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Is it possible to earn a paycheck while sitting on the couch watching television? Absolutely, but it takes a bit of work beforehand to set things in motion. By developing online assets, investments and interest payments, you can put your dollars to work so they provide gains while you sleep. Here are the details and the best ways to put $1,000 of passive income into your pocket every month. For help managing your money — no matter how you earn it — consider working with a financial advisor.
What Is Passive Income?
The IRS defines passive income as earnings generated by someone who isn’t materially participating in the endeavor, meaning you work less than 500 hours annually on a project or less than 100 hours if you put in more time than the rest of any coworkers involved.
Essentially, passive income is created by developing assets that earn money by themselves. For example, creating a blog with affiliate links will provide earnings every time a reader clicks through to a specific product. This way, you make money in perpetuity for the work you did once.
How to Find Ways to Make Passive Income
Passive income comes from assets, like a YouTube channel or an online store. In most cases, though, you need resources to start out. Whether you buy a better webcam or take a writing course, generating passive income means investing money to get yourself going. Therefore, saving money beforehand is key.
To that end, your first steps are researching the passive income streams that appeal to you, identifying your starting costs and saving the money you need. In this phase, it’s crucial to avoid financial risk. Piling money into a high-yield savings account is an excellent choice because you can earn 4% APY in an account with FDIC insurance.
Putting serious cash into a savings account that compounds monthly can also serve as a first exposure to passive income. You’ll put your dollars to work and watch your money grow. Once you save the money you need, you can invest it in more lucrative passive income streams.
Low-Involvement Passive Income
These options put the ‘passive’ in passive income because they require less work to get going. However, they have less earning potential than high-involvement passive income streams.
Purchase Series I Bonds
Rising interest rates have made Series I bonds a viable passive income investment. Specifically, you can purchase these bonds with a 4.3% APY through October 2023, after which the government will modify the rate (this occurs every six months). Plus, the U.S. Treasury backs these bonds, meaning your risk is almost zero.
Additionally, Series I bonds earn interest for thirty years, making them a suitable long-term investment. On the other hand, you can sell your bonds after holding them for at least a year. However, you’ll lose the most recent three months of interest if you sell them before holding them for five years.
Create a CD Ladder
A certificate of deposit (CD) is like a short-term savings account with an excellent interest rate. Therefore, you can continuously purchase new CDs as they mature and reinvest your gains. You can buy a CD at most banks and credit unions.
CDs mature in one to five years, depending on the specific product. The longer the term, the higher the interest rate. Because your CD money isn’t accessible while it matures (unless you want to forfeit your gains), it helps to create a CD ladder. This way, a portion of your investment is always available.
For example, your ladder could look like this:
$1,000 in a one-year CD with a 3.5% APY
$1,000 in a two-year CD with a 3.75% APY
$2,500 in a five-year CD with a 4.5% APY
So, you’ll receive part of your investment back after a year and can reinvest or pocket the profits. Then, you’ll get another portion of your investment back after another year and the final $2,500 plus interest three years after that. Your ladder will provide a stream of income at different milestones, boosting your liquidity as an investor.
Become a Paid Online Shopper
If you’re a dedicated online shopper, you can turn your pastime into cash. For example, Rakuten pays between 1% and 20% for each online purchase you make, with no upward limit on earnings. While this perk isn’t a license to impulse spend every night, it can provide a passive income boost to purchases you would make regardless. You’ll also get a $10 welcome bonus for signing up (or more for using specific affiliate links).
Use Rewards Credit Cards
A rewards credit card pairs perfectly with online shopping (and any other shopping you do). There are dozens of excellent rewards cards available, such as Discover (1% to 5% cash back per purchase) or Chase Freedom Unlimited (1.5% to 5%). This way, all your purchases, from grocery stores and gas stations to vacation expenses, will provide an income stream. Remember, paying your credit card monthly is essential for this strategy. Otherwise, you’ll pay at least 15% APR on your balance, putting yourself in the hole instead of getting ahead.
Use a Robo-Advisor
Robo-advisors are digital investment companies using algorithms to grow a diversified portfolio of assets. The advantages are the low management costs and balance requirements. For example, Betterment charges $4 per month to invest, with no minimum balance requirement (you can achieve even lower fees with a sufficient balance or monthly deposit). Because human advisors charge at least 1% of the assets managed and often require a high minimum balance, robo-advisors are an inexpensive, accessible way to receive capital gains. In addition, your portfolio will rebalance itself periodically, meaning you don’t have to lift a finger.
High-Involvement Passive Income
These methods require more elbow grease but can provide thousands of dollars per month:
Invest in the Stock Market
Since 1926, the top 500 companies in the stock market (as tracked in the S&P 500 index) have returned an average of about 10% per year. Therefore, the stock market remains one of the most lucrative passive income options.
You can open an investment fund, dump money into an S&P 500 index and let it grow. However, you can also become a more involved investor by researching companies and industries and allocating money to stocks in companies with high growth potential. While doing so requires more work, you may see higher gains if you can stomach the risk.
Invest in Real Estate
Real estate can provide passive income in various ways. First, you can purchase shares in a real estate investment trust (REIT) if you don’t want to own or manage physical property. Instead, you’ll have shares in a company that invests in mortgages and commercial real estate. You’ll receive gains when the company’s investments flourish. Because federal law requires REITs to return at least 90% of their profits to shareholders, you’ll see profits any time the company does well.
Next, you can purchase rental properties to develop monthly income from rent payments. This strategy involves managing property and can get hectic if you acquire multiple properties (fortunately, you can hire a company to manage your properties when you scale). The payoff is thousands of dollars per month, which can offset the mortgages for your properties and pad your wallet. As you pay off the homes, each rent payment becomes worth even more. Plus, property appreciation gives you an opportunity to sell the property for substantial gains.
Start a YouTube Channel
The typical YouTuber receives $18 per 1,000 views on their videos. So, you can transform a hobby or passion into a series of money-making videos. For example, if you have a particular skill, such as DIY home improvement, your how-to videos can educate the masses and provide hefty returns.
Start a Podcast
Similarly, your favorite topics, movies, books and more can become profitable discussion material on a podcast. So, choose what interests you most, purchase a high-quality microphone and start talking. Like a blog, a podcast can provide earnings through advertisements, affiliate sales and membership subscriptions.
Create a Course Online
Likewise, you can turn a special skill or interest into web-based training. So whether you’re a social media marketing savant or a workout expert, you can transform your knowledge into a purchasable set of online classes.
Write a Book
While writing a book requires time, editing and publishing costs, book royalties can provide sizeable passive income. Additionally, your earnings can snowball if you release multiple books. Plus, you can also pair this strategy with an online writing course if you become a well-known author in your genre.
Remember, you can write physical books or eBooks. The advantage of eBooks is the inexpensive publishing, mass availability and sales potential. Specifically, Publishers Weekly reported eBooks sales for 2022 to be $2.57 billion, a 6% increase from the year prior.
Maintain a Blog
Writing a blog can be an excellent creative outlet and passive income generator. Whether your focus is pet training or gardening, you can write with expertise and direct readers to the products you use. This way, you can earn affiliate income, gain an online/social media audience and accumulate an email marketing database.
Create Leads For Another Business
If you want to create a website but don’t have a specific idea for earning money, you can increase sales for another company instead. For instance, you can write about topics pertaining to the business and provide links to the company’s website. This way, every click can earn a commission. In addition, you can use social media and Google ads to generate leads.
As a result, competence in Digital Marketing and SEO is essential for this strategy to work. The payment structure usually involves a flat monthly fee or a pay-per-lead model. This flexible business model has great potential for scaling up to generate an unlimited monthly income.
Sell Stock Photography
Many internet-based entrepreneurs lack the time or inclination to snap their own photographs for their websites. Instead, they resort to stock images, which are generic and expertly captured photographs. These photographs are usually acquired as a set or via a monthly membership to a stock photo website.
So, if you want to diversify your income sources as a photographer, you could create and sell styled stock photo bundles. For instance, you could offer a package of 15 stock photos with a business theme for $15. Then, you can market your product to websites and businesses. By doing this, you can earn a continual flow of revenue from images you captured once.
Rent Out a Room
If you have additional rooms in your home and are open to having guests, you can utilize online platforms such as VRBO to rent out a room in your house. Moreover, you could rent out your entire home if you travel frequently. The cost of renting a room varies based on location and the area you reside in, meaning you could charge hundreds of dollars per night in a high-demand area.
Rent Out Your Car
Similarly, you can rent out a car if you have a second one or don’t drive much. Platforms such as Turo connect car owners with customers who need a vehicle temporarily. Renting out your car a couple of weekends per month can create hundreds of dollars of extra income for an asset you already own.
The Bottom Line
There are numerous options for generating $1,000 a month in passive income. Your path toward earning this self-sustaining income stream depends on your strengths, interests and the amount of time and work you put into the project. Therefore, your way forward may be as simple as becoming an Airbnb host or involve researching the real estate market and purchasing a rental property. Remember, your passive income will have specific tax implications, so it’s best to understand how an asset will affect your taxes before going all in.
Tips for Making $1,000 a Month in Passive Income
A financial advisor can help you create a plan for your money. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Remember, reducing costs means keeping more of your passive income. Shaving even a tiny percentage off expenses can create a significant upside. For more, here’s how minimizing expense ratios can boost your savings.
Ashley Kilroy
Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
Technology is changing many aspects of our world — including change. When I was young, I remember the thrill of cash and the spare change it generated when I spent it. I would scour my change looking for rare coins and deposit the ordinary ones into my trusty piggy bank.
Today that thrill is gone, along with the simplicity a piggy bank or coin jar brought to saving money. Whether you were working on building an emergency fund or simply wanted to save money for a rainy day, change was always there to give you a head start. Today we swipe a piece of plastic or pay for everything online with no paper bills or coins changing hands.
Thankfully, a new type of technology is filling the void electronic transactions have created. Savings apps that automatically round your purchases to the nearest dollar are bringing back the simplicity that spare change brought to saving.
The Best Round-Up Savings Apps
The apps on our best money-saving apps list all do one or two things very well, if not more. For example, some use psychological triggers to help you save wisely while others focus on helping you teach your children how to set and manage long-term financial goals. And while most aren’t officially banks, most have FDIC-insured checking accounts built in, protecting your money from the unknown.
Acorns
Our Rating
Acorns is a comprehensive personal finance app with a built-in checking account, automated budgeting and savings tools, and multiple investment accounts for all stages of life.
Monthly Fee
Deposit Insurance
Up to $250,000
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Acorns is built around the idea that you can build your finances to be as sturdy as an oak tree with a start as small as an acorn.
Though Acorns is much more than a round-up app, its simple round-up feature is key to its value. Just connect your credit cards and debit cards to your account and it will automatically round your purchases up to the nearest dollar and deposit the change for you. Once you have at least $5 in round-ups ready to process, Acorns transfers the money from your checking account to your investment account.
Acorns offers four different types of financial accounts: a general (taxable) investment account, a custodial account for children, a retirement investment account (IRA), and a checking account. It has two paid plans, with monthly membership fees starting at $3.
Acorns offers mobile apps for Android and iOS devices. They have all the features and capabilities of the desktop version.
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Chime
Our Rating
Chime is a personal finance app that helps you manage your money, save for the future, and build credit. It has one of the best savings yields of any FDIC-insured round-up app.
Monthly Fee
Deposit Insurance
Up to $250,000
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Chime is a mobile-first personal finance and online banking app. You don’t have to use it as a round-up savings app, but it’s easy enough to do so — just opt in to have your Chime Visa debit card purchases rounded up to the nearest dollar and transferred to your Chime savings account.
And that savings account is among the best on this list. Your cash earns 2.00% APY¹, far higher than what most other round-up apps can manage.
¹The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is accurate as of May 12, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.
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Qapital is a goal-based savings app that makes it easy and fun to save automatically. Its biggest downside: an unavoidable monthly fee of at least $3.
