Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
Choosing a checking account can be an overwhelming process. Between online banks operating nationwide and brick-and-mortar banks and credit unions serving your home region, there are hundreds if not thousands of legitimate institutions to choose from. Many offer more than one checking account option, sometimes several.
Not Truist. Though it’s one of the biggest banks in the United States, it offers just one main consumer checking account: Truist One Checking.
Having just one choice with Truist certainly simplifies the decision. But Truist One is a bit more complicated than your average checking account, so don’t rush to open one until you understand all its ins and outs.
What Is Truist One Checking?
Truist One Checking is a consumer checking account from Truist, formerly known as SunTrust Bank. It has a $12 monthly maintenance fee that’s relatively easy to waive with a qualifying monthly direct deposit, minimum balance, or other linked Truist accounts.
Truist One’s perks vary based on how much you have in all eligible Truist checking, savings, investment, and other qualifying accounts. As your combined balance increases or decreases, Truist automatically moves you between benefit levels. Notable perks of higher benefit levels include substantial rewards bonuses on linked Truist credit cards, ATM fee waivers, and maintenance fee waivers on linked accounts.
What Sets Truist One Checking Apart?
Truist One Checking stands out for several reasons:
Relatively easy maintenance fee waivers. You can waive this account’s monthly maintenance fee with a combined balance as low as $500 or a modest monthly direct deposit.
Legitimately valuable benefits as your combined balance increases. Once your balance exceeds $10,000, the perks really add up here.
Free, limited overdraft protection for eligible account holders. Even if you don’t have a sizable balance, you get free overdraft protection for negative balances up to $100.
No maintenance fee on your linked savings account. As long as your Truist One Checking account remains open, you pay no monthly fee on your linked Truist Savings account.
Key Features of Truist One Checking
Truist One has a standard set of checking account features, from a low minimum opening deposit requirement to a monthly maintenance fee with multiple ways to waive. However, its loyalty levels and associated benefits add some complexity.
Account Minimums
The minimum to open an account is $50. Once open, you don’t have to maintain a minimum balance, though one of the waiver options for the monthly maintenance fee involves keeping a $500 balance in eligible Truist accounts.
Account Fees & Waiver Requirements
Truist One has a $12 monthly maintenance fee. There are five ways to waive it in any given statement cycle:
Receive at least $500 in qualifying direct deposits into your account
Maintain a balance of at least $500 in eligible linked Truist deposit and investment accounts as of the last business day of the statement period
Have a personal Truist credit card, loan, or mortgage, excluding Lightstream personal loans
Have a linked small-business checking account with Truist
Be a student under age 25
ATM Access
Truist has a network of about 3,000 branded ATMs offering fee-free withdrawals. Withdrawal fees and other transaction fees may apply outside this network.
Free Linked Savings Account
Truist One comes with a complimentary Truist Savings account, which normally carries a $5 monthly maintenance fee. However, this isn’t much of a benefit because Truist Savings yields basically nothing (.01% APY on all balances).
First Book of Paper Checks Free
You get a free 10-pack of paper checks when you open your Truist One account. Reorder fees depend on your loyalty level.
Overdraft Protection
Truist One comes with complimentary overdraft protection, known as Negative Balance Buffer, for negative balances up to $100. Truist generally declines transactions that would result in an overdraft greater than $100.
To qualify, your account must be open for at least 35 days, be funded and have a positive balance at the time of approval, and receive at least one direct deposit totaling $100 per month for two consecutive months. Moving forward, you must receive at least one direct deposit totaling $100 each month to remain qualified.
Loyalty Levels & Benefits
As a Truist One account holder, you’re automatically assigned to one of five benefit levels based on the total combined value of all eligible Truist accounts. Eligible accounts include checking, savings, CD, and investment accounts.
Level 1 (up to $9,999.99): This level comes with all the standard features of Truist One. Other notable benefits include a 10% rewards bonus on a linked Truist credit card spending and a $25 discount on Truist’s annual safe deposit box fee.
Level 2 ($10,000 to $24,999.99): Notable benefits include a 20% credit card rewards bonus, 50% check reorder discount, one out-of-network ATM fee reimbursement per month, and an additional Truist One checking account (which is useful if you want to set up a custodial or joint account for a minor).
Level 3 ($25,000 to $49,999.99): Notable benefits include a 30% credit card rewards bonus, free check reorders, three out-of-network ATM fee reimbursements per month, and two additional Truist One checking accounts.
Level 4 ($50,000 to $99,999.99): Perks include a 40% credit card rewards bonus, free check reorders, five out-of-network ATM fee reimbursements per month, and three additional Truist One accounts.
Level Premier ($100,000 and above): Perks include a 50% credit card rewards bonus, free check reorders, and unlimited out-of-network ATM fee reimbursements.
Mobile Features
Truist has very well-reviewed mobile apps for Android and iOS. They’re comprehensive and user-friendly, allowing you to do pretty much anything you can using Truist’s standard online dashboard. Mobile check deposit is a big plus.
Deposit Insurance
This account comes with federal deposit insurance up to the standard FDIC limit of $250,000.
Pros & Cons
Truist One Checking has some clear advantages for active users, but it’s not perfect.
Pros
Truist One Checking has some potentially valuable perks, especially if you have substantial balances across all linked Truist accounts.
Valuable benefits with higher balances. Truist One’s benefits really add up as your balance increases. If you have at least $25,000 deposited across linked Truist bank and investment accounts, Truist One is much more generous than comparable accounts.
Complimentary overdraft protection. All Truist One account holders enjoy complimentary overdraft protection for negative balances up to $100. That’s a rare perk for a big bank.
First book of paper checks free. This account comes with a free book of paper checks, an increasingly rare perk in the new paperless banking normal.
Relatively easy to waive the monthly maintenance fee. Truist One does have a monthly maintenance fee, but an abundance of reasonable waiver requirements means it’s easy for most account holders to avoid.
Cons
Truist One Checking has some notable access issues, including a relatively small ATM network and a large but highly regional branch footprint.
Small ATM network. Truist One has only a few thousand ATMs in its network, which is fewer than most banks of its size.
Branches aren’t available nationwide. Truist’s branches cluster in the eastern U.S., especially the southeast. If you live outside this area, you might have trouble banking in person.
Poor yields on linked savings account. Truist makes a big deal of its linked savings account, but you can do better with literally hundreds of other choices elsewhere.
How Truist One Checking Stacks Up
Truist One Checking has a lot in common with Chase Total Checking, another popular checking account from a well-known big bank. Before applying for either, see how the two compare.
Truist One
Chase Total Checking
Monthly Fee
$12
$12
Waiver Options
Yes, relatively easy
Yes, more difficult
ATM Network
3,000+ machines
15,000+ machines
Branches
About 2,200
About 4,600
Loyalty Levels
Yes
No
Truist One’s advantages over Chase Total Checking include its relatively easy monthly fee waiver options and its generous loyalty perks. If you have a Truist credit card and significant balances across all linked Truist accounts, Truist One is the better choice. But Chase Total Checking is superior if you’re looking for a big branch and ATM network.
Final Word
Truist One Checking is one of the better big-bank checking accounts around, thanks in large part to its easy-to-achieve monthly fee waivers. It’s also a strong choice for account holders with sizable (and growing) balances. The more you have in your linked Truist accounts, the more generous this particular account becomes.
That said, Truist One Checking isn’t the best choice for people who prefer online banking but feel like giving traditional banks another shot. For that, look to a bank with an even broader ATM and branch footprint, like Chase or Bank of America.
The Verdict
Our rating
Truist One Checking
Truist One Checking is a full-service deposit account for people who hope and expect their balances to grow over time. It’s relatively easy to waive the monthly maintenance fee, and benefits start to pile up as your combined balance passes the $10,000 mark. But Truist has some important branch and ATM access limitations to keep in mind.
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.
Banking
5 Best Checking Accounts for Seniors – Rates for 2023
Banks don’t market checking accounts to older adults quite as vigorously as they do to students, small-business owners, or general audiences, but senior-friendly checking accounts are more common than you might imagine. Which checking accounts offer the best fit for seniors? Here are our picks.
Picturesque landscapes and unique wildlife draw throngs of tourists to North Dakota. But it’s also a great place to live and work, with agriculture and energy attracting top employers to the state.
If you’re among the millions who call North Dakota home, finding a bank that fits your needs is likely a top priority. Whether you’re in the market for a new bank or you’re thinking about a new credit card or CD, we have a list of some of the top banks in North Dakota to help you narrow your options.
12 Best Banks in North Dakota
From brick-and-mortar banks to online banking options, North Dakota has a little something for everyone. The state has a larger share of small, local banks than we typically see, but there are also plenty of large banks with nationwide branches. Here’s our list of the 12 best banks in North Dakota to help you narrow down the options.
1. U.S. Bank
U.S. Bank is another option for North Dakota residents who travel often. You’ll find more than 2,000 branches in 26 states, including throughout North Dakota. The Bank Smartly Checking account has a $6.95 fee which is easily waived by having at least $1,000 in direct deposits each month, keeping an average balance of $1,500, having a U.S. Bank credit card, or joining Smart Rewards.
Military members and those under age 25 or over age 64 automatically qualify for a fee waiver. U.S. Bank’s interest rates on deposits are also worth a look. Savings accounts earn up to 4.50% APY, while CD rates go all the way up to 4.75% APY.
Fees:
$6.95 monthly fee (waived with requirements)
$36 overdraft fee
Balance requirements:
$25 deposit to open
No daily balance minimum
ATMs:
Fee-free at U.S. Bank ATMs
Fee-free at MoneyPass ATMs nationwide
$2.50 out-of-network ATM fee
Interest on balance:
Up to 4.50% APY on savings account
Up to 4.75% APY on CDs
Up to 4.50% APY on money market accounts
Additional perks:
Smart Rewards offer perks like waived fees and discounts on mortgage loans
Personal finance tips and insights come with Bank Smartly checking account
2. Gate City Bank
If you’re looking for that local bank experience, Gate City Bank is worth considering. You’ll find 44 locations in 23 communities across North Dakota and Central Minnesota. But one of the best things about Gate City Bank is its unlimited ATM fee refunds. You can use any ATM, anywhere around the world, and Gate City Bank will refund all third-party fees. There are multiple checking account options, including a fee-free account that requires only $50 to open.
Fees:
No monthly maintenance fees
$32 overdraft fee
Balance requirements:
$50 minimum opening deposit
No minimum balance requirements
ATMs:
Fee-free at ATMs worldwide
Unlimited refunds of all out-of-network ATM fees
Interest on balance:
Up to 0.15% APY on savings accounts
Up to 4.84% APY on CDs
Up to 2.50% APY on money market accounts
Additional perks:
Wide variety of loan options
Free custom debit card options
3. Chime
Another online banking option is Chime, which offers a fee-free checking account and up to 2.00% APY on its savings account. While you won’t get a physical location, Chime does give you access to cash at ATMs, as well as cash deposits at partner retailers nationwide. You’ll need direct deposit to qualify for perks like a secured credit card that helps you build credit.
Fees:
No monthly fees
No fees for overdrafts
Balance requirements:
No deposit to open
No daily balance minimum
ATMs:
Fee-free at 60,000+ ATMs nationwide
$2.50 out-of-network ATM fee
Interest on balance:
2.00% APY on savings accounts
Additional perks:
Cash deposits at 90,000+ retailers nationwide
Secured credit card helps you build credit
4. American Express National Bank
As long as you don’t need local branches, an online bank like American Express National Bank could give you all the features you need. American Express Rewards Checking is fee-free, while also letting you earn 1.00% APY and rewards points on debit card purchases. Although there are no branch locations, you can get real-time customer support 24/7 via phone or chat.
