As COVID-19 swept the globe and the country, it put stress on all types of supply chains and industries. It has also put stress on the financial and health situations of many Americans.
If you’re looking back to whenever your last healthcare benefits enrollment period was and grimacing at the choices you made, you’re in luck—you might have the chance to change them. In addition to extending the tax deadline for 2020, the IRS has issued a rule modification in light of the pandemic that might allow you to change your elections mid-year instead of waiting for the next open enrollment period.
Find out more about these changes and what they might mean
for you here.
Key Points
You may be able to switch to a different healthcare
plan if your employer allows it.
You may be able to drop employer-sponsored
coverage if your employer allows it.
You may be able to change contributions to a
flexible spending account (FSA) if your employer allows it.
Employers may voluntarily extend the grace
period for using 2019 FSA funds.
A Potential Mid-Year Open-Enrollment Period
The IRS rule change allows mid-year enrollment in a
different plan that your employer offers. This means employees may be able to
make new elections to better use their income and protect themselves against healthcare
expenses.
However, employers are being given the choice of whether
they want to offer these options. The answers to the questions below all depend
on whether your employer elects to allow changes.
Can I drop my healthcare insurance altogether?
Yes, you can elect to end healthcare insurance coverage through your employer. The caveat is that you must replace that coverage with a qualifying plan through the health insurance marketplace, a spouse’s benefits or another option.
Can I switch healthcare plans?
If the employer allows it, yes, you can switch healthcare
plans outside of the normal open enrollment. This is true even for people who
have not had a qualifying event such as a job loss or a change in marital
status.
Can I get health insurance if I didn’t have it before?
Yes, if your employer allows an open enrollment period mid-year, you can elect benefits even if you previously declined them. This allows more people to get insurance that they may now want or need in light of the pandemic.
If I change plans, will I lose what I’ve paid toward my out-of-pocket deductible?
It’s probable that changing plans will reset all
benefits-related counters. That includes deductibles and out-of-pocket
expenses. If you’re considering making a change, weigh how much you’ve already
contributed toward your deductible and out-of-pocket maximum. In some cases, it
might be more financially beneficial to stick with the plan you have if you’re
close to or have already met your maximum.
Changes to FSAs
The IRS also provides a rule change that addresses flexible spending accounts. Again, these changes are dependent upon the employer choosing to participate.
If the employer does choose to participate, employees can make mid-year changes to their FSA elections. For example, you might have elected not to fund an FSA or to fund it very minimally. But in light of the health crisis, you may now want to put more money into your account to cover medical expenses. You may be able to do so.
Alternatively, perhaps your spouse lost his or her job due to COVID-19, and you’d previously elected to fund your FSA with a large amount. You might now need that money to pay for non-FSA-approved expenses. You may be able to elect to reduce your contributions.
Changes to Dependent Care Assistance Programs
The same rule change applies to section 125 cafeteria
plans used to help cover the cost of childcare programs. If your employer
allows it, you can elect to increase or decrease the contributions you’re
making to these programs.
For example, you might have previously elected to contribute enough money to pay for your children’s daycare expenses. This allows you to pay those costs with pretax dollars.
However, during the pandemic, your daycare might have closed, leaving your kids at home with you. Those contributed dollars are going nowhere and you risk losing them. If your employer allows it, you can change your contribution to stop adding money into your cafeteria plan. You can then use those funds to cover expenses related to your children being home.
Healthcare Coverage for COVID-19
The Coronavirus Aid, Relief and Economic Security Act instituted some exemptions to help ensure high-deductible plans and other insurance plans covered more services related to COVID-19. For example, the plan includes a specific exemption for telehealth services to help allow insurance providers to cover necessary telehealth treatments and appointments.
The IRS rule change allows those exemptions to be applied
retroactively up to January 1, 2020. That means if you sought telehealth or
other COVID-19-related care in the past months, you may be able to have those
claims adjudicated by your insurance plan at this time.
Reach Out to Your Employer’s Benefits Office
Understanding benefits and how they can impact your entire financial life can be difficult. Start by reaching out to your employer’s HR or benefits office to understand whether they’re going to offer the option for mid-year elections and whether they can provide information about how the options work.
Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.
Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
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The brilliant city of Philadelphia is a wonderful place to work and play. But city living isn’t the life for everyone.
Fortunately, the region – known as the Delaware Valley — has a slew of options for incredible boroughs, towns and cities near Philadelphia in which to live. These spots offer a wide range of entertainment, dining, nightlife, recreation and comfortable apartments.
Of all the incredible places to live within easy commuting distance of Philadelphia, it’s hard to narrow down to a top 10. But we are sure you’ll find these 10 cities near Philadelphia — all within five to 25 miles of Center City and listed by distance from the city — perfect places to call home.
Haddon Township, NJ
Ardmore, PA
Conshohocken, PA
Hatboro, PA
King of Prussia, PA
Langhorne, PA
Phoenixville, PA
West Chester, PA
Wilmington, DE
Doylestown, PA
Distance from downtown: 7.0 miles
One-bedroom average rent: $1,530 (down 3.38 percent since last year)
Two-bedroom average rent: $1,713 (down 13.88 percent since last year)
In New Jersey, townships are full-fledged municipalities, and Haddon Township is one of the region’s best cities near Philadelphia. Just 10 or so minutes from the Ben Franklin Bridge to Center City Philadelphia, the township offers both the quiet of a suburb and a main street that rivals any in the state for drinking and dining options.
Bustling Haddon Avenue in the downtown Westmont section is a mile-long stretch featuring some bakeries, cheesesteak joints, pasta shops, pizza places, taquerias, bars and taverns. Farther out, chain dining and big box stores line White and Black Horse pikes.