Round-up savings is actually just one way Qapital does this — it’s one of several custom rules (in this case, the “Round-Up Rule”) you can set to put your extra cash to work. Other rules include the Set & Forget Rule (which puts aside a set amount every week or month) and the Freelancer Rule (which saves a set amount from each deposit to cover estimated taxes).
Qapital also has an FDIC-insured checking account and debit card for everyday spending. Balances earn interest at a low rate, but it’s better than nothing.
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Worthy Bonds
Our Rating
Worthy Bonds is a crowdfunding platform, not a banking app. But it does allow round-up investments from a linked bank account, starting at just $10. With all bonds paying 5.65% APY, it’s the highest-yielding option on this list.
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Worthy Bonds is not a traditional round-up savings app, if there even is such a thing. It’s a crowdfunding platform that sells shares (also called Worthy Bonds) in loans made to small businesses and development projects across America.
All Worthy Bonds yield 5.65% APY. If you want, you can link an external bank account to your Worthy Bonds account and round up each purchase to the nearest dollar. Once your balance hits $10 — the value of a Worthy Bond — Worthy Bonds buys you a new bond.
Worthy Bonds is a fun and rewarding way to support everyday entrepreneurs, but there’s a catch: no FDIC insurance. So don’t invest more than you can afford to lose.
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Greenlight
Our Rating
Greenlight is a family finance app that helps kids (and parents) manage and grow their money. With high-yield savings, an investment platform, and even a credit card for parents, it’s the most comprehensive app on this list.
Monthly Fee
$4.99 and up
Up to 5.00% APY
Deposit Insurance
Up to $250,000
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Greenlight is an online custodial bank account that’s designed to help parents teach their children about money. A Greenlight account comes with a customized debit card and advanced ways to save and earn, including round-ups. Every time your children swipe their customized debit cards, the total value of the purchase is rounded to the nearest dollar and the spare change is transferred to their savings account.
That spare change has the potential to earn much more change. Depending on the type of account you open, your children can earn between 1% and 5.00% APY interest on their savings.
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Methodology: How We Select the Best Round-Up Apps
We used six metrics when comparing the micro-saving and micro-investing apps that offer round-up saving functionality. These metrics relate to the cost of the service, allocation of money saved through round-ups, the types of accounts they offer, and other functionality. Here’s what we paid the most attention to in our analysis.
Cost
Round-up apps are all about saving money, so it’s pointless to use them if the fees eat all your savings. To be fair, most apps with this functionality charge reasonable fees, but we did come across a few with fees that were a huge turnoff.
All apps on our list cost under $10 per month, even for the most premium memberships. Two options — Chime and Worthy Bonds — are 100% free to use with no monthly or hidden fees.
How Round-Ups Are Used
It’s important that the money you save grows over time. After all, inflation is a very real force in finance — if your money isn’t growing, it’s shrinking. All the options on our list offer ways to grow the money you set aside, whether through investing in the stock market or earning a meaningful interest rate on your savings balance.
Custodial Accounts
Financial education is valuable at any age, and the sooner you start teaching your kids concepts like savings, the better off they’ll be.
That’s why options like Greenlight are on our list. Custodial accounts and giving kids access to financial information are a great way to teach your children about money management.
Risk Management
Many of the best round-up apps focus on micro-investing — investing small amounts of money over time — to begin building a meaningful portfolio. But investing can be risky. We paid close attention to the risk management features each investing-focused round-up app offers. Every investment-focused app on this list offers highly diversified stock and bond ETFs to help keep risks at bay.
Savings Triggers
Round-ups are a great way to start your savings, but if you’re only saving your spare change, it will take forever to generate a meaningful safety net. All options on this list offer round-ups as well as at least one other savings trigger, like the ability to automatically transfer money to savings on a weekly, biweekly, or monthly basis.
Some apps offer other, more elaborate savings triggers.
For example, Qapital offers several triggers. You can set a spending budget, and when you spend less, the difference automatically goes into your savings.
Additional Banking Features
According to the FDIC, about 5.4% of Americans — more than 7 million people — don’t have bank accounts. That’s why we love to see companies like Chime make quality banking services available to everyone. Many of the companies that made our list offer accessible online banking services.
Round-Up App FAQs (Frequently Asked Questions)
If you’ve never used a round-up app, chances are you have a few questions you need answers to before you get started. Answers to some of the most common are below.
Do Round-Up Savings Work?
Round-up savings apps are a great way to kick start your savings, but their effectiveness largely depends on you. If you don’t spend frequently, round-up savings won’t generate meaningful balances. It’s best to use this feature as a small part of your work toward your overall goal of saving money.
If you want to aggressively save money, consider using round-ups in conjunction with other features, like scheduled savings contributions.
Which Is Better: Acorns or Stash?
That depends on how you’d like to invest your savings. If you’re interested in building and managing your own investment portfolio of individual stocks and ETFs, Stash is the way to go. If you’d rather let the pros handle the investment decisions and rebalancing efforts, Acorns is your best bet.
What Is the Best Round-Up App for Kids?
The hands-down best round-up app for kids is Greenlight. The platform was designed to give children some financial independence while giving parents a fun way to teach financial literacy. However, if you want a family experience on a platform where your and your children’s accounts can be viewed in the same place, you may want to consider Acorns.
Final Word
The options listed above are our favorite automatic savings apps, but by now you know they’re not all the same. Each app has its own features, costs, pros, and cons. Here are a few features you should compare before you decide which one to sign up for:
Cost. Some round-up apps are free and others have monthly fees. Consider the cost and how it might impact your savings before you sign up.
Banking Features. Are you one of the millions of Americans who are underserved by traditional banks? If so, consider signing up for an option like Chime that offers complete online bank accounts.
Investing or Saving. Do you want to grow your money in the stock market or a savings account? Have you considered investing in high-yield savings products like those offered at Worthy Bonds? Make sure you consider where your money’s going when you round up before you sign up with a provider.
Do You Have Children? If you have children, consider signing up for an app that offers custodial accounts, or signing up for Greenlight for your children and using a different app for yourself.
STASH DISCLOSURES
Paid non-client endorsement. See Apple App Store and Google Play reviews. View important disclosures.
Nothing in this material should be construed as an offer, recommendation, or solicitation to buy or sell any security. All investments are subject to risk and may lose value.
1 Stash Banking services provided by Stride Bank, N.A., Member FDIC. The Stash Stock-Back® Debit Mastercard® is issued by Stride Bank pursuant to license from Mastercard International. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Any earned stock rewards will be held in your Stash Invest account. Investment products and services provided by Stash Investments LLC and are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value.
2 All rewards earned through use of the Stash Stock-Back® Debit Mastercard® will be fulfilled by Stash Investments LLC and are subject to Terms and Conditions. You will bear the standard fees and expenses reflected in the pricing of the investments that you earn, plus fees for various ancillary services charged by Stash. In order to earn stock in the program, the Stash Stock-Back® Debit Mastercard must be used to make a qualifying purchase. Stock rewards that are paid to participating customers via the Stash Stock Back program, are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value.
3 Group life insurance coverage provided through Avibra, Inc. Stash is a paid partner of Avibra. Only individuals who opened Stash accounts after 11/6/20, aged 18-54 and who are residents of one of the 50 U.S. states or DC are eligible for group life insurance coverage, subject to availability. Individuals with certain pre-existing medical conditions may not be eligible for the full coverage above, but may instead receive less coverage. All insurance products are subject to state availability, issue limitations and contractual terms and conditions, any of which may change at any time and without notice. Please see Terms and Conditions for full details. Stash may receive compensation from business partners in connection with certain promotions in which Stash refers clients to such partners for the purchase of non-investment consumer products or services. Clients are, however, not required to purchase the products and services Stash promotes.
Stash has full authority to manage a “Smart Portfolio,” a discretionary managed account. Diversification and asset allocation do not guarantee a profit, nor do they eliminate the risk of loss of principal. Stash does not guarantee any level of performance or that any client will avoid losses in their account.
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Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.
We often hear stocks and bonds mentioned together as if they’re pretty much the same thing.
But are they? Not really.
In fact, it might even be that most people understand stocks even better than bonds. After all, relatively few people own bonds individually.
So, what is a bond, and how may it fit in your overall investment portfolio?
So, What Is A Bond, Exactly?
Bonds are securities representing debt obligations, usually issued by either corporations or governments.
They’re normally issued in denominations of $1,000 and pay interest twice each year. What’s more, the interest rate is fixed for the duration of the bond.
And if the bond is held to maturity, the investor will be paid the full face amount of the security.
As an example, if you purchase a bond for $1,000, with an interest rate of 4% and a term of 20 years, you will be paid $40 per year – $20 every 6 months – until the bond is paid in full 20 years later.
Bonds are much like certificates of deposit, except that they are issued by institutions other than banks, and have much longer terms. They also lack the FDIC insurance coverage that comes with bank-issued CDs.
Bonds are long-term securities, with terms greater than 10 years.
However, investors often lump any type of fixed income investment into the bonds category.
That can include securities with a term of anywhere from a few months to 30 years.
What Types of Bonds are There?
There are 3 primary types of bonds:
Corporate
US Treasuries
Municipal Bonds
Let’s take a look at each.
Corporate Bonds
These are bonds issued by publicly traded corporations and often listed on public exchanges. They can be used for a variety of business purposes, including paying off old debt, expanding operations, raising extra cash, or even acquiring competitors.
They’re generally considered less safe than US Treasuries and pay a higher rate of interest as a result.
Exactly how much interest they’ll pay will depend upon their bond rating, as issued by large bond rating services, such as Moody’s or Standard & Poor’s.
Bonds with ratings of BBB through AAA are considered the safest and rated as investment grade.
Lower rated bonds once referred to as “junk bonds”, are now called “high yield bonds”, and pay much higher rates of interest. Naturally, such bonds are also more likely to default and considered riskier.
Corporate bonds can generally be purchased through investment brokerage firms. They’re typically bought in denominations of $1,000, but you may have to buy a minimum of 10 bonds, or $10,000. Both purchase and sale will generally involve a small commission.
US Treasury Securities
US Treasury Securities come in a wide variety of terms. Technically speaking, only one security is actually a bond, which is the US Treasury bond. But just to clear up any confusion, we’ll discuss the various types of US Treasury securities that are available.
US Treasury Bonds. These are the longest term treasuries, with a maturity of 30 years. They are available in denominations of as little as $100 and pay interest every six months.
US Treasury Bills. These are the shortest term treasuries, with maturities ranging from a few days up to 52 weeks.
They can be purchased in denominations of $100, but are bought at a discount.
For example, you might purchase a Treasury bill for $99, which you will redeem at maturity for $100. The additional $1 paid represents interest paid on the security.
US Treasury Notes. Notes have maturities of 2, 3, 5, 7, and 10 years. They pay interest every six months and are available in denominations of $100.
Treasury Inflation-Protected Securities (TIPS). These are interest bearing treasuries that also increase your principal based on changes in the consumer price index (CPI). They come with maturities of 5, 10, and 30 years. The interest paid is lower than Treasury securities with comparable terms, but the principal additions are meant to keep the value of the security up with inflation.
US Savings Bonds. Available as EE and E savings bonds, they are available in denominations of $25 and earn interest for up to 30 years. There is also the I Savings Bond, which like TIPS, increases the principal value of the security based on changes in the CPI.
Where to Buy US Treasury Securities
All US Treasury Securities can be purchased, held, and redeemed through the US Treasury department’s web portal, Treasury Direct. They can also be purchased through investment brokerage firms, though there may be a nominal fee for both purchase and sale.
Municipal Bonds
These are bonds issued by local governments, including states, counties, municipalities, and their various agencies.
They have the advantage of not being subject to federal income tax. And if you are a resident of the same state where the bonds are issued, the interest will also be free from state income tax.
However, if you live in a different state, the interest will be taxable in your state of residence, if it has an income tax.
Municipal bonds can generally be purchased through investment brokerage firms, and once again for a small commission on both purchase and sale.
For those looking to get started in bond-investing, Worthy Peer Capital is a good place to start.
What are the Benefits of Bonds?
Bonds have two basic benefits, at least compared to stocks.
The first is relative safety. While stock prices fluctuate, bonds are repaid at the full face value if they are held to maturity. This makes them a solid diversification away from stocks.