Fees:
No monthly maintenance fees
No overdraft fees
Balance requirements:
No minimum deposit to open
No minimum balance requirements
ATMs:
Fee-free at 37,000+ MoneyPass ATMs nationwide
Interest on balance:
1.00% APY on checking account balances
4.00% APY on savings accounts
Up to 4.65% APY on CDs
Additional perks:
Rewards on debit card purchases
24/7 customer support
5. Bell Bank
Not only is Bell Bank headquartered in Fargo, but you’ll find branch locations throughout North Dakota, as well as in Arizona and Minnesota. There are limited Bell Bank ATMs, but as an account holder, you’ll be able to use your debit card fee-free at any ATM in the country.
Bell Bank will refund the first four third-party fees each month, but you’ll be responsible for the rest. One thing that makes this bank stand out, though, is its competitive interest rates on CDs. Currently, Bell Bank has a promotional rate of 5.10% APY on 7-month CDs and 5.05% APY on 14-month CDs.
Fees:
No monthly maintenance fees
Balance requirements:
No minimum opening deposit
No minimum balance requirement
ATMs:
Fee-free at Bell Bank ATMs
Fee-free at non-Bell Bank ATMs nationwide
First four third-party ATM fees refunded each month
Interest on balance:
Up to 3.04% APY on savings accounts
Up to 5.10% APY on CDs
Additional perks:
Wealth management services available
Competitive rates on auto and personal loans
6. Bremer Bank
For those who travel mostly within the upper Midwest region of the U.S., Bremer Bank could have everything you need. This regional bank has locations in North Dakota, Minnesota, and Wisconsin. The basic checking account comes with a $3 monthly fee, but you can avoid it by enrolling in free online statements, maintaining a $1,500 average balance, or being under age 21 or over age 64.
Fees:
$3 monthly maintenance fee (waived with requirements)
$35 overdraft fee
Balance requirements:
$100 minimum deposit to open
No minimum balance requirements
ATMs:
Fee-free at Bremer Bank ATMs
Fee-free at MoneyPass ATMs nationwide
$2.75 for each out-of-network ATM transaction
Interest on balance:
0.30% APY on savings accounts
Up to 3.00% APY on CDs
Up to 3.30% APY on money market accounts
Additional perks:
First order of checks is free
Checking account comes with a complimentary financial plan
7. GO2bank
Online banks are all about the mobile banking experience, and GO2bank delivers in this area. You’ll get everything you need in the app, including the ability to deposit checks, transfer money, and pay bills. You’ll also get cash deposits at retailers nationwide, including Walgreens and Walmart.
Fees:
$5 monthly service fee (waived with requirements)
$15 overdraft fee
Balance requirements:
No minimum initial deposit
No minimum balance required
ATMs:
Fee-free at Allpoint ATMs nationwide
$3 for each out-of-network ATM transaction
Interest on balance:
4.50% APY on savings accounts
Additional perks:
Deposit cash at 90,000+ retailers nationwide
Up to 7% cash back on gift cards
8. Bravera Bank
Bravera Bank is a small local bank with branches in Bismark and Dickinson, North Dakota, as well as Great Falls and Billings, Montana. If you’re in the market for a loan, Bravera has plenty of options, including auto, boat, RV, and even snowmobile loans. Bravera also has a variety of solutions for small business owners, including loans and multiple business checking account options.
Fees:
No monthly service fees
$30 overdraft fee
Balance requirements:
No minimum daily balance requirements
ATMs:
Fee-free at Bravera Bank ATMs
Interest on balance:
Rates not publicly disclosed
Additional perks:
$1,000 bonus for new homeowners who refinance within two years
Business loans and lines of credit available
9. First Community Credit Union
Credit unions bring VIP-style perks to those who qualify for membership. First Community Credit Union is open to those who live in the North Dakota and Minnesota communities within the FCCU service area. FCCU has three fee-free checking accounts, each with its own benefits. Two of the accounts offer rewards for purchases while the other issues 2.50% APY on your balance.
Fees:
No maintenance fees
$30 overdraft fee
Balance requirements:
No minimum balance required
ATMs:
Fee-free at First Community Credit Union ATMs
Fee-free at 32,000+ MoneyPass ATMs nationwide
Fee-free at 30,000+ CO-OP ATMs nationwide
Fee-free at 6,700+ NYCE Network ATMs nationwide
Interest on balance:
Up to 5.03% APY on CDs
Additional perks:
Competitive rates on loans
Competitive offerings for small business owners
10. Wells Fargo
Those who travel often might want to consider a national bank like Wells Fargo. You’ll find branches and ATMs in 37 states, including in locations across North Dakota. Currently, Wells Fargo is offering a $300 bonus if you open a new account with a $25 initial deposit and have at least $1,000 in direct deposit activity in the first 90 days.
One of the most popular choices is Everyday Checking, which has with no fees if you meet certain conditions. You must maintain a minimum daily balance of $500. Alternatively, you can receive $500 or more in qualifying electronic deposits. Another option is to be between the ages of 17 and 24. Lastly, you can also have a Wells Fargo Campus card linked to your checking account.
Fees:
$10 monthly service fee (waived with requirements)
$35 overdraft fee
Balance requirements:
$25 minimum deposit to open
No minimum daily balance required
ATMs:
Fee-free at Wells Fargo ATMs
$2.50 out-of-network ATM fee
Interest on balance:
Up to 2.51% APY on savings accounts
Up to 4.76% APY on CDs
Additional perks:
$300 bonus for new checking accounts
Generous rewards and bonuses on credit cards
11. VISIONBank
If you live in the Fargo area, VISIONBank is one of North Dakota’s best local banks. You’ll find three branches in South Fargo, West Fargo, and North Fargo, but you can access cash at any MoneyPass ATM across the country. If you run a small business, you might like VISIONBank’s business banking options, including great rates on loans.
Fees:
No monthly fees
$29.50 overdraft fee
Balance requirements:
No daily balance minimum
ATMs:
Fee-free at VISIONBank ATMs
Fee-free at MoneyPass ATMs nationwide
Interest on balance:
Up to 0.75% APY on savings accounts
Up to 4.78% APY on CDs
Additional perks:
Multiple business checking account options
Robust mobile banking options
12. BNC National Bank
BNC National Bank is a smaller national bank with locations in North Dakota, Minnesota, and Arizona. You’ll get multiple locations across North Dakota, including branches throughout the Bismarck area. You’ll need a $50 deposit to open a checking account with BNC, but the basic account comes with no fees or balance requirements.
Fees:
No monthly fees
$32.98 overdraft fee
Balance requirements:
$50 deposit to open
No daily balance minimum
ATMs:
Fee-free at BNC Bank ATMs
Fee-free at MoneyPass ATMs nationwide
Fee-free at Pulse ATMs nationwide
Interest on balance:
Rates not publicly disclosed
Additional perks:
Free checking for those aged 50 and over
Multiple business loans for small business owners
How We Picked: Methodology
When it comes to banking services, there is no one size fits all solution. We looked at a variety of factors, while also trying to bring a combination of national, local, and regional banks. Here are some criteria considered while compiling this list.
Online Banks vs. Big Banks
Mobile banking is an important feature for most consumers. You’ll want to be able to pay bills, deposit checks, and manage your debit card through the mobile app. These days, though, even traditional banks offer robust mobile banking features, so the choice to go with an online-only bank is a personal one.
We chose plenty of traditional banks that offer in-person service for those who like that option. But we also considered that some local and regional banks don’t have the mobile features offered by online banks and national banks.
We included a credit union because even though membership is limited, the lower interest rates and increased community commitment can make it a great choice for a small business owner or a consumer who wants that personal touch.
Opening Deposit
Not all banks in North Dakota let you walk in the door and open an account. For many, you’ll need some cash in hand to get the account started. When making our list of financial institutions, we paid close attention to this opening deposit to make sure you know what’s required.
Many of the best checking accounts require a minimum deposit to open. This might be $25 or $50, but occasionally, you’ll see a $100 requirement. If you’re looking for a checking account that pays an interest rate, though, you may find that the requirement to open an account is $1,000 or more.
Cash Deposits
As convenient as the internet and mobile banking have made cash management, there is one thing an internet connection can’t get you. When you need to deposit or withdraw cash, your phone won’t be of much help.
That’s why we prioritized ATM access in our look at the best banks in North Dakota. You might assume that a traditional bank is necessary, but online banking is getting better at cash access. Many online banks now have partnerships with ATM networks like MoneyPass and Allpoint. With those, you can access cash at ATMs inside retailers like CVS and Walmart, whether you’re at home or traveling.
Interest Rates
Interest rates factor into our search in two ways. First, there’s the interest rate you’ll pay if you take a mortgage or auto loan. Typically, local banks and credit unions tend to be the most competitive, but you’ll also find some online banks advertise better-than-average rates to win your business.
But what we really focused on for this list was interest deposit account interest. Whether you’re opening a personal checking account or setting up banking for your small business, the more interest you can earn on your checking, savings, CD, and money market balances, the better.
Minimum Balance
Your checking account might come with a requirement that you maintain a certain balance. There’s a reason for that. Banks don’t want consumers to open accounts and abandon them with little to no money in them. If you see a free checking account in North Dakota, you’ll often find that you have to keep a certain amount in the bank for it to remain in place.
We focused on North Dakota banks that keep this requirement fairly low. The best checking accounts have little to no balance requirement, and there’s a reason for that as well. If you have thousands of dollars, it should be in an interest-earning account. We focused on lower-tier accounts that minimize fees, but if you keep a high balance, look into the higher tiers with monthly fees and stricter requirements that offer interest and other perks.
Frequently Asked Questions
There’s no shortage of bank accounts in North Dakota, so it’s important to narrow the options to those that work best for you. Here are some FAQs about finding banking services.
What bank has the most branches in North Dakota?
Coverage is an important factor, especially if the in-person banking experience is important to you. If you travel outside your immediate area often, you’ll want to make sure there are branches and ATMs wherever you go. Some also prefer bank accounts with banks that have numerous branches since that can be a sign of stability.
Gate City Bank is the bank with the most branches in North Dakota. You’ll get 44 branches across North Dakota and Central Minnesota. As far as national banks go, though, U.S. Bank has the most branches in the state, at 11.
How much do I need to deposit into a savings account in North Dakota?
Each savings account will come with different requirements, but many do require you to maintain a certain balance. In some cases, banks will set a minimum to earn interest. So, that $25 you have in the account might not be earning a dime of interest.
Taking two of the state’s top banks into consideration, Gate City requires $100 to earn interest, while Wells Fargo requires you to keep $300 in the account to avoid a $5 monthly service fee. In all cases, if you can keep a higher balance, look into the best interest for your money, whether that’s a high-yield savings account, a CD, or a retirement savings account.
If you’re in the market for a new bank account, there are plenty of financial institutions in North Dakota that can fill your needs. Whether you’re looking for an in-person banking experience or you want the convenience online banks offer, it’s important to shop around. The good news is, once you’ve found a good bank account in North Dakota, you can stick with that bank for a long time.
In its July 2009 issue, Consumer Reports Money Adviser published a brief overview of the best online banking options according to their research. “Online banking, despite a rocky start, is becoming the rule rather than the exception,” the article says, noting that online banking can net savers better interest rates and increased security.