Haddon also offers plenty of green space, from Cooper River Park in the north along the lake to Newton Lake Park and Saddler’s Woods on the south.
Public transportation into Philly is a snap with Westmont Station a direct link via PATCO with park-and-ride facilities.
Find apartments for rent in Haddon Township Buy a house in Haddon Township
Photo source: Apartment Guide / One Ardmore Place
Distance from downtown: 7.7 miles
One-bedroom average rent: $1,357 (down 61.90 percent since last year)
Two-bedroom average rent: $2,552 (down 35.50 percent since last year)
Among swanky locales like Bryn Mawr, Villanova and Gladwyne, Ardmore is the iconic Philadelphia Main Line’s most accessible city to everyday folk.
Ardmore’s median income comes in at a tenth that of some of the region’s richest communities and is a much cheaper home value. But Ardmore is also less insular. The city is a destination for visitors and day-trippers from across the Delaware Valley.
Ardmore splits down the middle between Montgomery and Delaware Counties and Haverford and Lower Merion Townships. Its backbone is busy Lancaster Avenue that offers retail shopping, trendy restaurants and the 500-capacity Ardmore Music Hall, one of the area’s top concert clubs.
While other Main Line towns shun outsiders, the hum of Lancaster Avenue feels welcoming to all.
And on the north end of town is one of the region’s best spots for retail therapy or even just window shopping. Suburban Square is a six-square-block upscale outdoor shopping plaza. Dating back to the 1920s, the square is one of the nation’s oldest planned shopping centers.
Find apartments for rent in Ardmore Buy a house in Ardmore
Photo source: Conshohocken Borough / Facebook
Distance from downtown: 12.6 miles
One-bedroom average rent: $1,705 (down 7.82 percent since last year)
Two-bedroom average rent: $2,265 (up 7.69 percent since last year)
Throughout its history, Conshohocken has always held an important geographic location. Sitting at one of the largest bends of the Schuylkill River, the land was originally a large milling region along rail and shipping lines.
As interstates went up, the region morphed into a factory industrial center. As manufacturing declined, it was those same highways that turned “Conshy” into one of the most desirable suburban-chic and cosmopolitan residential commuter communities in the city.
Conshohocken lies between the I-476 Blue Route and I-76 Schuylkill Expressway at the “Conshohocken Curve.” As industry left, easy access to the region’s two major highways transformed it into a hub for upper-middle-class commuters into the city, especially as apartment complexes and mid-priced high-rise rental towers rose.
And as the population increased, so did the enclave which features shopping and dining spots and many glittering hotels.
The shoreline also features a section of the running and biking Schuylkill River Trail path.
Nearby, Conshohocken’s Fayette Street main street is popular among its young professional population, with a median age of 32 with 63 percent single. The downtown strip offers a selection of quaint boutiques, eateries and cafes, as well as a variety of notable bars.
Find apartments for rent in Conshohocken Buy a house in Conshohocken
Two-bedroom average rent: $1,695 (up 9.18 percent since last year)
Eastern Montgomery County has just a few towns with true main streets, but one of the best of the bunch is Hatboro. The borough sits along the Bucks County border, a suburban town settled among some residential communities.
Hatboro is known for its plethora of parks and green spaces, including the popular Hatboro Memorial Park and Memorial Pool. But its growing notoriety as a suburban craft beer lovers’ destination is what’s gaining prominence.
In the heart of the Craft Beer Trail of Greater Philadelphia, Hatboro offers Crooked Eye Brewery and Artifact Brewing, both opened within the last several years.
The breweries sit along York Road, Hatboro’s main street. The corridor also offers many bars and gastropubs, vintage clothing stores, hoagie shops and produce grocers, cafés and popular bakeries and Daddypops diner, a favorite of Food Network’s Guy Fieri.
The borough is also convenient for commuters, with Hatboro station along the Warminster Line to Center City just off York Road.
Find apartments for rent in Hatboro Buy a house in Hatboro
Distance from downtown: 16.9 miles
One-bedroom average rent: $2,204 (up 5.44 percent since last year)
Two-bedroom average rent: $2,544 (up 0.81 percent since last year)
To speak like a true Philadelphian, pronounce the name of the city of King of Prussia the proper way, “Kingaprusha.”
If you’re familiar with the western Montgomery County city, it’s most likely for one thing: its megamall. The King of Prussia mall is massive, at 2.8 million square feet and 450 stores. It’s the third-largest mall in the nation behind only the Mall of America and the new American Dream in New Jersey.
This central town nestles right along the Schuylkill River — between four major thoroughfares: the Pennsylvania Turnpike, I-76 Schuylkill Expressway, and U.S. Routes 202 and 422. Sitting between renowned Valley Forge Historical Park and county seat Norristown, King of Prussia is both a popular commuter city and an important edge city in its own right.
One key location in KOP is the King of Prussia Town Center. Opened in 2016, the large planned lifestyle development has become a hub of residential activity in town. Acting as the city’s downtown, Town Center offers a bevy of apartments and townhouses at Village at Valley Forge with mixed-use and office space, upscale department stores and a Wegman’s grocery, retail shops and several new restaurants and bars.
Nearby are several office parks, Upper Merion High School and the Valley Forge Casino Resort.
The area is growing so quickly, local transportation authority SEPTA is developing a $2 billion regional rail line to directly connect King of Prussia with University City and Center City Philly.
