The Dow Jones Industrial Average managed to set an all-time high amid, for a third straight day, a palpable investor preference for the reopening trade.
Payroll provider ADP on Wednesday reported that American private-sector employers added 742,000 jobs last month – below consensus expectations for 800,000 jobs, but a massive improvement from March’s 565,000.
Meanwhile, the Institute for Supply Management showed a services index reading of 62.7 in April; while anything above 50 suggests expansion, the reading missed forecasts and was down a point from March.
“April’s print is very strong any way you slice it, with the reading still at its second-highest level, and accompanied by an even more robust 64.7 print for the Markit service sector PMI,” says Barclays economist Jonathan Millar. “Hence, we see little reason to infer anything but positive signals from today’s report, which points to a sustained acceleration in service sector activity with ongoing progress in the vaccination campaign and measures by many states and municipalities to ease social distancing restrictions.”
Both data points still represented signs of growth, which was enough to bolster energy stocks such as Exxon Mobil (XOM, +3.0%) and Chevron (CVX, +2.7%) on a slightly down day for oil prices, and jolt materials plays such as Dow (DOW, +2.8%) and gases firm Linde (LIN, +3.0%).
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Other notable movers were General Motors (GM, +4.1%), which gained on a wide Q1 earnings beat ($2.25 per share vs. estimates for $1.04), and Peloton Interactive (PTON, -14.6%), whose shares cratered after announcing voluntary recalls of all Tread and Tread+ treadmills, which have caused one death and several injuries.
While early gains fizzled late, the Dow once again led the major indexes with a modest 0.3% gain to a record 34,230. The S&P 500 (up marginally to 4,167) inched ahead, while the Nasdaq Composite (-0.4% to 13,582) suffered its fourth consecutive decline.
Other action in the stock market today:
Facebook (FB, 1.1%) was in focus today, after the company’s oversight committee said it was right to ban former President Donald Trump from its platform following the Jan. 6 attack on the U.S. Capitol citing a “clear, immediate risk of harm,” but it was not justified in making the ban indefinite. “The reaction on both sides to Facebook’s Oversight Board statement on former President Trump’s suspension speaks to how central these social media platforms have become for interpersonal communication,” says David Keller, Chief Market Strategist at StockCharts.com. Facebook now has six months to decide if the ban will be permanent.
Jessica Alba’s Honest (HNST, +43.8%) surged in its market debut, after the initial public offering (IPO) last night was priced at $16 per share. HNST stock opened today at $21.22, climbed as high as $23.88, and closed at $23.00.
The small-cap Russell 2000 was off by 0.3% to 2,241.
U.S. crude oil futures slipped marginally to end at $65.63 per barrel.
Gold futures gained 0.5% to settle at $1,784.30 an ounce.
The CBOE Volatility Index (VIX) declined by 2.1% to 19.08.
Bitcoin prices rebounded 4.5% to $57,105.99. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
How to Get Out of This Holding Pattern
Even with the Dow at new highs, the broader market has been mired in mostly sideways action for weeks. Fortunately, investors looking to liven up their portfolios have quite a few options at their disposal.
Longer-term, you can find difference makers by looking at companies that are shaping the future via innovative technologies that could be with us for years to come. You can find a host of these among Argus Research’s best “innovator” picks.
In the shorter term, you can join in the reopening trade via oil stocks, travel plays and other clear beneficiaries of ramped-up vaccinations and looser COVID restrictions. But you can also do well by listening closely for the sound of sabers rattling.
Activist investors – Wall Street’s well-known (and often productive) malcontents – have made a name for themselves by taking significant stakes in underperforming companies and rallying shareholder votes to implement measures they believe will drive up their stocks’ value. Their mere involvement can put a charge into shares, and occasionally their successes do end up translating into stronger operations … and stronger returns.
Read on as we check out 13 such stocks that are currently getting the full-court press from Wall Street activists.
Buying a home can feel like a cut-throat process. You may find the craftsman style house of your dreams only to be bumped out of the running by a buyer paying in all cash, or moving super swiftly. But fear not, understanding the home buying process and getting a mortgage pre-approval can put you back in the race and help you secure the house you want.
