American Express is notoriously secretive about the details of the Centurion Black Card. For many years, the company didn’t acknowledge the existence of the Black Card. And there’s some evidence that the card became a part of pop culture lore before becoming an actual product.
But today, the Centurion Card very much exists as a product for a select group of high net worth individuals willing to shell out a generous sum of money to carry perhaps the most exclusive credit card out there.
Here are 10 things we know about the AmEx Centurion Card.
1. The Centurion Black Card is invitation-only
You don’t get the Centurion Card by applying for it.
If you want to join the exclusive club of cardholders who carry the Centurion Black Card, you must get an invitation from AmEx. And a Centurion Card invitation isn’t something AmEx hands out lightly. While AmEx services over 100 million cardholders, there are estimates that AmEx only has 100,000 Centurion cardholders worldwide.
2. It will cost you $10,000 to get one
The Centurion Card carries a hefty initiation fee. Reports vary, but the most recent information is that AmEx charges $10,000 to become a Centurion member.
You might think paying a five-figure fee would be enough to grant you a lifetime of benefits, but not with the Centurion Card.
If you want to keep the card, you’ll have to shell out $5,000 per year. And that annual fee is not waived in the first year.
3. You can request a Centurion Card invite online
While the Centurion Black Card is invite-only, it is possible to request an invitation online. You must have an AmEx card to make the request. AmEx also clearly states that an invitation request does not mean you will receive an invitation.
4. You need to be a big spender to get a Centurion Black Card
It is widely accepted that you need to be a big spender for AmEx to give you a Centurion Card.
Reports on the internet range from requiring $250,000 to over a million dollars of annual spending. AmEx has not confirmed any specific spending requirements, and there’s no known threshold at which Platinum cardmembers receive an invitation.
While the exact amount you need to spend on your cards is a matter of speculation, you probably need to spend at least six figures annually on an AmEx card to get a Centurion Card.
5. Centurion Cardmembers still get to bring guests into the Centurion lounge
Centurion cardmembers didn’t suffer this cut and still retain expanded access. Centurion cardmembers may bring in two guests or immediate family members. Eligible immediate family members include a spouse, a domestic partner and children under 18.
6. The Centurion Black Card offers an unbelievable level of concierge service
For the multimillionaires and billionaires who carry the AmEx Centurion Card, probably the most helpful benefit is the Centurion concierge.
The concierge service offered on The Platinum Card® from American Express is limited to helping with travel reservations, getting event tickets, making restaurant reservations and fulfilling shopping requests. The concierge service offered by the Centurion Card offers seemingly unlimited service.
Centurion cardholders report using the Centurion concierge for things you might expect. One cardholder says that his concierge makes travel bookings considering his seat preferences based on the airline cabin configuration. His concierge also contacts hotels to inform them of the cardmember’s arrival time.
But Centurion concierges have also handled requests such as arranging elaborate tours, getting front-row tickets for in-demand concerts, locating personal items lost during travel and even arranging emergency evacuations.
For someone who might not have a full-time personal assistant, the Centurion concierge can offer an alternative.
Like many other things about the Centurion Black Card, the card’s perks are shrouded in secrecy. AmEx doesn’t provide much information about the card on its website and most reports about the card’s perks are based on third-hand accounts and speculation.
However, we have confirmed a partial list of benefits offered to Centurion cardmembers. Here are some of these exclusive benefits:
An auto program that allows cardmembers to anonymously negotiate prices on luxury automobile purchases through a members-only website.
Global chef partnerships, which grant access to daily table reservations at fine dining restaurants around the world.
Exclusive seating in ticket blocks reserved for Centurion cardholders at many major events worldwide.
Various onboard credits, excursion credits and vouchers are available exclusively to Centurion cardmembers through Centurion Cruise Partners.
Private jet arrangements can be made for Centurion cardholders through the AmEx Private Jet program.
8. Yes, you can buy a mansion or a private jet on a Centurion Card
Like many aspects of the Centurion Black Card, the card’s purchasing power has been the subject of much speculation. The card offers no preset limit, but how far does that go? While there are no credible reports of someone buying a Gulfstream or even a Cessna Citation (private jet) with a Centurion Card, the card has been used for some substantial purchases.
In 2015, The New York Times reported that Chinese billionaire Liu Yiqian purchased a Modigliani painting at Christie’s auction house in New York. The price? $170.4 million. If you can put a $170 million painting on an AmEx card, why not a jet or a mansion?
9. You can get many of the Centurion Card’s perks from The Platinum Card® from American Express
Many of the perks offered by the AmEx Centurion Card can be had with The Platinum Card® from American Express, a card that carries a much more affordable $695 annual fee compared to its counterpart. Here are some of the perks that the Centurion Card shares with The Platinum Card® from American Express:
The Global Lounge Collection grants access to 1,400 airport lounges across 140 countries.
The AmEx International Airline Program offers preferred airfares with participating airlines.
Presale ticket access.
And just like The Platinum Card® from American Express, the Centurion Card earns Membership Rewards, which can be transferred to any of AmEx’s transfer partners.
Terms apply.
10. You can get better rewards on many other cards
The AmEx Centurion Card isn’t the card to get if you want to earn the maximum rewards on your spending. And even if it were, you’d have to chase a lot of category spending to compensate for the card’s annual fee.
If you’re looking for generous rewards on your spending, consider a card that earns 2% cash back on all purchases. Many of these cards have no annual fee.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
There’s nothing I like more than writing my annual checks for all my insurance protection…cough.
Not including my long-term disability policy, my $2.5 million 30 year term policy, standard homeowner’s and auto policies, and personal umbrella policy; I pay roughly $5,124 per year for my total business insurance coverage.
But we all know that insurance is a necessary evil.
When you damage someone else’s property or cause injury to someone else, you are usually held personally liable for the costs.
This means that you have to pay restitution.
In some cases, these costs can exceed your ability to pay. That is not a good situation!
With the help of personal liability insurance, though, it is usually possible to meet these types of obligations.
Personal liability insurance is a completely different ballgame from life insurance.
What is Personal Liability Coverage?
Chances are that you already have some liability coverage. Most homeowners policies and auto policies include a certain amount of personal liability coverage.
If someone is injured at your home, or if you ruin someone’s property with your car, the insurance company pays the claims, up to the amount that you are covered for.
Personal liability coverage helps you protect your assets since the insurance company pays out the claim, and you don’t have to dip into your savings, or into your other assets.
However, the personal liability coverage that comes with your more common insurance coverage isn’t always enough.
Consider Umbrella Insurance
One way to augment your personal liability coverage is to purchase an umbrella policy.
Umbrella insurance protects you in larger amounts than what is usually offered with your other policies, but the premium increase isn’t as bad.
You can usually buy a popular umbrella coverage amount for about $150 a year, and an increase of $50 for each additional $1 million. Many consumers find that boosting the deductible on auto or home insurance can offset the cost of umbrella insurance.
If you have factors that increase your chances of damaging property or injuring others, it can be worth it to get umbrella insurance — especially if you have a high net worth.
Someone who knows you have more assets might be more willing to sue you for $2 million after a slip and fall at your home. Umbrella coverage kicks in after your regular insurance is tapped out.
So, if your homeowner’s policy has $750,000 in liability coverage, and you have $3 million in umbrella insurance if you are sued for $2 million, your homeowner’s policy will be tapped first.
Once the $750,000 has been paid out, the remaining $1.25 million will be paid from your umbrella policy.
We initially started with a $1m umbrella policy but recently increased that to $2m of total coverage. I also have an umbrella policy for my business, too.
Errors and Omissions
When you are self-employed, you have to be aware of some of the liability issues that can come with your job.
If a client holds you responsible for a service you provided, or if the promised results were not realized, or if you are considered liable for a service you didn’t provide, this can become an issue.
Financial planners, lawyers, cosmetologists, and others who are in positions to provide advice and some services to clients can benefit from this type of liability insurance.
This is my whopper of a premium, but with my profession; it’s a necessity. My total premium is $3,654 per year for E&O coverage…gulp.
Some additional benefits that my E&O coverage policy covers on top of the $1m of coverage are:
Business travel Accidental Death Benefit: $25,000
Emergency Real Estate Consulting Fee: $25,000
Identity Theft Expense: $25,000
Key Individual Replacement Expense: $25,000
Kidnap Expense: $25,000
Theft of Work Materials: $2,500
Should You Buy Personal Liability Insurance?
Make sure you consider your situation and your position. If it appears that you could be sued for what you have done, it’s important to make sure that you have the proper liability insurance.
That way, you will protect your assets, and avoid financial ruin if you are held liable for someone else’s injury, loss, or property damage.
Once considered something of a novelty for agents, Instagram has emerged as one of the best ways to market properties. With a combination of creativity, diligence, and the successful application of Instagram know how, the following group of successful real estate gurus show the 86 percent of the industry not yet sold on Instagram, how business gets done. If you’re in the industry, Instagram is the perfect platform to show off your listings and your competency too. Pay close attention to the excellent leadership of the following companies.
The Agency
The Beverly Hills luxury lifestyle and luxury real estate brokers, The Agency just inspire. That’s all there is to it. Looking through their shares on Instagram I know I would pick from their listings if I had the millions it takes to buy one of these properties. 192,000 fans prove I am not the only one inspired. 38,000 plus likes on the following share punctuate my point.
Dusty Baker
This young and energetic California real estate pro is another social media phenom who understands how to engage with a personal touch. With just over 14,000 followers Dusty is not breaking any internet meme contests, but the fans he does have are engaged by family images and that special touch that makes people feel comfortable online or at an open house. Check it out when Dusty shares he and his wife’s happiest moments.
Cindy Ambuehl
Actress turned stunning Los Angeles real estate guru, Cindy Ambuehl has 41,500 fans on Instagram. Like other successful agents on social media, she understands the power of authenticity when she shares personal moments with her, her husband @DonDiamont and their 7 boys. I guess I should mention that Cindy works with The Agency too – maybe there is some correlation of excellence in social media there?
Chad Carroll
South Florida’s Chad Carroll is another superstar of Instagram for real estate dealing. Chad has a whopping 509k followers who check their feeds for the coolest properties on Instagram. This guy has not only sold $1.5 billion worth of luxurious properties, but he is also at the top of the South Florida food chain among agents. The share below now has almost 13,000 likes. Bravo Chad!
Douglas Elliman Real Estate
Douglas Elliman powers his Instagram dominance with gorgeous photos of some of America’s most amazing properties. This all-star has a powerful Instagram army numbering over 120,000. The property-gram from the Hamptons below tells the tale.
#Hamptons or #Florida? Which beach view do you prefer? Comment 1 or 2 below ? 1️⃣ In the #Hamptons, discover 25 Potato Road Sagaponack South, New York, a 6 beds, 5.5 baths ultra-luxe modern oceanfront residence listed for $29,995,000 by Justin Agnello and James Keogh at The Atlantic Team, and @erica0305g. This home is an exceptional balance of California beach chic and sophisticated modern design. #EllimanHamptons 2️⃣ In #Surfside Florida, explore 9001 Collins, S-1003, a 4 beds, 4.5 baths home at the #FourSeasonsResidences @thesurfclubmiamibeach listed for $12,995,000 by @pabloalfarorealestate. Enjoy the best of both views with a very ample oceanfront terrace and sunset/skyline views. #EllimanFlorida
Ein Beitrag geteilt von Douglas Elliman Real Estate (@douglaselliman) am Feb 19, 2019 um 10:19 PST
Fredrik Eklund
This bestselling author and star of Bravo’s MDLNY seems to doing everything right. His 1.1 million fans on Instagram attest to his influence and the quilty of his engagement. I feel bad putting two superstars from the same New York area in this roundup, but the fact Eklund works with Douglas Elliman does not detract from the level of expertise needed to attract leads on Instagram. Let me put it this way, if you have celebrity influence in any business, you’re well advised to use it where appropriate. This share with nearly 30,000 likes makes my point.
Shawn Elliott
One of the most popular Instagram followings out there belongs to Shawn Elliott, one of Long Island’s and America’s most successful luxury real estate pros. The Managing Director of Nest Seekers Ultra Luxury Division, Shawn has 31,200 followers as of this writing. The real power of his “gramming” is not about following alone. Shawn has a rare grasp of imagery and the way potential buyers perceive value and beauty. The real estate pro also knows how to engage without boring his following to death. The account is about more than business, which is what differentiates social media gurus from hard selling encyclopedia salesmen. Here’s Shawn with a familiar face from the movies.
Luis Iglesias
Instagram accounts that feature awe-inspiring photography have a distinct advantage. Luis Iglesias Group has forged this reality into one of the most alluring sales tools on Instagram. The close to 95,000 fans of this account get to feast their eyes on photographic candy equal to any Hollywood studio account. Check out how this Miami real estate boss melds stunning imagery with compelling texts to beckon his clients hither. Amazing. Take note and the lesson here. Social media management at this level does not come cheap, and I should know. Iglesias is backing his investment with this account.
Matthew Sweat
This Keller Williams pro in Lake Tahoe has melded his skills as a photographer and sales agent into a compelling Instagram effort worthy of mention. Though Sweat has less than 5,000 followers, the quality of his shares are incomparable.
Toll Brothers
Many do not consider America’s most admired home builders to be a real estate company, but for my money they take the American dream a step farther. This Fortune 500 company is consistently ranked the number 1 homebuilder in the world. And with nearly 90,000 fans on Instagram, it’s clear the company knows a thing or two about media. I cannot help but mention how high net worth individuals would seem to benefit from creating their lavish dreams from the ground up. Take a look at this home.
