rust says.
Compare bank accounts based on low fees and available features
Choosing where to bank involves assessing available features and their associated costs. A good checking account typically has low or no monthly fees, low or no minimum balance requirements, a free ATM network and cheap ways to move money around.
Banking fintech firms — or neobanks — tend to check many of the boxes for a desirable checking account: low costs and some perks not often available at traditional banks. Dave and MoneyLion have $1 monthly fees, either as part of membership or for bank account usage. Chime and Current have no monthly fees. These four offer free ATM withdrawals nationwide through third-party networks, direct deposits up to two days early and cash-back rewards. Albert has all of these features but charges a nearly $15 monthly fee.
Consider features they lack, too
Banking fintech firms often focus on a narrow set of accounts and features. None of the five mentioned offer joint accounts or business bank accounts, in case you manage money with a partner or run a small business. These firms don’t have branch networks for in-person services as an alternative to online or phone support. They’re also not part of the Zelle network, which enables nearly instant transfers across different banks. Other features, such as paper checkbooks, foreign currency and cashier’s checks, aren’t available either.
Most banking fintech firms have federally insured accounts through partner banks instead of being banks themselves. If the firms fail, there can be risks that bank failures don’t have. The Federal Deposit Insurance Corp. (FDIC) sweeps in to protect customers at failed banks to prevent any loss or delay to money access, but that doesn’t happen for bankrupt companies that partner with banks. Neobank failures can result in delays to accessing your money or bank accounts.
Even credit-related perks have limits. Dave and MoneyLion set caps on the amount users can borrow between paychecks. Overdraft features at Chime, Current and Albert have maximum coverage amounts — starting as low as $20 — and some transactions, like online bill payments or transfers, aren’t covered.
Bear in mind, too, that setting up direct deposit with a cash advance app’s bank account just to meet the criteria for a larger advance could disrupt your finances. Funneling your paycheck to two different banks may mean you’ll need another set of login credentials to access your account online, you may need another debit card — and things get even more complex if transfers take days to move from your new account to your primary one.
“It can obviously be a loss of convenience for the consumer to have multiple accounts or to have to only use their MoneyLion account because it could get them greater advances,” says Andrew Kushner, senior policy counsel with the Center for Responsible Lending.
Find alternatives for extra cash
Cash advances and overdraft coverage can be helpful if they’re used occasionally, but if you’re struggling to cover everyday expenses like gas and groceries, consider alternatives that require less commitment to an app and low or no fees.
Some national banks offer small, affordable loans to existing customers, and federal credit unions may provide low-cost payday alternative loans. Financial assistance programs from local nonprofits can help with necessities like food and clothing. Or consider taking out a low- or no-interest loan from a family member.
Mike Fratantoni, the chief economist and senior vice president of research and industry technology at the Mortgage Bankers Association (MBA), addressed three major challenges in the housing market during testimony before the U.S. House of Representatives‘ Financial Services Subcommittee on Housing and Insurance.
The biggest challenge in today’s housing market is the lack of inventory, Fratantoni said in his written statement on Wednesday.
“While the demographic fundamentals of the market continue to support strong housing demand for the next several years, the market is millions of units short of that needed to support this demand,” he said.
The silver lining, however, is that builders have picked up their pace of construction. New homes now account for roughly one-third of homes on the market, which compares to a more typical historical share of 10%.
As a result, a large delivery of multifamily units is expected over the next few years, but the recent trend in elevated mortgage rates has exacerbated this supply shortfall, Fratantoni explained.
Compounding the lack of supply is the proverbial “lock-in“ effect that has disincentivized homeowners to sell their current properties, thereby giving up a low mortgage rate and taking on a new loan at a much higher rate.
“A homeowner that was able to refinance into a low-3% or high-2% mortgage rate is just much less likely to list their property,” Fratantoni told lawmakers. “It doesn’t mean they’re never going to list … but it’s a friction in the system, so it’s going to keep existing inventory much lower than it otherwise would be.
“That’s been a support to home prices, but for someone trying to get into the market, it’s really an obstacle.”
Concerns over Basel III Endgame
Fratantoni also expressed concern that the recent Basel III Endgame proposal would accelerate the trend of the mortgage market shifting away from depository institutions, particularly large banks, toward non-depositories and independent mortgage banks.
The Basel Endgame proposal — issued by the Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) in July 2023 – boosted capital requirements for residential mortgage portfolios at large U.S. banks in comparison to international standards.
Under the draft proposal, 40% to 90% risk weights would be assigned for large banks that issue residential mortgages, depending on the loan-to-value ratio, which is 20 basis points above the international standard.
MBA’s comment letter highlighted the overly conservative risk weights on mortgages — particularly for low down payment loans favored by first-time homebuyers — and the lack of benefit for loans with mortgage insurance. It also mentioned the punitive treatment of mortgage servicing rights (MSRs) and the burdensome treatment of warehouse lending as being particularly negative for the mortgage market.
The Basel Endgame proposal would increase capital requirements on all three types of mortgage activities by banks — low down payment loans held on balance sheets, mortgage servicing and warehouse lending.
As a result, the Basel Endgame proposal “poses a significant risk to the stability of the housing finance market if it is not modified across all of these dimensions,” Frantantoni stated.
Rising cost of property insurance
Addressing the increased cost of property insurance for both prospective homebuyers and current homeowners is a priority for the MBA.
“The lack of availability and cost of homeowners insurance … it’s not only impacting the ability of borrowers to qualify for a loan, but increasing payments for existing homeowners to such an extent really puts them on an unstable path, so it really is front and center for us right now,” Fratantoni told lawmakers.