I’d love to be able to point you to an online version of this article, but none exists. And I’m not about to reproduce large chunks of the text here. (Consumer Reports doesn’t like that.) But I can highlight their main points about online banking, as well as list the results of my own research into online banks.
Some of the article’s main points:
Traditional banks that have moved into online banking (such as Bank of America and Wells Fargo) generally offer lower rates and impose higher fees than established online banks like Capital One 360 and bank safety ratings.
The biggest thing that holds people back from online banking is concern over security. Via Twitter yesterday, @thenonconsumer told me, “My husband is very skeptical about using an online bank like ING Direct (now Capital One 360) for savings.” He’s not alone. But according to Consumer Reports Money Adviser, online banking can be safer than traditional methods because there’s less of a paper trail, and your transactions are digitally encrypted.
Here’s a table of current interest rates, updated weekly. Below that is a list of online banking options I originally compiled in four hours of research but these have become out of date and I unfortunately don’t have the ability to update them regularly, so the table will let you see some of the most current rates. You can also see a full list of over 200 banks’ savings rates and an almost-as-long list of certificate of deposit returns by following the links.
I haven’t tried to be comprehensive here (a comprehensive list would be huge), but have based my research on my own interests and the requests of my Twitter followers. I’ve made no attempt to rank these banks. They are listed in alphabetical order. Rates are annual percentage yields (APY). All accounts are FDIC insured.
Online Savings
12-month CD
Money market
Bill-pay
1.45%
1.05%
0.85%
—
Notes: No fees, no minimums. Money-market account appears to act as a checking account and has no ATM fee. Ally Bank is the renamed GMAC Bank. Rates as of December 11, 2016.
Savings
12-month CD
Checking
Bill-pay
0.75%
1.25%
0.75%
Free
Notes: No fees. There is a $500 minimum balance for certificate of deposit accounts. You can open the 360 Checking account with no minimum balance, there are no monthly service fees and the APY is for balances from $50,000 up to $100,000. Capital One does not charge for ATM withdrawals or balance inquiries, but the owner of the ATM may. Rates collected within: 10025 (NY). Rates as of December 11, 2016.
Savings
12-month CD
Checking
Bill-pay
0.01%
0.15%
0.01%
Free
Notes: $500 minimum deposit for certificate of deposit and no minimum deposit for checking. Savings Plus, below $10,000 tier. ATM access for checking. Citibank rates may vary by state, rate collected within NY. Rates as of December 11, 2016.
Notes: No fees. $1000 minimum. No ATM. DollarSavingsDirect is an online banking division of Emigrant Bank. Rates as of December 11, 2016.
Savings
16-month CD
Checking
Bill-pay
0.50%
—
—
—
Notes: No fees, no minimums for savings account. $1000 minimum for certificate of deposit. No ATM. Sibling to Dollar Savings Direct. Rates as of December 11, 2016.
At any given time, there are numerous places and ways to invest your money, ranging from the stock market to real estate. But how and where you invest your money also brings up numerous potential risks and potential outcomes — for that reason, it can be difficult to decide what to do.
And while investors are right to wonder what investments make sense given the current economic and political climates, they may be surprised to hear that other, longer-term factors are just as important. As such, you may find it useful to learn the behavior of the available investment types, and then compare those patterns to whatever it is that you’re trying to accomplish, and along what timeline.
Learning About Investment Options
If you’re wondering “where should I invest my money right now?”There are several different potential answers and investment opportunities out there. But before you do anything, you’ll need to make some key decisions.
The first is to make a decision by investment type, which involves deciding to invest in certain asset classes or asset types. Your portfolio mix will be your asset allocation, which is covered below.
Stocks, bonds, cash, and money market funds, and real estate are just a few of the asset classes available to investors. Generally, the first order of business is to determine which is most appropriate for the financial goals an investor has. In order to determine this, it’s important to understand how each investment type earns a return.
Where to Invest Money
As noted, there are many different assets that investors can utilize or add to their portfolio. Here’s a rundown.
Stocks
A stock represents a share of ownership in a company. When an investor buys a share in a company, they own a small proportion of that company. Shareholders may even receive voting rights. This is why stocks are sometimes referred to as equities; investors now own equity in that company.
A stock can earn money in two ways. The first way is through the value of shares appreciating over time; this is called capital appreciation. The second is through periodic cash payments made to shareholders, called dividends.
Stock prices can be influenced by both internal and external factors, such as a new product launch or broader national or global events like a political event or natural disaster. Because the nature of business is highly unpredictable, stock prices can be volatile.
Bonds
A bond, on the other hand, is an investment in the debt of a company or government. The bondholder earns a rate of return by collecting a rate of interest on that debt for a predetermined amount of time, such as 10 or 20 years. Because the terms are stated upon purchase, bond values generally tend to be less volatile than stocks, but have more modest returns. That said, bonds are not completely without risk, and it is possible for bonds to lose value.
When interest rates are low, overall, bonds will likely pay out a lower rate of interest. Interest rates can change, and quickly, sometimes, which is something investors may want to take into account.
Typically, stocks are considered to have a higher potential for returns over time, but that comes with the price of volatility — the possibility of an investment losing value, especially in the short-term. Bonds are often considered a safer, more stable investment that may be more appropriate for investors who aren’t as comfortable with the volatility of the stock market.
A big part of deciding where to invest has to do with determining your relative comfort level with each of the different asset classes.
Mutual Funds
Investing directly in stocks isn’t the only option available to investors. Mutual funds present another way to invest in the stock market. Think of funds as baskets that hold an assortment of some other investment type, such as those mentioned above — stocks, bonds, and real estate holdings. Funds provide investors an easy way to access diversified exposure to many investments at once, but they are not an asset class in and of themselves.
Investment funds can be an affordable and quick way to get (and stay) invested, which makes them popular with both new and seasoned investors. But even if you decide to use funds as the device for which you invest in different markets, the first order of business is to understand the fund’s underlying asset class.
For example, someone who purchases a mutual fund that holds 500 stocks, is invested in those 500 stocks — and very much invested in the stock market. If you buy a mutual fund comprising 1,000 bond holdings, then you are invested in those bonds. If you buy a fund with real estate holdings, well, you get the idea.
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Options
Options are a form of derivative, and are “higher-level” investments than, say, stocks or bonds. Options can be difficult to understand, but fairly easy to trade — you’d likely want to discuss options trading or investing with a financial professional before you get into it.
That said, investors can invest their money in various forms of options, but they’ll need to keep an eye on their portfolios. Options trading is an active form of investing, as there are strike prices and dates that they’ll need to be aware of.
Exchange-Traded Funds (ETFs)
Exchange-traded funds, or ETFs, are very similar to mutual funds in that they’re effectively a basket of different investments, all compiled into one security. There are tons of different types of ETFs, encompassing all sorts of different market indexes, sectors, and asset classes. Odds are, if you’re looking for a specific type of ETF, there’s likely one out there that fits the bill — or that comes close to it.
Retirement Plans
A retirement plan or account is another place that investors can put their money to work. There are various types of retirement plans — the list includes individual retirement accounts (IRAs), 401(k) plans, and the Roth variations of each. Not all investors may have access to each type, so, see what’s available to you, and which type of plan best fits your investing strategy.
Index Funds
As discussed, index funds offer yet another investment vehicle. These are investment funds that track an index, which is usually a specific part of the broader market. For example, there are index funds that track the S&P 500, or there are index funds that track the tech sector.
Investing in an index fund allows investors to gain exposure to their preferred market segment, and there are numerous options out there, too.
Real Estate
Real estate investing can include physical property — houses, commercial buildings, etc. — or, it comprises purchasing certain real estate-oriented investment vehicles. While many investors may not have the capital laying around to buy a house for investing purposes, they can buy real estate stocks, or even look at REITs, or real estate investment trusts, to get real estate exposure into their portfolios.
Certificates of Deposit (CDs)
Certificates of deposit, often called CDs, should also be on investors’ radar. CDs are somewhat like savings accounts, in which investors “lock up” their funds for a predetermined period of time in exchange for interest rate payments. Functionally, they’re similar to bonds, but there can be fees if you need to pull your money out of a CD before it matures.
Options for Cash
In some instances, it may make the most sense to keep the money for a particular goal in cash. It is helpful to understand what options are available for cash savings.
Savings accounts at a traditional bank or credit union: This is likely the most familiar option. Traditional and commercial banks remain popular for their large geographical footprint. Note that many traditional banks tend to pay a relatively low rate of interest on any cash holdings.
Online-only checking and savings accounts: A newer option for bankers, online-only banks and banking platforms may offer a slightly higher yield than a savings account at a commercial bank. Additionally, many do not require minimums or charge monthly maintenance or account fees.
Money market funds: Often found in brokerage accounts, a money market fund is a fund that holds cash and or other “very liquid investments,” like short-term government securities.
Certificate of deposit (CD): As discussed previously, certificate of deposit is a savings account that holds money for a fixed amount of time, like one year or three years. A fixed rate of return is paid out during that period. Generally, there is a penalty to cash out a CD prior to expiration.
When considering cash as an asset class, consider the risk and reward tradeoff, just as one would for any other investment type. Although cash might not be risky when considered in terms of volatility, it does not come without risk. Cash carries the risk of losing value over the long-term due to the effects of inflation, or prices rising over time.
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Beginner-Friendly Places to Invest
If you’re a beginner investor looking for places to put your money, it may be beneficial to revisit some basic investing rules or guidelines. For instance, you’ll likely want to build an emergency savings fund before focusing on your stock portfolio.
But assuming you’re ready to put your money in the market or otherwise start building your investment portfolio, many beginners begin with some basic investment funds. ETFs are a popular choice, as are mutual funds — but note that there are some differences to be aware of.
If you’re not sure where to turn or what to do, consider speaking with a financial professional for advice.
Which Investments Provide the Highest Returns?
You’ve probably heard a certain phrase before: The higher the risk, the higher the reward. That largely holds true in the financial space, although not in every instance. It’s all to say that riskier investments tend to provide higher returns.
Assets like stocks are probably, by and large, going to provide higher or better returns than, say, bonds. Trading options can likewise be more profitable than buying and holding stocks, too. But there are significant risks involved in any strategy, and those risks can be magnified by the specific investments involved.
Again, if you’re looking for the highest possible return, it may be best to consult with a financial professional for guidance, or to give some thought to how each type of investment fits with your overall strategy.
Creating a Goals-Based Strategy
Contrary to how many new investors are encouraged to think about investing, it may not make sense to try and pick “hot” stocks right out of the gates.
Instead, take a step back and consider the bigger picture view, and ask whether stocks are even appropriate given your goals and investing timeline. This decision on which combination of asset classes to be invested in, and in what proportions, is called asset allocation.
To determine your asset allocation, start by thinking of each “bucket” or “pot” of money independently. For example, maybe someone has $1,000 set aside for retirement and another $1,000 that they’d like to use as a down payment for a home. Think about this intuitively; these are very different goals with different timelines and therefore, may require different investing strategies.
Next, consider the financial goals, risk tolerance, and investment time horizon for each bucket. This can sound pretty boring especially if you’ve been conditioned to believe that you should invest in whatever is currently the talk of the town.
Risk vs Reward
The asset allocation decision really boils down to an examination of an investment’s risk and reward characteristics in order to determine whether it’ll work on a personal level. Here’s what’s so important to understand: with investing, risk and reward are two sides of the same coin. Investors cannot have one without the other. For more reward potential, an investor will have to take more risk. There is no such thing as an investment that produces returns with no risk.