A last note on Instagram for those of you who are agents. Building trust via your social media prowess is a proven winning strategy now. With most agencies only paying lip service to Instagram and other platforms, forward thinkers like the agents mentioned can get a leg up on the competition. If your business is important to you, we can only recommend you emulate the most successful professionals like the ones illustrated here. Excellence in business is not new under the sun, and copying what these superstars do seems like child’s play for me.
Phil Butler is a former engineer, contractor, and telecommunications professional who is editor of several influential online media outlets including part owner of Pamil Visions with wife Mihaela. Phil began his digital ramblings via several of the world’s most noted tech blogs, at the advent of blogging as a form of journalistic license. Phil is currently top interviewer, and journalist at Realty Biz News.
Houston, Texas, one of the major metropolitan areas in the United States, has no shortage of financial advisors. But which ones are worth the money? Sincehiring a financial planner can be a major expense, you want to pick the right match.
Get Matched with 5-Star Rated Financial Advisors in Your Area
I looked for financial advisors who have a solid reputation for putting their clients’ interests first, and who value building a long-term relationship with clients (think from your twenties and thirties until your retirement). Here’s who made the grade.
What’s Ahead:
Overview of the best financial advisors in Houston
Linscomb & Williams
Contact – (713) 840-1000.
Services offered – Investment management, tax savings, retirement preparation, business and solo entrepreneurial consulting, sstate planning, wealth management, and more.
Asset requirements – Clients need at least $1 million in investable assets. This is a pretty high bar to entry, but the firm claims a diverse group of clients, including individuals without a high net worth.
Typical fees – A fee-only firm, You’ll pay a 1% annual all-inclusive fee for accounts with assets under $2 million. (If you hit $2 million and above, your fee drops to a smaller percentage.)
With over 40 years’ experience, Linscomb & Williams is one of the most well-respected firms in Houston. It has satellite locations in Austin and Fredericksburg, Texas, as well as three offices in Alabama.
Their staff boasts 23 financial advisors, including several who specialize in wealth management.
Like all the firms on this list, Linscomb & Williams is a Registered Investment Advisor (RIA) with the Securities and Exchange Commission.
Asset requirements – There’s no minimum asset requirement, but there is an account minimum of $375,000.
Typical fees – Chilton is a fee-only firm charging an annual 1% of managed assets (for accounts under $4 million) and taking no commissions.
Chilton Capital Management has offered financial literacy, planning, and investment services since 1996. Best of all, clients don’t have to be literal millionaires: Chilton Capital is the rare fee-only firm with no minimum assets required.
Thesmall but very well-credentialed staff includes three CFPs and seven chartered financial analysts (CFAs). Vice President Michael J. Stavar is a certified public accountant (CPA).
Asset requirements – A preferred $1 million account minimum, including assets.
Typical fees – Fee-only firm, $3,500 initial planning fee (waived if you sign on as a client), Fees start at 1.25% for the first $500,000 and drop to 1% for the next $500,000. Hourly rates for consultations ranging from $150-$350 an hour.
Established in 1999, Horizon Advisors works with partner CPA accounting firm Maddox Thomson & Associates to meet all your planning and tax needs.
They’re known for a personal approach with a low 1:54 advisor to client ratio (many advisors at other firms see hundreds of clients).
You’ll work with well-practiced advisors — two of whom, including firm president Larry Maddox, are CFPs. Other Horizon Advisors staff members boast CPA and chartered financial analyst (CFA) credentials.
Tanglewood Total Wealth Management
Contact – (713) 840-8880.
Services offered – Wealth management plan, which covers everything from the basics — retirement, asset protection, taxes, college funds if you need them — to small business financing and long-term disability risk management.
Asset requirements – $2 million ($3 million for those who want portfolio management without financial advice).
Typical fees – 0.60% annually for the first $3,000,000 and 0.35% for the next $17,000,000. The minimum annual fee is around $12,000.
Tanglewood Total Wealth Management describes their clientele as the “quietly wealthy.” If you own a business, have an inheritance to manage, have a lucrative career, or are otherwise negotiating “more money, more problems” Tanglewood has you in mind. With a hefty $2 million account minimum, Tanglewood is best for people further along on their journey to building wealth.
The staff includes six CFPs and one CFA. President John Merrill, a veteran CFP, is also known as a leader among Registered Investment Advisors (RIAs).
Asset requirements – Typical client has $1M+, but no hard set minimum.
Typical fees – Fee-only, Minimum annual charge of $5,000 — more than 2.5% of investable assets for clients with balances under $200,000.
The Financial Advisory Group, Inc. has been around since 1997. It’s on the smaller side, which isn’t a bad thing — fewer clients mean advisors can spend more time customizing your plan. Both the chairman and CEO are registered with the National Association of Personal Financial Advisors, as are most of the advisors on staff.
The Financial Advisory Group’s advisor qualifications include four CFPs, two CPAs, one CFP (Certified Financial Planner), and one JD (juris doctor, a law degree). You can expect expertise in accounting and law as well as finance and investment, though the Financial Advisory Group emphasizes it isn’t a formal CPA or legal firm.
Asset requirements – Investors need a minimum of $500,000 to $1 million in assets.
Typical fees – For investment management, you’ll pay 1.25% on the first $2 million in assets, then 1% on the next $3 million. The minimum annual fee is $5,000 regardless of account size.
The Goff Financial Group emphasizes “value investing.” Founded in 1994, they’re fairly new on the scene but they’ve already won a Better Business Bureau award for excellence.
Senior management at Goff includes a Certified Investment Management Analyst (CIMA) and a CFP. Founder Matthew Goff is a NAPFA-registered financial advisor. The firm is also a Registered Investment Advisor (RIA) with a fiduciary responsibility to clients.
Asset requirements – Requires $1 million in assets. Clients using the Pathway program only need $50,000 (not including a company retirement plan if they have one).
Typical fees – Fee-only, Pathway clients pay a modest $79 per month for accounts under $100,000, clients with over $100,000 in assets pay a percentage of their assets: 0.95% up to the first $1 million. Clients with higher starting balances will pay between 0.75% to 1.50% of total assets.
Financial Synergies Wealth Advisors is one company that welcomes younger investors, whether they’re maintaining individual accounts or building wealth for their families. The firm also specializes in working with professionals in the oil and gas industries, both booming in Houston.
It’s been recognized for excellent wealth management by the Financial Times and the Houston Business Journal.
Each financial advisor on staff is a CFP. The firm also has a certified divorce financial analyst (CDFA) and certified fund specialist (CFS) for those who need specialized plans. Individual advisors maintain NAPFA registrations in good standing.
Summary of the best advisors in Houston
Firm
Services offered
Primary clientele
Linscomb & Williams
Investment management, tax savings, retirement preparation, business and solo entrepreneurial consulting, estate planning, wealth management, and more.
Young people just starting their high-earning careers and those with modest assets.
Those looking to start their financial journey on strong footing, young people without a lot of assets.
Horizon Advisors
Financial planning, tax planning, specializes in unusual tax situations.
Those searching for a more personal experience and people with reasonable assets.
Tanglewood Total Wealth Management
Wealth management plan, which covers everything from the basics — retirement, asset protection, taxes, college funds if you need them — to small business financing and long-term disability risk management.
High-earners searching for help with all aspects of their finances.
Young professionals who don’t have a lot of assets, but want to learn how to grow them.
How I came up with this list
Out of hundreds of financial advisory firms in Houston, these firms stood out because of their solid reputations and reviews. They also hit a few key benchmarks you should look for in any advisor.
They’re Registered Investment Advisors (RIAs)
At a minimum, I wanted to pick firms that are Registered Investment Advisors (RIAs) with professionals who are Investment Advisor Representatives (IARs). All RIA firms are financial fiduciaries, which means their advisors are legally obligated to act in your best interest rather than their own.
They’re fee-only
Fee-only advisors earn nothing but the money clients pay them. These costs might be an hourly rate, a flat fee, or a percentage (usually between 1% and 2%) of your managed assets. They don’t get commissions or financial incentives for recommending certain investment products.
This is the kind of advisor you want — since they don’t have conflicts of interest, their only motivation is to make the best decisions for you. A firm that also operates as an attorney or insurance broker, or earns commissions by selling products and services, might steer clients towards choices that would increase the firm’s profits.
Their advisors have top credentials
The most common individual credential isCertified Financial Planner (CFP) which requires specific economic education, three years’ experience, and continuing education every two years as the industry changes. AChartered Financial Analyst (CFA), another common designation, needs four years’ experience making investment decisions.
A NAPFA membership is also a good sign since NAPFA has strict ongoing regulations and all their advisors are fee-only.
They’re trusted by industry insiders
The financial advisory industry is heavily regulated; clients trust advisors to handle their life savings, so they need the most qualified people on the job.
Aside from reading objective reviews, I looked up each firm and its principal staff members on a few watchdog sites: theInvestment Advisor Public Disclosure database run by the SEC, and the independent search engineinvestor.com. Both sites screen for possible conflicts of interest and track whether an advisor has any disclosures, or complaints, on their record.
What questions should you ask a financial advisor?
Who are your typical clients?
You want a skilled advisor, and just as importantly, you want a good match. I wanted to find firms that will work with young professionals despite the high financial bar to entry. If a firm’s clientele is mostly mid-career executives and people ready for retirement, they may not be the best fit for a recent college grad starting to save for retirement.
How do you usually communicate with clients, and how often?
Maybe you’re content with quarterly reports on your investments and annual check-ins. Or maybe you want an advisor available by email or phone whenever you have a question. Get a sense of how regularly your planner will be available outside of any scheduled chats.
What’s your investment philosophy? What asset allocation do you use?
A good advisor will have a clear answer, including their plan to diversify your portfolio and increase returns.
How are you compensated? Do you collect any commissions for investment products?
Your advisor should be compensated with fees only, not commissions. Otherwise, they may guide you towards investment choices that will earn them money or boost their sales.
Who has custody of my assets?
Reputable financial advisors don’t actually have contact with your assets. Instead, they’ll trust client assets to a “custodian”—a larger brokerage, often a big name like Charles Schwab or Fidelity.
What are the costs of hiring a financial advisor?
Almost all advisors offer an initial free consultation (in-person or via phone) where you’ll discuss what you’re looking for.
If you decide to work together, your annual fee will most likely be a percentage of your assets under the firm’s management. A charge between 1% and 2% of total assets is the industry standard. For instance, if your advisor charges a 1% fee and you entrust $500,000 in assets to the firm, your fee is $5000 a year or around $417 a month. As your assets climb higher, you’ll pay a smaller percentage.
Some firms charge an hourly rate instead of an asset-based rate for working with advisors, usually between $200 and $500 an hour.
Summary
Whether you’re exploring the idea of hiring a financial planner in Houston or you’re ready to commit, use this list as a jumping-off point. Non-Texas residents should give these firms a look too, since many are licensed or have offices in other states.
Efficiency, Fulfillment, Correspondent Products; Offices Into Housing; Capital Markets
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Efficiency, Fulfillment, Correspondent Products; Offices Into Housing; Capital Markets
By: Rob Chrisman
Mon, Jul 17 2023, 10:25 AM
I am often asked about the jumbo segment of our business. Frankly, aside from the coasts and a couple cities in-between, much of the nation is not overly concerned with it. Paying $1 million or more for a house may seem excessive to most Americans, although that doesn’t mean million-dollar homes aren’t prevalent in some parts of the U.S. Per LendingTree, only an average of 6.68 percent of owner-occupied homes in the nation’s 50 largest metros in 2021 were valued at $1 million or more. The share of million-dollar homes has grown: That’s up from an average of just 4.71 percent of owner-occupied homes in the nation’s 50 largest metros in 2020. San Jose (66.3 percent) and San Francisco, CA (52.9 percent) have the largest share of million-dollar homes, the only two cities where most homes are worth at least $1 million. Including San Jose and San Francisco, the four metros with the highest percentage of million-dollar homes are in California. Only four metros (Buffalo, NY, Cleveland, Pittsburgh and Louisville, KY) have fewer than 1.00 percent of owner-occupied homes valued at $1 million or more. (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. To experience how Richey May can help you transform your mortgage business, visit richeymay.com. Hear an interview with Richey May’s Nathan Lee on outsourcing considerations and changing fixed costs into variable costs.)
Lender and Broker Software, Services, and Products
“Citi Correspondent Lending remains dedicated to serving diverse markets as well as continued responsible, sustainable growth. With a growing product suite that includes our new HomeRun program (no MI, up to 97% LTV and as little as 1% borrower down payment contribution required), a robust set of CRA pricing incentives and a quality-focused pre-purchase loan review process, Citi is well positioned to help you grow your business. Complete our Prospective Correspondent Questionnaire or request an appointment to talk with a Citi Account Executive at the Western Secondary Conference next month. We would welcome the opportunity to chat with you about all that Citi Correspondent Lending has to offer.”
If you’re looking for ways to squeeze every dollar out of each loan transaction, check out Computershare Loan Services (CLS). You can turn your fixed costs into variable expenses by outsourcing your processing, underwriting, and closing to CLS’ originations fulfillment team. They maintain top-tier POS, LOS technology, and a robust compliance program that keep you one step ahead. CLS’ money-saving solutions continue! Membership in their mortgage cooperative gives you exclusive access to negotiated pricing on commonly used mortgage services like VOI, flood determination, and trailing doc solutions. They do the hard work, uncovering best-in-class services that positively impact lenders. You’re one call away from savings that could dramatically improve your bottom line. Contact Computershare Loan Services today.
Blend has always put borrowers at the forefront of their mortgage products. KeyBank, a regional bank that’s been around for nearly 200 years, knows that customers are the backbone of their business too. And with modern mortgage expectations, they needed a modern mortgage solution. Learn how KeyBank’s partnership with Blend improved their NPS scores, operational efficiency, and LO adoption in this case study.