Find apartments for rent in King of Prussia Buy a house in King of Prussia
Distance from downtown: 22.0 miles
One-bedroom average rent: $1,413 (down 1.55 percent since last year)
Two-bedroom average rent: $1,691 (up 6.72 percent since last year)
One thing you can have living in the suburbs that you usually don’t in the middle of a city is an amusement park down the street. That’s one of the features of living in the borough of Langhorne and adjoining Middletown Township. Here you’ll find Sesame Place, the Sea World-owned young children’s Sesame Street theme park.
Langhorne borough proper and surrounding Middletown Township are collectively referred to as Langhorne.
The area is an important business and shopping center along Neshaminy Creek in charming Bucks County. Along with numerous national chains and big box stores, a myriad of service centers, retail shops and old-school restaurants line Pine Street and Maple Avenue.
In addition, the borough features a quaint historic district dating back to the 19th century. Sitting just off the I-295 beltway, Langhorne is a popular bedroom community for commuters to Trenton as well as Philadelphia.
The expansive Middletown Country Club splits the borough, with the multistory Oxford Valley Mall out in the Township. And surrounding Lake Luxembourg is the expansive 1,200-acre Core Creek Park. The region offers a variety of housing options, from affordable apartments to large suburban mansions.
Several locations still offer 1950s style tract housing leftover from the expansion of the nearby Levittown planned community.
Find apartments for rent in Langhorne Buy a house in Langhorne
Photo source: Borough of Phoenixville / Facebook
Distance from downtown: 23.9 miles
One-bedroom average rent: $1,229 (down 14.82 percent since last year)
Two-bedroom average rent: $1,426 (down 12.71 percent since last year)
In 1958, a large gelatinous alien creature was let loose and devoured dozens of residents of Phoenixville, Pennsylvania. That of course only happened on screen, in the Steve McQueen horror classic “The Blob,” which filmed and took place in the Chester County suburb.
The movie features a famous scene where terrified residents flee the alien out the Colonial Theater’s doors. That real-life theater is the centerpiece of Phoenixville’s Bridge Street main street as well as the annual Blobfest which celebrates the landmark film.
But as important as the film is, younger residents will tell you it’s the craft beer scene that makes Phoenixville special. After languishing for years as a rundown mill town, a revitalization plan included a call for brewers to set up shop. Today the city of just 17,000 offers 10 craft breweries.
On Bridge Street alone are four breweries, along with a tap house, a distillery and three winery tasting rooms. That collection gives downtown Phoenixville the distinction of having the most breweries per square foot of any place in the nation.
For residents, Phoenixville is more than just beer and blobs. Its absolutely teeming downtown along Bridge Street has boomed with pizzerias and bistros, coffee and smoke shops and boutiques and galleries.
Phoenixville Area High School offers a high ranking and a 15:1 student-teacher ratio. And many parks and green spaces dot the region, including the large Black Rock Sanctuary wildlife refuge along the Schuylkill River bend that also features Basin Trail for hiking and biking. The Schuylkill River Trail also crosses the borough, along French Creek.
Find apartments for rent in Phoenixville Buy a house in Phoenixville
Distance from downtown: 25.0 miles
One-bedroom average rent: $1,631 (down 1.23 percent since last year)
Two-bedroom average rent: $2,095 (up 7.54 percent since last year)
A little under 25 miles from Center City, West Chester is a more affordable alternative to the nearby Main Line. The seat of Chester County offers a selection of bars, restaurants and shops in its surprising downtown along Gay and Market streets.
Local businesses are accessible, catering to the borough’s young, affluent residents as well as budget-conscious clientele. Need proof? West Chester’s downtown sits on the top-three list of “Great American Main Streets.”
West Chester is a more affordable, younger enclave surrounded by old-money communities like Malvern, Kennett Square and Chadds Ford, with swaths of an urban-rural buffer.
The borough offers high-ranked schools and an average age of just 24.9 years old. A vibrant part of that young community is West Chester University, ranked a Top 10 Public Regional University by U.S. News.
Why is West Chester attractive to young professionals? Perhaps it’s the borough’s title as “Most Exciting Place” in all of eastern Pennsylvania. It’s a locale to meet new people, as the state’s second-most densely populated city, fifth-best for nightlife and fifth-best spot to lead an active lifestyle.
Or maybe it’s because it’s the world headquarters of the QVC shopping network.
Find apartments for rent in West Chester Buy a house in West Chester
Distance from downtown: 26.2 miles
One-bedroom average rent: $1,186 (down 14.08 percent since last year)
Two-bedroom average rent: $1,477 (up 1.09 percent since last year)
Look behind Pennsylvania and New Jersey to find the best cities near Philadelphia — don’t forget about Delaware!
Wilmington is certainly having a moment. While the previous president spent his weekends at swanky Mar-a-Lago or Bedminster golf club, the current chief executive has been taking his off weekends back in his home state of Delaware. President Biden famously grew up in and around Wilmington and is known to have commuted back to his residence weekly dating back to his earliest days as the Diamond State’s senator.
Wilmington, despite being the largest city in a completely different state, is just a half-hour drive from Center City Philly. But it’s the finance industry that fuels the economy of the Corporate City.
The 1980s Financial Center Development Act liberalized financial regulations in Delaware, removing usury laws and interest rate caps. This caused financial and insurance corporations from around the world to set up shops in Wilmington.
An attractive city to big money employers is an attractive city to its white-collar workers. And one of the favorite locals is the Christina River waterfront. Popular waterfront spots include the Blue Rocks’ Frawley Stadium, the Delaware Children’s Museum, a convention center, a movie theater, parks, trails, hotels and a slew of cafes, restaurants and bars.