What is Mortgage Pre-approval?
Mortgage pre-approval is essentially a letter from a lender that states that you qualify for a loan of a certain amount and at a certain interest rate based on an evaluation of your credit and financial history. You’ll need to shop for homes within the price range guaranteed by your pre-approved mortgage. You can find out how much house you can afford with our home affordability calculator.
Armed with a letter of pre-approval you can show sellers that you are a serious homebuyer with the means to purchase a home. In many ways it’s competitive to buying a home in cash. In the eyes of the seller, pre-approval can often push you ahead of other potential buyers who have not yet been approved for a mortgage.
Getting pre-qualified for a mortgage is not the same as pre-approval. It’s actually a relatively simple process in which a lender looks at a few financial details, such as income, assets, and debt, and gives you an estimate of how much of a mortgage they think you can afford.
Taking out a mortgage is a huge step and pre-qualification can help you hunt down reputable lenders and find a loan that potentially works for you. Going through this process can be useful, because it gives you an idea of your buying power, or how much house you can afford.
Check out local real estate market trends to help with your home-buying journey.
It also gives you an idea of what your monthly payment might be and is a chance to shop around to various lenders to see what types of terms and interest rates they offer. Pre-qualification is not a guarantee that you will actually qualify for a mortgage.
Getting pre-approval is a more complicated process. You’ll have to fill out an application with your lender and agree to a credit check in addition to providing information about your income and assets. There are a number of steps you can take to increase your chances of pre-approval or to increase the amount your lender will approve. Consider the following:
Building Your Credit
Think of this as step zero when you apply for any type of loan. Lenders want to see that you have a history of properly managing your debt before offering you credit themselves. You can build credit history by opening and using a credit card and paying your bills on time. Or consider having regular payments , such as your rent, tracked and added to your credit score.
Checking Your Credit
If you’ve already established a credit history, the first thing you’ll want to do before applying for a mortgage is check your credit report and your FICO score. Your credit report is a history of your credit compiled from sources such as banks, credit card companies, collection agencies, and the government.
This information is collected by the three main credit reporting bureaus, Transunion, Equifax and Experian. Your FICO score is one number that represents your credit risk should a lender offer you a loan. You’ll want to make sure that the information on your credit report is correct.
If you find any mistakes, contact the credit reporting agencies immediately to let them know. You don’t want any incorrect information weighing down your credit score, putting your chances for pre-approval at risk.
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Stay on Top of Your Debt
Your ability to pay your bills on time has a big impact on your credit score. If you can, make sure you make regular payments. And if your budget allows, you can make payments in full. If you have any debts that are dragging on your credit score—for example, debts that are in collection—work on paying them off first, as this can give your score a more immediate boost.
Watch Your Debt-to-income Ratio
Your debt-to-income ratio is your monthly debts divided by your monthly income. If you have $1,000 a month in debt payments and make $5,000 a month, your debt-income ratio is $1,000 divided by $5,000, or 20%.
Lenders may assume that borrowers with a high debt-to-income ratio will have a harder time making their mortgage payments. Keep your debt-to-income ratio in check by avoiding making large purchases before seeking pre-approval for a mortgage. For example, you may want to hold off on buying a new car until you’ve been pre-approved.
Prove Consistent Income
Your lender will want to know that you’ve got enough money coming in each month to cover a potential mortgage payment. So, they’ll likely ask you to prove that you have consistent income for at least two years by taking a look at your income documents (W-2, 1099 etc.).
For some potential borrowers, such as freelancers, this may be a tricky process since you may have income from various sources. Keep all pay stubs, tax returns, and other proof of income and be prepared to show them to your lender.
What Happens if You’re Rejected?
Rejection hurts. But if you aren’t pre-approved, or you aren’t approved for a large enough mortgage to buy the house you want, you also aren’t powerless. First, ask the bank why they made the decision they did. This will give you an idea about what you might need to work on in order to secure the mortgage you want.
SoFi Mortgage.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement. SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details. Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The federal direct loan program offers subsidized and unsubsidized loans to college students. A federal direct subsidized loan is a loan where the government pays the interest while the student is in school. A federal direct unsubsidized loan is one in which the student is responsible for paying all interest, receiving no additional federal aid.