Let’s consider, again, the two hypothetical investment goals from above: $1,000 for a down payment and $1,000 for retirement. How do goals lead one down the path of where to invest?
First, the $1,000 for a down payment: If the money is designated for use in the next few years, the risk of losing any money in a volatile investment may outweigh the potential to earn investment returns. Therefore, it might be best to keep this money in a lower-risk investment or cash equivalent.
Next, the $1,000 for retirement. Many retirement investors have the goal of reasonable growth over the long-term. Because of this long time horizon, there should be enough time to grow beyond spates of short-term volatility. Therefore, it may be suitable to create a portfolio that is primarily invested in the stock market or a combination of stocks and bonds.
Retirement investors close to retiring may opt to consider some exposure to bonds for both diversification purposes and to lower the overall volatility of the portfolio. Ultimately, a person’s comfort level with the stock market will determine their specific stock and bond allocations. And it’s worth noting that an investing strategy isn’t stagnant. As a person ages, their goals and investing strategy will likely need to evolve, too.
Opening the Right Account
Here’s another way to answer the question, “where should I invest my money?” By doing so, in an appropriate account type, at a brokerage bank or on an investing platform.
Just as it makes sense to keep cash in a bank account, the same must be done with investments. But with investments, opening the right account can be a bit trickier.
It is not uncommon to hear someone refer to a 401(k) or a Roth IRA as if one of those is, in itself, an investment. But retirement accounts are not investments — they are accounts. Granted, they can hold investments, but they are still accounts.
Money is contributed to any investment account in cash, and then those proceeds are used to purchase investments, like stocks, mutual funds, and ETFs. (In a plan sponsored by a workplace plan, like a 401(k), the investing might happen automatically, hence the confusion about it being an investment itself.)
It is also possible to invest in an account that is not designated for retirement. At a brokerage firm, these are often simply referred to as brokerage accounts. If you use a trading platform, it may be referred to as an individual or a wealth account.
Retirement accounts offer some sort of tax benefit, like tax-free growth on your investments, which make them suitable vehicles for long-term goals. But because they offer a tax benefit, there are more rigid rules for use. For example, some retirement accounts, like 401(k) and Traditional IRAs, levy a 10% penalty on money withdrawn before retirement age (there are some exceptions to this withdrawal fee). Also, there are limits to how much money can be contributed annually to retirement accounts.
Weighing Your Options
It all comes down to the individual. You’ll need to look at your risk tolerance, time horizon, and personal preferences to determine the most suitable investing path or accounts.
For short-term goals that require more flexibility, a non-retirement account may be a better choice. Because there are no special taxation benefits, there are generally no rules about when money can be withdrawn or how much can be contributed. Because of this, non-retirement accounts can also be a good place to invest for folks who have met their maximum contribution amount for the year in their retirement accounts.
Investing With SoFi
At any given time, there are a plethora of places or vehicles in which you can invest your money. You can invest in stocks, bonds, funds, real estate — the list is long. But each has its own considerations and risks that must be taken into account. Overall, an individual’s investing strategy is the most important thing to keep in mind.
As for where to open an account, new investors may want to focus on an institution or platform where they are able to keep costs low. There’s not a whole lot that investors can control, like investment performance, but how much they pay in fees is one of them. There are lots of options for investors.
SoFi Invest offers educational content as well as access to financial planners. The Active Investing platform lets investors choose from an array of stocks, ETFs or fractional shares, but restrictions apply.
Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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FAQ
Which investment gives the highest returns?
Higher-risk investments tend to give the highest returns, but can also give the highest losses. These can include certain stocks or investment funds, particularly those focused on market segments that are risky or volatile.
Where can you invest your money as a beginner?
Beginners can use any number of investment vehicles to invest their money. Some choices include investment funds like ETFs or mutual funds, or even retirement accounts or plans.
Where can you invest money to get good returns?
There are numerous investment vehicles that can provide good returns, but those returns can be thwarted by down markets. Stocks and more volatile investments tend to provide higher returns, but also tend to have higher risks than other investment types.
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Highlights
The Panic of 1907 was a major U.S. financial crisis in the fall of 1907.
It exposed deep weaknesses in the U.S. financial system and raised concerns about bankers’ economic influence.
In its aftermath, Congress created the Federal Reserve Bank of the United States, the linchpin of the modern financial system.
In 1907, cars are unreliable luxury goods, electricity is still rare outside urban areas, and penicillin won’t be discovered for another 20 years. The world is a totally different place.
Yet 1907 turns out to be a critical year in the development of the modern American financial system. That fall, financial speculators set off a period of gut-wrenching stock market volatility that spurred numerous bank runs and failures that ruined many investors and countless ordinary folks.
But it would have been far worse had financier and industrialist J.P. Morgan and richest American John D. Rockefeller not come to the rescue.
What Was the Panic of 1907?
The Panic of 1907 was a major American financial crisis that occurred in the fall of 1907. Also known as the Bankers’ Panic or Knickerbocker Panic, it nearly ruined the New York Stock Exchange. In its aftermath, Congress created the Federal Reserve Bank of the United States.
The crisis began as a result of financial speculation on the New York Stock Exchange but quickly spread throughout the United States. Many banks failed as a direct result of the panic, wiping out thousands of savers and investors, and nearly drove New York City into municipal bankruptcy.
The crisis ended only after a coordinated effort by private financiers and U.S. Treasury officials to pump tens of millions of dollars into the teetering financial system.
The Panic of 1907 was the last major financial panic to occur before the creation of the Federal Reserve system in 1913. Afterward, Congress investigated the causes of the crisis and recommended that a national bank be created to prevent similar panics in the future.
What Caused the Panic of 1907?
The immediate cause of the Panic of 1907 was a failed scheme by financial speculators to buy up a huge number of shares in a company called United Copper. However, at the time, the U.S. financial system had some underlying weaknesses that increased the risk that such a scheme would cause severe turmoil in financial markets.
Seasonal decline in bank reserves. In the early 1900s, many banks’ reserves were closely tied to the agricultural calendar. Banks typically had less cash on hand after the fall harvest, leaving them more vulnerable to bank runs.
San Francisco’s rebuilding effort. A devastating earthquake leveled much of San Francisco in 1906, and a capital-intensive rebuilding effort was in full swing by late 1907. New York banks were providing much of the financing, further depleting their reserves.
Ongoing economic recession in the U.S. The Panic of 1907 began in October 1907, by which time the U.S. economy had been in recession for months. Financial institutions and smaller investors were already stretched, laying the groundwork for a panic.
Widespread weakness at New York’s trust companies. Trust companies were a vital source of short-term loans for stock market investors. But they had much smaller cash reserves than banks and were even more vulnerable to runs and failures.
A failed attempt to corner United Copper’s stock. F. Augustus Heinze, a financier and part-owner of United Copper Company, joined forces with his brother Otto and his associate Charles Morse to buy as much United Copper stock as possible. The idea was to drive the price up and then sell the shares at a massive profit. The scheme failed, ruining the Heinzes and weakening several financial institutions associated with them.
Crisis of confidence in trust companies. As worry spread through New York’s investor community, customers began to pull cash from a trust company run by an associate of the Heinzes and a fellow speculator named Charles W. Morse. This led to a full-blown run that quickly spread to other trust companies.
Liquidity crisis on the New York Stock Exchange. As the panic grew, trust companies dramatically slowed lending to investors in an effort to preserve capital. Traditional banks followed suit. Stock prices fell sharply and concerns grew about the viability of the New York Stock Exchange, or NYSE — the country’s most important financial exchange.
Within a matter of days, a seemingly isolated financial maneuver had consumed New York City’s financial industry, and about a dozen banks and trust companies in the city had already failed.
But what happens in New York’s financial industry doesn’t always stay in New York’s financial industry. Financial panic spread outward and numerous hinterland banks experienced runs of their own. A broader economic crisis loomed, demanding intervention at the highest levels of government and industry.
What Happened During the Panic of 1907?
The Panic of 1907 began as an isolated, ill-advised exercise in financial speculation and morphed into a widespread crisis of confidence in the American financial system.
Key Participants
Countless individuals and hundreds of financial institutions directly or indirectly participated in the Panic of 1907, but the number of central players was relatively small. They included individual financiers, financial institutions, and top-ranking U.S. government officials.
Financier F. Augustus Heinze and brother Otto Heinze. The Heinze brothers’ failed attempt to corner shares in United Copper set the panic in motion. It also bankrupted them and essentially ran them out of the banking industry.
Financier Charles W. Morse. A close associate of the Heinzes and fellow financial speculator, Morse was also ruined in the panic. His association with Knickerbocker Trust Company president Charles T. Barney sparked the first of many runs on New York trust companies.
Financier Charles T. Barney. Knickerbocker Trust Company was the third-largest trust company in New York before the panic. Though Barney refused to fund the United Copper scheme, his close ties to Morse proved too much for investors, which drained Knickerbocker’s cash reserves and forced it to suspend operations for five months.
Financier and industrialist J.P. Morgan. Reprising his role from the Panic of 1893, J.P. Morgan organized a group of bankers, industrialists, and U.S. government officials to stabilize the financial system as the crisis grew.
Industrialist John D. Rockefeller. Then the richest person in the United States, Rockefeller personally deposited $10 million in National City Bank (Citibank’s predecessor institution) at Morgan’s urging. The gesture temporarily increased investor confidence but wasn’t enough to resolve the crisis.
U.S. Treasury Secretary George B. Cortelyou. Cortelyou worked closely with Morgan on a bailout for Trust Company of America, the failure of which would have deepened the crisis. Cortelyou ultimately deposited more than $25 million in U.S. government funds in several key New York banks and trust companies.
NYSE President Ransom Thomas. As credit dried up and trading volumes plummeted at his institution, Thomas approached Morgan’s group for a bailout. Morgan and several other prominent bankers put up nearly $35 million to keep the exchange afloat.
New York City Mayor George McClellan. The market panic deepened New York City’s existing financial woes. Facing a looming loan payment deadline, McClellan asked Morgan for a $20 million loan. He obliged, averting municipal bankruptcy.
Industrialist Elbert Gary. Gary, Morgan, and other U.S. Steel co-founders organized U.S. Steel’s purchase of TC&I, a distressed industrial company. That helped avert bankruptcy at a major New York brokerage firm that borrowed against TC&I’s near-worthless shares.
U.S. President Theodore Roosevelt. The TC&I deal needed Roosevelt’s blessing to go through. Forced to choose between compromising his anti-monopoly principles and worsening an already dire financial panic, Roosevelt went with the less-bad option.
Key Events & Impact
The Panic of 1907 lasted from Oct. 16 to Nov. 2. It began with the Heinzes’ failed effort to corner United Copper and ended with the forced merger of U.S. Steel and TC&I.
The Heinzes wash out. Otto Heinze started buying up United Copper shares on Monday, Oct. 14, and continued into the next day. But he underestimated the number of shares outstanding and ran out of money. The scheme unraveled on Oct. 16, with the stock dropping by more than 80%.
Concerns grow around Heinze- and Morse-affiliated institutions. Augustus Heinze and Charles Morse sat on the boards of more than two dozen financial institutions. One Heinze-controlled bank failed on Oct. 17 and several others experienced runs on Oct. 17 and 18.