Holding a certain percentage of your portfolio in bonds can reduce the overall volatility and has been shown to improve long-term investment results.
The second benefit is steady income.
The interest paid on bonds is a contractual obligation. Unlike dividends, which can be either reduced or eliminated by the issuing institution, the interest rate set on a bond upon issue is guaranteed until maturity.
This provides the bondholder with a steady source of income, even while stocks may be fluctuating in value.
There’s a third benefit bonds have in common with stocks, and that’s the potential for capital appreciation. It has to do with changes in interest rates.
Let’s say you purchased $10,000 of a certain bond with a 5% interest rate.
Two years later, prevailing interest rates fall to 4%. The value of your bond increases to $12,500, which gives it a 4% yield.
You then sell the bonds and collect a $2,500 capital gain on the transaction.
What are the Risks of Bonds?
Despite the advantages of holding bonds, they’re not without risks. There are two primary risks.
Issuer default. This is a bigger concern with corporate bonds. A company can fall on hard times, and default on its debts. Not only would you lose the interest income, but the principal as well. There are different ways this can play out. In a corporate bankruptcy situation, you may receive partial value of the bonds.
But in an extreme situation, the bonds may be declared completely worthless.
Since they are issued by the US government, Treasury securities are considered immune from default. Municipal bonds do have a slight possibility of default, but in fact, defaults have been very rare on these securities historically.
Interest rate risk. In the last section, we talked about the possibility of bonds providing capital gains if you purchase a bond then sell it into a market with lower interest rates. But the opposite can happen if interest rates rise.
Let’s reverse the example given earlier. You purchase $10,000 in bonds paying 4%. Two years later the prevailing rate on bonds is 5%. You sell the bonds at $8,000, which is the principal value that will produce a 5% return. In the process, you take a $2,000 capital loss.
This is referred to as interest rate risk – the risk that the value of your bonds will fall if interest rates rise.
The major disadvantage with bonds is that they have an inverse relationship with interest rates. Rising rates equal falling values while falling rates equal rising values.
You should also be aware that US Treasury bonds are also subject to interest rate risk, even though the principal value of the bonds is guaranteed at maturity.
So far we’ve been talking about purchasing individual bonds.
But you can also invest in bonds through bond funds. Bonds are sold through funds, just the way stocks are. Each is a portfolio of bonds held in a single investment unit. The fund may hold hundreds of different bond issues and will be run by an investment manager.
It’s important to understand that there is a wide variety of bond funds. In fact, you can choose a fund based on your own investment preferences.
For example, you can invest in a bond fund that holds only US Treasuries, municipal bonds, or corporate bonds. You can also invest in funds that hold foreign bonds.
Some very specialized bond funds invest only in securities with limited terms.
For example, a bond fund may hold sureties due to mature within 5 years.
That can include five year Treasury notes, but it can also include 20 year corporate bonds due to mature within 5 years. Investors often choose shorter-term bond funds to minimize or eliminate interest rate risk.
You can also invest in bond funds that hold only non-investment grade bonds (bonds with ratings below BBB). These funds are riskier than the ones that hold higher-quality bonds, but they provide higher interest rate returns.
An investor may take a small position in a high-interest bond fund to increase overall yield on a larger bond portfolio.
Bond funds offer professional management, as well as greater diversification.
However, they typically charge commissions, known as “load fees”, that can range between 1% and 3% of the fund value.
You can invest in bond funds through investment brokers, or through large mutual fund companies like Vanguard and Fidelity.
How Much of Your Portfolio Should You Hold in Bonds?
Virtually everyone who invests should have at least some money invested in fixed income investments, including bonds.
They provide greater stability in an investment portfolio and are particularly valuable during downturns in the stock market. Not only are they more likely to retain their value in a market decline, but they’ll also pay interest income along the way.
But there’s much debate about exactly how much you should hold in bonds. Different factors have to be considered, including your age, your investment time horizon, and your market risk tolerance.
But there are some formulas that reduce the allocation percentage to a mathematical equation.
One that’s grown popular in recent years is 120 minus your age. For example, If you’re 40 years old, 80% (120 minus 40) of your portfolio should be held in stocks, while 20% should be held in bonds.
If you’re 60, then 60% (120 minus 60) should be held in stocks and the remaining 40% in bonds.
The formula might not be entirely fool-proof, but it at least accounts for your age and investment time horizon.
For example, notice that as you get older, the bond portfolio percentage increases.
This is consistent with what investment managers typically recommend. The closer you get to retirement, the lower your stock exposure should be.
It doesn’t really take risk tolerance into account, but you can use the formula as a starting point, then adjust the allocations based on your own personal tolerance.
Final Thoughts on What is a Bond
So there you have a high altitude view of bonds.
As you can see, bonds are probably more complicated than most people believe. They come in different shapes and sizes and are issued by various entities. Each has its own strengths and limitations.
Armed with just a general understanding of bonds, you should be able to appreciate the need to hold at least some part of your portfolio in them. Most investors don’t hold individual bonds since it’s difficult to adequately diversify.
Bond funds are usually the better choice for small investors, particularly if you’re interested in specialized bonds, like municipal bonds or high yield bonds.
One final word on bonds…if you’re looking for an asset that’s totally safe, bonds may not qualify.
They are subject to the risks discussed above, despite being less risky than stocks.
But if you want complete safety for at least part of your portfolio, then you’ll need to look at CDs, money markets, and high yield savings accounts.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
If you’re looking to make a big difference with your money, then read on.
You might be thinking that it’s unlikely for anyone to generate $100k in revenue on their first go.
But we have good news: You don’t need to – people can earn more than 10x the amount they had initially invested into them!
This is possible because there are so many ways to make money today that cost less than what most would consider “big-ticket” investments like a car or a house.
Today, you will learn from this article provides tips on how to turn $10k into more money in 2022.
The goal is to learn how to make your money work for you.
We have included 20 different ways to make quick and easy money.
The methods included are varied and include things like investing in stocks, starting a business, and finding work that pays well. This guide will help you get started on making extra cash quickly and easily!
What can I do with my 10K to make money?
There are many ways to make money with your 10K. You can use it to invest, save, or spend.
You can also use it to purchase items that will generate income such as rental properties, stocks, and businesses.
The most important thing is to find something that you enjoy and that will help you grow financially. Making passive income is even better!
How can I grow 10K to 100K?
The goal is to find the method that works best for you and makes the most money. That is who you will grow 10K to 100K this year.
There are many options available below to help you grow your money, so choose what will work best for you.
You don’t need expensive equipment or special skills to start making your money multiply. In fact, learning how to invest $100 to make $1000 a day is a common question answered here by Money Bliss.
You can start with simple methods and add on as you get better at it.
What are some fast ways to invest 10k to make 100k?
While it is difficult to make a living from one job, the ability to work multiple jobs has been shown in many studies as an effective way of generating income.
More and more people today, are focusing on ways to build passive income to grow their wealth.
Setting a goal of how to turn $10k into $100k is a great way to multiply your money.
Option #1 – Stock market investing
The goal of investing in the stock market is to earn profits by buying and selling stocks at a higher price than what was paid for them.
There are several ways to invest in the stock market, but the simplest way is to buy and sell individual stocks. You can also purchase mutual funds, which are collections of different stocks that are managed by an investment company or ETFs. Other investors prefer to look at dividend stocks.
Investments in the stock market can be risky, but if you do it correctly, you could see significant returns over time.
Related Learning: How To Invest In Stocks For Beginners: Investing Made Easy
Option #2 – Invest with Retirement Accounts
Investing in retirement accounts can help you turn 10K into 100K over time. By investing in a 401k, IRA, or other retirement accounts, you will have access to growing assets that can help you reach your financial goals.
When you invest money in a retirement account, the funds are held by the company and grow over time. This means that even if the stock market experiences tough times, your 401k or IRA will still be growing steadily. This is important because it allows you to delay taking major financial risks and focus on long-term planning instead.
By investing early in your career, you can build up a sizable nest egg that will provide security for yourself and your loved ones when you retire.
Option #3 – Invest in Rental Property
Investing in rental property can be a great way to make money. Rental properties often have high yields (the percentage of income returned to investors), and there’s never been a better time to invest in this type of property.
Rental properties are an attractive investment because they tend to have stable yields, which means you can count on making a certain amount of money every year.
In addition, rental properties are usually less risky than other types of investments, so you can feel confident about your returns even if the market goes down.
There are many ways to buy and sell rental properties, so you can find one that’s right for your financial situation. And since rents always go up (to some degree), investing in rental property is a guaranteed way to grow your money over time.
Option # 5 – Flip Stuff To Make Money
Flipping is the process of buying and selling assets in order to generate profits. It can be done through stocks, bonds, real estate, furniture, art, sports equipment, or any other type of material item.
There are a few ways to flip stuff for money. One way is to buy assets and then sell them at a higher price later.
For example, you might buy stock in a company and then sell it two months later for a higher price. This technique is called “swing trading.” Others do the buying and selling within the same day for “day trading.”
Another way to flip stuff is to wait until the asset has reached its peak value and then sell it. For example, you might buy property in downtown Chicago for $100,000 and wait six months until the market reaches its peak value of $200,000 before selling it for $200,000 minus commission.
On a smaller scale, many people flip items found at Flea Markets and easily make $100k with a few transactions. If that sounds like you, then take a free flippers class!
Option # 6 – Start An Online Business
Starting an online business is a great way to make money. There are a variety of ways to do this, and the sky is the limit!
Some people start their own businesses to create something they’re passionate about, and others start businesses in order to make extra money. Whatever your reasons for starting an online business, there are plenty of ways to do it fast.
In fact, learning how to make money online for beginners is a hot topic!
Option #7 – Start a Side Hustle
Not willing to start a full-fledged online business yet? Then, look at a side hustle. This is an extra job or business you do on the side to make money.
It is flexible, easy to start, and doesn’t require much time commitment. You can work part-time or full-time, as long as you’re able to devote enough time each week to it. And since it’s your own gig, you have complete control over its success!
There are plenty of resources available online that will help guide you through the process (including this blog post on best gig economy jobs). Just remember: don’t give up on your side hustle until it becomes profitable and meaningful to you – because once it does, that’ll be worth double the effort!
Option #8 – Invest In Cryptocurrency
Cryptocurrencies are digital tokens that use cryptography to secure their transactions and control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
Many people view cryptocurrencies as a way to make money online. Bitcoin, for example, has increased in value by over 1,000% since its inception in 2009! While there is a lot of speculation involved with cryptocurrencies, if you’re patient, you can find opportunities to invest in them as well.
There are two main ways you can invest in cryptocurrencies: buying them on an exchange and mining them. Buying cryptocurrencies on an exchange allows you to quickly and easily trade them for other currencies or assets. Mining coins involves trying to solve complex mathematical problems that reward participants with cryptocurrency tokens.
While it’s important to do your own research before investing in any type of cryptocurrency, these fast ways could help you double your money within just a few short weeks!
Option #9 – Peer-to-peer lending (P2P)
P2P lending is a type of online lending where individuals lend money to other individuals, usually without any collateral.
P2P lending has become increasingly popular in recent years because it offers borrowers and lenders an alternative to traditional banking products. Borrowers can borrow money from multiple lenders at once, which gives them more options and access to financing. Lenders can earn interest on their loans while also taking advantage of the high demand for P2P lending products.
Because P2P lending is a new product category, there are still some risks associated with it. For example, borrowers may not be able to repay their loans, and lenders may not be able to collect on the loans they have lent out. However, the growth of P2P lending indicates that there is room for this type of financing in the marketplaces.
Peer-to-Peer Lending Options:
Option #10 – Invest in Yourself with Education
The fastest way to turn $10,000 into $100,000 is to invest in yourself. This is very often overlooked, but one of the best returns on investment that you can have.
Consider taking courses to improve your skillset or investing in real estate or stocks.
My favorite online courses to improve your income:
With hard work and dedication, you can make your money work for you and achieve your financial goals.