Sleep in Your Office? What About the Vacant Homes Conspiracy?
Before “van life” people would occasionally sleep in their offices. But what about making the office into a place to sleep?
There’s an anomaly facing major cities in the U.S.: many office buildings are empty while housing is in short supply. There has been a lot of talk of simply converting large offices into more apartments, but it’s much more difficult than it seems. Conversions are possible, but real estate developers face a variety of physical, regulatory, and financial constraints. Zoning restrictions and regulations restrict alterations and limit the scope for office-to-residential conversions. Structural complexity and code requirements mean that not all buildings are conducive for repurposing (e.g., ceiling height, access to lighting, plumbing considerations, etc.), and many structures have to be reinforced with more steel. Repurposing is often an expensive process that comes on top of initial acquisition costs, and ultimately will not save or make any money.
High costs require high rents to offset, meaning that most office conversions tend to cater to the luxury segment of the market and won’t help to alleviate a shortage of affordable housing in the city. Finally, as the status of remote work remains in flux, there’s a big question mark over the desirability of these conversion projects in the first place.
While we’re talking about inventory solutions, Chris Maloney with BOKF had some recent thoughts on people who look at the level of vacant single-family homes “that are, to them, evidence of a nefarious plot by speculators to hold supply off the market, drive prices higher and then sell at an even greater profit.” “There are a number of problems with this viewpoint, the most evident being that the total of vacant houses in these United States is currently far below its historic average.
“Except that of the 145 million or so housing units in the country, only about 15.1 million (or 10.4 percent of total housing stock) are vacant, which if it were proportionate to what the average has been this millennium (12.7 percent of total housing stock) would mean we’d have about 3.3 million more vacant homes than we currently see. The supply of vacant homes, like everything else in the housing market, is scarce. And of the 15 million housing units that are vacant, the Census Bureau number crunchers estimate only about 3.6 million fall into the ‘other’ category where speculators reside, and of that 3.6 million only about 227,000 fall into a sub-category (such as “preparing to rent/sell”) which points to the unit being readied for a near-term sale.
“Bottom line, it does not appear (at the national level) that speculators holding homes off the market, waiting for a better selling point, are the cause of the housing crisis. Of course, an institutional investor can concentrate its fiscal firepower onto specific areas, but even if they do the question here comes down to private property. If someone buys a home and wishes to take the risk of holding it off the market until they decide it’s the right time to sell, that is their right as it is their house, not society’s.” Thank you, Chris.
Capital Markets
Where to start with last week? Upbeat quarterly earnings reports on Friday from three of the largest U.S. banks capped a week in which almost everything rallied in markets. JPMorgan Chase, Citigroup, and Wells Fargo all reported above-consensus results to kick off the Q2 earnings season. However, the main economic headline over the last week was the continued deceleration in inflation, as core CPI was below 5 percent for the first time since November 2021. Consumer prices rose 0.2 percent in June and core CPI increased 4.8 percent from one year ago as durable and nondurable goods saw price declines. U.S. inflation is down from its peak of 8.9 percent, and suddenly “disinflation” is the buzzword on trading desks.
While the lower inflation numbers were welcomed by the markets, the Fed is still expected to increase the federal funds target following its next meeting on July 26. The committee is likely to feel validated that tighter monetary policy is slowing inflation while economic growth has not turned negative. Housing costs may continue to be a headwind in the Fed’s fight to get back to 2 percent inflation as higher interest rates not only reduced demand as intended but have also severely limited supply which has buoyed home prices. For those thinking that the Fed is done hiking rates, Fed Governor Waller said on Friday that he expects two more rate hikes this year.
This week kicks off with a limited calendar that consists of just NY Fed manufacturing for July. Data and supply pick up over the remainder of the week and include June retail sales, June industrial production/capacity utilization, May business inventories, and July homebuilder sentiment tomorrow, June housing starts and permits on Wednesday, and July Philly Fed manufacturing, June existing home sales, June leading indicators, and $17 billion in new 10-year TIPS on Thursday. After the 10-year U.S. Treasury yield dropped 23 basis points over the course of last week to 3.82 percent, in the early going to start the week, Agency MBS prices are better about .125 versus Friday, the 10-year is yielding 3.78, and the 2-year is 4.72.
Employment
Black Knight is hiring an MSR Account Manager in its Optimal Blue division. This person will be responsible for helping clients with strategies related to mortgage servicing rights valuation and hedging, whole loan valuations, and more through the employment of industry-leading, proprietary analytics. This position is available in Chevy Chase, Md., Denver, Colo., and San Francisco, Calif. For more details on this role, contact Betsy Meek. In addition, Black Knight is always looking for talent across many roles. Visit BlackKnightInc.com/Careers for a full listing of all open positions.
Recently named by Euromoney.com as the Best U.S. Super Regional Bank in 2023, Citizens is garnering attention for its clear vision, strong leadership and disciplined execution. With the recent strategic acquisitions of HSBC branches and Investors Bancorp., making it geographically complete, Citizens is looking for talented salespeople (managers, loan officers, account representatives) in all three mortgage lines of business – Retail, Wholesale and Correspondent businesses throughout the Northeast, MidAtlantic, Midwest and Florida. Our deep product mix allows us to help many different loan needs, from affordable loan programs such as HomeReady to a best-in-class one-time close construction to permanent product, Citizens has what you need to succeed. Our specialty loan programs such as condo/co-op financing, rate protection programs with extended rate locks, along with an amazing Private Wealth discount value proposition for high net worth banking clients, ensures you have all the tools to win in this challenging market. To learn more, contact Sean Reilly or visit here.
Nations Lending continues growth, expanded opportunities for producers! Nations Lending is continuing its growth with multiple in-house product offerings, creating a world of opportunities for its origination team nationwide. The company’s dedication to servicing almost all its agency business and its licensure in all 50 states highlights its commitment to building the businesses of its loan officers. This proves true with the expansion of its recent product offerings: RIO and ACE. RIO is the company’s DSCR product (underwritten in-house), which eliminates proof of employment or income verification, services LLCs, and caters to short-term rentals. With ACE, borrowers complete their loan application and receive financing approval before initiating the homebuying process, varying largely from traditional pre-approval methods. Corey Caster, EVP of National Production says, “We know the headwinds originators are faced with today and our goal is to give them as much ammunition as possible. Every day our Leadership Team is focused on how we can improve our platform.”
“At Guaranteed Rate Affinity we believe our loan officers need the perfect combination of technology and human touch to succeed in this market. Not only are we a fintech organization but we focus on memorable experiences to drive loan officers’ personal branding. We have a dedicated events team to support our loan officers in the creation of these experiences that will leave a lasting impact. Build your business by leveraging the power of events to make connections and partnerships organically and stay top of mind in your community. Your Events Coordinator will take care of everything from start to finish, all you have to do is host your referral partners and clients. Learn more about what sets us apart. Contact Tim McGraw to get started.”
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how to avoid overspending on investing and brokerage fees, and get smart about how to choose a financial advisor.
Today’s First Money Question: Investing Nerd Alana Benson joins Sean Pyles and Liz Weston to demystify brokerage fees and how you can reduce them. They discusses the types of brokerage fees and how they can impact your investments.
Today’s Second Money Question: The Nerds walk through the process of choosing the right financial advisor for your needs. They explain the qualifications and expertise of various financial advisors and what to consider when selecting one, including how to spot red flags. They also discuss the importance of estate planning and power of attorney, and they offer ideas for how you can manage your money independently if you prefer a DIY approach.
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Episode transcript
Liz Weston: Sean, what’s your favorite part about working with a financial planner?
Sean Pyles: Well, I always love having another set of eyes to check my work. And my financial advisor has shown me financial opportunities that I didn’t know that I had, which was a nice surprise. What about you, Liz?
Liz Weston: Oh, check my work. I love that. That’s it exactly. I am a certified financial planner, but I still want another CFP looking over my shoulder. For one thing, she has access to more powerful financial planning software than I do. And I also like it that if something happens to me, my husband has somewhere to turn to get his answers.
Sean Pyles: Nice. So, listener, today we’ll tell you a few things that you might want to consider if you are in the market for a financial advisor, but first we’ll answer a listener’s question about brokerage fees. Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Liz Weston: And I’m Liz Weston. This month we’re bringing back some of our most popular money tips from the past couple years, and today’s theme is investing.
Sean Pyles: We’ll answer two timeless listener questions. First, how do brokerage fees work? And second, what might you want to consider when you’re choosing a financial advisor?
Liz Weston: And listener, if you’ve used any of our tips or tricks when choosing a financial advisor, then please let us know. We’d love to hear your story. Leave us a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-NERD, or email a voice memo to [email protected]
Sean Pyles: OK, on with the show. This episode’s money question comes from our listener’s voicemail. Here it is.
Danny: Hi, this is Danny in Fort Worth, Texas. I was curious about fees paid on investments like mutual funds and ETFs, things like expense ratio, commissions, et cetera. How do they work and how closely should an average investor be watching the fees on their 401(k), taxable brokerage accounts or other investment vehicles? Thanks so much.
Liz Weston: To help us answer Danny’s question, on this episode of the podcast, we’re joined by investing Nerd Alana Benson. Welcome back to the podcast, Alana.
Alana Benson: Hey, guys.
Sean Pyles: Hey, before I throw a bunch of questions at you, Alana, we have to get one thing out of the way, a brief disclaimer, and that is that we are not investment advisors and will not tell you what to do with your money. All that we are about to discuss is for educational purposes. So OK, with that done, Alana, our listener Danny is primarily concerned with something called brokerage fees. Both trade commissions and expense ratios are forms of brokerage fees, but there are others, too. Can you start off by explaining what brokerage fees are at a high level?
Alana Benson: So brokerage fees can be a lot of things. They’re essentially fees that are charged by your brokerage and other investment companies for everything from making a stock trade, to closing your account. And there are even fees for premium research tools or investing data, but the important thing is that some of these fees you can avoid and some you just can’t.
Liz Weston: Let’s break down the different fees paid on investment accounts.
Alana Benson: OK, so trade commissions: This is about how much it costs every time that you make a trade. If you bought a stock, they might charge you a little bit for that trade. Many brokerages have actually dropped these to zero, but you should always check with your individual broker to see how much a trade will actually cost you because they can really vary. If you’re finding a brokerage that is going to charge you for every single trade that you make, it’s definitely worth shopping around because there are a lot more now that charge $0 per trade.
Sean Pyles: And what about expense ratios?
Alana Benson: Expense ratios, these are what are charged on funds like mutual funds or exchange-traded funds, and this is the cost of what it actually takes to manage the fund. Think of index funds; these are passively managed and they just track an index like the S&P 500. So it doesn’t actually cost that much to manage them and they can vary, but around 0.1% to 0.2% is a pretty good deal. So that would be about $10 or $20 for every $10,000 that you invest. But if you have a mutual fund, that’s actively managed and that means someone is picking and choosing the investments within the fund. So it’s a much more expensive fund to manage than a passively managed fund. And these can run closer to 0.5% or even over 1%, and that means instead of paying $10 or $20 for each $10,000 that you have invested, you’re paying like $100 or more.
Liz Weston: Ooh. That’s a big difference. Now our listener’s also wondering about 401(k) fees. How should they think about those?
Alana Benson: The investments that are available to you in your 401(k) may be more restricted than just buying different investments from a brokerage, but just because you may not be able to do as much about your 401(k) fees doesn’t mean that you should not invest in one, particularly if your employer offers a match.
Liz Weston: If you work for a larger company, you may have access to institutional funds through your 401(k) and those are the cheapest ones you can get. So the idea that all 401(k)s are expensive really isn’t the case. The fees have come down and in some cases you can do better in a 401(k) than you could in your own IRA [individual retirement account] when it comes to expenses.
Sean Pyles: I have a quick follow-up question around index funds and mutual funds. Is there a max fee that you think people should look for and say, “OK, this fee is too high for this account and I’m not going to go for that”?
Alana Benson: I think that really just depends on each individual investor and what’s important to you and what you want to get out of the fund. Personally, when I look for funds, and again, I am not a financial advisor, but I try to find the cheapest management fees that I possibly can. So I’ll look for an index fund that will have a really, really low fee. But if you want something that’s managed by professionals or you’re looking for a particular type of fund, there’s different reasons why people might pay a higher fee. If you’re looking at a mutual fund and it wants you to pay 1%, that’s a pretty significant fee.
Sean Pyles: I could see some people thinking, “OK, the fee is higher, that must mean I’m going to get a greater return or the results will be better for me,” and that may not be the case, right?
Alana Benson: And in fact, a lot of times actively managed investments like those actively managed mutual funds don’t perform as well as passively managed funds because it requires people to sort of predict the market, which people — no matter how much experience they have in the industry or whatever their background is — people are just notoriously bad at predicting the market. And so the likelihood that your actively managed fund will outperform the market is actually really low. So you’re kind of paying more to underperform in a lot of cases.
Sean Pyles: Doesn’t sound like a good deal.
Alana Benson: To each their own, but I’m inclined to agree with you, Sean.
Sean Pyles: OK.
Liz Weston: Well, maybe we should give people an example of how much fees can cut into earnings. There’s so much that you can’t control with investing. You can’t control the market, but the thing you can control is how much you invest and what you pay in terms of expenses. So can you talk about how fees cut into earnings?
Alana Benson: Absolutely. Say you invested that $10,000 into a fund with a 0.1% fee and you match the average market returns; you’d have nearly $210,000 after 40 years. But if you had a 1% fee, you’d have just $150,000. So that’s a pretty significant difference just from a fee that you don’t actually have to be paying.
Sean Pyles: That leads me to my next question, which is how much should folks be worrying about their fees? And it seems like the answer is maybe a lot, a decent amount at least.