What Is the Difference Between Subsidized and Unsubsidized Student Loans?
The main differences between federal direct subsidized and unsubsidized loans are the qualification criteria, the maximum limits and how the loan interest works.
Loan Qualifications
Subsidized: To qualify for a subsidized loan, you must be an undergraduate student who can demonstrate financial need based on the information you submit through the Free Application for Federal Student Aid (“FAFSA”).
Unsubsidized: Unsubsidized loans are available to both undergraduate and graduate students, and there is no requirement to demonstrate financial need.
Maximum Loan Limits
Subsidized: Your school will determine exactly how much you can borrow each year, but there are federal limits. These limits are based on what year of school you are in and whether you file as a dependent or an independent. Subsidized loan limits tend to be lower than unsubsidized limits. The aggregate limit for an independent student with subsidized loans is $23,000.
Unsubsidized: Unsubsidized loan limits tend to be higher than subsidized loan limits. The aggregate limit for an independent student with unsubsidized loans is $34,500.
How Interest Accrues
Subsidized: The U.S. Department of Education pays the interest for subsidized loans as long as the student is enrolled in school at least half-time. They will also pay the interest during your grace period—defined as the first six months after leaving school—and any period of deferment. This means that the amount of the loan will not grow once the student graduates, since the government has been paying the interest.
Unsubsidized: Whether you’re an undergraduate or a graduate student, you’re responsible for paying all of the interest during the entire life of your unsubsidized loan.
What Are the Similarities Between Subsidized and Unsubsidized Student Loans?
When it comes to interest rates, fees and the “maximum eligibility period”—the amount of time you’re able to take out loans—subsidized and unsubsidized loans are virtually the same.
Fees
On top of interest, you can expect to pay a small fee for both types of loans. This is approximately 1.06 percent of your total loan amount, and it is deducted from each loan disbursement.
Undergraduate Interest Rates
The interest rates for both subsidized and unsubsidized loans for undergraduate students are the same. Currently, the rate is at 2.75 percent for loans first disbursed from July 1st, 2020, to June 31st, 2021. The one exception is for direct unsubsidized loans for graduate students, which have an interest rate of 4.30 percent.
Maximum Eligibility Period
For both loan types, the time in which you’re eligible for your loans is equal to 150 percent of the time of your program. For undergraduates pursuing a four-year bachelor’s degree, this means they will be eligible for their loans for six years. Those pursuing a two-year associate’s degree will be eligible for three years. This ensures that students can still receive loans even if they’re unable or choose not to graduate within the program’s time frame.
How to Apply for Subsidized and Unsubsidized Loans
Once you’re ready to apply for a federal direct loan, fill out the FAFSA. Your school will send you a detailed report of what student aid you’re eligible for. Any grants or scholarships are free money, so make sure to accept them. They’ll also decide which loans you’re eligible for, the amount you can borrow each year and what loan type you can get—subsidized or unsubsidized.
No matter what type of student loan you go for, it’s important to understand how they affect your credit so that you can set yourself up for financial success after graduation. With responsible, on-time payments, you’ll be well on your way to healthy credit for life.
Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.
Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Marcus by Goldman Sachs is a smart choice for growing your money through its modern solution for online banking.
Savings APY
0.50%
Min. Deposit
$0
J.D. Power Rating
N/A
SimpleScore
3.5 / 5.0
SimpleScore Marcus by Goldman Sachs 3.5
Savings APY 3
Customer Satisfaction N/A
Product Variety 2
Goldman Sachs is a financial behemoth most well-known for its wealth management and investment services. Marcus by Goldman Sachs is the institution’s foray into personal and online banking by offering certificates of deposit, personal loans and savings accounts. The original Goldman Sachs was founded in 1869 by Marcus Goldman and is headquartered in New York City, New York. The subsidiary, Marcus by Goldman Sachs, was brought to the market in 2016 as a way to help individuals reach their financial goals, without fees or unnecessary complexity.