Run on Knickerbocker Trust Company. Spooked by Knickerbocker president Charles Barney’s connection to the United Copper scheme, customers started pulling funds on Friday, Oct. 18. The run deepened the following Monday. By Tuesday, Oct. 22, Knickerbocker had suspended operations. It remained closed until March 1908.
Trust Company of America bailout. The Knickerbocker run spread to other New York trust companies, most notably the Trust Company of America. On the evening of Oct. 22, a group of bankers and government officials led by J.P. Morgan raised $8 million to keep it afloat.
New York Stock Exchange bailout. As panic grew, trust companies stopped providing the short-term loans that kept NYSE traders solvent — and the NYSE itself operational. Facing an unprecedented suspension of operations, the NYSE asked for and received about $25 million on Thursday, Oct. 24, and another $9 million on Oct. 25.
New York bank bailouts. By Oct. 24, more than a dozen New York banks and trust companies had failed. That evening, Treasury Secretary Cortelyou committed $25 million in U.S. government funds to shore up several others. John D. Rockefeller deposited $10 million in National City Bank.
Public relations blitz to restore confidence. Anticipating further panic when markets opened on Monday, Oct. 28, Morgan, Cortelyou, and others talked to every reporter they could over the weekend. They explained the steps they’d taken to avert the crisis and what more they’d be willing to do if need be.
New York Clearing House provides short-term credit. Also over the weekend, New York Clearing House — a critical player in the city’s financial markets — announced it would provide up to $100 million in credit for banks and trust companies. This stemmed cash outflows and calmed financial markets.
New York City municipal bailout. With a $20 million municipal loan repayment coming due on Nov. 1, Mayor McClellan reached out to Morgan in secret to ask for a bailout. Fearing renewed market panic if word got out, Morgan quietly bought city bonds worth $30 million.
Moore & Schley bailout and trust company crisis resolution. The market turmoil put intense pressure on the finances of brokerage firm Moore & Schley, which had borrowed heavily against nearly worthless TC&I stock. In marathon overnight negotiations on Nov. 2 and 3, Morgan brokered a grand bargain to bail out Moore & Schley and several trust companies that remained at risk of failure.
U.S. Steel-TC&I merger. The Moore & Schley bailout required U.S. Steel to purchase TC&I at a favorable price. Under normal circumstances, the merger would have violated antitrust law, but Morgan and high-ranking government officials persuaded President Roosevelt to approve it anyway.
The “panic” part of the Panic of 1907 peaked on Oct. 24 and 25. Although the early interventions led by Morgan and Cortelyou kept things from totally spiraling out of control, the real turning point was New York Clearing House’s massive credit extension over the weekend of the 25th. That gave Morgan and friends breathing room to shore up New York City’s finances and stabilize the troubled trust companies.
Response & Interventions
The Panic of 1907 unfolded over the course of about three weeks. A lot happened during that time, and the main participants in the response probably experienced it as a sleep-deprived blur of action and reaction.
In hindsight, the panic had several distinct phases. Each generated a specific response from the financiers, industrialists, and government officials who’d taken it upon themselves to limit the damage.
Initial fallout from the United Copper scheme. This phase preceded the full-blown panic. It consisted of largely unsuccessful efforts by bank owners and executives, most notably at Knickerbocker Trust Company, to quell runs on their own institutions.
Morgan-Cortelyou alliance. Morgan and Cortelyou got involved on Oct. 22, once it became clear that the trust companies couldn’t manage the crisis on their own. They collectively raised nearly $50 million to keep the industry afloat.
NYSE bailout. The NYSE got the single biggest bailout — nearly $35 million — because it was the single most important institution at risk of failure. Its collapse would have had devastating consequences for the U.S. financial system and economy.
Restoring confidence in the U.S. banking system. This was the most public phase of the crisis management effort. Morgan, Cortelyou, and his associates blitzed the press, assuring Americans that their money was safe in the bank. New York Clearing House’s massive credit line was critical to this effort as well.
New York City municipal bailout. Though they arose independently, New York City’s financial woes deepened during the Panic of 1907, and Morgan felt obligated to step in. He judged that the crisis would reignite if the city declared bankruptcy at such a sensitive time.
Grand bargain. This was the Panic of 1907’s final act. Both Morgan’s group of capitalists and the decidedly progressive Roosevelt administration agreed that all outstanding threats to the financial system had to be resolved as quickly as possible.
How the Panic of 1907 Affected the Future Economy
Though it’s barely remembered today, the Panic of 1907 had a deep and durable impact on the American financial system and economy. Its influence rivaled two much better-known financial panics: the Crash of 1929, which sparked the Great Depression, and the Great Financial Crisis of the late 2000s.
Establishment of the Federal Reserve System
The most significant outcome of the Panic of 1907 was the establishment of the Federal Reserve system.
Unlike other industrialized nations in Europe and Asia, the United States had been without a central bank since the 1830s. That mattered because other countries’ central banks could extend credit to private banks as needed to shore up cash reserves and maintain liquidity. They could do this not only during extraordinary financial crises but in response to costly disasters like an earthquake in San Francisco — or even in response to seasonal forces like the capital-intensive fall harvest.
Though many politicians and economists saw the lack of a U.S. central bank as a major economic vulnerability, key players in the financial industry were opposed to the idea of a government-run creditor of last resort. Resistance to the idea continued despite periodic financial panics in the 19th and early 20th centuries.
The Panic of 1907 was a turning point in part because it was the second time in less than 15 years that a single individual — J.P. Morgan — led a broad bailout of the American financial system. The idea that one man held such sway over the economy made even the most committed capitalists nervous.
So in May 1908, Congress established the National Monetary Commission to study the question of whether the U.S. should have a central bank. The commission reported its findings in 1911 — in short, arguing that the U.S. needed a central bank — and Congress created the Federal Reserve system two years later.
Antitrust Backlash
The Panic of 1907 sparked an intense political backlash against individual plutocrats like J.P. Morgan and the concept of concentrated wealth and influence in general.
The U.S. House of Representatives’ Committee on Banking and Currency established a select committee to examine the “money trust” — the financial institutions controlled or influenced by Morgan and his associates.
Known as the Pujo Committee, it investigated questionable allegations that Morgan engineered the crisis to profit from the merger of U.S. Steel and TC&I while weakening the power of the trust companies. There was a fair bit of spectacle involved, and people close to Morgan blamed lawmakers’ aggressive questioning for hastening his death shortly after his testimony.
But the Pujo Committee’s final report was a comprehensive (if somewhat exaggerated) accounting of the U.S. economy’s vulnerabilities. Among other revelations, it found that Morgan had ownership in or influence over more than 100 companies worth more than $22 billion, a shocking sum at the time.
The Pujo Committee’s findings further increased support for a federal income tax, which was already on its way to being enacted via constitutional amendment. That officially happened in 1913. The following year saw the passage of the Clayton Antitrust Act, which strengthened existing antitrust laws and — in a clear swipe at Morgan — prohibited people from serving as directors for competing companies under certain conditions.
Final Word
It’s tempting to dismiss the Panic of 1907 as a relic of a bygone era, like the telegraph or whale-oil lamps. It’s also tempting to downplay it in light of much more recent economic crises, like the financial crisis of the late 2000s or the brief but severe COVID-19 recession in 2020.
But the Panic of 1907 remains relevant today.
For starters, it was the final financial crisis before the U.S. government set up the Federal Reserve system in the hopes of averting future crises. New York Clearing House’s broad credit guarantees, which headed off further panic, inspired the Federal Reserve system’s discount lending window for troubled banks.
The Panic of 1907 was also an important inflection point for the American financial industry after the excesses of the Gilded Age, as the industry’s leaders realized the limits of self-regulation and gained newfound appreciation for (limited) government intervention.
That said, the reforms instituted in the wake of the Panic of 1907 couldn’t prevent the Great Depression or the late-2000s financial crisis. Those crises prompted their own reforms. Unfortunately, so will future financial panics.
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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.
On my first day of college, I chose a checking account because the bank was handing out free Frisbees. This was my only bank account for nearly 20 years.
Eventually I opened a savings account at the local credit union. Then I discovered the benefits of a high-yield savings account. Last autumn I opened my first certificate of deposit. And just a few months ago, I started a money market account.
Why so many accounts? To me, each bank account serves a specific purpose. Not every account is suitable for every need. Though not everyone needs (or wants) as many bank accounts as I now have, it’s still a good idea to make sure you’re using the right tool for the job.
Here are my four favorite types of bank accounts for personal use — and what they’re good for:
Rewards checking accounts Many small community banks and credit unions around the United States offer a special “rewards” checking account, a product administered by a company called Kasasa. These accounts carry restrictions and requirements (you have to make 10-12 debit purchases each month, the rate only applies to the first $30,000 or so in your account, etc.), but if you meet them, it’s tough to beat the returns.
I tried to maintain a rewards checking account at a local credit union, but ultimately it didn’t work for me. The credit union was too far away, and I wasn’t meeting the transaction requirements.
Here’s a huge list of rewards checking accounts by state. There are still checking accounts that offer 6%!
A rewards checking account is a great option for your main checking account, provided you have a nearby branch and you have a lot of monthly debit transactions. (ING Direct offers a checking account, but it’s not nearly as good as a rewards checking account.)
[Read more: Making the most of your checking account]
Online high-yield savings accounts Like most personal finance bloggers, I’m a fan of online high-yield savings accounts. While traditional banks and credit unions are offering a pittance on their accounts (my credit union’s “high-yield” account is at 0.10%!), you can still find rates above 1.50% through online accounts at CIT Bank, Ally Bank, and others.
I’ve used my online savings account at ING Direct for two primary purposes:
An emergency fund — When I first started my emergency fund, it was important to me that it be a little difficult to access. An online savings account was perfect because I can’t just decide on a whim to spend $10,000. If I want the money, I have to wait a couple of days for it to transfer to my main account. Perfect for an emergency fund.
Online high-yield savings accounts are a great way to save. Interest rates are low right now, but as the economy continues to improve, yields will rise.
[Read more: Which online high-yield savings account is best?]
Money market accounts As an alternate to an online high-yield savings account, consider a money market account from a brick-and-mortar institution. Until recently, my credit union offered an account with interest rates that were competitive with ING Direct. Now, however, they’ve dropped to under 1.00%.
Money market accounts require higher minimum balances than savings accounts. My credit union requires a $10,000 minimum deposit on a money market account, for example. Their minimum deposit for a savings account is $5. Some money market accounts allow limited check-writing privileges. They often limit the number of withdrawals per month.
A money market account can be a great choice if you’re attempting to consolidate all of your accounts at one bank, or if you’re wary of using an online bank.
[Read more: An introduction to money market accounts]
Certificates of deposit Certificates of deposit (often simply called CDs) are time deposits. You give your money to the bank and then promise not to touch it for a specific length of time. In general, the longer you agree to let the bank keep your money, the higher the interest rate you’ll receive.
Unlike a savings account, once you put your money into a CD, the interest rate does not fluctuate. If you open a 6-month CD at 3.50% and interest rates drop, you earn 3.50% the entire six months.
If certificates of deposit offer higher returns than a savings account, then why doesn’t everybody use them? The primary drawback to CDs is that they’re less liquid than a savings account; you can’t just move money in and out of them without penalty. You can take your money out of a CD before it “matures”, but you’re docked interest when you do. In fact, many (most?) banks penalize the interest amount, even if it isn’t earned (meaning you could lose part of your principal if you close your CD early).