Option #11 – Day Trade (or Swing Trade) in the Stock Market
Investing in the stock market is a way to make money by buying and selling shares of companies.
There are two main ways to make money through investing: buying and holding (also known as long-term investing), and active trading (also known as short-term investing).
Many people in this popular investing course choose to become active investors by day trading or swing trading for income. In fact, many people have made the $1000 in a day club.
Option #12 – Trading Stock Options
Option traders can make money by predicting which direction prices will move and then trading on those predictions.
Trading options is risky because it’s possible for prices to change after you’ve bought or sold them – so your profits (or losses) may depend on how well you guess what’ll happen.
But if you do manage to make money by trading options, it can be very lucrative – especially over short periods of time (days or weeks).
First, before trading stock options, you must learn how to trade the underlying stocks first. Learn how to trade options with this VIP investing course.
Option #13 – Invest in an Initial Public Offering (IPO)
Wouldn’t you love to invest in Amazon (AMZN) or Google (GOOGL) when they first went public??
If you invested $500 into AMZN, it would be worth $855,505 (as of August 2022) – source)
If you invested $500 into GOOGL, it would be worth $27,502 (as of August 2022) – source)
An IPO is a type of stock market transaction in which a company sells shares to the public. An IPO offers businesses the opportunity to expand their reach and raise money quickly.
IPOs are popular because they provide investors with access to new companies at an early stage. As such, IPOs can be a great winner or a great loser of your capital. Thus, do your research.
Option #14 – Flip Websites
Flipping websites is a quick and easy way to make money. All you need is the right software and some knowledge of how the internet works.
Flipping websites means buying a website, fixing up the code, improving the SEO, and selling it to another owner or business. This process can be done quickly and easily with the help of some simple tools. By flipping websites, you can earn a profit while also increasing your web traffic.
Flipping websites is a great way to make money on the side and supplement your income. It’s also an excellent way to learn more about online marketing and build your own business skills.
Option #15 – Start Affiliate Marketing to Turn 10k into 100k
Affiliate marketing is a great way to turn 10,000 into 100,000 by earning money through promoting other people’s products. This is also known as an influencer. And you don’t have to carry inventory yourself!
There are a few different ways to get started with affiliate marketing, and the most important thing is to find an affiliate program that aligns with your goals and interests.
Once you’ve registered with an affiliate program, it’s time to start promoting! There are a variety of tools and resources available online that can help you build an effective affiliate campaign through social media or blog traffic.
Option #16 – Invest in REITs with Real Estate Market
Real estate investment trusts (REITs) are a type of investment that allows you to invest in real estate without having to own the property. This is done by investing in a portfolio of properties that are owned and managed by the REIT.
REITs offer investors several advantages over other types of real estate investments. These advantages include:
Low risk – REITs are typically less risky than other real estate investments, such as buying and holding single family homes or properties.
Lower fees – Unlike buying and holding individual properties, REITs pay relatively low management fees, which means your money is more likely to be returned to you quickly.
Liquidity – As long as there is demand for REIT shares, the prices will generally continue to rise, giving you an opportunity to make significant profits over time.
Investing in REITS can be a great way to diversify your real estate portfolio and achieve higher returns while avoiding some of the risks associated with other types of real estate investments.
My favorite REIT platforms are:
Option #17 – Invest in penny stocks
Penny stocks are a type of investment that is usually considered to be risky but can offer high returns if the right investments are made.
Penny stocks are small companies that trade on the stock market for under $2-10 per share. Because these companies are relatively new and often have little financial stability, penny stocks can be volatile – meaning they can rise or fall in price quickly while low or high volume.
Because penny stocks are so risky, it’s important to do your investigation before investing in them. However, if you make the right choices and invest in carefully chosen penny stocks, you could see high returns over time.
Option #18 – Make Money With Retail Arbitrage or Flipping
Retail arbitrage is the practice of buying products in one market and selling them in another market to earn a profit. Many do this with dropshipping.
There are a few fast ways to get started with retail arbitrage. The first is by using online tools like eBay, Facebook Marketplace or Amazon’s Selling Manager. These platforms make it easy to find specific items that you want to buy and sell at a profit.
All in all, you are looking for low price items and selling them for a profit.
By taking advantage of flipping methods like these, you can quickly increase your income without having to spend too much time researching each opportunity. Learn more withthis FREE webinar.
Option #19 – Start A Service-Based Business
Starting a service-based business can be a great way to make money by finding clients willing to pay for your services. There are many different types of service businesses, and each offers its own unique opportunities and challenges.
Service businesses can be profitable in a number of different ways. You may be able to charge high prices for your services or offer them at a discount in order to attract customers.
There are several advantages to starting a service-based business.
First, you have control over your own schedule and work environment.
Second, you can set your own hours and earn a flexible income.
Finally, service businesses tend to be more recession-proof than other types of businesses because they don’t rely as much on consumer spending habits.
Option #20 – Buy a business
Buying a business is a great way to increase your wealth and expand your empire. There are many different types of businesses available for purchase, so it’s important to choose the right one for you.
There are two main reasons why buying a business can be beneficial. First, buying a business gives you access to valuable assets that you couldn’t otherwise own – like cash flow, customer lists, and intellectual property. Second, buying a business can help you build a dynasty by passing on the company name and legacy to future generations.
There are many different factors to consider when purchasing a business, so it’s important to consult with an experienced advisor and do your due diligence.
How to Turn 10K Into 100K FAQs
Obviously, you probably have a lot of questions when trying to decide on which investment opportunities are best for you. While affiliate programs may work for some, you may want to use your stock market knowledge. Maybe even a dog walking business?
Ultimately, you have $10k in investment capital to start with, now you have to make some decisions.
What are the best ways to turn $10k into $100k?
A lot of people have been asking themselves this question lately and wondering what they could do with their money in order to make a big difference in their lives and achieve financial freedom.
In addition, you probably have questions before you make this a reality.
How Can I Get Rich With 10K?
One of the best ways to get rich is to start with a small sum of money and grow it over time by being consistent in your actions.
Learn the best ways to invest 10k.
It’s not about getting lucky, but rather developing habits that will help you achieve your goals. With hard work and dedication, anyone can become wealthy over time.
How to Turn 10k into 100k in 1 year?
There are a few key things you need to do in order to turn 10k into 100k in 1 year.
You need to look for a business to start that has a lot of potential for growth and profit. Don’t forget, that you must be willing to work hard and put in the time and effort required to make your business successful.
You need to be passionate (and adamant) about turning 10000 dollars into 100000. If you are wanting a 900% return on investment, then you must be willing to put in the effort to make that happen.
How to turn 10k into 100k in a month?
For most people, it will take more than just one month to turn 10k into 100k.
Regardless of the path you choose, it will take time to get the education and experience needed to achieve such a high return.
The best options for faster success include: starting an online business, becoming an active stock market trader, or investing in real estate. There are many options available, but it is important to do your research and find what works best for you.
How Can I Turn $10k into $100k Passively?
The key right here is … passive income!
You want to find ways to make money passively – also known as making money while you sleep.
The most common way is through passive income streams, which include investments, real estate, and online businesses. Whichever route you decide to take, the key is to be patient and let the money grow over time.
Many people want to make 10k a month – passive income is even better!
How Do I Convert 10K Into 100K With Stocks?
There are a few different ways to convert 10,000 into 100,000 with stocks.
Buy and hold: This is the simplest option and can be effective for those who are looking to invest for the long term. By buying stock in a company and holding on to it, you will eventually see your investment grow over time.
Day trading: This involves buying and selling stocks quickly in order to make money based on the movements of the market. While this can be very exciting, it is also risky because you could lose all of your money if the market goes down.
Investing in Options: Options allow you to buy or sell a security at a set price within a certain period of time. This type of investing is often considered conservative because you don’t have to worry about losing your investment if the market goes down – you only risk losing money if the option doesn’t expire or hits its expiration date without being exercised (sold).
Dividend stocks reinvestment: When companies pay out cash dividends each quarter, many investors choose to reinvest that money back into more shares of stock – which increases their total ownership stake in the company over time.
Trade shares for assets: Some people choose to trade their shares of stock for other types of assets, such as real estate or precious metals. This allows them to diversify their portfolio and increase their chances of making a profit.
What are some risks associated with these methods?
As always, there are risks with any method of looking for a high rate of return. You must do your due diligence first to make sure the investment is worthwhile and not a scam.
When looking to make a high return on investment, it is important to be aware of the risks involved. Sometimes, these investments are not as secure as low-return options and can result in losing the original investment. It is, therefore, crucial to do your homework before investing in anything.
What are some other things to keep in mind when trying to double your money?
There are a few other things to keep in mind when trying to find a way to double $10k quickly.
Though it can be difficult to turn 10k into 100k, there are ways to make this happen. For example, by investing in stocks or real estate, one can see an increase in their original investment. Additionally, starting a business can also lead to a doubling of one’s money. However, it is important to keep in mind the risks associated with these ventures.
When you are trying to double your money, make sure you are looking at smart investments, saving wisely, and increasing your income. Additionally, don’t forget about enjoying life while you’re working towards this goal!
Be cautious about get-rich-quick schemes
There are a lot of get-rich-quick schemes out there that promise you can make money quickly by following a certain plan or investing in a certain product. While these schemes may seem promising at first, they’re often nothing more than scams.
The reality is that most get-rich-quick schemes don’t work the way they’re supposed to. In fact, many of them actually lead to losses for the people who try them. This is because most of these schemes involve high-risk investments or unproven methods.
So if you’re thinking about trying one of these schemes, be sure to do your research first. You might be able to find a better way to make money without risking everything you have.
What Skills Will Help You Make 100k Fast
The goal of this article is to help you turn $10k into $100K by the end of this year. No need for a fancy MBA or years’ worth of experience, just some simple skills that will help you.
More than likely, you will have to invest in an online course or even a few books to help you along your journey. For instance, I purchased a blogging course to jumpstart my entrepreneurship. Also, I dived straight into an investing course to further my stock market knowledge.
When you are growing your liquid net worth, you are looking somewhere to have your money make more money. The strategy you choose will be different than the person reading this same post. Buy, you have to show patience and know that you will reach your target based on your timeline.
There is a lot of content available to help you along your path.
As we discussed above, there are many different ways to make 10K to 100K this year, so choose the one that works best for you and gets results!
Know someone else that needs this, too? Then, please share!!
Living frugally is all about a simple principle: Spending less than you earn. It may sound super easy, but putting that philosophy into practice can be a challenge.
You already know the advice about not signing up for every streaming platform under the sun and not having a fancy coffee every day. Fortunately, living a frugal life doesn’t have to feel like you must sacrifice your favorite things. By adopting some basic money-saving moves, you can stash cash without even thinking about it.
Being More Frugal in 5 Simple Steps
Here are five tips on how to be more frugal and save money — without giving up all the fun (and caffeine) in your life.
1. Reform Fixed Expenses
Regardless of what specific items might appear on a budget, they all come in two general varieties: fixed expenses vs. variable expenses.
Fixed expenses are, as the name suggests, those bills that are fixed and consistent each month, such as rent, insurance payments, and student loans. Variable expenses, on the other hand, are those whose amounts aren’t fixed… but that doesn’t mean all variable expenses are optional (or “discretionary”). For example, your electric bill probably varies from month to month, but you still know you’re going to have to pay it.
Let’s hone in on those fixed expenses first, though — because cutting down on regular, consistent costs can lead to regular, consistent savings. There are a variety of ways to do this, some more radical than others.
For example, moving to a less expensive neighborhood or splitting bills with a roommate might cut your rent in half; deciding to forgo a car can eliminate not only the car payment and insurance cost, but also variable expenses like parking, maintenance, and gas. These kinds of global lifestyle changes can take a lot of effort to set up at the start. However, the payoff is months or years of significant savings without too much ongoing effort.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
However, there are plenty of ways to cut fixed expenses without making such seismic shifts to daily life. For instance, switching to a less expensive cell phone carrier can lower the monthly burden, as can ditching a gym membership in favor of hiking or cutting back on streaming service subscriptions. (Even those low per-month amounts can really add up when there are three or four of them!)