Alana Benson: Yeah, and like Liz said, this is something that people actually have some control over when it comes to investing. And there’s not a lot of things that you do have control over, so you should definitely look into your fees. But I don’t think this is something that you should be super stressed about. Once you know what fees your brokerage charges, you can kind of adjust your plan. So if your brokerage charges a trading commission, maybe keep that in mind if you’re regularly trading stocks and you can also check out the expense ratios of funds that you’re invested in and see how much you’re paying and maybe explore cheaper options if the fees are pretty significant.
Sean Pyles: Is there any room for a negotiation? Say you’ve been with a brokerage for a while, you find another one that has lower fees and you call up the brokerage that you’ve been with and say, “Hey, there’s someone else over here that has lower fees. If you lower yours, I won’t jump.” Is that possible?
Liz Weston: A lot of it is baked-in, in terms of what they’re going to charge you for trading commissions, if they’re charging those and what the expense ratios are of the underlying investments. But if you are paying someone to manage your money for you, if you’re paying a financial advisor a 1% of assets fee for example, or you’re paying some kind of brokerage rep fee, there may be some room.
Sean Pyles: OK.
Liz Weston: So you can let them know that you’re looking around and you think it’s a little expensive what they’re charging and maybe you can get a break. One thing we should talk about is robo-advisors because that’s another way to get access to some pretty cheap investment accounts.
Alana Benson: I love the idea of a robo-advisor, particularly for the folks who otherwise just would be too stressed out, or not have enough time or get a little intimidated by the research that they should do to start investing on their own. And a robo-advisor is great because like you said, the fees are pretty minimal for the service that you get and you just don’t even have to think about it. You don’t have to know any of the lingo. All you have to do is set up an auto deposit and kind of forget about it.
Sean Pyles: Well, speaking of lingo, we should probably define what a robo-advisor is for those who don’t know. These are services that use computer algorithms to build and manage a portfolio for you.
Alana Benson: And when you invest through a robo-advisor, you’re paying for them to manage those investments for you. So those fees will typically float around 0.25% of your assets. So if you have $10,000 managed, you’ll pay $25, but remember they’re doing all of that work for you. So that’s not just an expense ratio that you’re paying, you’re actually paying for a service.
Sean Pyles: Some brokerages will charge you for things like inactivity fees, and robo-advisors don’t tend to do that. Is that correct?
Alana Benson: That’s correct, because essentially a robo-advisor will be doing the managing for you. So it’s kind of tough to have an inactive account with a robo-advisor, particularly if you have auto deposits. There could be robos out there that do charge for that. So these fees will vary by broker or robo-advisor. So it’s always really important to look into what fees you’d be charged before committing to one.
Sean Pyles: And one thing I’m betting our listener and a lot of other listeners out there are wondering, is how they can reduce the fees that they’re paying on investment accounts?
Alana Benson: The first and most important thing is to just know what you’re going to be charged. Expense ratios may not actually show up on your monthly statement. They’ll likely just be deducted. So it’s good to know what kind of expense ratios, whether you’re working with a robo-advisor or you’re buying investments on your own, what those fees are going to look like for expense ratios. But the other thing is that you can always look at a brokerage or robo-advisors fee sheet. This’ll give you a whole list of every possible fee that they could charge you.
So things like those closing or inactivity fees, that’s where they’ll be listed. So definitely do your research ahead of time and just make sure you know what you’ll be charged. The second thing to do is look at your investment fees that you’re already being charged. So if you’re in an actively managed mutual fund, you can kind of consider some of those lower cost investments like index funds, look at the price point difference and see what you’re comfortable paying.
Sean Pyles: This is also a good reminder for folks to shop around when they’re looking for various investment accounts. When people are considering one account or another, how do you think fees should factor in?
Alana Benson: Fees are pretty important because they do eat into your bottom line, but they are just one factor alongside performance and sector. Like if you wanted to invest in a particular fund like emergent technologies, that kind of fund, because it’s so particular, might be a little more expensive. You can look at the existing diversification in your portfolio. You can also look at what kind of tools and research that that brokerage has because some are better than others, and if you really want to get into the nitty-gritty of your investments, that might be something you’re willing to pay a little bit more for. So just remember that fees are important, but it can be balanced with other things.
Sean Pyles: All right, Alana, I think that covers this pretty thoroughly. Do you have any final thoughts for our listener?
Alana Benson: I think it’s just really important for investors to remember that they’re in control. They have the choice to make about what kind of investments matter to them, and some will charge more than others, but at the end of the day, it’s their choice. So they should remember that they have the power. If they’re getting charged a really high fee, they don’t just have to pay that; they can look around and find other options.
Sean Pyles: I know what you’re thinking. There’s a lot to consider when it comes to brokerage fees, but don’t be discouraged. If you’re feeling overwhelmed, then you could always work with a financial advisor to help you sort things out. And you know what? That’s what our next listener question is all about. So let’s get into it.
Liz Weston: This episode’s money question comes from Andrea, who has a number of questions about financial advisors. Here they are. Any recommendations on how to interview and choose a tax or retirement advisor? Are there any red flags to look out for? And specific questions that should be asked? And should you have both types of advisors or can one cover both areas? Also, at what point should a family consider estate planning? How do you know when you need this type of service? I’m interested in locating and engaging with advisors that 1. won’t take advantage of me and 2. are willing to consider my best interests. Thank you.
The good news is that it’s never been easier to find good, objective, affordable help with your finances. The bad news is that it’s still not necessarily easy to find the right financial advisor.
Sean Pyles: That is true. I think that we should maybe start off by talking about what exactly financial advisors do. At the highest level, a financial advisor is someone who helps people manage their money and reach their goals. There are many different types of financial advisors though, who have different qualifications and areas of expertise. Someone who’s the tax advisor, for example, might not be able to help you with investment advice. Alana, can you give us a quick rundown of the different types of folks that one could hire?
Alana Benson: So there are a lot of different names of financial advisors and some mean more than other things. For example, anyone can call themselves a financial advisor. Joe Schmoe down the street with no qualification could legally call himself a financial advisor, and that’s something that you really want to look out for. At the bare minimum, a registered investment advisor is governed by the SEC [Securities and Exchange Commission] or a state securities office, and they can legally provide personalized investment advice. So at the bare minimum, someone who is talking with you about your money should have that designation.
Ideally, you could work with a certified financial planner. This means that they have a very rigorous education and they have a fiduciary responsibility, which just means that they have to work in your best interest. And that really addresses what this reader is asking about. They want to make sure that this advisor isn’t going to take advantage of them, and that is so, so important. The other designation, if you’re looking for help with your taxes, is a CPA or a certified public accountant, and they’ll be able to answer all of those nitty-gritty tax questions.
Liz Weston: I’d also recommend enrolled agents because they’re not CPAs, but they are tax pros and they can be a little bit more affordable than CPAs. So that’s another thing to think about. If you’re looking for just strictly help with taxes.
Sean Pyles: Another type of financial advisor that folks might not think about is actually credit counselors. And these work at nonprofit credit counseling agencies, and they offer free debt and credit advice for people who maybe can’t afford financial help but would benefit from it.
Liz Weston: Another category to look into is accredited financial counselors and accredited financial coaches. These folks tend to be employed by credit unions, the military, sometimes they’re available for free, sometimes they have a sliding scale, but they specialize in issues that are common to middle-class folks. So it’s not just estate planning, trust issues of the high net worth. They really are on the ground and can help you with things like budgeting and debt, stuff like that.
Sean Pyles: Paying someone to manage your money is something that I think a lot of people either can’t afford or don’t think that they need. When do you think someone should think about hiring a human, versus DIYing it or employing a robot on the internet?
Alana Benson: This is a great question. It’s all about how complex your individual picture is. If your situation is getting very complex and say you got married and you bought a house, and your parents are getting older, and you’re having kids and trying to figure out where your money should go in the future, that might be a time to talk to a financial advisor. Say you got a new job and they offer a lot of different health care plans or an HSA [health savings account], versus an FSA [flexible spending account]. Those kinds of things are a great time to get in touch with someone so you can ask your individual questions.
If you are just looking for investment management and you don’t care at all about picking your own stocks, you just know you’re supposed to invest, but you don’t really want to have to do anything, a robo-advisor will automatically invest your money for you. But it’s not going to be the same as going to someone saying, “Hey, I want to make an estate plan. Can we do that?” And it just depends on what you want to do with your money and how complex your life is getting.
Liz Weston: I also think it might be a good idea to think about hiring somebody if you’re not keeping up with the DIY chores. If you are not rebalancing your account or you’re not staying up on tax law or whatever needs to be done. You can also consider hiring somebody if you’re having trouble coming to an agreement with your partner. You may need a neutral third party to work things out. And also, this is kind of interesting, but it’s truly a thing: Some people hire financial advisors because they want somebody to blame if things go wrong, and financial advisors typically will have errors and omissions insurance. Basically it gives you somebody to sue. So not the best reason, but it’s a reason. So there you go.
Sean Pyles: For me, I think a lot of personal finance management comes down to understanding specific products, which are often tied up with different acronyms, and the way that these products intersect with your financial goals and often tax liabilities and this can get extremely complicated. So for me, I am trying to get help from a team that I’m building — one of my financial goals for next year — that can help me understand all of these different products that I should be leveraging, how I can use them in the most efficient way tax-wise and also in a way that can help me meet my personal goals.
Liz Weston: Yeah, exactly. That’s really smart to think about who can help you. And a lot of times it’s the tax person who’s the gateway financial advisor. It’s like we look at taxes and go, “Oh, I really don’t want to deal with this.” So that’s the first person that we hire.
Sean Pyles: Yeah. Well, Liz, I actually want to talk for a minute about your situation because interestingly, you are a certified financial planner, yet you have a team of folks that help you manage your money. Can you talk with us a bit about how and why you decided to outsource some of your money management?
Liz Weston: Yeah, when I started getting the CFP credential, I thought, well, a reasonably intelligent person can handle her own money. And by the time I’d finished the education, I had my tax person lined up, I had an estate planning attorney. And later I added all kinds of other people, including, I have a terrific insurance agent now. And the last part of it was hiring our own CFP. And part of it was that thing about the cobbler’s children having no shoes, is that I was advising everybody else and I wasn’t taking care of my own business. So things weren’t getting done that needed to be done. Another part of it is just really nice to have somebody to bounce ideas off of. My CPA lives and breathes taxes so that I don’t have to.
Sean Pyles: Right.
Liz Weston: And to me that is just amazingly freeing. It’s well worth the money that I pay her. Same thing with the insurance agent. We just had an issue and I was able to go to her and say, “Can you help us out with this?” She moved mountains, got things done. It really is nice to have people on your side.
Sean Pyles: Think it’s really telling that in the process of going through the various courses you have to take to get the CFP certification, you saw just how complex all these different areas of money management are and you decided to get someone who can handle this for you to take that weight off of you.
Liz Weston: Exactly, because you don’t know what you don’t know. And that’s what really trips people up. Particularly I think if you are heading towards retirement, you really, really, really need another set of eyes on your plan because you’ve never retired before. And a good financial planner will have many, many clients who have been retired and they know all the things that can come up, all the ways that you can screw it up. And again, this is your money for the rest of your life. You need to make sure you’re making the right choices.
Sean Pyles: Well, now I think we should probably talk about how and where people can find financial advisors for tax, retirement or general money management advice. Alana, where do you think people should go for that?
Alana Benson: You definitely want to work with a CPA for taxes, as Liz said that they really live and breathe that sort of thing. They’re the person to talk to. A CFP for financial advice. One note on this is it’s really, really important to do your due diligence and double-check their certifications. Some people could have a delinquency on their designation, maybe they had a violation. There are websites where you can go and check these designations and make sure they’re up to date. Make sure they haven’t had any lawsuits and make sure they’d be a really good person for you to work with. So definitely before you work with anyone, double-check that their designation is what they say it is and you’ll save yourself a very big headache by doing that small amount of work upfront.
Liz Weston: We should also mention that there are financial planners who have a tax background, those are CPA-PFS. So the PFS stands for personal financial specialist, and if you want to get a tax person but also want financial advice, there is that all-in-one designation you can look for. Alana, there used to be a pretty wide divide between the people who worked in person and then the people who only worked online or robo-advisors. That’s kind of blurred a little bit with the pandemic, but can you talk about online, versus in-person financial advice?
Alana Benson: So traditional in-person financial advisors often charge around 1% of your money that they manage for you. The more money you have under management, the steeper that fee is going to be. Some people just want to meet with someone in person and that is totally fine. If that is your comfort zone and you want to pay for that, that is a personal choice. But online you are able to find services that will help you connect with an online financial advisor and they often charge a much lower fee of the percentage of assets that they manage for you. And they can do just about everything that a traditional in-person advisor can do. And a lot of times these services will also have access to tax help and tax preparation.
Those are a nice in-between if you don’t want to necessarily pay the 1% fee of meeting someone in person and you can pay a cheaper fee. And a lot of these services now do video calls so you can still meet with someone and talk to a human being. It’ll just be over Zoom or over video conferencing. There’s also a lot of one-time services that can be offered. I know Ellevest is a provider that you can purchase one-on-one sessions with a CFP, or you can even do career counseling and some other providers offer these one-time services as well. If you need help with something very particular, that might be a good option.
And then there are some providers that even do a mix of robo-advising, so managing your money with a computer algorithm and access to human advisors for less as well. There’s a lot more flexibility than there used to be and there are more affordable options. So you don’t just have to be this very wealthy person to go and get help with your finances. There’s all kinds of options for every financial threshold.
Liz Weston: In addition to that 1% all-around fee, you can find people who charge by the hour, for example. Or maybe have a monthly retainer fee and that can be a more affordable way to get help.