Despite these limitations, CDs are great place to put money you don’t expect to need for a while. For most folks, a CD ladder is a good way to maximize returns.
[Read more: Put your savings on steroids with certificates of deposit and Current CD rates]
Peer Lending
If banks are not the right fit for you, there are other services out there such as peer lending. Peer lending services, such as Lending Club match people looking for a personal loan with people who are willing to fund it. Lending Club isn’t FDIC insured, but offers rates between 7%-9%, which are significantly higher than banks.
Choosing an account Each of these four types of accounts can be put to use to build your wealth. (And, of course, you’ll probably want a brokerage account for your Roth IRA and other investments.) As you look to choose an account, be sure to answer the following questions:
What do you need the account for? Long-term savings? Business? Personal? Every-day use?
How much will you keep in the account? Some accounts have minimum deposits in order to get the best interest rate. For example, my credit union’s money market account requires a $50,000 deposit in order to get the top rate.
How liquid does the money need to be? If you need quick and easy access, you’re best served by local brick-and-mortar banks. If you don’t mind a small delay, online banks will work. And if you can let your money go for months (or years) at a time, a certificate of deposit might be your best choice.
Do you need easy access to the money? Do you need a lot of ATMs? I tend to think that for day-to-day use, it’s best to have an account with a local brick-and-mortar bank. But for substantial savings, I’ve found it useful to create barriers. If I don’t have easy access to the money — if I have to jump through a few hoops to get it — then I’m less likely to spend it frivolously.
How important is online access?
How important is customer service?
How important is privacy? All banks should meet certain minimum privacy levels. But you give up a little of that if you have a regular bank you use. At my local credit union, for example, I tend to get the same teller quite often. She remembers a couple of past transactions because they were unusual. This doesn’t bother me, but I know it would bother some of my friends. If you need maximum privacy, take this into consideration.
Whichever account you choose, be sure that it’s FDIC insured. (Or, if it’s held at a credit union, that it’s insured through the NCUA.)
Conclusion Ten years ago I had a single bank account. Today I have five, including each of the above. (My fifth bank account is a business account.) Each account serves a purpose.
Picking a bank account is like choosing the right tool for a job. Sure, you can beat a nail into the wall with a screwdriver — if that’s all you have. But you’ll do it a lot faster and with more precision if you use a hammer. The same is true with money. Use the right tool and you’ll get better results.
How many bank accounts do you have? Do you try to keep things simple? Or do you spread your money around many accounts? Any tips or tricks to share with other GRS readers?
An emergency fund can help you cover life’s curveballs when an unexpected financial situation comes your way. You may be wondering where to keep your emergency fund until you actually need it.
You could stuff your emergency savings under the mattress or in a piggy bank, but a bank account can be a smarter way to save. The best account for emergency fund savings is one that offers you convenient access to your money, a competitive rate on deposits, and minimal fees.
Weighing some of the different banking options can help you decide where to put emergency funds. Read on to learn more about:
• Where you can keep an emergency fund
• How much to keep in an emergency fund
• The pros of having an emergency fund
• How to start an emergency fund
Where to Keep Emergency Funds
Now, where to keep an emergency fund? There are different places you could keep your rainy-day money. When making a decision, it’s important to consider what works best for your lifestyle. And you’ll also want the security of knowing your money is safe, so it can be best to bank at a financial institution that is insured by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration).
With that in mind, here are five possibilities you might consider when looking for the best account for emergency funds.
1. Traditional Checking or Savings Accounts
You might consider keeping emergency savings in a traditional checking account or savings account at a brick-and-mortar bank. On the pro side, that could make it easier to access your money in an emergency. However, you may not get the best rate for your money. Also, checking accounts often don’t earn you any interest, and their accessibility can make it tempting to dip into the funds for something that isn’t a true emergency.
Traditional banks are not known for offering the highest annual percentage yields, or APYs, on savings accounts either. You’re also more likely to pay a monthly maintenance fee for a traditional savings account than one at an online bank.
Ready for a Better Banking Experience?
Open a SoFi Checking and Savings Account and start earning up to 4.30% APY on your cash!
2. High-Yield Savings
High-yield savings accounts offer above-average rates on balances. For example, you might find a savings account with an APY that’s five, 10, or even 20 times higher than the national average.
It’s more common to find high-yield savings accounts at online banks vs. traditional banks. That’s because online banks tend to have lower overhead costs so they’re able to pass on savings to their customers. You’re also less likely to pay a monthly fee for a high-yield savings account.
Of course, you won’t have branch banking access with an online savings account. You may, however, be able to access your account via an ATM card or debit card, or by transferring funds to a linked account.
3. Bonds
A bond is a type of debt instrument. When you buy a bond, you’re agreeing to let the bond issuer use your money for a set time period. In return, the issuer agrees to pay interest back to you.
Bonds can be attractive since you can earn decent interest rates on savings. However, they’re not great for accessibility since you have to wait for the bond to mature to get your money back.
You could cash out a bond early but that might mean forfeiting some of the interest you could earn. So you may want to consider bonds for money that you’d like to invest, versus money that you might need to tap into for emergencies.
4. Certificate of Deposit (CD) Accounts
A certificate of deposit or CD is a time deposit account. When you put money into a CD, the bank agrees to pay interest on your balance over a set time period. Once the CD matures, you can either withdraw your initial deposit and the interest or roll it all over to a new CD.
CDs can be a reliable way to save, since interest rates are guaranteed. However, your money is locked in for the entire maturity term. If you need to break into a CD early, your bank may charge an early withdrawal penalty. That could cost you some or all of the interest earned.
If you’re interested in using CDs for emergency savings, you might consider a CD ladder. Laddering CDs means opening multiple CDs with different maturity terms. That way, you always have a CD maturity date on the horizon. CD laddering could also help you to capitalize on rising interest rates since you can roll expiring CDs into a new account with a higher APY.
5. Money Market Accounts
Money market accounts combine features of savings accounts with checking accounts. For example, you can earn interest on balances and you might also get a debit card or paper checks that you can use to access your money.
A money market account can offer flexibility since they’re easier to access than bonds or CDs. And you might find money market accounts at online banks that offer rates comparable to what you could get with a high-yield savings account or CD. However, read the fine print: There may be minimum account opening and balance requirements as well as monthly fees to be paid.
If you’re considering a money market account for your emergency fund, consider the fees. An online money market account might be preferable for minimizing what you pay in fees while getting a competitive rate. Remember, the best account for an emergency fund will be the one that suits your specific needs.
How Much Should You Keep in Your Emergency Fund?
A common rule of thumb for emergency savings is to aim for a minimum of three months’ worth of expenses and many financial experts bump this up to six months. How much money you should keep in your emergency fund should be a number that you’re comfortable with, based on your financial situation.
For example, instead of aiming for three to six months’ worth of expenses, you might choose to save $2,000 for every person in your household. If you have a family of four, that means you’d need an $8,000 emergency fund.
Whether that’s sufficient can depend on what expenses you have, what other financial resources you have, and how quickly you believe you could replace lost income if you end up out of work. Some people may be fine with having a $1,000 mini emergency fund while others are more comfortable setting aside nine to 12 months’ worth of expenses for emergencies.
The Benefits of Having an Emergency Fund
The importance of emergency savings can’t be underestimated. When an unexpected situation or expense comes along, your emergency fund can act as a safety net and help you pay bills without resorting to high-interest methods.
In this way, an emergency fund may be able to reduce stress and give you a sense of financial security.
When you have money in emergency savings, it becomes easier to:
• Avoid high-interest credit card debt. Rather than using your credit cards, you can draw from your emergency savings to cover extra expenses. You can then pay yourself back by depositing money into savings, without having to pay the high interest a credit card might charge.
• Get through financial challenges. An emergency fund can pay for a smaller expense, like a new tire, but it can also cover bigger obstacles. For example, if you lose your job unexpectedly, having emergency savings to fall back on can ease anxiety over paying bills while looking for a new job.
• Avoid impulse decisions. Having emergency savings gives you some breathing room so you can make financial decisions with less pressure. That’s a good thing if it allows you to avoid a potentially negative outcome, like rushing into an expensive loan without reading the fine print.
Keep in mind that your emergency savings isn’t meant for any kind of spending. It’s designed for emergencies only.
So what is a financial emergency? Generally, it’s any situation that you weren’t expecting that affects you financially. Examples of financial emergencies can include:
• A job loss or extended layoff
• Natural disasters that displace you from your home
• A car accident or breakdown that requires major repairs
• Illness or injury that leaves you unable to work
• An important appliance (whether that’s a washer or a laptop) that breaks down
• Unexpected loss of a loved one
Those are all examples of when to use your emergency fund. Buying new clothes, funding a last-minute, or upgrading your furniture because there’s a sale happening, on the other hand, are “wants” and not true emergencies.
Starting an Emergency Fund
If you’re ready to start an emergency fund, the first step is finding the money in your budget to save. The amount of money you get started with doesn’t have to be much; the most important thing is to commit to saving for emergencies on a consistent basis.
For example, say you can only save $25 per pay period and you get paid biweekly. That’s $650 you could save in one year if you’re saving regularly. If you’re not satisfied with that amount, you could review your budget to look for more money to save.
Here are a few additional tips for starting an emergency fund:
• Consider opening a separate bank account to hold your emergency savings and linking it to your main checking account. Money in your checking account often gets spent despite the best intentions.
• Look for a savings account that offers a competitive APY with no monthly fees.
• Set up automatic transfers from checking to savings each pay period to make saving effortless.
• Use “found” or extra money, such as tax refunds or year-end work bonuses, to grow your savings versus going shopping with the whole bundle.
Comparing different banks can help you find the best place to keep your emergency fund savings. And remember that while saving money might seem difficult at times, it can pay dividends if you’re able to stick with the habit.
The Takeaway
Having an emergency fund can help you sleep easier at night if you know that you’re covered should an unexpected expense crop up. If you’re looking for the best emergency fund savings account option, you can start with your current bank then compare it to other banks. Look for a combination of high APY and low (or no) fees to make the most of your money.
For instance, you might consider opening an online bank account with SoFi. With our Checking and Savings account, you can spend and save in one convenient place, plus you’ll earn a competitive APY on balances while paying no account fees, which can help your cash grow faster. One other terrific benefit: Qualifying accounts can get paycheck access up to two days early.
Better banking is here with up to 4.30% APY on SoFi Checking and Savings.
FAQ
What type of account is the safest for emergency funds?
A bank account at an FDIC-member bank is the safest option for holding your emergency fund. FDIC insurance protects your deposits in the rare event that your bank fails. Accounts that can be FDIC-insured include savings accounts, money market accounts, checking accounts, and CD accounts. NCUA serves a similar function insuring credit union accounts. Both offer $250,000 coverage per depositor, per account type, per insured institution.
Should I open a separate bank account for my emergency fund?
Opening a separate bank account for an emergency fund can be a good idea if you’re worried that you might be tempted to spend savings that are mingled with other funds. Having a separate savings account that’s linked to your checking account can allow for easy transfers. You’ll also continue earning interest until you need the money.
Should emergency funds be kept in cash?
Keeping an emergency fund in cash can be problematic as it increases the risk of the money being lost or stolen. You’re also not earning any interest by keeping emergency funds in savings. What’s more, certain emergency expenses might need to be paid using a check or debit card, which would still require you to deposit your cash into a bank account at some point.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 4.30% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 6/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Online banking vs. traditional banking: Which is better for you? By Markia Brown
| Jan. 19, 2023
Online banks have no physical location and require you to do everything digitally — and because of that, they tend to come with lower fees and higher rates of return. Traditional banks, on the other hand, have brick-and-mortar locations, a wider range of products, and in-person customer service.