Recommended: Building a Line Item Budget
2. Gear Up Your Grocery Game
Groceries count as a variable expense, but they’re certainly not optional. That said, there’s an incredible margin for savings when it comes to stocking up on food each month.
So how to go about saving money on food and other grocery store items?
One easy way to start is to choose discount grocers and chains that are known for their low prices. Aldi, Trader Joe’s and WinCo, for example, all have well-founded reputations for their frugal choices, particularly when compared to upscale grocery chains like Whole Foods. Shopping at a cheaper store can take some of the footwork out of saving; you may be able to spend less on the exact same grocery list. But it’s also possible to take the project even further.
Coupon clipping might not be the most glamorous activity, but those deals can create substantial savings, particularly for practiced couponers. These days, apps like Ibotta and Checkout 51 make it easy to score savings on the items you’re already shopping for.
Additionally, aiming to make cheaper meals can stretch each grocery store dollar even further. Relying on inexpensive staples like rice, which can be dressed up and filled out in many different ways, can help keep both bellies and wallets full.
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3. Decide to Do It Yourself
Buying things is one thing. But maintaining them is a whole ‘nother can of worms — and it can be a downright expensive one. For instance, going in for an oil change vs. doing it yourself can be a pricey undertaking. And calling in a plumber when the sink or toilet is clogged can be expensive compared with going into DIY mode.
All of which is to say: honing some handiness skills could easily help save money over the course of a lifetime. And thanks to the fact that we live in the digital age, it’s relatively easy to become a Jack or Jill of all trades. YouTube is full of free video tutorials that can walk you through everything from fixing a dishwasher that won’t drain to rotating your own tires.
💡 Quick Tip: If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.
Other high-cost services to consider DIYing: mani/pedis, facials, pet grooming, landscaping, moving, and more. Basically, anytime you could spend money on hiring a professional, think seriously about whether you actually need the help.
Recommended: Pros and Cons of Online and Mobile Banking
4. Enjoy Free Entertainment
While some events are worthy splurges — like a once-in-a-lifetime concert — it’s also important to consider all the free forms of entertainment at our fingertips. For example, your local library may offer streaming movies along with books and audiobooks (or try services connected to libraries, like Kanopy and Hoopla), and many museums offer cost-free admissions on specific days of the week or month.
Even the national parks offer free admission from time to time! Free national park entrance days vary slightly from year to year, but generally include the first day of National Park Week in mid-April and National Public Lands Day, which falls on the fourth Saturday in September, along with Veterans Day and the birthday of Martin Luther King, Jr.
5. Take Frugalism With You Wherever You Go
Speaking of national parks: Travel is another big ticket item as far as discretionary expenses are concerned. Seeing the world can be enriching — and it doesn’t have to strip away all your riches, either.
Finding ways to be a frugal traveler, such as choosing budget-friendly destinations and scoring the cheapest flights possible, can mean saving money without sacrificing this major life experience. You might even try a home swap or being a house-sitter in a foreign country to make your journey as affordable as possible.
💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.
What Does Frugal Mean for Your Money?
Adopting frugal habits and creating a savings plan can be ways to improve your financial health. Cutting back on day-to-day living expenses can mean more money set aside for retirement as well as major life milestones, like owning a home or having a baby.
One of the most important first steps toward frugality is getting organized, financially speaking. Having a budget and tracking your finances are valuable moves. How often to monitor your bank accounts is a personal decision, but a couple of times a week can help you see how your money is coming in and going out.
Living frugally can also mean more money goes towards realizing your long-term financial goals and building wealth. Whether that means saving for a child’s college education or for retirement, by cutting back on spending now, you can help assure a better future.
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Back when most of us were younger, we didn’t discuss money. You probably had no idea how much money your parents made. You didn’t care if your sneakers cost $5 or $50. And unless you were being chastised for leaving lights on (because electricity was not free!), you didn’t think about household bills.
If you received an allowance, you rode your bike to the candy store and spent it promptly. Spare quarters went toward Pac-Man or Galaga. If you ran out of money, you couldn’t call or text your mom and ask her to reload funds onto your debit card. That was it until next week, or at least until the Tooth Fairy or Good Report Card Gods deposited a few more dollars into your piggy bank.
Things seemed simpler then. Today’s parents take a more active role in teaching kids about money. And we’re left trying to figure out the right age to let our kids open a bank account.
The Right Age to Open a Kid’s Bank Account: Factors to Consider
Some banks and credit unions offer bank accounts and debit cards to children as young as 6 years old. While some children that young may be old enough to carry a debit card (especially if you use features like parental locks to limit the purchases they can make), other children aren’t ready until they’re in their teens. A lot of factors should influence your decision about your own child.
Age of the Child
You wouldn’t give a toddler a debit card. But an older child or teen may be well equipped to manage a spending account, which is like a traditional checking account with a debit card instead of paper checks.
To determine whether your child is old enough to have a bank account, consider these questions:
Do they understand the concept of money?
Do they have income (such as an allowance or birthday money) to place in an account?
Are they mature enough to make decisions about what they might like to buy?
Children as young as newborns can have a college savings account, and little ones may enjoy watching their money grow in a custodial savings account, which is an account a parent or guardian oversees on the child’s behalf.
Sometime around middle school, your child may be ready to start learning about money management and get their own spending account with a debit card.
Financial Responsibility & Understanding
Although many banks allow children as young as 6 years old to get their own debit card, lots of kids don’t understand how to use it until they’re slightly older. Your child requires both understanding of banking basics and some sense of responsibility surrounding money.
Don’t expect 6- or even 12-year-olds to know when to save money or how to evaluate when a potential purchase is a good deal. They will learn these concepts as they use their debit card. But your child should have some understanding of how much things cost — and how money works in general — before they get a spending account of their own.
Purpose of the Account
Think about the reason you want to open an account for your child. Do you want:
A quick, secure, and convenient way to give your child money?
To teach about savings and investing?
To teach the basics of banking?
To help them save for college?
Your reason for opening the account will drive your choice.
It’s never too early to open a custodial account to save money for college or a first home. You can teach your child to save 10% to 50% of all birthday or holiday cash gifts they receive and show them how the interest builds.
Many parents open a spending account for their child for convenience’s sake. If your child frequently needs money to go out with relatives or friends, it’s convenient to empower your teen or tween with their own debit card.
Similarly, if your child earns an allowance and you want to start teaching them how to manage their money, choose a bank account tailored to teens and tweens with an easy-to-use mobile app. Some accounts, such as Chase, GoHenry, and Greenlight, allow you to assign chores and transfer money into your kid’s account when they complete the chores.
Some financial technology (fintech) companies, like Cash App and Copper, even offer your child a door into investing and cryptocurrency.
If your primary goal is to teach your children how to save, look for a bank like Bank of America, that allows kids to round up their debit card purchases and put the difference into a high-yield savings account.
Some banks, such as Ally Bank and Capital One, allow your child to put money into different subaccounts for various purchases. They can set aside long-term savings in one subaccount, save for a larger purchase like a bicycle in another, and even set aside money for friends’ birthdays or Mother’s or Father’s Day gifts as they get older.
Parental Involvement
Until the child becomes a teen and has learned some money sense, you can closely monitor their spending. Many kids checking accounts allow you to put limits on ATM withdrawals, debit purchases in general, and debit purchases in certain spending categories. Most also allow you to receive alerts when your child makes a purchase or withdrawal.
For instance, if I give my son $20 to treat himself and his friends to pizza on a sunny Saturday, I can change the settings in the app to ensure he can only spend the money at restaurants.
Your Financial Means
If you give your child a bank account or a prepaid debit card, you want to ensure you (or they) can fund it. Until they’re old enough to hold a job, they can use holiday or birthday gift money or you can give them an allowance. If you’re giving them an allowance, make sure it’s an amount you can afford weekly or monthly, even if it’s just $5.
Risks & Considerations
Risks exist when you open a debit card for your school-age child.
They might lose the card
They might spend all the money too quickly and realize they don’t have money to buy something they really want
They could lose money on investments
A kids’ debit account could charge fees, costing you money
However, none of these contingencies will spell financial ruin for you or your child. Rather, they will learn important lessons from the experience.
Online Banking Security & Bank Safety
When you’re choosing a bank for your kids, you should look for the same protections you expect from your financial institution:
Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration insurance
Ability to turn the debit card on and off in the app
Secure website and app
Fraud alerts (for you and your child)
Purchase alerts (for you and your child)
You should both have the ability to lock a lost or stolen debit card through the app. However, if you lock the debit card, your child shouldn’t be able to unlock it.
Fees & Charges
Teaching your child where they can withdraw money for free is one of the financial lessons they can learn with a debit card. Fortunately, most children’s accounts have no monthly fees, no overdraft fees, and no fees for in-network ATMs.
It’s worth mentioning that kids prepaid debit cards like Greenlight, GoHenry, and Famzoo, often charge fees for the service. For example, Greenlight, one of the more popular children’s debit cards, charges fees of up to $14.98 per month. But it also delivers a host of benefits, including 1% cash back on purchases and 5% APY on savings.
You’ll have to decide if the added features justify the costs for your family. In most cases, a free online bank account delivers the convenience and security parents want in a child’s bank account.
Financial Institutions’ Policies & Regulations
When you’re choosing an account, ensure it’s available for kids in your child’s age group. For instance, Alliant Credit Union Kids Savings Account is open to kids of any age. Many accounts are only available to teens.
That said, children under the age of 18 typically can’t open a checking or savings account on their own. You can open it for them and designate the account for your child. If it’s a custodial account, ownership will transfer to the child once they reach adulthood. That age varies by state. Otherwise, you must transfer the funds to an account your child owns once they reach 18.
Your bank may also permit you to open a joint account with your child. Be aware that your child will have full access to the money in a joint account, so choose one with features that allow you to place parental controls on the account or at least receive alerts of withdrawals, purchases, or transfers.
What to Know About Age-Appropriate Banking
As with basic life skills like cooking or changing a tire, the burden falls on parents to teach their kids about banking and personal finance since most high schools don’t offer these classes.
But the good news is you don’t have to wait until your child reaches a specific age to teach them about money. At-home finance lessons can begin as soon as you feel your child is ready.
From birth to young adulthood, children mature at different rates. Only you can decide when your child is ready to learn specific banking tasks. Whether we’re experts in finance or child behavior, we can only provide you with suggestions.
Toddler to Preschool (Ages 2 – 5)
As soon as your child can communicate and begins to develop a sense of self, they can start learning about money. For instance, toddlers can deposit money in a piggy bank. Preschoolers can help you wrap and count coins to deposit in a brick-and-mortar bank account.
With children this young, it’s best to visit a neighborhood bank or credit union and open a custodial savings account. That helps the concepts of money and banking feel more real to a toddler or preschooler.
If you still bank with a traditional bank, let your child see how you interact with tellers and learn that you can deposit and withdraw money at a bank. Banks and tellers usually don’t mind. In fact, my local bank still gives lollipops to kids.
Middle Childhood (Ages 6 – 11)
Some banks offer special spending and savings accounts to children as young as 6 years old. That’s the earliest you probably want your child to have an account they can access with a debit card, although some parents might feel it’s still too young.
At this age, you can enlist your child’s help in choosing an online bank with high interest rates for savings. They might choose the bank with the prettiest debit card. Take the opportunity to show them how to compare features like:
Interest rates
Cash-back debit
Roundup savings features
Monthly fees
Person-to-person payments
Minimum balance requirements
In-network ATMs
Savings subaccounts
Whether you choose an online bank or traditional bank, the account should be insured and give you parental controls over your child’s account. You should be able to limit:
Person-to-person payment transfers
Purchases
ATM withdrawals
Also consider how easy it is for you to transfer money from your account into your child’s account. I chose Chase First for my kids because I can manage their accounts in my Chase app. Transfers appear immediately, whereas transfers from other financial institutions could take three to four business days via ACH deposit.
Preteen & Teen Years (Ages 12 – 17)
If you want to influence your child’s money personality, you should give them an opportunity to start managing their own money by the time they’re a teen. As you would with a tween, empower your teen to choose an online bank with a high-yield savings account and other features they want.