Sean Pyles: Choosing a financial advisor is a pretty serious decision. You want to make sure that this is someone that you can trust, that you can have a healthy, open and ongoing relationship with. While there are a lot of options, choosing the one that’s right for you can be a little bit of a challenge. When someone is vetting a potential financial advisor, what questions do you think they should ask?
Alana Benson: So first and foremost, the most important is to ask them if they are a fiduciary. And again, that just means that they’re legally obligated to work in your best interest. They won’t offer you products because they’ll make a commission on them. They will offer you things that are truly the best option for you. Well, another important thing is to ask how they get paid. Advisors can use that assets-under-management structure I was talking about, but people use a variety of fee structures. So it’s really important to upfront understand how you’re going to be paying them so that down the road you’re not saying, “Well, wait, I thought it was going to be a lot less than this.”
You definitely also want to, again, ask about those qualifications. And then you can also ask about how you’ll communicate. Make sure that you’re comfortable talking with them in the way that you would prefer, whether that’s over the phone or over email. Make sure you know how frequently you’ll get to speak with them. Maybe it’ll only be four times a year or maybe you’ll have unlimited access. And that’s going to be a really important distinction. Like if you need a lot of help, you want to make sure you have unlimited access to your advisor so you’re not just holding out for those quarterly phone calls.
Liz Weston: There’s also the issue of are you going to be talking with the same person each time, or could your case be handed off so that you’re talking to a different CFP or different advisor every time. With the less expensive services, you may not have one dedicated person to talk to.
Alana Benson: It’s really important to figure that out upfront because that is the difference of developing a long-term relationship with one person who gets to know you as a person and gets to know the things that you really care about and maybe even gets to know your family background a little bit. And if you develop that relationship over time, that can be a really, really valuable asset, versus speaking to a different person every single phone call.
Sean Pyles: Our listener is also wondering about red flags to look for when vetting an advisor. What do you guys think about that?
Alana Benson: I think one of the biggest things is that they can’t answer your questions clearly. If they’re giving you really vague answers about payment or what you’re going to be invested in, that is definitely a red flag. Another thing is to just make sure that you click with them. Do you feel comfortable communicating your concerns or are you kind of holding yourself back? Really trust your gut and see if this can be a person that you can have a really solid relationship with.
Liz Weston: You don’t want to be the first time that they’re dealing with certain issues, like stock options or small-business issues. Retiring or being a government employee, being a military employee, you don’t want them learning on you. So if they have other people who are like you in that situation, they’re likely to have a deeper knowledge of what you need and how to get you to your goals. Alana, how could people decide if they’re better off having one advisor doing a lot of things or having specific advisors for different purposes?
Alana Benson: I think it really depends on the person. It’s more important to have a team that all works together if you’re going to work with a team. I know a lot of advisors will work with your finances and then call your tax person and make sure that everybody plays together nicely and let you live your life. In terms of whether it’s better to have one for everything, again, I think it just depends on the person. If you find an advisor who also has a background in tax and they can kind of take care of everything for you, that might really, really work for you.
But just like you were saying, Liz, not everyone can be an expert in everything. And if your financial picture gets more complicated or you have to deal with stock options or you have to deal with estate planning, you may want to bring in a specialist who really, really knows their stuff in that field and then they can work with your existing team. But again, it depends on the person.
Liz Weston: Yeah, and good people tend to know good people. That was the case when we hired our financial planner. She knew the insurance person that we have now and she knew the CPA that we have now, recommended them both and we’ve been really happy. So if you do find one of these professionals and want more, maybe go to them for recommendations.
Sean Pyles: Our listener’s also wondering about when to consider estate planning? The short answer is ASAP. You should probably have an estate plan yesterday and it won’t take that long to sort out. It’s very important, but it’s especially important if you have kids that you want to take care of.
Alana Benson: It’s much better to have those things ready and in place, versus to not have them.
Liz Weston: And there’s two documents actually everybody needs. Even if you decide not to have a will, which I can’t imagine why you would. But you do need to have advance directives so that somebody can make decisions for you if you are incapacitated for health care. And you need a power of attorney for financial decisions. So those are about quality of life. That’s not what happens to your stuff after you die, that’s while you’re still alive. And as Sean said, if you have minor children, really you need to name a guardian. You don’t want them to go through the court or the foster care system, heaven forbid. So do that because you love them, get it done.
Sean Pyles: Right. And there are a lot of resources available online like Rocket Lawyer is a service people can pay for, some have as a benefit from their employer. Also, websites like Nolo.com, they have templates for certain documents like this that can help you get started.
Liz Weston: Even if you decide to go to an attorney later, if your situation gets more complicated, at least the online stuff will put something in place for you so you have it in case of emergency.
Alana Benson: And estate planning may be one of those things that you could pay a one-time fee for. And then just go speak to someone who could help you draw up those plans. And it’s not a fee that you’re paying on an ongoing basis; you could just pay it once, get those documents squared away and then they’re done.
Sean Pyles: All right. Well, Alana, do you have any final thoughts for Andrea or anyone else that’s in the market for one or a team of financial advisors?
Alana Benson: I really think the biggest thing is to trust your gut. Know that this is a relationship that you’re starting to form. If you’re working with a person, whether it’s online or if it’s face-to-face, make sure you feel comfortable with them because at the end of the day, you are paying them as a service and it’s your money. You don’t owe anybody anything upfront. And a lot of these advisors will offer free consultations. So just make sure that you feel comfortable. I think that’s the most important thing.
Sean Pyles: Well, thank you so much for talking with us.
Alana Benson: Yeah, thanks for having me.
Liz Weston: So, Sean, how has the way you work with the financial advisor changed since we had that conversation?
Sean Pyles: Well, to start, I work with one now at all, which is a change. I have a CFP that I check in with a couple of times a year to talk about my financial goals and how I can meet them and how I can maybe course-correct to hit them by the end of the year. And that’s one thing that I didn’t realize before I had a financial advisor is that it’s not like you have to be in constant communication with them. You’ll likely talk with them a little more regularly in the beginning and then you’ll go off and do the slow work of meeting your goals and then you’ll check in with them a few months later. Or at least that’s been my experience.
Liz Weston: Yes, exactly. And for me, I mentioned at the top that I wanted somebody that could help my husband if something happened to me. He’s a very gifted artist, but money just isn’t his thing and I didn’t want him to have to worry about finding help if he needed it. So it’s really a huge relief knowing that all the money management isn’t on my shoulders. I love having somebody to answer any questions that we have. And there is a small element of, “See, I told you so,” when she sides with me.
Sean Pyles: Yeah, I bet.
Liz Weston: And that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]
Sean Pyles: Remember to follow our show on your favorite podcast app to automatically get new episodes in your feed. If you’re listening on Apple Podcast or Spotify, then tap the 5-star button to rate the show. We really appreciate it.
Liz Weston: This episode was produced by Cody Gough and myself, with help from Sean. Kaely Monahan mixed this episode with additional audio editing by Cody. And a big thank you to the folks on the NerdWallet copy desk for all their help.
Sean Pyles: Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the Nerds.
Standard Bank says struggling customers have home loans of less than R1.5 million. Many are first-time home buyers with incomes between R15 000 and R40 000 a month.
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Standard Bank says customers with home loans of less than R1.5 million have felt the most pressure from a rapid rise in interest rates.
Many are first-time home buyers with incomes between R15 000 and R40 000 a month.
Home loans that the bank wrote in 2020 – when many of its peers switched off their lending taps – had been performing the best.
For more financial news, go to the News24 Business front page.
Standard Bank says customers with home loans of under R1.5 million are battling the most with a rapid rise in interest rates that pushed up their bond repayments by more than a third.
But Africa’s largest lender, which warned on Tuesday that its impairment charges rose by almost 50% in the first five months of 2023, says its decision not to turn off the lending taps during the height of Covid-19 has also paid off, with market share gains among the more affluent.
During a call with analysts on Tuesday evening, the bank said cases referred for debt review have climbed more than a fifth as a rise in interest rates saw more clients struggling to pay their instalments.
Typically, households spend a maximum of around 28% to 30% of their income servicing their home loans.
However, given that the South African Reserve Bank has hiked rates by 475 basis points since it began its tightening cycle in November 2021, this percentage has increased for many households.
A customer who received a R1 million home loan at a prime lending rate of 7% with no deposit in 2020 or 2021 now pays 40%, or R3 000 more.
CFO of Standard Bank’s Consumer and High Net Worth Clients franchise, Lihle Ngema, said on Tuesday “pockets” of customers with home loans of under R1.5 million were under the most pressure.
Ngema said interestingly, though, the home loans that the bank wrote in 2020 – when many of its peers switched off their lending taps – had been performing the best.
Losses and gains
Standard Bank and Absa grew their secured lending books drastically in 2020, taking advantage of the record-low interest rates that brought a new calibre of first-time buyers to the property market. Ngema said that as other banks tightened their lending appetite, Standard Bank used that opportunity to take low-risk clients from them.
“Those [2020] home loans have actually been our best vintages,” she said. “What’s quite important is that in the last couple of years is that we’ve been very targeted in terms of the clients. It has been largely within the affluent segment.
“The average income in terms of our lending has been to people earning over R60 000 on a monthly basis,” she added.
But Standard Bank also grew its market share among first-time buyers. Standard Bank’s CEO for the Consumer & High Net Worth Clients division, Funeka Montjane, previously told News24 that around 60% of home loans the bank wrote before the recent hiking cycle went to first-time buyers. This was mostly young black women who bought homes worth about R1 million.
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But the bank assessed buyers’ affordability by assuming a higher interest rate than the prevailing one.
Ngema said that of those customers, people with salaries between R15 000 and R40 000 a month are under pressure now.
“But more broadly, what we are also seeing is an increase in the flow to debt review, which you would expect in this sort of market. Debt review across the portfolio is up 22% from this time last year,” she noted.
READ | Don’t fall for big-talking debt counsellors, Capitec and others warn
But Standard Bank Group Financial Director Arno Daehnke said the bank has enough coverage if more customers struggle to service their home loans. This is the case even if there is another 25 basis point hike in 2023, which the group expects.
“Of course, if we have a worst-case scenario playing out, with many more interest rate hikes, that might put additional pressure on the portfolio. But on the base case scenario, we remain confident that we’ll be within the [targeted credit loss ratio] range,” he said.
The base case scenario Standard Bank has modelled includes only one more interest rate hike of 25 basis points in July. The bank also said that if more customers fall on hard times, it has programmes in place to help them keep their homes.
California would like to crack down on a type of trust that lets the very wealthy avoid state income and federal gift taxes. And the Golden State is not alone: A number of state officials have taken aim at the loophole, known as an incomplete non-grantor trust (ING). In its 2023 budget proposal, the administration of Gov. Gavin Newsom proposed banning the trust.
New York state passed a similar law in 2014, and the idea has begun picking up steam in states that have seen many of their wealthiest citizens use INGs to avoid taxes. Below we dive deeper into the controversy – and explain how an ING trust works.
You can work with a financial advisor to lower your tax bill.
California Wants to Ban ING Trusts
Naturally, high-income, high-tax states have a lot to lose from tax loopholes on the wealthy. These trusts have also come under fire from some tax policy analysts, who cite it – alongside the carried interest loophole – as a substantial tax-avoidance practice employed by the very wealthy. This criticism is sharpened by the fact that an ING trust is only particularly useful to someone seeking to avoid the gift tax, which does not apply until a taxpayer has transferred roughly $13 million in total assets.
In 2014, New York state banned the use of ING trusts to avoid state taxes. They did this by redefining what New York state considers a grantor and non-grantor trust. Specifically, it updated its income tax laws to include any income generated by a non-grantor trust funded by an incomplete gift. (While this contradicts the IRS interpretation of the matter, because this law applies only to taxes in the state of New York it has not run afoul of any supremacy clause issues.)
California would like to follow New York’s lead. Under Newsom’s proposal, the state would update its own tax laws based on the Empire State’s model. It would stop using the IRS definition of incomplete gifts and would instead set its own definitions for when a taxpayer has made a complete transfer of assets. As proposed, this change would apply to California residents, which could leave an open question regarding non-resident taxpayers. Legislators would have to resolve that issue when drafting the actual law.
This proposal “which would be effective beginning in tax year 2023, is projected to increase tax revenues by $30 million in 2023-24 and by $17 million annually thereafter,” according to a state news release. At time of writing, this remained in the governor’s proposed budget. However, the legislature appears to have omitted this issue from the text of the budget itself, which is scheduled for a vote later this week.
What Is an ING Trust?
An incomplete-non grantor trust is a specialized form of trust designed to shift the tax base of its assets. If properly created, it allows the creator to pay no state taxes on the assets they put in trust while also paying no federal gift taxes on the underlying transfer. Given the high IRS cap on gift taxes, an ING, which is a self-settled irrevocable trust, is typically only useful for taxpayers with a very high net worth.
To understand how this works, we need to look at the nature of trusts.
A trust is a legal entity set up to hold, manage and distribute assets. Every trust has three (or more) main parties to it:
The Grantor – The person or persons creating the trust and putting assets in it
The Trustee – The person or firm who manages and distributes the trust’s assets
The Beneficiary – The person or persons getting assets from the trust
When you create a trust, you set its terms. This means you can identify who the trustee and beneficiaries will be, how and when its assets will be distributed, and any other rules for how the entity should work. The trust then becomes an independent third party that can legally own, control and distribute its assets.
While there are many kinds of trusts, there are two broad categories for tax purposes: grantor and non-grantor trust.