The average cost to insure a $300,000 home surged by 12% in 2023, reaching $1,770 per year, according to an Insurify report.
Certain insurance carriers have also limited their participation in natural disaster-prone states like California and Florida, given the increases in risks and costs.
Over the past 18 months, seven of the 12 largest insurance companies by market share in California have either paused or restricted new policies in the state, highlighted by the departures of State Farm and Allstate in June 2023.
Due to these departures and price hikes, the California FAIR Plan, the state’s insurer of last resort, has seen enrollment double over the past few years.
“Although these increases in premiums and reductions in availability of insurance have been concentrated in certain markets at this point, the concerns regarding property insurance continue to build for our lender members in the residential, multifamily and commercial sectors — and for all their customers,” Fratantoni said.
Welcome offers make the first year you carry a credit card an especially lucrative one. After that, you’ll earn rewards for your spending, but nothing comes close to that influx of points worth potentially hundreds of dollars upon redemption.
However, a card’s terms and conditions might stop you from getting multiple new cardholder bonuses from the same issuer, which is the case for certain American Express cards. If you open a new AmEx card and earn a welcome bonus, you may not be able to earn a bonus from another AmEx-issued card within the same “family” later on.
Here’s how to navigate AmEx application rules when it comes to restrictions on new cardholder welcome offers.
AmEx card ‘families’
It helps to think of cards that offer similar benefits as “families.” A family of cards has a major thing in common, like what rewards currency they earn (travel points or cash back). They may all be part of a rewards program for a specific airline or hotel brand. Within families, you’ll find different tiers of cards. A more premium card will charge a higher annual fee in exchange for more rewards. A no-annual-fee card provides a lower-cost option, but that card won’t offer as many perks.
AmEx cards fall into several families, each with rules about how many bonuses you can get. If you’re ineligible to get a bonus, you’ll get a notification before your application is processed, so you can decide at that point whether or not to proceed.
These are the AmEx card families.
Membership Rewards cards
A number of AmEx cards earn Membership Rewards points, which can be redeemed for travel (including transfers to airline and hotel partners), statement credits, gift cards or purchases at participating merchants. There are two sub-families within this category:
For travel
The Platinum Card® from American Express: If you had this card before, or other versions of it including the Platinum Card from American Express Exclusively for Charles Schwab, the Platinum Card from American Express Exclusively for Morgan Stanley or previous versions, you may not be able to qualify for a welcome offer by getting it again.
American Express® Gold Card: If you had this card or any versions of The Platinum Card® from American Express before, you may not qualify for a welcome offer.
American Express® Green Card: If you had this card, the American Express® Gold Card or any versions of The Platinum Card® from American Express before, you may not qualify for a welcome offer. (All information about the American Express® Green Card has been collected independently and the card is no longer available through NerdWallet.)
Terms apply.
For everyday purchases
Amex EveryDay® Credit Card: If you had this card or The Amex EveryDay® Preferred Credit Card from American Express before, you may not be eligible for a welcome offer. (All information about the Amex EveryDay® Credit Cardhas been collected independently and the card is no longer available through NerdWallet.)
Terms apply.
Cash-back cards
AmEx issues several cards that earn cash-back rewards. The Blue Cash Preferred® Card from American Express and Blue Cash Everyday® Card from American Express earn elevated rewards in specific spending categories, while the American Express Cash Magnet® Card earns the same rate on all purchases.
American Express Cash Magnet® Card: If you had this card, the Blue Cash Preferred® Card from American Express or the Blue Cash Everyday® Card from American Express before, you may not be eligible for a welcome offer. (All information about the American Express Cash Magnet® Card has been collected independently by NerdWallet.)
Terms apply.
Airline cards
AmEx issues these co-branded Delta cards that earn rewards in the form of Delta SkyMiles:
Delta SkyMiles® Gold American Express Card: If you had this card, the Delta SkyMiles® Reserve American Express Card or the Delta SkyMiles® Platinum American Express Card before, you may not be eligible for a welcome offer.
Delta SkyMiles® Blue American Express Card: If you had this card, the Delta SkyMiles® Reserve American Express Card, Delta SkyMiles® Platinum American Express Card or Delta SkyMiles® Gold American Express Card before, you may not be eligible for a welcome offer.
Terms apply.
Hotel cards
The Hilton cards provide an exception to some of the rules you see with other AmEx cards. You can’t get a welcome offer on a card if you get that exact same card again, but you can get another card in the Hilton family and be eligible for that card’s offer.
Hilton Honors
Hilton Honors American Express Aspire Card: If you had this card before, you may not be eligible for a welcome offer. (All information about the Hilton Honors American Express Aspire Card has been collected independently and the card is no longer available through NerdWallet.)
Marriott Bonvoy
What you can do
Choose your card carefully
If you can only get one welcome bonus per card family, go for the card with the biggest bonus available. That may mean stomaching a higher annual fee (and the annual fees on some of these cards are no joke), but if you choose a card with other perks you’ll actually use, you can get more value out of the card while you carry it.
You can opt to downgrade the pricier card later on to another member of the family with a lower annual fee if you’d like to keep your account open for a lower cost. You won’t earn another bonus this way, however.
Look for targeted offers
Anecdotally, consumers may receive targeted credit card offers from AmEx without this lifetime language, meaning you may be eligible for another bonus despite carrying another card in that family. These offers arrive randomly, so pay attention to what you get in the mail.
Ask for a retention bonus
If you’re considering canceling a card once the annual fee is due again, call the number on the back of your card and ask about retention offers. You’re shut out of bonuses on other similar AmEx cards, but perhaps a kindly customer service representative can convince you to hold onto the card you have now with a waived annual fee or some extra rewards points.