At this age, savings subaccounts become even more important. As a parent, you may want the capability to assign chores and allow kids to receive money when they complete those chores. It’s also handy to be able to put money into certain spending categories.
Remember, if you need to lock your child’s debit card because you don’t want them to use it, most banking apps allow that with a simple click. But double-check.
How to Open a Kids Bank Account
Depending on the type of account you’re opening, you may need your child’s full name, address, date of birth and Social Security number.
Most banks allow you to fund your child’s account via ACH transfer from another financial institution or through a direct transfer from the same bank. Once you’ve opened the account, you may also be able to send funds via Zelle.
For more information, see our article on how to open a bank account. It’s basically the same process for kids as adults.
A Tale of Two Siblings With Debit Cards
Before you venture too far down the negativity rabbit hole because your kids aren’t “doing it right” according to all the parenting stuff you’ve read, I’d like to share my perspective as a parent of a teen and tween.
My children, 2.5 years apart, were more or less raised the same when it comes to financial literacy. They both received debit cards at ages 10 and 12, with a steady allowance each month for doing a few basic household chores.
Yet my eldest consistently spends her allowance the day after she receives it. Sometimes, she spends it on snacks at 7-11 before we even make it to the mall. (Yes, we have snacks at home!)
But my son saves most of his money for larger purchases. He often treats his friends to pizza or soft drinks, but he keeps tabs on his checking account balance and puts 25% of his allowance into his savings account each month, where it builds.
My daughter also puts money into her savings account. But she transfers it out as soon as a vinyl record catches her eye at the mall.
So don’t worry if your children aren’t grasping the lessons you’re teaching or you feel like you’re doing “everything right” and they aren’t catching on. Finance isn’t easy and hopefully, with the solid foundation you’re building, your kids will catch on before they have real bills to pay as adults.
Also note that I chose to house my kids’ bank accounts at Chase because I’ve been a Chase customer for more than 20 years and it was easy and convenient to keep all our banking in one place. Better options exist for teens and tweens, including savings accounts that earn interest.
In researching this article, I even asked my son if he would prefer to switch to a kid’s account that offers savings subaccounts and a 4.00% APY interest rate. He said he liked the convenience of using the same bank I do since it’s easy to check his balance and transfer funds.
At age 12, he’s already learning how to weigh the benefits and drawbacks of different types of accounts. Confession: I was relieved because sometimes, parents just have to do what’s easiest for us.
So if your child seems to be behind the curve, don’t worry. Just give them tasks they can handle and build on earlier foundations.
Final Word
Kids can begin learning about money at the same time they learn basic concepts like colors, numbers, and reading sight words. The earlier you begin to make money a part of their life, the more likely they are to develop healthy attitudes surrounding finances.
Money is a tool to obtain material goods we want or need. Completing work, such as chores, is one way to earn money. Money may also come as a reward for high performance, such as good grades or as part of a celebration (like a birthday).
Developing good spending and saving habits can begin as soon as kids start to understand how money works. A spending account or joint account can help establish and reinforce good habits. If you don’t believe your child is ready for a bank account, consider a prepaid debit card for convenience.
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Dawn Allcot is a freelance writer and content marketing specialist who geeks out about finance, technology, and travel. Her lengthy list of publishing credits include TheStreet, Chase Bank, Forbes, and MSN. She is the founder and owner of Allcot Media Marketing and GeekTravelGuide, where she shares her love for roller coasters, family travel, healthy living, and keto foods.
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Most people’s income comes as the direct result of work — you get a job, show up, hopefully perform decently well and then money shows up in your bank account. Some people, though, look to set up streams of passive income — money that flows into your account regularly that doesn’t require any direct work. As with any income, though, there are tax implications for potential passive income streams. Here’s how it works.
If you would like professional help developing a comprehensive investment plan, consider working with a financial advisor.
What Is Passive Income?
Passive income is also often called unearned income, which differentiates from earned income — money you get from working for a company or yourself. Common forms of passive income are earnings from rental properties, returns on investments and interest on savings accounts.
Passive income is named as such because it doesn’t require any regular action on your part; once you have the stream established, it can mostly be set and forgotten.
Passive Income and Taxation
Generally speaking, passive income is taxed the same as active income. However, the exact tax treatment will depend on the exact source of your passive income and your financial situation as a whole. Let’s take a look at three examples.
Rental properties: Rental income is taxed the same way as regular income. All rent payments, security deposits, pet fees and any other payments you get for the use or occupation of your property count as rental income. That said, you can deduct many expenses related to a rental property, including mortgage interest, property tax, operating expenses, depreciation and repairs.
Stock dividends: Dividends — money distributed to shareholders from a company’s earnings — are taxed depending on whether they’re classified as ordinary or qualified. Ordinary dividends are taxed the same way as ordinary income, while qualified dividends are taxed as capital gains.
Savings account interest: You will owe taxes on most interest from an account that you can withdraw from in the year you receive that interest. This interest is taxed the same as earned income.
Passive vs. Active Income Tax
We’ve seen that in the vast majority of situations, passive income is taxed in much the same way as active income, but there can be some differences. After all, the taxes you owe will be determined not just by whether your income is passive or active, but your overall financial picture. You may find that working with a financial advisor can help you reduce your tax burden and maximize your passive income.
To get a sense of what your total income tax bill will be for the year, use SmartAsset’s free income tax calculator.
Passive Income Streams
It may be prudent to create multiple passive income streams rather than focusing on one. The principle of diversification applies here just as it would in building a stock portfolio: you can lower your risk and potentially increase your returns by spreading your investments among multiple areas.
As you start thinking about passive income and ways to earn it, try to create a varied portfolio with different asset classes, regions and sectors. Say you decide to purchase and rent out ten homes in Miami. You may be sitting pretty, doing minimal work and collecting thousands in rent each month. But if a hurricane comes through and levels all those homes, it’s going to take a lot of time and effort to get back to that position. That’s why it’s important to diversify.
Ways to Earn Passive Income
There’s no denying that passive income is a highly desirable way to build your net worth. Here are some great ways to develop a passive income stream yourself:
Rental properties: Buying a home, condo or apartment complex and renting it out is one way to generate passive income. Of all the passive income options, this one might require the most work as landlords often need to take on multiple responsibilities to ensure their property remains in good condition and their tenants remain happy.
REITs: If you want to get into real estate without doing the actual work of being a landlord, a real estate investment trust (REIT) is an excellent option. REITs own or manage real estate and allow you to invest in the business — and they’re known for their high-yield dividends.
Dividend stocks: Dividend stocks distribute a portion of the company’s earnings to the shareholders on a regular basis and can be an excellent source of passive income.
Bond ladders: A bond ladder is a portfolio where each bond comes to maturity at a different time at a steady pace. This is a low-risk way to generate steady income.
High-yield CDs: In the current high-interest-rate environment, high-yield CDs are a particularly appealing option. With this option, you hand over your money for a set amount of time — often 12 months or more — and are paid a set interest rate over the life of the CD.
High-yield savings accounts: These also benefit from the current rising rate environment and are an excellent option for passive income, though you will usually need to maintain a high balance to earn the top interest rate.
How to Grow Passive Income & Pay Little-to-No Tax Forever
Here are some tips for generating passive income while keeping taxes low:
Focus on investments that will be taxed as long-term capital gains. Capital gains are the profits you make selling an investment. Say you bought a stock for $5 and two years later sold it for $10—the $5 in profit is known as capital gains. If you sold the stock within a year of buying it, it would be taxed as regular income. If you held it for more than a year, though, it is considered a long-term capital gain and is taxed at either 0%, 15% or 20% depending on your taxable income.
Municipal bonds are not taxed by the federal government and those issued within your state may not be taxed by the state or municipality as well. These bonds are a safe bet and a great way to earn interest, save on taxes and help your government fund public projects and services.
A Roth IRA isn’t the sexiest investment option, but they grow tax-free and you won’t owe taxes on withdrawals as long as you’re 59 ½ or older and have had the account for at least five years. This is a good way to establish passive income when you’re retired.
The Bottom Line
While earning money without working for it may sound like a pipe dream, it’s more accessible than you think. If you have savings, put them to work generating passive income for you—just understand the tax implications before you do so.
Investment Tips
A financial advisor can help you build a robust stream of passive income. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Whether you’re considering getting started with investing or you’re already a seasoned investor, an investment calculator can help you figure out how to meet your goals. To see how much your investments will grow over time with a fixed rate of return, use our investment return and growth calculator.
Your kid’s first bank account doesn’t have to be a traditional bank account. Several legitimate financial technology companies offer family finance apps with kid-friendly debit cards, customizable parental controls, chore management systems, and even parent-paid interest.
FamZoo is one of those companies. For my money, it’s one of the best. And with no minimum age for kids to join or no limit on the number of kids you can have on the account at one time, it’s never too early or too late to start using it.
Of course, you want to know what you’re getting into before downloading any finance app. Take a few minutes to understand FamZoo’s features, capabilities, upsides, and downsides.
What Is FamZoo?
FamZoo is a personal finance app for families. Major features include debit cards for kids, family and personal budgeting tools, chore assignments and payments, and basic banking capabilities like direct deposit and electronic funds transfers. Each account corresponds to a family unit, with a single recurring fee that covers all debit cards on the account and all advertised features.
FamZoo allows an adult account holder — generally a parent or guardian — to monitor kids’ usage and set parental controls that limit what they can do with their funds. Unlike most family finance apps, it doesn’t require a smartphone.
Funds held in FamZoo accounts have deposit insurance up to the current FDIC limit of $250,000.
What Sets FamZoo Apart?
FamZoo stands out from other kid-friendly debit cards and finance apps for several reasons:
Sophisticated chore management capabilities. FamZoo has everything you need to assign, track, and compensate for your kids’ household chores. It’s a big improvement on your family’s chore whiteboard or whatever other nondigital system you use.
Parent-paid interest. FamZoo balances don’t earn interest by default, but you can encourage your kids to save by paying them interest out of your own account. You’re free to set the interest rate and the balances it applies to, making it easy to incentivize specific financial behaviors (like saving regularly).
No external bank account needed. FamZoo is easier to use if you have an external bank account, but unlike most family finance apps, it doesn’t require one. You can fund your account with cash at thousands of load points around the United States, or with direct deposit from a qualifying employer or government benefits provider.
No smartphone needed. You don’t need a mobile app to access FamZoo. You can log into your account from any device with an internet connection. FamZoo even has a text messaging interface that utilizes simple text commands for common functions like funds transfers and payments.
Key Features of FamZoo
FamZoo has straightforward pricing, kid-friendly debit cards, a range of access options, and tons of financial features for the whole family.
Pricing Options
FamZoo requires a paid membership. There’s only one membership level that includes all features, but you can save a considerable amount of money if you prepay in advance. The longer you pay in advance, the more you save:
Pay by the month: $5.99 per month
Prepay six months: $25.99 ($4.33 per month)
Prepay 12 months: $39.99 ($3.33 per month)
Prepay 24 months: $59.99 ($2.50 per month)
If you’re paying by the month, you can switch to a prepaid membership at any time.
Account Access (Mobile & Web Apps)
You can access your FamZoo account through the FamZoo mobile app (iOS or Android) or through its website. If you don’t have a smartphone or haven’t downloaded the app, you can perform many FamZoo functions through a text message commands system, but this is probably too clunky to use as your primary FamZoo interface.
Kid & Adult Debit Cards
Every person in your family can get a debit card if they (or you) want, including young kids.
Your account needs at least one adult card owned by someone 18 or older (generally a parent or guardian). This is the master card for the account. You can add additional adult cards for your spouse or co-parent and any offspring 18 or older.
Cards for kids under 18 have built-in parental controls. Teens 13 and older jointly own the card with you, while you’re the legal card owner for kids 12 and under.
Direct Deposit for Teens & Adults
Teen and adult cards can accept direct deposits from employers, government agencies, and other qualified payers.
You can split the direct deposit between multiple FamZoo cards, or between one FamZoo card and an external bank account. This feature is useful if FamZoo isn’t your primary bank account and/or you’d like to share part of your paycheck with your kids (or they with you).