Grantor Trusts
A grantor trust is one in which you, as the grantor, maintain some measure of control over the assets in trust. For example, you might allow yourself to take assets out of the trust. Or you may retain the right to change the trust’s beneficiaries or rules, to take loans from the trust, or collect its investment income. However you do it, if you keep a meaningful measure of ownership or control over the trust’s assets, the entity is considered a grantor trust.
With a grantor trust, you pay the trust’s taxes. The assets are still considered functionally yours, so any income or capital gains that the trust generates are reported on your taxes.
Non-Grantor Trusts
A non-grantor trust is one in which you, as the grantor, have no meaningful control over the assets in trust. While you might retain some de minimis connection, you have made a complete gift of the assets to the trust. Any trust that is not considered a grantor trust is a non-grantor trust.
With a non-grantor trust, you pay any applicable gift taxes at the time of your transfer. Then, as the full owner of the underlying assets, the trust itself pays all applicable income and capital gains taxes.
Incomplete Non-Grantor Trusts
An ING is a type of trust designed to thread the needle between these two categories. It is a non-grantor trust, which moves the tax burden of the trust’s assets onto the trust itself. However, it is funded with a legally incomplete gift, which allows the grantor to avoid federal gift taxes while maintaining a measure of control over the assets.
Grantors take three basic steps to set up an ING trust:
Create a trust that is legally based in a state with no taxes on income and capital gains. This effectively nullifies state taxes the trust would otherwise be liable for. Keep in mind, this will not affect the trust’s federal income tax status.
Fund the trust as a non-grantor trust. This shifts the tax base of any assets to the trust itself, which pays the taxes of the state in which it is based (thanks to step one, this will be zero). To do this the grantor must fund the trust with a gift that effectively relinquishes control and ownership of their assets to the trust.
Structure the gift as a defective transfer. This is where an ING gets tricky. By carefully wording the asset transfer, you can structure it as complete enough to qualify for non-grantor trust status yet not complete enough for the IRS to consider it a taxable gift. This is typically done by transferring almost all ownership rights to the underlying assets, but still retaining some narrow, specific measure of control over them. A financial advisor can help guide you.
If properly structured, you will have created a non-grantor trust that assumes all the tax liability for its assets without paying gift taxes on the assets you transfer in. Since the trust is based in a tax-haven state, it will owe no state taxes on the income and capital gains that it generates, while leaving you a small measure of control over how those assets are managed.
Bottom Line
California Gov. Gavin Newsom has proposed closing a tax loophole known as the incomplete non-grantor trust. This is a structure used by the very wealthy to avoid paying state income taxes and federal gift taxes, and which may soon be less available than it was before.
Estate Tax Planning Tips
A financial advisor with estate planning experience can help you plan for the future, including how to minimize future tax bills. 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 have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
There are grantor trusts and non-grantor trusts. There are also revocable and irrevocable trusts, intentionally defective grantor trusts, lifetime trusts, testamentary trusts and many more. Let’s take a look at which, if any, are right for you.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
When you choose a bank for your daily checking and savings needs, you can choose between a national bank, a smaller regional bank, credit unions of varying sizes, and even online banks and financial technology companies.
Since early 2023, when Signature Bank and Silicon Valley Bank both experienced failures after customers pulled out large amounts of money during bank runs, banking customers may feel more comfortable choosing a national bank.
Although the U.S. government took extraordinary measures to protect the assets of SVB and Signature Bank customers, and deposits held in the accounts were FDIC insured, many customers were still rightfully concerned about gaining access to their money in a timely manner.
After the banking crisis of 2008, the Federal government declared banks like JPMorgan Chase, Bank of America, Citibank, and Wells Fargo as “too big to fail.” But these aren’t the only national banks or credit unions available.
You might think that smaller online banks may have lower fees, while small local banks are known for friendly and responsive customer service. But the national banks on this list blend the best of all worlds: low fees, high marks for customer satisfaction, ways to avoid overdraft fees, convenient ATM networks, and a variety of banking products.
16 Best National Banks
Here are the 16 best national banks that offer exceptional services, excellent customer support, and innovative banking solutions to meet all of your financial needs.
1. SoFi – Best for Digital Banking & High Yields
SoFi became a nationally chartered online bank in 2022, after acquiring Golden Pacific Bancorp, Member FDIC. Originally known for its vast array of loan products, including private student loans, today SoFi has a combination checking and savings account, or a cash management account, with no monthly service fee.
SoFi also has no minimum balance requirements, no overdraft fee, and overdraft protection up to $50 with qualifying direct deposits each month. You can bank for free at any of 55,000+ fee free Allpoint ATMs nationwide.
As an online bank, SoFi offers higher interest rates than you may find at brick and mortar banks. Earn up to 4.20% APY on your savings account balance and 1.20% on money in your checking account. When you use your SoFi debit card at select local businesses, you can earn up to 15% cash back.
SoFi offers two tiers of accounts: SoFi and SoFi Plus. To qualify for the “freemium” SoFi Plus membership, bank customers must have qualifying direct deposits. Plus, when you sign up before December 31, 2023, you can earn a cash bonus of $250 when you set up direct deposits of $5,000 or $50 with a direct deposit as low as $1,000.
SoFi Plus members receive loan rate discounts, bonus rewards, access to special entertainment events and more, making SoFi a unique company when it comes to online banks.
2. Discover Bank – Best for Cash Back
Discover may be best known for cashback and rewards credit cards. But its online banking products are some of the best you’ll find among national banks.
With no monthly fees and no minimum balance, your Discover Cashback checking account pays 1% cashback on up to $3,000 worth of debit card purchases monthly. You’ll never pay overdraft charges, and you can withdraw cash at a network of 60,000+ fee free ATMs.
You can qualify for overdraft protection by linking your Discover Bank savings account. Discover Savings pays a high 3.90% APY with no minimum deposit required.
Other Discover Bank deposit accounts include CDs with terms from 3 months to 10 years, and a money market account that pays 3.80% APY for balances under $100,000 and 3.85% on balances $100,000 and up.
For questions or help with your account, you can reach a U.S.-based customer service representative for Discover Bank by phone, 24/7/365.
3. Chase Bank – Best for Credit Card Rewards & Referral Bonuses
As the world’s largest national bank, JPMorgan Chase Bank doesn’t need to do much to entice customers. People will choose Chase based on its name, reputation, and more than 4,700 convenient branch locations across the U.S.
However, Chase happens to have one of the best bonuses for new customers and a generous referral bonus program when existing customers refer their friends. This, coupled with a robust and easy-to-use mobile app and a variety of checking, savings and investment services, puts Chase on our list of top national banks in the U.S.
Chase is currently offering new Chase Total Checking customers a $200 bonus when they open a new account and set up direct deposit within the first 90 days.
New or upgrading Chase Private Client customers can earn a $3,000 bonus with a deposit of $500,000 or more within the first 45 days of account opening. Deposits of $150,000 to $249,999 earn $1,000 and cash deposits of $250,000 to $499,999 earn $2,000. You must keep the money in your J.P. Morgan Wealth Management or JPMorgan Chase deposit accounts for 90 days to qualify.
In addition to Chase Total Checking, the bank’s most popular checking account, and Private Client services, Chase also offers other checking and savings accounts.
Chase Secure Banking has a $4.95 monthly fee and no overdraft fees. Chase Premier Plus Checking offers a few added benefits beyond Chase Total Checking, including ATM fee rebates up to four times per statement cycle, a linked personal checking account with no monthly fees, and a 0.01% interest rate on balances.
Chase also offers bank accounts for kids, teens, and college students, as well as CDs, savings and money market accounts, mortgages, loan products, and a full array of top-rated rewards credit cards.
If you have multiple Chase accounts, it’s easy to manage them all within the mobile app.
4. Chime – Best for Building Credit
Chime is a financial technology company backed by Stride Bank, Member FDIC, and Bancorp Bank, Member FDIC. It is not a bank, itself, but offers some of the same features, including online banking, a debit card, and direct deposit up to two days earlier than some other banks.
Chime has no monthly service fee, no overdraft fee, and no minimum balance requirements. For customers who need a little boost to make it from paycheck to paycheck, Chime offers fee-free overdraft up to $200 through the SpotMe5 program and a credit builder secured Visa credit card with no annual fees, interest or minimum security deposit.
Use your Chime debit card at any of 60,000+ fee free1 ATMs in the Allpoint, MoneyPass or Visa Plus Alliance ATM networks. Out of network ATM fees may apply, otherwise.
You can qualify for Chime’s SpotMe program with a single direct deposit of $200 or more during any monthly statement period. If you process a transaction that would put you into overdraft, Chime will accept the transaction even if it puts your balance into the negative by up to $200.
The Credit Builder Secured Visa card carries the same requirements of a $200 monthly minimum direct deposit. You can build your credit and raise your credit score with responsible use of the card.
5. Citi® – Best for Large Cash Deposits
The third of the four largest national banks in the U.S. based on assets, Citi, owned by Citigroup, is best for high net worth customers or those with large cash deposits divided among Citi checking, savings, and other accounts.
Currently, you can earn a generous cash bonus of $200 to $2,000 when you open a qualifying Citi checking account and meet specific minimum opening deposit requirements. Your bonus will be determined by your account balance on the 20th day after opening the account. Funds must remain in the account for an additional 60 days after the 21st day.
Citi offers multiple checking accounts to meet various customers’ financial needs, all with monthly fees that are easy to waive if you hold the required minimum balance. The bank accounts include:
Citibank
Citi Priority, which includes travel perks and access Citi Personal Wealth Management advisors
Citigold, relationship banking and investment services
Basic Banking and ATM access
Access Account, a debit account with no paper checks
For the Basic Checking account, you’ll need to maintain a $1,500 minimum balance to waive the fees. The other accounts have larger minimum balance requirements to avoid monthly maintenance fees and take advantage of other perks, up to $200,000 for a Citigold account.
All accounts provide access to personal banking at Citi branches and access to more than 65,000 fee free ATMs across the U.S. All accounts except for Basic and Access accounts also have no fees at ATMs outside the Citi network.
Like all the larger national banks on this list, Citi has a full gamut of rewards credit cards, savings and money market accounts, and high-yield CDs.
6. CIT Bank – Best for High Interest Rates
CIT Bank, a division of First Citizens Bank, has earned awards and accolades for customer satisfaction, rated by American Banker as #1 for “delivering the most humanized experience in banking.”
You should be aware that deposits in First Citizens Bank & Trust Company, Member FDIC, are not separately insured. This only matters if you hold more than $250,000 in any single account type, such as checking or savings, in both First Citizens Bank and in CIT Bank.
CIT is the online only banking arm of First Citizens Bank, with high-yield savings accounts, CDs, money markets, and eChecking, all with no monthly fees and no overdraft fees. You won’t pay any ATM fees at CIT Bank machines, and CIT Bank reimburses up to $30 per month when you use out-of-network ATMs.
CIT offers 0.25% APY on checking when you hold more than $25,000 in your account, and 0.10% APY on balances under $25,000. The bank has high interest rates for savings, offering customers a 4.85% APY on balances of $5,000 or more with the Platinum Savings account.
CIT Bank has two other savings accounts as well:
Savings Connect, with a 4.60% APY
Savings Builder, which requires a minimum balance of $25,000 or a $100 monthly deposit to earn 1.00% APY
You’ll need a $100 minimum deposit to open a checking or savings account at CIT Bank.
7. Bank of America – Best for College Students
As the second largest of the best national banks, behind Chase, Bank of America has the full gamut of banking products, with three checking accounts plus a student account, savings, CDs, and investment products.
It’s easy to waive monthly maintenance fees on a checking account with a minimum daily balance, direct deposits, combined balances across eligible linked Bank of America accounts, or by enrolling in their Preferred Rewards programs.
We like the Advantage SafeBalance banking for kids, teens, and college students under 25 years old. They have no monthly fee and no overdraft fees. Teens ages 16+ can have sole ownership of the account.
For everyone else, the bank offers Advantage Plus and Advantage Relationship checking accounts with easy ways to waive the monthly fees with direct deposit or a minimum daily balance.
When you open a new checking account, you can qualify for a $100 bonus when you receive qualifying direct deposits of at least $1,000 within 90 days of opening the account.
Of course, Bank of America also has CDs, and a savings and money market account. Plus you can invest with Merrill. All of these deposit accounts count toward your Preferred Rewards membership.
When you have a combined average daily balance of at least $20,000 for three months, you’ll qualify for the rewards program.
8. U.S. Bank – Best for Military Members & High Balance Savings
U.S. Bank offers the Bank Smartly checking account so you can earn interest on your money. The current interest rate is just 0.01% APY on all checking balances. You’ll pay a $6.95 maintenance fee, but this is waived if you meet minimum deposit requirements or if you are a member of the U.S. military.
You can link your Bank Smartly checking account to a standard savings account or Elite Money Market to earn even more. To avoid fees on your savings account, you’ll want to keep a $300 minimum daily balance or a $1,000 average monthly collected balance. If you are already a Bank Smartly customer, you can enroll in Smart Rewards to waive savings account fees.
The Elite account is better for those with high balances. You can earn up to 4% APY on balances from $25,000 up to just under $500,000.
The appeal of U.S. Bank is in its high ratings for banking satisfaction across the board from customers. U.S. Bank earned accolades for having the best mobile app, the best digital mortgage tools, the best customer service features, and best mobile check deposit capabilities. These factors all contribute to its ranking as a best national bank.
9. Axos Bank – Best Online Bank
Axos is an online only bank with a rewards checking account that delivers up to 3.30% APY, with no fees and unlimited ATM fee rebates for out-of-network ATMs.
To earn the maximum APY, you’ll need to set up direct deposit and Axos Bank’s free Personal Finance Manager for 0.70% interest. Then, open an investment account and take out an Axos personal loan or auto loan and earn another 2.60% annual percentage yield on your checking account balance.