Although it lacks brick-and-mortar locations, Marcus by Goldman Sachs benefits users with no fees, high APY and no minimum deposit.
Marcus by Goldman Sachs at a glance
Min Deposit
APY
J.D. Power Survey Score
Key Benefit
Marcus by Goldman Sachs
$0
0.50%
N/A
High yield with no minimum deposit
*Rates accurate as of May 2021
What we like about it
Marcus online savings accounts offer excellent perks without the usual drawbacks of traditional banks like service fees and minimum deposits. There’s no minimum required to open a savings account. In fact, you can open up an account without any funds at all. There are also no monthly fees, transaction fees or service charges. Best of all, a 0.50% APY is a competitive rate that can help you grow your money over time.
If you like to bank on the go, the Marcus app is free to use and enables you to connect all of your Marcus accounts, talk to customer support agents and see how much interest you’ve earned in your savings account.
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Things to consider
The Marcus high yield savings account has no option for a corresponding checking account, but you can get a CD account or personal loan. Marcus is only useful if you’re using a checking account somewhere else.
While Marcus won’t charge you any fees, your outside bank might charge fees for transfers and transactions. Furthermore, there is no ATM network to use for withdrawals and no branches for in-person banking services. If you want to deposit money via check, you’ll have to send it in via U.S. Mail — which is significantly more hassle for people accustomed to a few quick photos for a check e-deposit and near-instant fund availability.
What you need to know
The Marcus savings account delivers tons of benefits for users who want to benefit from the high APY of 0.50%. You can even open up your account without any funds, but you’ll need to deposit money within the first 60 days of account opening.
Marcus doesn’t use an automated phone system during business hours, so when you call the Marcus savings account support line, you’ll be able to talk to a U.S.-based representative. This is a huge perk for people who want to avoid talking to a robot on the other end of the line.
Marcus by Goldman Sachs savings accounts boast FDIC insurance coverage, just like traditional bank savings accounts. This means you’ll be covered for up to $250,000 if the bank fails.
To put money in your account, you can set up a direct deposit, use an electronic funds transfer, wire transfer or mail a check. To withdraw money, you can use an e-transfer or a wire transfer. Customers are limited to six withdrawals or transfers per monthly statement period, which is on par with other banking institutions. This is to help maintain a bank’s reserve, in accordance with a federal law called Regulation D.
To get the most bang for your buck with Marcus, view it as a complementary banking tool to your financial portfolio. A checking account somewhere else is necessary, especially if you want to be able to withdraw money from an ATM and e-deposit paper checks. However, if you don’t mind needing another financial institution to fill those needs, Marcus savings accounts can still be a boon for individuals who want to focus on growing their money.
Mobile app
The Marcus mobile app lets you check balances, schedule transfers to and from other banks and make loan payments. Marcus also allows you to monitor your progress toward any financial goals you’ve set. Plus, you can set up AutoPay and create a recurring deposit to increase savings.
With its intuitive graphics and user-friendly design, the Marcus app gives you simple insight into your accounts and goals. You can receive in-app alerts, review your bank statements, review tax documents and access customer support. All personal data is encrypted, and you can use multi-factor authentication to log in.
Fees and penalties
Marcus by Goldman Sachs has no monthly fees or overdraft fees to worry about eating into your savings. With that said, your external bank or third-party entities might charge you for transfers or require you to pay service fees.
You can make up to six withdrawals or transfers, but you’ll need to verify with your outside transfer partner (bank, app or other third-party) to determine if fees will be charged. There’s an outgoing transfer limit of $125,000 per transfer, and if you need to withdraw more, you’ll have to call the customer service line.
Marcus by Goldman Sachs vs. Citi
Citibank offers promising features with more traditional account options. Individuals will get the highest savings rates with a Citi Accelerate Savings Account. There is no required minimum amount to open a savings account, but to waive monthly account fees, you’ll need a minimum account balance. The minimum account balance ranges from $1,500 to $200,000; the amount is conditional upon the account you choose. Unfortunately, Citi charges account fees between $10 to $30, so you’ll have to keep that in mind while you’re weighing your options.
Marcus is still a better choice if you want fewer fees, but if you prefer all your banking with one entity, Citibank can give you a wider variety of accounts and services.