And for those concerned about Wilmington’s less-than-stellar crime safety record, there is good news. The city reports being “safer now than it’s ever been.” The city is noting its lowest crime rate in recent history.
Find apartments for rent in Wilmington Buy a house in Wilmington
Photo source: Doylestown Township / Facebook
Distance from downtown: 27.2 miles
One-bedroom average rent: $1,408 (up 25.06 percent since last year)
Two-bedroom average rent: $1,999 (up 9.93 percent since last year)
Gateway to the colonial-estate-and-covered-bridge tourism lands of Upper Bucks, Doylestown is the charming exurban seat of Bucks County.
The borough offers a slew of cultural and entertainment options not usually found in a town of under 9,000, about an hour commute from Center City by either train or car.
Doylestown has one of the densest gatherings of museums out of all of the cities near Philadelphia. James Michener Art Museum (named for the native son author), the Moravian Pottery and Tile Works, the Mercer Museum and Oscar Hammerstein II Farm (the final residence of its namesake) can all be found here.
Just off the center of town is the historic art deco movie house County Theater which shows blockbusters and arthouse films alike.
Elsewhere in Doylestown’s downtown along State and Main streets are quaint thrift shops, big city-worthy restaurants, bookstores, coffee shops and brewpubs.
For those seeking a more natural setting, just as appealing is the natural beauty of rural Bucks County just outside of town, packed with hiking trails, bike paths, water recreation and nature watching. Favorite spots include urban 108-acre Central Park and wooded 1,500-acre Peace Valley Park.
Find apartments for rent in Doylestown Rent a house in Doylestown
Make one of these cities near Philadelphia your next home
No matter where you decide to call home, you can’t go wrong with any of the amazing cities near Philadelphia you might choose.
Whether in Bucks, Montgomery, Chester or Delaware Counties, across the river in South Jersey or down I-95 in Delaware, you’ll have tons to do all within a short commute into the city.
Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments in April 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.
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Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
Market speculation is seemingly everywhere. From new SPACs being issued, to the prevalence of Reddit stocks such as GameStop to the popularity of electric vehicle stocks and the rise of cryptocurrency – speculation is alive and well in the markets today.
“Mania” is a good word to describe the energy surrounding these types of investments. Dramatic daily swings are the new normal in these holdings. Hollywood elites and business moguls are attaching their names to crypto and the latest SPAC investments.
The top mania investment areas are electric vehicles, cryptocurrency, Reddit stocks, space, SPACs, precious metals and pot stocks. The dictionary definition of mania describes “excessive or unreasonable enthusiasm.” That seems about right. The result has been a meteoric rise in value not tied to business fundamentals but tied to hype, expectations or projections.
Investors looking to boost performance often wonder how much exposure to these types of investments should they have. With strong appreciation in some of the holdings, it is tempting to get into the game. Here are our top eight tips for mania investing.
1 of 8
1. Admit that it is a mania
Have some honest reflection about the investment environment you are in. Mania investing can be fun, it can be thrilling and, ultimately, it can be painful. But mania investing is not your conventional long-term investing strategy. Admit you are being swept up in a mania and acknowledge what that might mean regarding your tactics. It’s impossible to explain to yourself or your friends the fundamentals of a company with no earnings, so stop trying to make sense of it. It is a mania, not an investment based on fundamentals.
2 of 8
2. Have an exit strategy & set a price target
How far are you willing to watch your investment drop before you pull out? Set a price target and stick to it. Some of the biggest mistakes happen with investors who fall in love with a company or a product and hold it while closing their eyes. Mania investments are not typically long-term plays, and you must plan for how much risk you are willing to take. Set a target to get out and limit your downside exposure.
3 of 8
3. Limit your overall portfolio exposure
If you are going to be a mania investor, maybe you limit your exposure to 3%, 5% or 10% of your total portfolio. Understand it is the high-risk portion of your portfolio and do not allocate more than you are willing to lose. The older you are and the closer to retirement, the less you can afford to lose. The younger you are, the more you might be willing to allocate to more aggressive strategies.
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4. Diversify your manias
Maybe you like cryptocurrency — go ahead and invest in it, but buy into three different types, instead of just one, to diversify. Maybe you like electric vehicles. If so, consider adding some exposure to space or precious metals as well. Even in your mania investing, you do not want to concentrate all that allocation to just one mania strategy. Diversification can help reduce risk even in a risky space. Although, be careful of too much diversification. In a world like electric vehicles, there is a possibility of there being few winners and many losers.
5 of 8
5. Understand performance in context
The S&P 500 10-year average over the past 100 years is around a 10% return per year. Warren Buffett has averaged about 15% per year. If your mania investments have made 100% in a year, understand how rare that is and that the odds of duplicating that performance year after year are incredibly remote. Part of good investment performance is not just making money in good times, but also weathering losses during challenging times.
6 of 8
5. Know the difference between investing and speculating
Investing for the long term carries its own set of disciplines and rules and expectations. Mania investing is more akin to speculating or even gambling. It often has dramatic movements in price over a short period of time. It might include hype in the media, memes on social networks and inexperienced people giving investment advice. Be careful and realize speculating is a high-risk game — it is not the same as sound investment on fundamentals.
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6. Take some winnings off the table
Maybe you own one of the stock names that have doubled or tripled in value over the past year. Consider selling some of the holdings and locking in your gains. Maybe reduce your exposure by 50%. Keep some of the holdings a bit longer, but diversify into something more stable or consistent. Setting a price target on the upside can be just as important as setting one on the downside.