Reload Options
You can reload FamZoo debit cards via direct deposit, transfers from external bank accounts or digital wallets, and cash deposits at tens of thousands of retail load points nationwide. You can find retail load points at many Walmart, CVS, Kmart, Rite Aid, 7-Eleven, and Walgreens outlets. Retailers generally charge a fee for cash loads — often $4.95 per load, but it can vary.
Parental Monitoring & Controls
FamZoo has some basic parental monitoring and control features:
Card lock and unlock, which allows you to put a kid in financial time-out if they’re overspending (or in trouble for nonfinancial reasons)
Activity alerts, which ping you in real time when a kid uses their card
Money requests, which allow you to approve or decline kids’ attempts to transfer money into their account
Decline info, which provides detailed information about every declined transaction
FamZoo allows instant card-to-card transfers, which are ideal not only for one-off grants to kids but for weekly or monthly allowance payments. You can automate these transfers if you wish so you don’t have to initiate every single one.
Chore Management & Payment Tools
FamZoo has a sophisticated chore management and compensation system. It’s built around a “chore chart” that you can use to assign chores, specify a dollar value for successful completion of each, and mark each as completed (thus releasing payment) when they’re done. You can assign chores directly to specific kids, create a “first dibs” chore chart that allows kids to assign chores to themselves, or both.
If you trust your kids, you can allow them to mark chores complete. Or you can use the chore review feature to hold payment for completed chores until you confirm they’re done.
If you prefer, you can reverse the payment-for-chores arrangement and set negative values for negative chores. In other words, instead of a $5 payment for “making the bed,” you can assign a $5 chore penalty for “not making the bed.”
Customizable Subaccounts
With FamZoo, each user can create as many customizable subaccounts as they wish, earmarking each for a specific purpose (or no purpose). This is a useful feature if you’re teaching your kids the basics of envelope budgeting, encouraging them to separate emergency savings from discretionary savings, or helping them save for specific goals.
Parent-Paid Interest
FamZoo pays no interest on balances, but it does have a parent-paid interest feature that lets you reward kids for saving. You can pay interest on a specific subaccount or on a kid’s entire balance, and you’re free to set whatever rate you wish.
Automated Family Billing
You can use your FamZoo account to cover shared expenses like utility bills and automate payments on them, just as you would with a regular bank account. This is a big help if you don’t have another bank account.
Advantages
FamZoo is an affordable family finance app with above-average chore management features and useful tools for savers of all ages.
Sophisticated chore management and payment features. Unless your current bank or money management app has a digital chore management platform that rivals FamZoo’s, FamZoo’s is an improvement on whatever system you’re using.
One fee for the whole family. FamZoo is reasonably priced. Unlike some family finance apps, it charges one monthly fee for the entire family, rather than by the card or child account.
Significant savings when you pay in advance. You can save more than 50% off the monthly fee when you pay 24 months in advance. That sounds like a long time, but if you’re happy with FamZoo, you can use it for much longer — until your kids are out of the house, or even beyond.
Subaccounts help kids budget and save. FamZoo’s subaccounts feature makes it easy for kids (and parents) to save for specific goals, separate emergency cash from everything else, or create and fund category-based buckets for everyday spending.
Direct deposit for teen and adult users. Teen and adult cards can accept direct deposit from employers and benefits providers. Even if you’re the primary breadwinner in the home, you can allocate a portion of your paycheck to FamZoo and the rest to your main bank account.
Doesn’t require a smartphone or linked bank account. FamZoo has user-friendly mobile apps for iOS and Android, but you don’t have to use them if you don’t want. Its web app is just as capable, and it even has a text messaging interface that you can use for everyday money management.
Open to all ages. FamZoo has no minimum age. This is a notable advantage over family finance apps and kid-friendly debit cards that cut off eligibility at age 12 or 13.
Disadvantages
FamZoo’s few downsides include a distinct lack of educational features and no built-in interest or rewards — parents have to pony up if they want.
Limited educational features. You can teach your kids a lot about managing money simply by using FamZoo, but maybe that’s not enough. Unlike competing apps like Greenlight and GoHenry, FamZoo has no education vertical to speak of — no articles, videos, games, or tutorials.
No FamZoo-paid interest or rewards. FamZoo pays no interest on balances in any accounts, nor does it have a debit card rewards program. If you want to encourage your kids to save more or spend wisely, you have to do so out of your own pocket.
How FamZoo Stacks Up
FamZoo shares the spotlight with several other popular family finance apps built around kid-friendly debit cards. One of the most popular is Greenlight, which has a wider range of features at correspondingly higher cost.
FamZoo
Greenlight
Whole-FamilyPricing
$5.99 per month or less
$4.99 per month and up
Chores
Yes
Yes
Interest
Parent-paid only
Parent-paid or Greenlight-paid
Debit Card Rewards
No
Yes, with higher-priced plans
Investing
No
Yes
Minimum Age
None
None
Final Word
FamZoo is an affordable, all-ages family finance app for families big and small. It really shines on chore management and payment — it’s almost certainly better than your current system — and is ideal for parents who want to encourage kids to save more. In a mobile-saturated world, it’s also nice that FamZoo doesn’t require a smartphone.
FamZoo does fall short in some important ways though. Chief among these are its nonexistent rewards program and lack of FamZoo-paid interest. If you want to reward your kids for saving, you need to pay them out of your own pocket. It would be nice if FamZoo had more educational resources too.
Ultimately, it’s your call as to whether FamZoo is right for your family or whether a different family finance app makes more sense.
The Verdict
Our rating
Monthly Price: $5.99 per family
Discounted Price: Up to 58% off when you pay 24 months in advance
Parental Controls: Yes, card lock/unlock and money request approvals
Chores: Yes, management system with built-in payments
Rewards: None
Interest: Parent-paid only (comes out of parent account)
Direct Deposit: Yes, for teens and adults
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
It’s nice to earn predictable interest on your savings account balance or rewards on your debit or credit card transactions. But it’s not as fun as doubling your paycheck or earning tens of thousands of dollars in cash prizes for everyday financial activities.
Yotta leans into the idea that money management should be fun. Rather than pay interest or rewards points at set rates, Yotta doles out daily prize entries and instant variable cash back. With Yotta, you can earn a great deal more than you would with a traditional savings or checking account on any given day, but you’ll also come up empty quite a bit.
Over time, things even out and you’ll most likely earn at a rate that’s higher than traditional banks but not quite as good as the best online and mobile alternatives. But there’s a lot you need to know before you sign up for Yotta.
What Is Yotta?
Yotta is a financial technology app backed by Evolve Bank & Trust, member FDIC. It includes a checking account with debit card, a savings account with multiple goal-based subaccounts, and a secured credit card with no interest or fees. It also has social features, including a product roadmap that incorporates user feedback into new features and capabilities.
Unlike most traditional checking and savings accounts, Yotta’s deposit accounts don’t earn interest or rewards on balances. Instead, everyday financial activities like debit card transactions and paycheck deposits earn opportunities to win cash prizes.
Actual winnings vary, but Yotta claims the average user can earn an amount equivalent to 2.70% annual interest (APY). Yotta draws prizes daily with a maximum potential daily prize of $1 million (though this is extremely rare).
What Sets Yotta Apart?
Yotta does things differently from most financial apps. It really stands out from the competition for:
Prizes on balances and transactions rather than interest or points. Yotta’s most unusual feature is its prized-based rewards program. Debit card purchases, paycheck deposits, and other activities earn you prize entries or instant cash rewards, but there’s no way to say for sure how much you’ll earn until those entries or rewards hit your account.
Social features like the Yotta Roadmap and prize pools. Yotta is more social than the typical fintech app, and certainly more so than traditional banks. Yotta Roadmap is a standout feature that gives users a peek into Yotta’s future plans and takes user feedback. Prize pools allow groups of users to pool prize entries and share the winnings, increasing their chances of winning (and overall winnings).
Secured credit card with no interest or fees. Yotta offers a secured credit card with no annual fee or interest charges. It’s secured by your Yotta account balance and uses that balance to pay off charges automatically each month. In other words, it’s a low-risk, low-cost way to build credit.
Is Yotta Legit?
Yes, Yotta is legitimate. You can safely hold as much as $250,000 in your Yotta account because Yotta offers banking services through Evolve Bank & Trust, an FDIC member institution with full FDIC insurance coverage.
You can also count on Yotta to pay out promised prizes. Yotta’s website is thick with testimonials from real users who’ve won real money through the app. While your overall odds of doubling your purchase or paycheck value are quite low, and the average return on Yotta balances is actually a bit lower than the top high-yield savings accounts, Yotta isn’t a scam.
Key Features of Yotta
Yotta works differently than a regular old checking or savings account. To make sure it suits your needs, take a few minutes to understand how its features and capabilities fit together.
Yotta Debit Card
Yotta comes with a Mastercard debit card accepted wherever other Mastercard products are. You can use this card to withdraw cash with no surcharge at about 55,000 ATMs in Yotta’s network.
Early Direct Deposit
If your employer or benefits provider qualifies, and most do, you can get your direct deposit up to two days early with Yotta. So if you normally get paid on Friday, you get your money on Wednesday.
Yotta Credit Card
Yotta offers a secured credit card that can help you build credit over time with responsible use. It’s secured by your account balance, which is also the maximum credit limit. To increase your credit limit, just deposit more cash into your Yotta account.
Unlike most credit cards, the Yotta card charges no interest or fees. At the end of each statement cycle, Yotta automatically pays off your card balance out of your cash balance, so there’s no risk of a late payment.
Yotta Boxes (Cash-Back Rewards)
Yotta’s answer to cash-back rewards is the Yotta Box.
Every time you make a debit or credit card purchase or receive a direct deposit, you get a box with a pre-assigned amount of cash in it. You don’t know the amount until it’s in your account.
Each box can have as much as 100% of the transaction or deposit amount in it — or nothing at all. Yotta isn’t totally transparent about how it sets box amounts, but it does provide app-wide data for the past 30 days.
According to the most recent figures available (as of early May 2023), about half of all debit and credit card transactions earned some amount of cash back. About 1% earned the full transaction amount, meaning the transaction cost nothing out of pocket. About 0.3% of direct deposits earned the full deposit amount, effectively doubling the winners’ paychecks.
Yotta Tickets (Prize Drawing Entries)
Tickets are the second way Yotta rewards users. Each ticket is a separate entry into Yotta’s daily prize drawing, which doles out prizes worth up to $1 million to multiple recipients.
Most winners earn far less — a few dollars at a time — but some earn hundreds, thousands, or even tens of thousands. Yotta keeps a running winners list with testimonials from actual big-money winners.
You get tickets for simple financial activities you already do regularly:
Making debit or credit card transactions
Receiving a direct deposit
Paying bills from your Yotta account
Making a one-time or recurring savings deposit
Like the contents of each Yotta Box, the number of tickets you receive for these actions varies seemingly at random. For example, you can earn up to twice the dollar value of debit and credit card transactions in tickets, but the average is lower — about 1.15 times the transaction value, according to Yotta. On a $100 purchase, that’s 115 tickets.
Prize Pools
Yotta’s prize pools feature lets users band together to combine their tickets ahead of each daily drawing. Each pool member’s prize share is proportional to the number of tickets they allocate to the pool. You can customize your allocation as you wish — reserving some tickets for yourself and the rest for the pool, or contributing them all to the pool.
Yotta allows public and private pools. Private pools are limited only to authorized participants, like members of your immediate family or a work group. Public pools are open to anyone with a unique invite code that any member is free to share.
Savings Buckets
Yotta offers savings subaccounts called buckets. You can set up as many as you wish, each with its own goal or purpose but all with the same basic features.
Transfer funds from your Yotta spending account or a linked external bank account to an individual bucket
Split inbound transfers between as many buckets as you wish
Transfer funds between buckets
Set up recurring transfers into one or more buckets
Lock individual buckets to prevent withdrawals before you reach your goal
Mobile Features
When it first came out, Yotta was only available as a mobile app, and the experience is still better on a mobile device. Notable mobile features include mobile check deposit and peer-to-peer payments using Yotta Pay.