Axos also offers an Essential Checking account with early direct deposit and no fees, and a Cashback Checking account, which gives you 1% cash back on debit card purchases, along with no maintenance fees and unlimited domestic ATM fee reimbursements.
Voted the best online bank by many top personal finance sites, Axos Bank offers more than just high interest, no fee checking.
Axos Bank offers CDs with terms between 3 and 60 months and a savings account with 0.61% annual percentage yield, with interest compounded daily. You can also find personal loans, car loans, mortgages, and investment products.
Like other national banks, Axos Bank provides FDIC insurance up to $250,000 or $500,000 for joint account holders. But you can expand your coverage up to $150 million with Axos Bank InsureGuard+ Savings from IntraFi Network Deposits.
Axos splits up your large deposit into multiple accounts across several banks, each covered up to $250,000. If you are dealing with a substantial amount of cash and want your savings protected at a single bank, Axos may be a good choice for you.
New customers can earn a $100 welcome bonus by opening an account with just a $50 minimum opening deposit.
10. Truist Bank – Best for Relationship Banking & Innovative Savings Perks
Truist Bank is one of the top 10 largest national banks, formed as a merger between BB&T and SunTrust in 2019. Called “the biggest bank you’ve never heard of” by CNN Business, Truist holds assets of $574 billion and has been growing steadily since the merger.
Truist offers checking and savings accounts, CDs, and credit cards. Truist checking and savings customers can earn perks and benefits. This includes access to Long Game, a savings game app that lets you earn cash when depositing into your Truist savings account. It also includes bonus rewards on your Truist credit cards.
Truist has four levels of relationship banking in its Truist One checking account. This means the more you deposit, the more perks you will receive, up to a 50% loyalty bonus on Truist credit cards, and a discounted annual fee for a Delta SkyMiles debit card. Benefits for relationship banking begin at $10,000 in combined average monthly balances for Truist deposit accounts.
Your Truist checking account has a $12 monthly fee, which is easy to waive with $500 or more in direct deposits each month or a $500 minimum balance across all Truist deposit accounts. Truist personal loan, mortgage or credit card customers also pay no fees on their Truist checking account.
You can also waive the monthly fee with a linked Small Business checking account or if you are a student under the age of 25. You’ll need a $25 minimum opening deposit for a Truist One checking.
Customers with lower income or just getting started establishing their finances can benefit from Truist Confidence checking and savings accounts. The account has just a $5 monthly maintenance fee, which is easily waived.
11. Capital One – Best for High Interest Rates at a Brick and Mortar Bank
Like Chase Bank, Capital One is well known for its top-rated rewards credit cards. The company is also one of the best national banks with a savings account and CDs offering interest rates higher than the national average.
Capital One Performance 360 savings has a 3.90% APY, no monthly maintenance fees, and no minimum deposit to open your account. A Capital One 360 Performance checking account, similarly, has no monthly maintenance fee, overdraft protection through your linked savings account, and early direct deposit.
You can bank with no fees at a network of 70,000+ ATMs nationwide, and can deposit cash easily at CVS retail locations. Although you must open your Capital One Performance account online, you can receive personalized service and deposit cash at any Capital One bank branches or Capital One Cafes.
12. PNC Bank – Best in East and Southwest
PNC Bank is a large, national bank with branch locations across 29 states. Most branches are in the east, south, and southwest, although you will also find branch locations in some Midwest states.
PNC Bank’s online checking account is called Spend and it links to the PNC VirtualWallet. You can add a savings account, called Reserve, or upgrade to the Performance Select product with two tiers of savings and double layer overdraft protection.
When you set up your VirtualWallet with PNC Bank and open your Spend account, you can earn a $50 bonus.
Combining your Spend account with a PNC Bank Reserve account yields even more benefits. Earn a $200 bonus when you qualify. Finally, if you open a Performance Select VirtualWallet, you could earn $400.
Each account comes with a low monthly fee that is easily waived through qualifying monthly direct deposits or by meeting minimum balance requirements.
13. Wells Fargo – Best for Checking Account Options
Wells Fargo, one of the “big four,” is the fourth largest of the best national banks in the U.S. It is known for having many convenient bank locations, with 4,700 branch locations.
The vast number of branches across the country puts it top on our list for in-person banking and customer satisfaction.
Plus, we also rated it best for various checking account choices for everyone from children to retail investors.
Like the other national banks on this list, Wells Fargo has checking, savings, and CD accounts. The bank has four checking account options for consumers at various stages of their financial lives:
Clear Access Banking, with no overdraft fee and a low $5 monthly fee, waived for teens and young adults ages 13 to 24
Everyday Checking, the most popular bank account, with optional overdraft protection
Prime Checking, offering discounted interest rates for loans and higher interest rates for linked CDs and savings accounts
Premier Checking, a relationship banking service with 24/7 support and discounts on investing services
It’s easy to waive the $10 fee on Everyday Checking with a $500 minimum daily balance or $500 in monthly direct deposits. Waive the $25 fee on your Prime checking with $20,000 in linked balances. Similarly, your Premier Checking account will be free with $250,000 in linked balances, including investments with the bank’s Advisors.
You’ll need a $25 minimum opening deposit to open your account.
14. Ally Bank – Best Online Only Bank for Savings
Ally Bank is widely recognized as one of the best national online banks. It has very few fees, including no maintenance fee, no overdraft fee, and no ACH fee (even on expedited transfers). Plus, you’ll earn interest of 0.25% in your checking account and 3.85% APY on savings, including money you have allocated into various buckets.
We rated Ally Bank as the best online only bank for savings, not just because of the high interest rate, but because it offers so many ways to manage your money and ramp up your savings efforts.
You can set up recurring transfers into your savings account for specific goals or just to build up your emergency coffers. You can choose to round up transactions made with your Ally Bank debit card, or even electronic payments and checks. When Ally Bank finds at least $5 in “round-up” savings, it will be transferred automatically to your checking account.
Finally, Ally Bank analyzes your checking account periodically to reveal extra funds that are “safe to save.” Ally Bank automatically transfers that money for you. But you can transfer it back whenever you’d like.
In addition to these savings benefits, Ally Bank lets you access your money with your debit card with no fees at any of 43,000+ Allpoint ATMs. The online bank also refunds up to $10 in fees charged by out-of-network ATMs.
You can avoid stress and overspending with the Overdraft Transfer Service, which automatically transfers money from your Ally Bank savings account into checking. If you exceed six transfers or six savings withdrawals per month, Ally Bank will reimburse those fees, too.
You can also apply for CoverDraft℠ Coverage, which will cover up to $250 in charges that would put your account in the negative. You’ll qualify 30 days after you deposit at least $100 into your checking account. If you receive qualifying direct deposits of at least $250 two months in a row, you can increase your coverage to $250.
15. TD Bank – Best for Overall Banking Satisfaction
TD Bank, deemed America’s most convenient bank for its number of branches, branch hours and excellent customer service, blends the best of brick and mortar banks with easy online banking.
Most TD Bank locations are open seven days a week, including Sundays, with extended hours beyond what most brick and mortar banks provide. Most TD Bank branches are located across the East Coast, with locations in 15 different states and Washington, D.C.
TD Bank is the 7th largest bank in the U.S. based on deposits, with 1,668 branch locations nationwide. You can also reach customer service by phone, 24/7/365, which earns TD Bank high marks for banking satisfaction.
TD Bank offers six checking accounts for customers in various life stages:
TD Essential Banking
TD Convenience Checking
TD Beyond Checking
TD Simple Checking
TD 60 Plus Checking
TD Student Checking (for ages 17 to 23)
Currently, TD Bank is offering sign-on bonuses for new customers who open a TD Beyond or TD Convenience bank account. You’ll need a qualifying direct deposit (or more than one) totaling $2,500 within the first 60 days to earn $300 with TD Beyond, and a direct deposit of just $500 within the first 60 days to earn $200 with TD Convenience.
16. Schwab Bank – Best for Investors
Schwab may be best known as an investment service, but the bank was rated highest in banking satisfaction with checking accounts from J.D. Power & Associates four years running.
If you have a Schwab investment account, or are considering opening one, Schwab could be the best choice in banking for you.
The Schwab Bank Investor checking account has no foreign transaction fees, no minimums, and unlimited ATM fee rebates. Plus, earn 0.45% annual percentage yield on checking. Schwab’s savings account offers 0.48% APY.
Schwab also offers exceptionally high interest rates for CDs, with up to 5.40% APY and terms as short as 30 days. You’ll receive FDIC protection exceeding the federal maximum because you can purchase CDs from multiple banks, all through Schwab investment.
Methodology: How We Chose the Best National Banks
We evaluated a variety of banks and credit cards, taking into consideration the:
Variety of products
Interest rates
Monthly fees
ATM fees and ATM fee reimbursement
Branch locations and number of branches
Minimum deposit requirements
Fraud protection and security
We also looked at consumer reviews, and drew on the general reputation of each bank to find the best national bank.
Finding the Best National Bank
Now that we’ve explored the specifics of the best online banks and brick and mortar banks nationwide, you probably still have questions about which one is really the best national bank.
Let’s compare the three largest in the U.S. based on number of branches, interest rates, and overall banking satisfaction.
Chase vs. Wells Fargo
For the largest nationwide bank, Chase offers excellent banking satisfaction with an A+ rating from the Better Business Bureau, 4,800 branch locations, and an easy and intuitive mobile app. If you are shopping for a bank credit card, Chase also offers some of the best rewards cards available today.
Wells Fargo rivals Chase when it comes to number of branches, with roughly 4,700 locations across the U.S. It’s somewhat easier to waive the checking account fees at Wells Fargo. Wells Fargo offers higher interest rates for savings, with a 0.15% APY compared to Chase’s 0.01%.
Both banks have lower interest rates than you might find at online banks. However, if you are looking for national banks with a solid reputation, many branches, and high marks in banking satisfaction, either Chase or Wells Fargo would be a good choice.
Wells Fargo vs. Bank of America
Bank of America and Wells Fargo are the second and third-largest banks in the U.S. based on assets. BofA only has 4,000 branches compared to Fargo’s 4,700, but BofA boasts more ATMs nationwide.
BofA stands out when you join the Preferred Rewards program because you can waive the fees on your bank account and enjoy perks, bonus rewards on BofA credit cards, and rate discounts on loans.
If you have a large balance or are looking for an investing platform through your bank, BofA may be your best choice. On the other hand, Wells Fargo offers high interest rates on savings and convenient branch locations nationwide.
Common Questions
People have many questions related to whether an online bank is better than a traditional bank or whether a local bank is better than one of the largest national banks. We break it all down here.
Which is better, an online bank or a brick-and-mortar bank?
If you are looking for the highest interest rates and generous rewards programs, you are highly likely to find them at online banks. However, there are some advantages to a brick and mortar bank, including in-person service at local branches, the availability of paper checks, and easy ways to deposit cash in person or at branch ATMs.
You should expect the best national online banks and the best brick and mortar banks to have robust mobile apps, easy-to-waive fees, and fraud protection.
Make sure whatever bank you choose is “Member FDIC,” which means your deposits are insured up to $250,000 per account holder, per account type. That means joint accounts have $500,000 worth of FDIC insurance protection.
Is my money safer in a national bank vs. a regional bank (or a national credit union vs. a regional credit union)?
All banks on this list are Member FDIC, which means they are insured to the maximum allowable limit of $250,000 per account holder, per account type. Credit unions are covered up to the same limits by the National Credit Union Administration.
Many online banks are insured up to $2 million or more. These financial institutions divide cash deposits among multiple partner banks. Each bank insures deposits up to the maximum limit allowed by the Federal Deposit Insurance Corp. Read the fine print to determine your coverage limits when you choose a bank.
Beyond that, your money should be equally safe in a national bank, a smaller bank, or a credit union of any size. Also look for features such as fraud protection, fraud alerts via text, email or in the mobile app, and enhanced website security measures. You should also be able to lock and unlock your debit card in the mobile app if you misplace it or believe it may have been stolen.
What makes big banks different from smaller banks?
By definition, big banks will have larger market capitalization, which represents the total value of a bank’s stocks. Big banks will also hold more assets. For instance, Chase, which is the world’s largest financial institution, holds $3.2 trillion in assets. The second-largest national bank, Bank of America, possesses $2.41 trillion in assets. Larger financial institutions may also have more bank branches.
In many other ways, big national banks and smaller banks are similar, especially today. Customers want specific features and are unwilling to compromise on things like fee-free ATMs, no monthly fees, early direct deposit, and an intuitive mobile app.
How much interest do the best big banks pay?
In general, some of the largest national banks do not have the highest interest rates for savings and very few offer interest earning checking accounts.
Capital One 360 and Discover are two of the best national banks that offer interest on checking. To earn a higher APY with one of the largest national banks, you might want to consider CDs.
Are national banks better than other kinds of banks?
National banks aren’t necessarily better or worse than other kinds of banks. They may have more convenient branch locations, a higher number of branches, and a greater variety of products, but they might also have higher fees. Decide what’s most important to you when you choose a bank.
If you’d prefer to trust your money with one of the largest national banks, with a large market capitalization, high value, and branches nationwide, consider opening your checking and savings accounts with one of the best national banks on this list.
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
The Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
5. Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.
No financial institution can be all things to all people, but some come pretty close.
BMO Harris Bank is one of those banks. It’s a full-service bank with hundreds of branches in the United States (mainly in the Midwest and Southwest) and thousands of fee-free ATMs. With a comprehensive array of checking and savings accounts, plus credit cards, auto loans, and more, BMO Harris Bank is about as close as a bank can come to being a one-stop shop.