8 of 8
7. Do not gamble the farm
A smart gambler, if they go to Vegas, will set their own personal limit on what they are willing to lose. Whether that is $100, or $10,000 — set a limit when it comes to mania investing. Also, do not raid all your retirement money on a whim to chase manias. While a portion could make sense, the lion’s share of your retirement should be focused on fundamental investment strategies that are consistent. Pulling all your retirement money to buy into different manias would likely be a crazy idea, just like putting your house keys in the pot of a poker table would be ill advised.
Investing in some of these sexy stocks and industries has appeal, and there is money to be made. But there is also money to be lost, and it is important to have a rule set for investing even if you are investing in mania stocks. Finally, know how risk taking can fit in your overall financial plan and realize that the risk you are willing to tolerate is likely to be different from someone else.
Investing carries an inherent element of risk, and it is possible to lose principal and interest when investing in securities. Strategies are used to assist in the management of your account. Even with these strategies applied to the account, it is possible to lose money. No strategy can guarantee a profit or prevent against a loss. There may be times when the strategy switches between equities or fixed income at an inopportune time, causing the account to forfeit potential gains.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
CEO – Senior Wealth Adviser, Sterling Wealth Partners
Scot Landborg has over 17 years of experience advising clients on retirement planning strategies. Scot is CEO and Senior Wealth Adviser for Sterling Wealth Partners. He is host of the retirement planning podcast Retire Eyes Wide Open. Scot is a regular contributor to Kiplinger.com and has been quoted in “U.S. News & World Report,” Market Watch, Yahoo Finance, Nasdaq and Investopedia. He also formally hosted the nationally syndicated radio show “Smart Money Talk Radio.”
Investment Adviser Representative of USA Financial Securities. Member FINRA/SIPC A Registered Investment Advisor. CA license # 0G89727 https://brokercheck.finra.org/
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Starting a business is an opportunity to be your own boss, make money and grow your skill set.
There are also the not-so-great, somewhat messy and complicated parts about operating a business. If you start off solo or small, you’ll be tackling a lot of tasks yourself.
But don’t worry. In this article, we’re going to address something relatively simple in the business world: the best business checking accounts.
We’ll go into why you need one, what you should look for and several of the best ones available, both in-person and online-only.
Wait, Do I Really Need a Business Checking Account?
The purpose of a business checking account is to keep your business finances separate from your personal finances.
Technically, you might not need one depending on the legal structure of your business.
For example, if you’re a freelance writer who established a sole proprietorship and is starting slowly, you could use your personal checking account to get off the ground. But you’ll want to be extremely organized about keeping track of your business money for tax time. (Nothing will damper your momentum like getting audited.)
The type of business you’re running makes a difference here. If it’s transaction-heavy — or a particular legal structure, like a limited liability company — you might need a business checking account, full stop.
But if you’re starting any kind of business, it’s probably in your best interest to open one.
Business checking accounts make it easier to track profits, expenses and deductions, and help establish your operation if you file for business credit cards or loans down the line.
What You Need to Open a Business Checking Account
To open an account, you’ll typically need the following:
Social security number (SSN) or employee identification number (EIN)
Valid driver’s license or state ID
An initial deposit
How easy it is to open a business checking account will depend on your business. If you’re a sole proprietor, the process might feel similar to opening a personal checking account. If you have a different legal business structure, you’ll likely have to provide additional documentation (like your articles of incorporation). Requirements will vary from bank to bank.
What You Should Look for in a Business Checking Account
Before you peruse accounts, get a handle on your business needs and wants. For instance, do you make a lot of transactions? Do you want a business credit card ASAP? Do you prefer a big bank where you can pop into a different branch every half mile?
There are other considerations. Do you want your bank, credit union or financial institution to…
Offer free bank statements?
Have an app?
Offer free online banking and/or bill pay?
Have in-person locations?
Offer comprehensive customer service, i.e., allow you to talk to someone online and on the phone 24/7?
Have integration with tools, like invoicing software?
Offer multiple products, such as business credit cards, small-business loans, etc.?
There are lots of banks for small businesses to choose from, but you want one that will give you the most options. And ideally, save you some money and headaches in the process.
To choose the best business checking accounts, we focused on accounts that:
Require a low minimum initial deposit ($1,000 or less — most require only $25).
Offer a certain number of transactions for free.
Either have no monthly service fee or make it easy to have the fee waived.
We also focused on checking accounts for small and medium businesses. If you’re looking for accounts to manage a higher volume, many of the traditional institutions on our list have them, too.
Pro Tip
Check out our current list of bank promotions for a chance to gain a monetary bonus when signing up for a new business checking account.
The 5 Best Business Checking Accounts for May 2021
We chose five institutions and a couple of different checking account options for each where available.
1. Chase: Best for 24/7 Customer Service and Overall Accessibility
Chase is a well-known brand with many physical branches and flexible options for business owners. It’s a good choice if you want to be able to find a chain easily and talk to someone in person. Chase also offers 24/7 support, so you can call and email them anytime of day. From personal experience, if you send them a secured online message, they typically follow up within 24 hours. To learn more, read our Chase Bank review.
Number of branches: Approximately 4,700
Number of ATMs: 16,000
Here’s the lowdown on Chase Business Complete Banking and Chase Performance Business Checking.