Consolidating credit card debt is a common use of personal loans. And it makes sense, given that personal loans typically have lower interest rates than credit cards (which currently average 24.58%).
But what about saving money on an existing personal loan? Can you refinance a personal loan, ultimately saving money on interest or lowering your monthly payment? The answer is, yes. However, it may not make sense for every person or every type of personal loan.
Read on to learn why you might refinance a personal loan, how the process works, plus the pros and cons of a personal loan refinance.
Table of Contents
Why Refinance a Personal Loan?
While there may be a variety of reasons to refinance a loan, it mainly comes down to two.
1. To lower the overall interest rate and total interest paid.
2. To lower the monthly payment.
These two might seem like the same thing, but they’re not.
When you refinance any type of loan, you are essentially replacing your old loan with a new loan that has a different rate and/or repayment term. If the new loan has a lower annual percentage rate (APR), you can save money on interest. If the APR is the same but the repayment term is longer, you can lower your monthly payments, making them easier to manage, but won’t save any money. (In fact, a longer repayment term generally means paying more in interest over the life of the loan.)
Another reason why you might consider refinancing a personal loan is to consolidate your debts (so you just have one payment) or to add or remove a cosigner.
Possible Advantages of Refinancing a Personal Loan
Here’s a look at some of the benefits of refinancing a personal loan.
Pay Less in Interest
If you are able to qualify for a personal loan with a lower APR, it may be possible to save a significant amount of money over time, provided you don’t extend your loan term. You can also save on interest by shortening your existing loan term, since this allows you to pay off the loan sooner.
Lower Your Monthly Payment
Refinancing to a lower APR and/or extending the length of the loan can lower your monthly payment. A lower monthly bill could help you get back on track, especially if you’ve been struggling to make your monthly payments.
Consolidate Multiple Debts
If you have a personal loan as well as other debts (such as credit card debt), you can use a new personal loan to consolidate those debts into one loan and a single monthly payment. If your new loan has a lower APR than the average of your combined debts, you may also be able to save money.
Possible Disadvantages of Refinancing a Personal Loan
Refinancing a personal loan might not be the right move for everybody. Here are some disadvantages to consider.
You May Pay More in Interest
If you refinance a personal loan using a loan that has a longer repayment term, you could end up paying much more in interest over the life of the loan.
You May Have to Pay an Origination Fee
Many personal loan lenders charge origination fees to cover the cost of processing and closing the loan. This is a one-time fee charged at the time the loan closes and, in some cases, can be as high as 10% of the loan. Since the fee is deducted before the loan is disbursed to you, it reduces the amount of money you actually get.
You Might Get Hit with a Prepayment Penalty
Some lenders charge a fee if you pay off the loan before the agreed-upon term, which is known as a prepayment penalty. If your original lender charges you a prepayment penalty, it could cut into your potential refinancing savings.
Refinancing a Personal Loan
If you are thinking about refinancing a personal loan, here are some steps you’ll want to take.
Check Your Credit Report and Score
To benefit from personal loan refinancing, you typically need to have better credit than you had when you got your original personal loan. With a stronger credit profile, you might qualify for a lower APR on the new personal loan.
You can access your credit report for free from each of the three major credit bureaus — Equifax, TransUnion, and Experian — through Annualcreditreport.com. It’s a good idea to scan your reports for any errors and, if you find one, report it to the appropriate bureau.
You can typically access your credit score for free through your credit card company (it may be listed on your monthly statement or found by logging in to your online account).
Shop Around for Loans
Every bank has different parameters for determining who they’ll offer loans to and at what rate, so it’s always worth it to shop around. This could mean looking at traditional banks, credit unions, and online-only lenders.
Many lenders will give you a free quote through a prequalification process. This typically takes only a few minutes and does not result in a hard inquiry, which means it won’t impact your credit score. Prequalifying for a personal loan refinance can help compare rates and terms from different lenders and find the best deal.
Awarded Best Online Personal Loan by NerdWallet. Apply Online, Same Day Funding
Applying for a Loan
Once you’ve decided on a lender who can help you refinance to a new loan, it’s time to formally apply. You’ll likely need to submit several documents, including pay stubs, recent tax returns, and a loan payoff statement from your original lender (which will show how much is still owed).
Paying Off the Old Loan
Once you have your new loan funds, you can pay off your original loan. You’ll want to contact your original lender to find out what the process is and follow their instructions. It’s also a good idea to ask your original lender for documentation showing the loan has been paid off.
Making Payments on the New Loan
Be sure to confirm your first payment due date and minimum payment amount with your new lender and make your first payment on time. You may want to enroll in autopay to ensure you never miss a payment. Some lenders even offer a discount on your rate if you sign up for autopay.
The Takeaway
Can you refinance a personal loan? Yes, and doing so may allow you to get a better rate and/or more affordable payments. However, you’ll want to factor in any fees (such as origination fee on the new loan and/or a prepayment penalty on the old loan) to make sure the refinance will save you money. Also keep in mind that extending the term of your loan can increase the cost of the loan over time.
If you’re interested in exploring your personal loan refinance options, SoFi could help. SoFi personal loans offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
FAQ
Can you refinance a personal loan?
Yes, it is possible to refinance a personal loan. Refinancing involves taking out a new loan to pay off the existing personal loan, ideally with more favorable rates and terms. However, whether you can refinance your personal loan will depend on factors such as your creditworthiness, the terms of the original loan, and the policies of the new lender.
Does refinancing a loan hurt your credit?
Refinancing a loan can have both positive and negative impacts on your credit. Initially, the process of refinancing may result in a hard inquiry on your credit report, which can cause a temporary decrease in your credit score. However, if you use the refinanced loan to pay off the existing loan and make timely payments on that loan, it can positively impact your credit over time.
Can I refinance a personal loan with another bank?
Yes, it is possible to refinance a personal loan with another bank. Many banks, credit unions, and online lenders offer loan refinancing options. This allows you to transfer your personal loan balance to a new loan with a new lender. However, eligibility criteria, terms, and interest rates will vary by lender. It’s a good idea to shop around, compare offers, and consider factors such as interest rates, fees, and repayment terms before deciding to refinance with another bank.
What are the pros and cons of refinancing a personal loan?
The pros of refinancing a personal loan include the potential to:
• Secure a lower interest rate
• Reduce monthly payments
• Consolidate multiple debts into a single loan
• Switch to a more favorable lender
This can result in savings on interest costs and improved cash flow. However, there are also potential downsides to consider, which include:
• Paying an origination fee for the new loan
• Getting hit with a prepayment fee from your original lender
• Extending your loan term can increase the total cost of the loan
It’s important to weigh the pros and cons before you pursue a personal loan refinance.
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Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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Whether you are a freelancer, side hustler, or run a full-time business, opening a separate business bank account should be your first move after starting your business.
A business bank account helps you keep your business finances and personal income and expenses separate. Having a business bank account for all your business finances makes it easy to run records and track your costs and deductions at tax time.
Business checking accounts can also help business owners establish credit, which they can use for net terms with suppliers or to take out business loans or business credit cards.
But which business checking account is best? And can you find good options with free business checking accounts?
12 Best Free Business Checking Accounts
We’ve done the legwork for you, compiling a list of the 12 best free business checking accounts available in the U.S. today.
1. Bluevine: Best Free Business Checking Account Overall
Bluevine offers one of the most comprehensive and best free business checking accounts you’ll find. It has no monthly maintenance fees, no overdraft fees, and an annual percentage yield APY of 2% on up to $250,000 of your balance if you meet monthly activity goals. To qualify, simply make $500 in debit card purchases with your Bluevine business debit or receive $2,500 per month in customer payments to your account.
Bluevine offers features that make it great for a team, including the ability to open multiple sub-accounts and even have separate logins for employees or contractors, like accountants and virtual assistants.
While some free business checking accounts have transaction limits, your Bluevine business checking account does not. Funds are backed by Coastal Community Bank, Member FDIC. Coastal Community Bank provides business banking services for Bluevine customers.
2. Capital One Business Bank Account: Best for Local Branches
If you’re looking for personalized service at local branches, consider Capital One business checking. Capital One offers two tiers of checking accounts: Basic and Enhanced. Both accounts offer unlimited digital transactions, free overdraft coverage, access to Capital One’s mobile app, no ATM fees at 70,000 Capital One, Allpoint, and MoneyPass ATMs, and low monthly fees that are easily waived when you meet minimum balance requirements.
Capital One Enhanced business checking is designed for larger businesses who can meet $25,000 average daily balance requirements needed to waive the $35 monthly service fee. Enjoy free incoming wire transfers, five free outgoing wire transfers monthly, and a remote scanner for mobile check deposits.
3. GO2bank: Best for Online Banking
GO2bank is a complete mobile banking solution with digital banking services provided by Green Dot Bank. The bank offers many features in its online business checking account that will appeal to business owners and their employees, including co-branded debit cards, optional overdraft protection, and a co-branded app for businesses. You can also get a secured business credit card through GO2bank.
Waive the monthly fees with qualifying direct deposits, and receive ACH payments up to two days early. You can also purchase eGift cards for yourself or as employee incentives and earn up to 7% cash back.
4. Found: Best for Freelancers
Hailed as the debit card for the self-employed, we rate Found as the best free business account for freelancers. It has no monthly maintenance fees, no minimum deposit or minimum balance requirements, and no credit check to open your account.
Found has a few features that can help you streamline your business. By evaluating your income and expenses, Found can calculate your tax bill, categorize tax write-offs, and even auto-save the correct amount from each deposit to cover your quarterly taxes. You can also send invoices from the app.
Found is a financial technology company, not a bank. Deposits are FDIC insured through Piermont Bank.
5. First Citizens Bank Basic Business Checking: Best for Checking Account Choices:
Most business checking accounts have one option for a business owner. First Citizens has four choices to help you choose the right business checking account with the features you need. The basic business checking account offers 100 transactions with no monthly fee, and has a minimum opening deposit of $100.
Business Banking I is free with a merchant account or a minimum daily balance of $25,000. It offers processing of up to $250 transactions per month, plus $10,000 in cash processing, including cash deposits. Business Banking II has similar features with 500 free transactions and $15,000 in cash processing, including cash deposits. There is a $50 monthly fee unless you have a merchant account or an average daily ledger balance of $50,000.
Business Banking III is best for larger enterprises who want choices and do a high volume of business. Process up to 750 transactions free each month, with $20,000 in cash deposits. You’ll need a merchant account or $75,000 in your average daily ledger balance to avoid the monthly maintenance fee.
Business Banking I, II, and III accounts also let you customize your plan with additional discounted services.
6. Novo Business Checking Account: Best for E-commerce and App Integrations
Novo is not a bank, it’s a financial technology company with deposits backed by Middlesex Federal Savings, Member FDIC. Novo is one of the most tech-forward financial institutions on our list, offering easy integration with apps like Shopify, Wise, Stripe, Square, and Quickbooks.
The Novo Business Checking account has no monthly fees, no minimum balance requirements, no cash deposit fees, and ATM fee reimbursement for out-of-network ATM use. Account holders can also get discounts on popular business software and services, including LegalZoom, Constant Contact, and Stripe.