Compare top bank accounts
Too long, didn’t read?
For those who want to avoid unnecessary fees and already have a checking account somewhere else, Marcus by Goldman Sachs is an excellent choice. With competitive rates and easy-to-use banking features, Marcus by Goldman Sachs is a great choice for users who want convenience and a safe place to grow their money.
Ally Bank offers a high yield online savings account with interest rates considerably higher compared to traditional banks.
Savings APY
0.50%
Min. Deposit
$0
J.D. Power Rating
5/5
SimpleScore
4.6 / 5.0
SimpleScore Ally Bank 4.6
Savings APY 3
Customer Satisfaction 5
Product Variety 5
Ally Bank is known for its Ally high yield savings options, with Ally savings account interest rates much higher than most physical banks. Ally Bank’s history dates back to 1919, when the company debuted as GMAC, a financing division of GM. In 2009, GMAC Bank transformed into Ally Bank, an online bank without physical branch locations. Its headquarters are in Sandy, Utah.
Ally Bank is a completely online bank with interest rates considerably higher compared to brick and mortar banks. While the Ally Bank savings rate is attractive, if you like having the option to meet with someone face to face with your bank, you won’t get that here.
Since Ally Bank doesn’t the overhead of physical locations, it puts those savings in bankers’ hands, making it one of the best savings accounts around. While the Ally savings rate is one of the highest available, people who want the option to go into their bank might not be completely sold on Ally Bank high yield savings accounts.
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In this article
Ally Bank at a glance
Bank
Min Deposit
Interest APY
J.D. Power Survey Score
Key Benefit
Ally Bank
$0
1.00%
5/5
Comparatively higher interest rates
What we like about it
First, the high-yield savings rate is one of the best features of an Ally savings account. Compared to minimal savings interest rates of 0.01% to 0.04% at traditional banks, Ally savings interest rates are up to 10 times higher than that — which means 10 times the return on savings.
Ally Bank is digital-focused, so its online dashboards and mobile app are elegant, intuitive and easy to use. Customers can use nifty features like recurring transfers and buckets. The buckets feature allows users to add 10 “buckets” to their savings account, which are categories like emergencies, home, vacations and education. Users can then distribute a portion of their savings to each bucket, so they can visualize and work towards their savings goals for specific items.
Things to consider
Ally Bank savings rate amounts, like most banks’, will fluctuate depending on the market. Even though Ally Bank rates were at 1.7% in December 2019, for example, the rates experienced several drops because of the COVID-19 pandemic and fell 0.6% in just seven months. High rates now aren’t guaranteed in the future.
Furthermore, there are also no physical locations. Ally Bank customers are limited to interacting with bank representatives online or over the phone. For people who like their bank to have a place visit for help, Ally Bank doesn’t have that option.
What you need to know
You can open an Ally Bank savings account online or through the mobile app. When you designate an account to move money from into your Ally savings account, Ally Bank will do some refundable test withdrawals before transferring your money from your old account into the Ally Bank savings account.
There’s no minimum deposit to make, no monthly maintenance fees and no minimum balance requirements. Your money earns money with interest compounded daily. Interest savings are deposited into your savings account each month.
Once your Ally Bank savings account is open, you can set up buckets to organize your savings and deposit certain amounts towards items like home improvements and vet bills. You can also set up recurring transfers from another account.
You can also link a checking account to your Ally Bank savings account for “Surprise Savings,” which are small amounts moved from your checking account to your savings account so you amplify your savings. Ally Bank’s technology analyzes your spending patterns and will make transfers on your behalf based on what you wouldn’t normally spend from your checking account.
Ally Bank provides 24/7 customer support by phone, chat and email, both online and through the app.
Mobile app
You can access the mobile app via passcode or touch ID. You’re immediately greeted with a look at your total balance for all your Ally Bank accounts. In the app, you can organize buckets, set up recurring transactions and track a checking account for Surprise Savings.
You can also pay bills from the app, use the app to find ATMs and send or request money using the Zelle money transfer feature. The app also features a message center for Ally Bank messages and a customer service dashboard where you can call, chat or message Ally Bank directly from the app.