Chase Business Complete Banking
Chase Business Complete Banking (for small businesses) at a glance:
Sign-up bonus: $300 for new customers who meet certain criteria
Minimum initial deposit: $25
Monthly service fee: $15; waived if you maintain a minimum daily balance of $2,000 or link a qualifying Chase account
Cash deposits per month: Up to $5,000 without an additional fee
Free transactions per month: 100
Other benefits:
Access to Chase online and mobile banking
Get same-day deposits on card payments at no additional cost
Chase Performance Business Checking
Chase Performance Business Checking (for medium-sized businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $25
Monthly service fee: $30; waived if you maintain a minimum daily balance of $35,000 or more in qualifying accounts
Cash deposits per month: Up to $20,000 without an additional fee
Free transactions per month: 250
Other benefits:
No charge for all incoming wires and two outgoing domestic wires per statement cycle
Interest-bearing option availableChase has business saving account, lending and credit card options, too. Chase offers several small-business credit cards, all with new card member bonuses, which include $750 cash back to 100,000 bonus points depending on the card.
Tina Russell/The Penny Hoarder
2. Wells Fargo: Best for Small Business Owners Just Getting Started
Wells Fargo is another strong choice for your business checking account needs. It has many branch locations and you can call them 24/7. Its website is also easy to navigate and lets you find answers to your questions without clicking on a ton of links. Check out our Wells Fargo Bank review for more information.
Number of branches: Approximately 7,200
Number of ATMs: Over 13,000
Wells Fargo Initiate Business Checking
Initiate Business Checking (for new and small businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $25
Monthly service fee: $10; waived by having a minimum daily balance of $500
Cash deposits per month: Up to $5,000 for free
Free transactions per month: 100
Other benefits:
Customized business debit card
24/7 fraud monitoring
Mobile deposit
If you’re just getting started with your small business and don’t expect to scale right away, Initiate Business Checking is a solid, affordable account to open.
Wells Fargo Navigate Business Checking
Navigate Business Checking (for small- to medium-sized businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $25
Monthly service fee: $25; waived by having a minimum daily balance of $10,000 or an average combined business deposit balance of $15,000
Cash deposits per month: Up to $20,000 for free
Free transactions per month: 250
Other benefits:
Customized business debit card
24/7 fraud monitoring
Mobile deposit
Wells Fargo also offers small-business lending and credit card options.
3. U.S. Bank: Best for Simple, Fee-Free Banking
While primarily located in the Midwest, this chain has lots of locations across the country. That’s great news if you’re a small-business owner looking for a simple checking account.
U.S. Bank has no monthly service fees for its Silver account, so no worries about meeting certain criteria to have the fee waived. You can also go to its website and take a short quiz to determine which account would work best for your needs.
Number of branches: 3,106
Number of ATMs: 4,842
U.S. Bank offers Silver, Gold, Platinum and Premium business checking accounts, and we’re going to outline the first two.
U.S. Bank Silver Business Checking
Silver Business Checking (best for newer or smaller businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $100
Monthly service fee: $0
Cash deposits per month: 25 for free
Free transactions per month: 120 per statement cycle; 50 cents per excess transaction
U.S. Bank will charge you $5 for paper statements, so stick with online ones to save money and the planet.
Other benefits:
Online and mobile banking
Discount on first check order
Small Business Visa credit card
Card payment processing
U.S. Bank Gold Business Checking
Gold Business Checking (for businesses with moderate transaction levels) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $100
Monthly service fee: $20; waived by satisfying one of several criteria listed on its website
Cash deposits per month: 100 for free
Free transactions per month: 300 per statement cycle; 45 cents per excess transaction
Other benefits:
Online and mobile banking
Remote check deposits
Discount on first check order
Small Business Visa credit card
Card payment processing
Silver and Gold are good options for small businesses looking for free business checking accounts (as long as you stay within the limits). And in general, Chase, Wells Fargo and U.S. Bank are all good options for an LLC.
4. BlueVine: Best for Fee-Free, Online-Only Banking
Want to open an account on your phone and manage it entirely online? Welcome to 2021… and to BlueVine.
BlueVine boasts no hidden fees and unlimited transactions. Members can pay vendors, schedule one-time and recurring payments, and earn an impressive 1.0% on their checking account balance up to $100,000. Deposits are FDIC-insured (up to $250,000) through The Bancorp Bank.
Number of branches: 0
Number of ATMs: Users can withdraw cash fee-free at over 38,000 MoneyPass® locations in the U.S.
BlueVine at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $0
Monthly service fee: $0
Cash deposits per month: Unlimited. You can deposit cash at close to 100,000 retail locations through a partnership with Green Dot. A $4.95 fee, per deposit, applies.
Free transactions per month: Unlimited
Other benefits:
A BlueVine Business Debit Mastercard®
Access to a business line of credit
Two free checkbooks
Phone and email customer support
Getty Images
5. Axos Bank: Best for Business Interest Checking
Axos Bank is another online-only bank. In addition to business checking accounts that earn interest, customers can take advantage of surcharge-free ATMs across the U.S.
Number of branches: 0
Number of ATMs: You can use any ATM in the U.S. and you’ll be reimbursed for the fees
Axos Bank offers Basic Business Checking, Business Interest Checking and Analyzed Business Checking. We’re going to look at the first two.
Axos Basic Business Checking
Basic Business Checking at a glance:
Sign-up bonus: $!00 if you incorporated after June 1, 2020
Minimum initial deposit: $1,000
Monthly service fee: $0
Cash deposits per month: Up to 60 items with remote deposit
Free transactions per month: 200; afterward, 30 cents each
Other benefits:
Pay bills with no charge through the app
First set of 50 checks is free
Compatible with QuickBooks
Axos Business Interest Checking
Business Interest Checking at a glance:
Sign-up bonus: $100 if you incorporated after June 1, 2020
Minimum initial deposit: $100
Monthly service fee: $10; waived if there’s an average daily balance of $5,000
Cash deposits per month: Up to 60 with remote deposit
Free transactions per month: 50; afterward, 50 cents each
Other benefits:
Earn up to 0.81% APY
First set of 50 checks for free
Axos Bank also offers saving accounts and Business CDs, but no credit cards.