7. Mercury Banking For Start-ups: Best for Start-ups
Bootstrapped and venture-backed startups of every size have unique needs in a business checking account. A Mercury free business checking account helps your money stretch further with no monthly fee, no minimum balance requirements, and no minimum deposit to open. You can earn 5.11% annual percentage yield APY with mutual funds invested through Mercury Treasury if you have an account balance of $250,000 or more.
Mercury free business checking offers unlimited free transactions, including no cash deposit fees, for businesses who process less than $200,000 per month. The account offers team management tools, debit cards for multiple employees, and capabilities to open multiple checking and savings accounts to manage cash flow.
Plus, your Mercury account is backed by up to $5 million worth of FDIC insurance through partner banks. Banking services are provided by Choice Financial Group and Evolve Bank & Trust, Members FDIC and deposits are held in various partner banks.
8. U.S. Bank Silver Business Checking: Best for Sign-up Bonus
If you’re looking to earn free cash to boost your business, consider a U.S. Bank Silver Business checking account with a $100 minimum deposit before June 30, 2023. You can earn a $500 bonus when you make new deposits of at least $5,000 and maintain a minimum balance of at least $5,000 until 60 days after the account opening. Increase that to $15,000 in new money deposits and maintain that balance for 60 days and earn $750 deposited into your new business checking account.
U.S. Bank offers tons of benefits for business owners, including no transaction fees for up to 125 transactions each month, 25 free cash transactions (or up to $2,500 in free cash deposits, whichever comes first), no monthly maintenance fee, and 50% off on your first check order, up to $50.
Larger businesses may prefer a Gold Business Checking Account, with no transaction fees for up to 300 transactions per month. It also has a waivable $20 monthly fee.
There is also a Platinum Checking Account Package with 500 free transactions and a $30 monthly fee. This fee is waived by meeting monthly minimum balance requirements.
9. Chase Business Complete Banking: Best for Payment Processing
For those who want to avoid online only banks and are looking for a big bank with international recognition and branches and ATMs across the U.S., Chase Business Complete Banking offers a solid solution. It comes with many ways to waive the monthly service fee.
Chase also makes it easy to accept credit and debit card payments without using a third-party payment processor. Chase QuickAccept is a built-in feature as part of Chase Business Complete Banking. You don’t need to apply for a separate merchant account, and the transaction fees are competitive with other credit card processing companies.
QuickAccept also allows you to access money faster with same-day deposits with no added fees. If you need a merchant payment processing provider that works in synch with your bank account, Chase Business Complete Banking could be the best choice for you.
Right now through August 3, 2023, businesses can earn a bonus up to $500 when they open a Chase Business Complete Checking account and meet requirements, which including total deposits of $15,000 or more. Deposit just $2,000 or more and snag an easy $300 for your new business checking account.
10. Huntington Business Checking 100 (Midwest): Best for Community Banking
Huntington National Bank, headquartered in Columbus, Ohio, since 1866, offers three business checking accounts, including a business interest checking account, Unlimited Plus Business Checking.
The top-tier account includes unlimited transactions, plus cash deposits of up to $25,000. Waive the $40 monthly fee with up to $50,000 in total deposit relationship balances across business accounts. Designed for larger businesses, the Unlimited Plus Business Checking allows you to choose two bonus services such as a fraud tool, waived returned deposited items fees on up to 25 items per month, or two free incoming domestic wires monthly.
The Unlimited Business Checking account offers similar features, with unlimited transactions, free cash deposits on up to $10,000 per month, and a choice of one bonus service. Waive the $20 monthly fee by maintaining a minimum balance of at least $10,000. A Business Checking 100 account offers up to 100 transactions per month, and up to $5,000 in cash transactions with no monthly fee.
Huntington is devoted to the local communities it serves and spotlights small business owners on its website. It also specializes in SBA loans and offers a linked business money market account to earn interest on savings with no monthly maintenance fee if you maintain an average daily balance of $10,000+.
11. Relay Business Checking: Best for Money Management
Relay online banking offers up to 20 primary business checking accounts for members of your team or for different business expenses, plus 50 virtual or physical Visa debit cards. Designed to assist with cash flow and money management, your Relay online banking account allows automated transfers into the various checking accounts based on percentage of income or flat-rate dollar figures.
Your Relay online and mobile banking account also includes up to two business savings accounts with APYs of 1% to 3%. Best of all, unlike many free business checking accounts that are only free if you meet transaction or balance requirements, Relay has no monthly maintenance fee, no transaction fees, no overdraft fees, no ATM fees, and no minimum balance requirements.
12. Axos Basic Business Checking Account: Best for No Fees
Axos Bank has been voted best online bank by Money Magazine and its business offering stands out for small business owners as a straightforward business checking account with no transaction fees, no monthly maintenance fee, and no minimum opening deposit. You also don’t have to worry about balance requirements or ATM fees. You’ll even receive unlimited reimbursements for using out-of-network ATMs within the U.S.
You will need to maintain a minimum balance of at least $5,000 for the first five statement cycles to earn a $100 account opening bonus. You will receive $25 into your business account each month you maintain the minimum requirements. However, if you close the account within 120 days, you might have to pay a $100 early closure fee.
What to Consider When Choosing the Best Free Business Checking Account
The best free business checking account for your business depends on the volume of cash deposits, number of transactions, the size of your company and your general banking needs.
It’s important for a business of any size, including a sole proprietor or 1099 contractor, to open a business checking account to keep business funds separate from your personal checking account and other personal finances. This is especially important at tax time.
Many of the business bank accounts on our list of best free business checking accounts make it easy for you to track your business finances. They offer end-of-month or quarterly reports or integrate with QuickBooks or other accounting software to make money management easy. This, along with costs, quality of customer service, mobile apps, and more should factor into your decision when you choose a small business checking account.
Monthly Maintenance Fee
Account fees have long been a fact of life for individuals and business owners, but they no longer have to be with so many free checking accounts available today. Some of the banks on this list, including Axos and Relay, offer no monthly fee of any kind. Others make it easy to waive the monthly fee by meeting balance requirements.
See if there are any balance requirements, direct deposit requirements, or minimum debit card purchases to avoid the monthly service fee, and if you will be able to meet those minimums easily each month.
Easy-to-use Online and Mobile Banking
Even basic business checking today should have a robust app and mobile banking solutions, including mobile check deposits, capability to turn your debit cards on or off, and to monitor spending in a user-friendly app.
You may think online-only banks have better mobile capabilities, but that’s not always the case. All the best business checking accounts on our list have intuitive, user-friendly mobile apps.
Low Minimum Opening Deposit Requirements
Most of the free checking accounts on our list have low minimum opening deposit requirements. Some may have higher minimums to earn a bonus on your business checking account. Make sure to read the fine print and know the minimum deposit requirements if you want to earn that sign-up bonus.
Reasonable Fees
While it’s possible to find a business checking account with no monthly service fee, your bank may have some fees. Read the fine print so you know exactly what you’re getting for your money. It should be easy to avoid ATM fees, overdraft fees, and even monthly fees.
However, you may have to pay for wire transfers, out-of-network ATMs, and other transactions. Unlike personal accounts, it’s common for business bank accounts to have fees if you deposit cash. Sometimes, a certain number of cash transactions is included in your monthly fee.
Customer Service
It’s important to research the bank’s customer service before you commit to a business checking account. Online only banks, especially, may have limited ways to reach customer support. Find out if they offer 24/7 service. Many people prefer online banking for the convenience and low account fees. But if you experience a problem, you want to make sure you can get help promptly.
Positive Customer Reviews
When you’re looking for the best business checking account, it pays to research the opinions of other business owners like you. Customer reviews can give you a feel for the level of customer service, ATM fees, monthly fees, fraud protection, and more.
Practical Transaction and Cash Deposit Limits
Many of the best business checking accounts offer unlimited transactions and reasonable monthly limits to deposit cash. Many banks offer different tiers of business checking accounts, so you can pay a set monthly fee for the level of service you need.
Linked Business Savings Account or Business Interest Checking Account
If you want to earn interest on your cash reserves, look for a checking account that pays interest or for a bank with a high interest savings account. Pay attention to account fees, withdrawal limits, and
Consider the Need for a Bank With Physical Locations
Online banking offers lower monthly fees and convenience. But if your business needs to deposit cash regularly or you just want personalized service and relationship banking, you might prefer a bank account at a financial institution with brick-and-mortar locations.
Questions to Ask Before Deciding on a Business Checking Account
When you’re shopping around for a free business checking account, consider your needs, the number of transactions you conduct daily, your account balance, and whether you prefer a traditional bank or are willing to consider online only banks for your business checking needs. Ask yourself the following questions so you can compare your options.
Will you be making regular cash deposits?
Many business checking accounts charge a fee if you want to deposit cash. Sometimes, a number of cash deposits will be included in your monthly fee. Make sure to pick an account with the capabilities you need.
Do you prefer a bank or credit union?
You might prefer the personalized service of a credit union instead of choosing a large bank or an online bank. When you’re evaluating credit unions, compare all the features and fees the same as you would evaluate business bank accounts.
Do you need to process customer transactions?
Banks like Chase offer credit card processing as an add-on feature to their services. If you are using an online bank, you might want one that integrates with Stripe, Square, or other payment processors. The capability to process customer transactions is one element that sets a business bank apart from a personal checking account.
Do you want to earn interest on your balance?
Several banks on our list offer high yield savings accounts, which is a benefit for small businesses, start-ups, and any business that wants to earn free money from their balance. You might also consider an interest earning business checking account like Bluevine, which pays interest on your checking account balance.
Business Checking vs. Money Market Account
A money market account is a special savings account designed to hold money that you may need to access in the short term. Some money market accounts offer higher APYs than other savings accounts. A money market account often has limits on the number of fee-free withdrawals per month.
Most business owners will want to open a free business checking account and link it to a money market account to earn interest on cash reserves.
What You Need to Open a Small Business Checking Account
You may not need an Employer Identification Number or Tax ID number to open a business checking account. If you have one, you should open the account using that number instead of your Social Security number to help keep your business and personal funds separate.
But if you are a freelancer and file taxes as a sole proprietor/self-employed, you can open your business checking account with your SSN. However, if your business has a DBA (doing business as) you will need a certificate or paperwork showing that name.
Likewise, if you are an LLC, you’ll need your business registration along with your EIN. If you have a partnership, you’ll need your partnership agreement and paperwork showing the business name.
Beyond that, you can open a business checking account with your business address, a phone number, email address and the minimum deposit (if required). Visit a branch for personalized service or open your free business checking account online.
FAQs
See what people are asking about free business checking accounts.
Do you need to pay account or transaction fees?
Some business checking accounts have monthly fees that you can waive by meeting specific requirements. You may also pay ATM fees, fees for cash deposits, and fees for wire transfers or international transactions.
Read the fine print or speak to a personal banker to choose the account that’s right for you.
Can you open a business checking account with no credit check?
Most banks and credit unions will allow you to open a business checking account with no credit check. By maintaining a positive balance in your account, you can build your business credit. A credit check may be required for business loans, lines of credit, or “net” terms with vendors.
What are the most important features of business checking accounts?
Most business owners are looking for business checking with no ATM fees and no monthly fee or easy ways to waive the monthly fee. Beyond that, consider the type and number of transactions you complete monthly, whether you need payment processing capabilities, and if you want a linked savings account to earn interest.
What banks offer free business checking accounts?
Many online and traditional banks offer free business checking or easy ways to waive the monthly fee. The list above describes 12 of our favorite options in free business checking.