Does that mean BMO Harris Bank is right for you? Not necessarily. Plenty of other high-quality banks vie for your deposits every day. See whether BMO is the best fit — or whether you should see what else is out there instead.
What Is BMO Harris Bank?
BMO Harris Bank N.A. is an American bank that provides consumer and business banking services online and through a network of physical branches. Eligible deposits with the bank are FDIC-insured up to statutory limits set by Congress.
Its deposit accounts include checking, savings, money market, and certificates of deposit (CDs), and it also offers credit products like credit cards, mortgages, auto loans, personal loans, and private student loans. BMO Harris Bank has a wealth management division that focuses on relatively high net worth individuals and families, but no self-directed brokerage platform.
Is BMO Harris Bank a good place to park your cash, borrow money, and invest for the future? I’ve reviewed dozens of online banks and brick-and-mortar financial institutions over the years, and I believe BMO Harris Bank is in the upper echelon of the brick-and-mortar group. In other words, it’s one of the best traditional banks to work with — in part because it has embraced technology and innovation in a way that many of its competitors haven’t.
How BMO Harris Bank Stacks Up
BMO Harris Bank is a full-service financial institution that consistently ranks among the top traditional banks for U.S.-based consumers.
It competes not only with other big banks like Chase Bank and Citibank but with major online banks as well. If you’re torn between an “innovative incumbent” like BMO Harris Bank and an “established upstart” like Ally Bank, see for yourself how the two compare.
BMO Harris Bank
Ally Bank
Monthly Maintenance Fees for Checking
None on the BMO Harris Smart Advantage™ Account
None
Savings Account Yields
Relatively low
3.60% APY
CD Yields
Up to 4.50% APY
Up to 4.25% APY
Credit Products
Credit cards, mortgages, credit-builder loans, home equity products, personal loans, auto loans, private student loans
Credit cards, mortgages, home equity products, auto loans
Self-Directed Brokerage
No, managed investments only
Yes
Physical Branches
Yes, in Illinois, Arizona, Wisconsin, Indiana, Florida, Missouri, Kansas, and some other states
No
What Sets BMO Harris Bank Apart?
Where does BMO Harris Bank get its edge? Out of all the bank’s advantages and selling points, three things really stand out:
A Checking Account With No Monthly Maintenance Fee, Period. The BMO Harris Smart Advantage™ Account is a truly free checking account. It doesn’t charge a monthly maintenance fee, period, regardless of balance or relationship status with BMO, yet it’s packed with features. It’s rare to find an account like this at a big bank.
One-Stop Shop for Credit. Even Ally Bank, probably the best online bank for borrowers, doesn’t bother with certain credit products. BMO Harris Bank has a comprehensive lineup of loans and lines of credit, from home and auto loans to personal and student loans.
Excellent CD Rates (For a Traditional Bank). BMO Harris Bank’s CD rates are competitive with the top online banks for CD customers. And they blow most traditional banks’ CD rates out of the water.
Key Features of BMO Harris Bank
BMO Harris Bank has a comprehensive lineup of deposit accounts and loans, plus some nice value-adds like account opening bonuses and a handy digital app. See what to expect from its products and how to determine which, if any, are right for you.
Account Opening Bonus Opportunities
BMO Harris Bank has some fantastic new account opening bonus opportunities for new checking customers.
BMO Harris PremierTM Account — $350 Cash Bonus
This one is best for higher-income folks who have no problem meeting the direct deposit requirement. Here’s how it works:
Open a new BMO Harris PremierTM Account by July 14, 2023, and receive a total of at least $7,500 in qualifying direct deposits during the first 90 days of account opening. If you do, you’ll get a $350 cash bonus in your account.
This new checking account offer is not available for current BMO Harris personal checking customers, nor to customers who closed a personal checking account within the past 12 months. Open on-line or in branch; accounts subject to approval.
If you can’t notch $7,500 in qualifying direct deposits during the first 90 days, this bonus could be right for you. It’s nearly as generous:
Open a new BMO Harris Smart AdvantageTM or Smart MoneyTM Account by July 14, 2023,and receive a total of $4,000 in qualifying direct deposits within 90 days of account opening. Do this and you’ll get a $200 cash bonus in your account.
The same restrictions apply to this offer — you must be a new BMO Harris personal checking customer and can’t have had a BMO Harris personal checking account within the past 12 months.
Checking Accounts
BMO Harris Bank offers three consumer checking accounts, each with its own clear use case. All offer access to in-branch and online banking, plus low- or no-fee transactions at more than 40,000 in-network ATMs:
BMO Harris Smart Advantage™ Account: With no monthly maintenance fee, this account is ideal for folks with modest incomes and low-ish balances — folks who wouldn’t be able to avoid monthly maintenance fees at most big competitor banks.
BMO Harris Smart MoneyTM Account: Is a $5 monthly maintenance fee worth it for no overdraft fees, ever? If you occasionally dip into the red, probably yes. And there’s no maintenance fee if you’re under age 25, making this a solid student checking account.
BMO Harris Premier™ Account: BMO’s fanciest checking account entitles you to relationship benefits like up to $25 in monthly out-of-network ATM fee reimbursement and 0.50% off your home equity line’s interest rate. Benefits increase with your total BMO deposit balance.
Like all banks, BMO charges some account fees beyond the headline monthly maintenance fees (where present). Here’s how the Smart Advantage Account’s fee schedule looks:
Fee Type
Fee Amount
Monthly Maintenance Fee
$0
Allpoint and BMO Harris ATM transactions
$0
Non-BMO ATM transactions
$0
Paper statements
$2, but $0 when you opt into paperless
Check images
$3, but $0 when you opt into paperless
Overdraft fee
$15, but $0 when you opt into overdraft services
Minimum opening deposit
$25
Savings Builder Account
The Savings Builder Account is BMO Harris Bank’s standard savings account. There’s a $25 minimum opening deposit and no monthly maintenance fee.
Savings Builder’s defining feature is a $5 reward for each month you save at least $200 during the first year. Save $200 per month for all 12 months of the first year from account opening and you’ll clear a cool $60 in extra cash.
Moving forward, the Savings Builder Account has a negligible yield — just 0.01% APY. First-year deposit bonus aside, it’s not suitable if you’re looking for a high-yield savings account. On the bright side, it doesn’t have the usual savings account transaction limit. You’re free to make as many withdrawals as you like without incurring a penalty.
Money Market Account
BMO Harris Bank’s money market account has a higher yield than the Savings Builder Account. However, the yield requires a paired Premier checking account, and your actual return depends on how much you have on deposit across all BMO accounts.
To get the best rates — 2.00% higher than the baseline — you need at least $250,000 in deposits with BMO. And you need at least $10,000 in the money market account to avoid the $10 monthly maintenance fee.
Needless to say, this one’s better if you have a lot of cash on hand.
Certificates of Deposit
BMO Harris Bank offers standard CDs with terms ranging from three months to 60 months (five years). All require a minimum opening deposit of $1,000 and charge interest penalties if you withdraw principal before maturity.
BMO’s standard CD rates are not competitive. The longer-term products earn less than 0.50%, compared with 4.00% APY or higher at the best online banks for CDs.
BMO does offer CDs with competitive rates though. These special CDs, as they’re known, earn upwards of 4.00% APY on terms ranging from 13 to 59 months. They require a minimum deposit of $5,000, but if you can swing that, they’re well worth it.
You can structure select CDs as individual retirement accounts (IRAs) and enjoy tax-deferred or tax-free growth.
Individual Health Savings Account
BMO Harris Bank is one of relatively few banks that offer direct-to-consumer health savings accounts (HSAs). If you’re enrolled in an individual or family high-deductible health plan (HDHP) not through your employer, a BMO Harris Bank HSA can help you save for planned and unplanned medical expenses — or save for retirement if you stay healthy.
BMO’s HSA is delivered by Lively, a leading provider of individual HSAs. There are no ongoing or hidden service fees or monthly fees — you pay nothing out of pocket for the account — and you can withdraw money at any time to cover eligible health care expenses without paying taxes. Your contributions may be tax-deductible as well.
Credit Cards
BMO Harris Bank has four consumer credit cards, although its lineup has changed in the past and could in the future:
BMO Harris Bank Platinum Rewards Mastercard®. Earn 2 points per $1 spent on eligible gas and groceries, up to $2,500 in combined purchases each calendar quarter. Plus, get 10% bonus points on your cardmember anniversary each year (based on prior-year spending) and 0% introductory APR on balance transfers for 12 months from date of first transfer (must be completed within 90 days from date of account opening).
BMO Harris Bank Premium Rewards Mastercard®. Earn 3 points per $1 spent on eligible dining, hotels, and airfare, up to $2,500 in combined spend each calendar quarter, plus 15% bonus points on your anniversary. The same first-year balance transfer promotion applies, but there’s a $79 annual fee after the first year.
BMO Harris Bank Cash Back Mastercard®. Get 5% cash back on eligible streaming and cable/satellite TV purchases and 3% cash back on eligible gas and grocery purchases, up to $2,500 in combined spend per calendar quarter. Plus, get up to $400 in cellphone protection (restrictions apply) and the same first-year balance transfer deal.
BMO Harris Bank Platinum Mastercard®. If you need to finance a major purchase, this is your card. Enjoy 0% APR for 15 months from account opening on purchases and balance transfers.
Loans and Lines of Credit
BMO Harris Bank offers a full lineup of loans and lines of credit:
Mortgage loans, including fixed-rate and variable-rate conventional loans, jumbo loans, and specialty loans like VA and FHA mortgages
Home equity products, including home equity loans and lines of credit
Specialty property loans for bank-owned properties — BMO is one of the few banks that connects consumers with distressed property opportunities
Unsecured personal loans and lines of credit
Savings secured loans — borrow against your savings balance
Credit-builder loans — ideal for people just beginning their credit journeys
Auto loans
Private student loans and student loan refinancing
Premier customers may qualify for rate discounts and other benefits on select loan products.
Wealth Management Services
BMO Harris Bank has a team of in-house wealth advisors who offer financial planning and investment management services customized to your needs. One thing to note here: BMO doesn’t have a self-directed brokerage, so if you prefer to manage your own funds, you’ll need to look elsewhere.
Mobile Banking App
The BMO Harris mobile banking app is compatible with Android and iOS devices. It’s capable of handling most everyday banking functions, including online bill pay, money transfers, and statement review.
Advantages of BMO Harris Bank
BMO Harris Bank has a lot going for it. These are its most notable advantages.
Actually Has a Free Checking Account With No Minimum Balance. BMO Harris Bank is one of the few big banks that has a truly free checking account: the Smart Advantage Account. Most competitors require you to jump through some sort of hoops to avoid a monthly fee or impose age-based restrictions you can’t avoid.
Offers a Health Savings Account for Individuals. BMO Harris Bank’s individual HSA is another rarity among big banks. And it’s backed by Lively, a leader in the HSA space.
Built-in Free Overdraft Protection With Smart Money. BMO’s Smart Money Account doesn’t charge for overdrafts, period. Call it complimentary overdraft protection — it’s a big deal if you sometimes cut it close.
Impressive Range of Deposit Accounts and Loans. BMO Harris has three checking accounts, several savings products, and just about every major type of consumer loan you can imagine. It’s a one-stop shop for consumer financial products and services.
Competitive Rates on Special CDs. If you can meet the $5,000 minimum balance requirement, BMO’s special CDs are a great deal. Yields range from 2.00% to 3.00% annual percentage yield and appear responsive to changes in benchmark interest rates.
Disadvantages of BMO Harris Bank
Consider these potential drawbacks before opening an account with BMO Harris Bank.
Poor Savings Account Yields. BMO’s Savings Builder Account has a very poor yield. It’s not even worth talking about, frankly — if you’re in the market for a high-yield savings account, look elsewhere.
Standard CD Rates Aren’t Competitive. BMO’s standard CD rates aren’t competitive either. Fortunately, as long as the special CDs are available, you don’t have to bother with them.
Special CDs Have High Minimum Balance Requirements. BMO’s special CDs have high minimum balance requirements ($5,000). If that’s tough for you to swing, you may need to look elsewhere for competitive CDs.
Premier Benefits Have High Balance Requirements. BMO’s Premier relationship tiers offer lots of potentially valuable perks and benefits, but you have to hold up your end of the bargain by bringing tens of thousands of dollars to the table. The juiciest perks are reserved for people with at least $250,000 in eligible BMO accounts.
Is BMO Harris Bank Legit?
Yes, BMO Harris Bank is legit. It’s the eighth largest bank in North America by assets and serves more than 12 million customers on both sides of the U.S.-Canada border. It has been in business for nearly 200 years and has paid dividends to shareholders for virtually all of that time — dividends that have steadily increased over the decades.
For U.S.-based customers, BMO Harris Bank is a Member FDIC institution, which means eligible deposits are insured up to statutory limits by the Federal Deposit Insurance Corporation. When you open a checking, savings, money market, or CD account with BMO Harris, you can rest assured that your money is backed by the full faith and credit of the U.S. government — up to $250,000 per account type.
Final Word
BMO Harris Bank is a full-service financial institution that has been in business for hundreds of years and serves millions of customers in the U.S. and Canada. It’s accessible through a network of physical branches (mostly in the Midwest and Southwest), through thousands of in-network ATMs, and online and through the BMO Harris Bank mobile app from anywhere.
BMO Harris Bank stands out for several reasons. It has one of the best no-maintenance-fee checking accounts of any big bank. It offers a comprehensive lineup of savings products, although its actual savings accounts don’t have competitive yields. And it’s basically a one-stop shop for consumer credit, from credit cards and auto loans to mortgages and education financing.
If you’re in the market for a new bank, I’d encourage you to give BMO Harris Bank serious consideration. It’s not perfect, to be sure, but it’s better than most.
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.