Regional Business Checking Account Options
Here’s a glance at three smaller, regional options for business checking accounts. If your area isn’t listed, you can research credit unions and banks near you.
America First Credit Union
This institution has branches in Nevada and Utah. America First offers four types of business checking accounts: Basic, Premier, High-Yield and Non-Profit.
The Basic Business Checking offers 250 free monthly transactions, free online bill pay, access to money market savings, lines of credit and Business Visa credit card.
First Horizon
This bank has branches in Tennessee, Florida, North Carolina, South Carolina, Virginia and Texas. First Horizon offers BizEssentials Checking (Value, Basic, Standard and Interest) and Business Interest Checking Account, which combines the benefits of a checking and interest-earning savings account.
The Business Interest Checking Account has no minimum balance requirements, plus you’ll earn interest on your balance and have access to a Visa Business debit card.
SunTrust, Now Truist
This bank has branches in Alabama, Arkansas, Washington, D.C., Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. SunTrust offers three types of business checking accounts: Simple Business Checking, SunTrust Primary Business Checking and SunTrust Business Advantage Plus Checking.
SunTrust Primary Business Checking has a $15 monthly fee that’s waived in the first two statement cycles and after that when you have a $1,000 minimum daily balance. Each month, you’ll get 150 free transactions and $5,000 cash processing.
What’s the Right Business Checking Account for You?
The best business checking account for you will depend on your business and needs. Whether you’re just starting out or looking to level up, there are plenty of options out there, online and off. Start your search now, so your future self — and CPA, come tax time — will thank you later.
Contributor Kathleen Garvin (@itskgarvin) is a personal finance writer based in St. Petersburg, Florida, and former editor and marketer at The Penny Hoarder. She owns a content-writing business and her work has appeared in U.S. News, Clark.com and Well Kept Wallet.
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I’m in favor of anything that makes it easier to add to my savings account balance, and Digit definitely fits that bill. It’s a free-to-join, automatic savings tool that ties into your checking account, uses a sophisticated algorithm to analyze your income and spending habits, and then makes regular transfers to your FDIC-insured Digit savings account and Digit investment accounts, typically every week or every few days.
What Is Digit?
You don’t have to direct or schedule your Digit transfers in any way. In fact, you don’t even know in advance how much Digit will transfer. With its automated, hands-off saving algorithm, pretty much all you have to do is sit back and watch your savings account balance grow over time. If you’re unsatisfied with the pace of Digit’s automatic withdrawals, you can tell it to save more or less with each withdrawal.
Digit isn’t the first online tool designed to simplify and incentivize savings. There are plenty of bank-run programs, such as Bank of America’s Keep the Change, which both allow for recurring checking-to-savings transfers and small, automatic savings deposits when you make a debit card purchase. And, of course, you can set up recurring checking-to-savings transfers at banks — including online banks such as Ally Bank and Capital One Bank — without formal savings incentive programs.
The difference is that Digit is the first completely automated savings app for iOS and Android. When it first launched, the Digit app was functionally unique, although it has since spawned imitators. Digit has added features over the years, including a handy new tool that analyzes your cash flow and tells you exactly how much you can safely spend every day, and now boasts taxable and tax-advantaged investment account options too.
Digit is free to join and use for 30 days. After that, it carries a $5 monthly fee. A 0.10% annualized yield — or “Savings Bonus,” in Digit’s parlance — offsets this monthly charge, although Digit only pays out once every three months. There’s no minimum balance required at any time and no minimums required to earn the interest rate.
All told, this savings app has some useful advantages over any other program, account, or service on the market, plus a few drawbacks that may hamper your experience.
How It Works
Here’s how Digit works. Below, we cover the sign-up process, basic account management practices, and procedures for transfers and withdrawals.
Sign-Up for New Users
To get started with Digit, you need to provide some basic personal information and contact details. You’ll then be asked to securely link your bank account with your new Digit account. You won’t need to provide your account number or routing number, and the link usually happens near-instantaneously.
Account Management and Automated Savings
Once you’re set up with your FDIC-insured Digit savings account, the app goes to work. It uses its proprietary algorithm to get a sense of your spending (debit transactions and ATM withdrawals), income (paychecks), and recurring obligations (monthly bills).
To get the most out of Digit, you should make sure that all important bills are included in your checking account’s bill pay system — or otherwise paid out of the tied checking account — so Digit’s algorithm can see them. The same goes for paychecks and other income sources. Digit doesn’t know what goes on outside the tied checking account, so you need to make sure it has as much information as possible.
Inbound Transfers
Based on your income, spending patterns, and obligations, Digit begins making transfers from your checking account to your savings account, the first typically coming within a week of sign-up. These transfers are entirely automated; you never have to set an amount or frequency. Digit’s algorithm only allows for transfers it thinks you can afford, so there’s little chance of an overdraft or cash crunch. After the first one, transfers usually happen every two or three days in relatively small amounts.
Bear in mind that you may not receive a notification of each withdrawal. However, if Digit determines at any point that you really don’t have the funds to save money right then, it simply stops making withdrawals until you can afford them again. In the meantime, Digit keeps a rolling tally of your discretionary income and tells you exactly how much you can safely spend on any given day.