Yotta Roadmap
The Yotta Roadmap is a social feature that takes feedback from users, incorporates that feedback into new Yotta features (or not), and provides a look ahead at new or updated Yotta capabilities. Yotta doesn’t incorporate every user suggestion it receives or provide total visibility into its operations, but it’s still far more transparent than your standard fintech app or bank account.
Advantages
Yotta is mobile-friendly and fun to use, and it offers multiple ways to earn valuable prizes for everyday financial activities.
No maintenance fee and only a token minimum balance. Yotta has no monthly maintenance fee. The only catch is that you need to keep at least $5 in your account, otherwise Yotta reserves the right to close it. That should be no sweat for most users.
Potential to win truly valuable prizes. Yotta offers the possibility, if not the guarantee, of earning far more in prizes and random cash back than you would with a traditional rewards credit card or savings account. The daily prize jackpot is $1 million, though most winners receive a small fraction of that.
Prize pools boost winning odds. Just like pooling cash to buy lottery tickets with friends, family, or colleagues, Yotta’s prize pools increase members’ odds of winning something in each drawing. Even if you don’t win, it makes the experience more fun.
Partial transparency around prizes and winners. Yotta’s ticket allocations, box amounts, and prize drawing process are proprietary. Ordinary users have no visibility into them. But to its credit, Yotta does keep a running list of prize winners, ticket allocations, and box amounts. This builds confidence and ensures you have at least some idea of what you’re getting into.
Users have a say in Yotta’s future plans. The Yotta Roadmap is another social feature that gives users the sense that they have a stake in Yotta’s future. Even if you have no big ideas for Yotta, seeing its future (and already executed) plans mapped out is super-useful (though not all are guaranteed to come to fruition).
Mobile-first approach. Yotta is a mobile-first platform. Its mobile app came out before its desktop version, and it still looks better on a small screen. That’s good news for anyone who does some or all of their banking on the go.
Secured credit card can build credit at lower cost and risk. With no interest or fees and an automatic payment process, Yotta’s secured credit card is legitimately innovative — and consumer-friendly. If your credit needs work, it’s a good place to start.
Disadvantages
Yotta has a few important disadvantages, some of which might not be obvious to would-be applicants.
Lower yields than the top savings accounts. Yotta says its average annual savings reward works out to 2.70% APY. Basically, this is what you can expect to earn, combined, from Yotta prizes and instant cash. While better than the big banks, it’s not up to par with current yields on the best high-yield savings accounts.
Earnings aren’t predictable. Because they’re random prizes and cash rewards, Yotta account earnings aren’t as predictable as fixed interest or rewards rates. There’s no reliable way to calculate your monthly earnings in advance, as is the case with a traditional bank account or credit card.
Not all debit card and credit card purchases earn rewards. Another downside to Yotta’s rewards structure is that about half of all debit and credit card purchases earn no rewards at all. If you use your account only occasionally, you could go days or weeks without earning any cash or prizes.
How Yotta Stacks Up
Yotta is markedly different from traditional bank accounts and even most new fintech apps, but it still competes against them. Before you open an account, see how it compares to another popular mobile money management platform: Current.
Yotta
Current
Balance Requirement
$5 minimum
None
Monthly Fee
$0
$0
Yield
2.70% on average, but highly variable
4.00% APY on eligible balances
Spending Rewards
Variable, based on prize entries and instant cash
Up to 7x rewards on debit card purchases
Early Direct Deposit
Yes
Yes
Credit Card
Yes
No
Deposit Insurance
Yes, up to $250,000
Yes, up to $250,000
Final Word
Not all bank accounts are the same, but it can feel that way sometimes. That makes choosing your next bank account — or mobile money management app — a more difficult, overwhelming prospect.
Yotta is different. There’s no mistaking it for a traditional bank account, and its unusual prize-based rewards structure sets it apart from fintech apps that are otherwise quite innovative. If you’re looking for a truly novel banking experience that’s social, fun, and rewarding, it should be on your short list.
Then again, the same features that make Yotta so fun and interesting can also negatively impact your experience with it. It’s impossible to predict how much your balance or spending earns from month to month, and even by Yotta’s calculation, the expected annual return is lower than the best savings accounts. If you value predictability over serendipity, Yotta might not be right for you.
The Verdict
Our rating
Minimum Balance/Deposit: $5
Maximum Balance: None
Monthly Fee: $0
Rewards: Varies based on prize entries
Yield: 2.70% APY on average
Additional Benefits: Early direct deposit, mobile check deposit, secured credit card
Banking Services By: Evolve Bank & Trust, member FDIC
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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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.
Opening a certificate of deposit (CD) account is one way to save for short- or long-term financial goals. You can deposit money, then earn interest for a set term until the CD maturity date rolls around.
At that point, you’ll have to decide whether to continue saving or withdraw the money. Your bank may renew the CD automatically if you don’t specify what you’d like to do with the account.
Understanding CD maturity options (and there are several) can help you decide what to do with your savings once the term ends. Here, learn more about:
• What happens when a CD matures
• What you can do with your CD when it matures
• What to do if you miss the grace period to withdraw funds
• What are the tax implications when a CD matures
What Can I Do When My CD Matures?
A certificate of deposit is a time deposit account. That means you make an initial deposit which earns interest over a set maturity term. You’re typically not able to make additional deposits to your CD, though some banks offer what are known as add-on CDs that allow you to do so.
You are not supposed to withdraw any or all of the funds until the CD matures; you’ve committed to keeping your cash there. That’s why CDs may pay a higher annual percentage yield (APY) than a conventional savings account.
Early withdrawal can trigger penalties, though there are some penalty-free CDs available, typically at a lower interest rate.
So what happens when a CD matures? It largely depends on your preferences, but there are four main possibilities for handling a CD once it reaches maturity.
Deposit It Into a Different Bank Account
If your financial goals have changed or you’d just like more liquidity when it comes to your savings, you could deposit CD funds into a bank account. For example, savings accounts and money market accounts are two types of deposit accounts that can earn interest.
You might deposit funds at the same bank or at a different bank if you’re able to find a higher rate for savings accounts elsewhere. Or you may choose to put your CD savings into checking if you were saving for a specific purchase and the time has come to spend that money.
Quick Money 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.
Deposit It Into a New CD
Another option is to continue saving with a new CD. You might prefer a certificate of deposit vs. savings account if you know that you won’t need the money prior to the CD maturity date.
Otherwise, you could end up paying a CD withdrawal penalty, as noted above, if you need to break into the new CD before it matures. The penalty for withdrawing money from a CD early can vary from bank to bank but it could cause you to forfeit a significant portion of the interest earned.
Automatically Renew the CD
Banks can renew CDs automatically if the account owner doesn’t specify that they’d like to make a withdrawal at maturity. In that case, your initial deposit and the interest you’ve earned would be moved into a new CD that would begin a new maturity term of similar length. The interest rate might be different, however, if rates have increased or decreased since you initially opened the account.
Continuing to save in CDs (or a savings account) can keep your money safe. When accounts are held at a FDIC-member bank, they’re protected up to $250,000 per depositor, per account ownership type, per financial institution by the Federal Deposit Insurance Corporation. If you choose to have a CD at an insured credit union, NCUA (the National Credit Union Administration) will provide similar insurance. So if you’re wondering, “Can CDs lose money?” fear not. You can rest assured knowing your savings are covered.
A point worth noting: When you invest in CDs, their security can make them a good way to balance out your holdings. They can be a wise move if you have some funds in the stock market or other more volatile uninsured investments.
Withdraw CD Savings In Cash
A fourth option is to withdraw your CD savings in cash. That might make sense if you need the money to pay for a large purchase. For example, if you were using a CD to save money so you could buy a car, you might use the proceeds to cover the cost.
How Long Do I Have to Withdraw My CD?
Banks typically offer a grace period for CDs which allows you time to decide what you’d like to do with the money at maturity. The CD grace period is usually around 10 days (say, one to two weeks), and the clock starts ticking on the day the CD matures.
Your bank should notify you in advance that your CD maturity date is approaching so you have time to weigh your options. You may also be able to find your CD maturity date by logging in to your account or reviewing your account agreement.
It’s important to keep track of CD maturity dates, especially if you have multiple CDs with varying terms. For example, you might build a CD ladder that features five CDs with maturity terms spaced three, six, nine, 12 and 18 months apart. Being aware of the dates and grace periods can help you plan in advance which of the maturity options mentioned earlier you’d like to choose.
What Happens If I Miss the Grace Period to Withdraw?
Once the CD grace period window closes, you’ll generally have to wait until maturity to make a withdrawal. As mentioned, banks can impose an early withdrawal penalty if you take money from a CD ahead of schedule.
The penalty may be a flat fee, but it’s more common for the fee to be assessed as a certain number of days of interest. The longer the maturity term, the steeper the penalty usually ends up being. For example, you might have to pay three months’ worth of interest for withdrawing money early from a 6-month CD but that might get bumped up to a year’s worth for a 5-year CD.
There is one way to get around that. If your bank offers a no-penalty CD, you’d be able to withdraw money at any time during the maturity term without paying an early withdrawal fee. There is something of a trade-off, however, since no-penalty CDs typically offer lower interest rates than regular CDs.
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Things to Think About When Your CD Matures
If you have one or more CDs that are approaching maturity, it’s important to have a game plan when deciding what to do with them. Otherwise, you could end up locked in to a new CD which may not be what you want or need.
Here are a few things to consider when weighing your CD maturity options:
• Do I need the money right now?
• Could I get a better rate by moving the money to a new CD or savings account elsewhere?
• If I let the CD renew automatically, how much of a penalty would I pay if I decide to withdraw the money early later on?
• Would it make more sense to keep the money in a savings account so that it’s more accessible if I end up needing it?
• If I have multiple CDs in a CD ladder, does it make sense to roll the money into a new CD “rung” or use the funds for something else?
Thinking about your financial goals and your current needs can help you figure out which option might work best for your situation.
What Are the Tax Implications Once a CD Matures?
Here’s one more question you might have about CD maturity: Are CDs taxable? The short answer is yes. Interest earned from CDs is considered taxable interest income by the IRS if the amount exceeds $10. That rule applies whether the bank renews the CD, you deposit the money into a new CD or savings account yourself, or withdraw the money in cash. If you have a CD and it accrues more than $10 in interest, those earnings are taxable.
Your bank should send you a Form 1099-INT in January showing all the interest income earned from CDs (or other deposit accounts) for the previous year. You’ll need to hang onto this form since you’ll need it to file taxes. And if you’re tempted to just “forget” about reporting CD interest, remember that the bank sends a copy of your 1099-INT to the IRS, too.
The Takeaway
CDs can help you grow your money until you need to spend it. Assuming your goals line up with your CD maturity dates, that shouldn’t be an issue.
On the other hand, you might prefer to keep some of your money in a savings account so you have flexible access. When you open an account with SoFi, you can get Checking and Savings (and the ability to spend and stash your cash) in one convenient place. You’ll earn a competitive APY on balances, and you won’t pay any of the usual account fees. Those are two features that can really help your money grow and work harder for you!
Better banking is here with up to 4.20% APY on SoFi Checking and Savings.
FAQ
Which should you do when your CD matures?
When a CD matures, you can roll it into a new CD, deposit the funds into a savings account, allow the CD to renew, or withdraw the money in cash. The option that makes the most sense for you can depend on your financial goals and whether you have an immediate need for the money.
Do you have to pay taxes when your CD matures?
Interest earned on CDs is taxable. Your bank will issue you a Form 1099-INT in January showing the interest earned for the previous year. You’ll need to keep that form so you can report the interest earnings when you file your annual income tax return.
Are there penalties if you withdraw a CD early?
Banks can charge an early withdrawal penalty for taking money out of a CD before maturity. You may pay a flat fee or forfeit some of the interest earned. The amount of the penalty can vary by bank and by CD maturity term. Generally, the longer the maturity term, the higher the penalty ends up being.
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SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. SOBK0123019