Withdrawals
You can withdraw funds held in your Digit account whenever you wish, with no daily or monthly limit, and have the money in your checking account the following business day. You can also manually override Digit’s automatic transfer algorithm and make manual deposits into your Digit account at any point, provided you have enough money in your linked account to support the transfer.
Key Features
Here’s a closer look at some of Digit’s key features, including Digit’s investing and retirement platforms, Digit’s savings goals feature, and the Digit Pay bill payment feature.
Digit Investing
Digit’s investing feature allows you to put your money to work in the stock market without assuming unwise levels of risk or setting aside more than you can afford to lose. Like Digit’s savings tool, this feature automatically transfers funds that you can safely invest into a diversified portfolio that can grow over time. Digit takes the long view, looking for sustainable, long-term opportunities rather than short-term gains.
Digit Retirement
Digit’s retirement feature matches you with the right tax-advantaged investment account for your income level and automatically reserves a portion of your savings for your retirement goals. Once per month, Digit invests those savings in a diversified portfolio. With no account minimums or deposit requirements, it’s easy to kick-start your retirement planning with Digit.
Savings Goals
Digit lets you set savings goals for just about anything, from your next date night to a down payment on a house to an emergency fund for unexpected expenses or financial setbacks. Simply follow the prompts in the app.
Digit Pay
Digit Pay is a free bill pay service designed specifically to help you pay down credit card debt. You can activate it when you set a “credit card debt” savings goal in the app.
No Overdraft Guarantee
Because Digit’s algorithms are designed only to withdraw what you can afford, the likelihood of a checking overdraft due to a Digit withdrawal is low. However, should Digit ever cause an overdraft, the company guarantees reimbursement of any applicable fees.
Customer Support
You can contact Digit directly using the onsite ticketing system. Queries typically produce responses within one to two business days.
Advantages
Digit has some key advantages, including next-business-day transfers, set-it-and-forget-it automation, and unlimited savings withdrawals.
1. Next-Business-Day Transfers
If you need to withdraw from your Digit savings balance, you can have the funds in your checking account on the next business day. By comparison, transfers from savings accounts — especially from online banks such as Ally — to external accounts can take two or three business days. If you need funds fast, that can be an inconvenient time frame.
2. Set It and Forget It
Digit is unique among savings tools in that it’s completely automated. It measures your spending and income daily and uses a sophisticated algorithm to determine how much you can save without affecting your lifestyle. If you earn more and spend less, Digit automatically increases your savings. If you earn less and spend more, Digit automatically saves less.
As long as you’re satisfied with the amount you’re saving, you never have to manually transfer funds to your savings account, although you do have that option to fall back on. This setup is superior both to recurring bank transfers (which need to be manually adjusted to account for changes in income and spending) and budgeting tools such as Mint (which aren’t truly automated).
3. Unlimited Savings Withdrawals
You can make unlimited withdrawals from your Digit savings account — one per day if you like, or even multiple times per day. Savings accounts at traditional banks and credit unions, including those tied to a recurring savings plan, typically limit withdrawals to six per month. Tax-advantages savings accounts (IRAs) can be even more restrictive.
4. No Overdraft Fees
In the unlikely event that a Digit transfer results in an overdraft from your checking account, the company promises to pay any associated fees and charges. However, it doesn’t specify if there’s a limit to what it pays in this case. If your balance remains negative for many days on end, you could stretch the limits of this guarantee.
Regardless, you get no such protection from banks such as Capital One Bank, Ally, or brick-and-mortar institutions such as U.S. Bank. These charge daily or interest-based overdraft fees that can amount to $10, $20, $30, or more per day.
5. No Balance Requirements
Digit savings accounts don’t have balance requirements, allowing you to start off saving small amounts of money. That isn’t always true of comparable services offered by big banks such as U.S. Bank and Bank of America.
6. Earn a 0.10% Quarterly Savings Bonus
Digit savings accounts don’t accrue interest in the traditional sense, but they do have de facto yields: 0.10% APY, paid quarterly as a Savings Bonus. To qualify for each quarter’s Savings Bonus, you must maintain your Digit savings account for the entire three months prior. The bonus is annualized, meaning you earn 0.025% of the balance in your account at the end of each quarter.
Disadvantages
Digit’s downsides include a monthly maintenance fee and no transaction-based withdrawals.
1. $5 Monthly Maintenance Fee
Digit has a 30-day fee-free introductory period. Eventually, however, the bill comes due. After the intro period ends, you’re automatically charged $5 per month. When you’re just starting out and your balance is low, this charge is likely to swamp your Savings Bonus.
2. You Need to Give Your Bank Account Information to a Third Party
To work properly, Digit requires your external checking account number. That’s a problem if you’re bothered by the thought of providing sensitive financial information to yet another third party and thus increasing your risk of exposure to a data breach. Safer options include bank-run savings incentive programs with checking and savings accounts under the same roof.
3. No Option for Transaction-Based Withdrawals
Digit doesn’t let you tie automatic checking-savings transfers to a debit card transaction, which is another way to make easy savings deposits — sometimes multiple deposits per day — without dramatically reducing your checking account balance. Bank of America’s Keep the Change program lets you round up debit card purchases to the next dollar and deposit the difference in your savings account.
Final Word
According to CareerBuilder, nearly 80% of Americans live paycheck to paycheck. That means about 4 in 5 of us don’t save money at all. In that light, Digit’s couldn’t-be-easier savings automation tool is welcome news.
However, Digit isn’t a panacea. It only squirrels away funds on your behalf if you consistently demonstrate that you spend less than you earn. It can’t force you to rein in your spending habits or live within your means. For that, a strict personal budget and lifetime savings plan are still your best options.