Fees and penalties
Ally Bank doesn’t charge for monthly maintenance, but it does have other fees. The returned deposit item fee is $7.50. There’s a $25 fee for an overdraft item paid or overdraft item returned. Excessive transactions that go over the six withdrawals a month limit cost $10 per transaction. There’s also an expedited delivery fee of $15, an outgoing domestic wires fee of $20 and an account research fee of $25 per hour.
Ally Bank vs. Vio Bank
Vio Bank is another online bank with a high yield savings account. As of June 12, 2020, the online savings account rate was 1.35% on all balances, which is considerably higher than Ally Bank’s. There’s no monthly maintenance fee with Vio Bank, but there is a $100 minimum requirement to open a Vio Bank savings account. Vio Bank also offers a free mobile app.
The excessive transaction fee with Vio Bank, like Ally Bank, is also $10 for going over six monthly transactions. The outgoing domestic wire transfer fee is higher than Ally Bank’s, at $30, and the returned deposit item is slightly lower at $7.
If you want to bank with an online savings account and can make the $100 minimum, Vio Bank’s higher APY might make more sense than going with Ally Bank’s.
Compare top bank accounts
Too long, didn’t read?
Whether you’re opening a new savings account or you already have a savings account, moving your money to a trusted savings account that has a high yield rate makes sense. Ally Bank is flexible, with no minimum deposit. The Ally savings rate is one of the highest available, but online bank options like Vio Bank could help you earn even more interest on your savings.
Today’s retirees face many obstacles, from an unpredictable market to a lack of guaranteed income in retirement. While these are important challenges to address, they would be remiss to ignore their future tax burdens. We’ll likely see increased taxes in the future, and this will affect today’s retirees more than tax increases have affected retirees in the past.
Retirement Then vs. Now
Today’s retirees are the first IRA generation: Whereas previous generations could primarily rely on Social Security benefits and pensions to cover their retirement expenses, many of today’s retirees find themselves having to fund a much larger portion of their retirement through their own pre-tax retirement accounts. And while retirement accounts such as 401(k)s and IRAs have significant benefits, they also come with downsides, namely that all of the withdrawals in retirement are taxable as ordinary income at the current tax rates in our country.
This means that if tax rates were to rise, the retiree living off of IRAs will have to pay more in taxes and therefore live off of less after-tax income. Previous generations saved their money in after-tax accounts, meaning if tax rates were to rise, it would not affect them the same way it will for this IRA generation. When we look at the history of taxes and the Biden administration’s tax-increasing proposals, it’s clear that retirees need to have a tax-minimization plan.
Could We See Taxes Increase?
We need to plan for the tax rates of the future, not the present. Previously, tax increases primarily affected wage earners. The Social Security payroll tax and income tax increases had little effect on Social Security beneficiaries and retirees who saved in after-tax accounts. However, those who take distributions from a tax-deferred retirement account and who invest in the market are affected by both income tax increases and new taxes.
These could include:
The possible elimination of the favorable long-term capital gains taxes rates for the wealthiest investors. This could mean those with incomes of $1 million or more might pay up to 39.5% on their gains, rather than the current top rate of 20%.
Lowering of the current standard deduction. Many retirees don’t itemize their deductions and rely on the standard deduction. Therefore, if the current standard deduction is lowered, people’s taxes could go up.
Imposing the Social Security payroll tax on workers or households earning over $400,000 annually. This tax — in which employers and employees each pay 6.2% and the self-employed pay the full 12.4% — helps pay for Social Security benefits.
Lowering the federal estate tax exemption amount, which could affect estates above about $5 million.
Retirees should note that we may be experiencing tax rates at 100-year lows now, and that this could end in light of recent increased government spending. Our already large national debt increased during the pandemic, with the CARES Act of 2020 costing $2.2 trillion and the American Rescue Plan Act of 2021 costing $1.9 trillion. We will have to pay for this eventually, and retirees with large tax-deferred IRAs could be the ones to do it.
When we look at history, we see that after a period of increased government spending during World War II, income tax rates in the following decades were much higher than they are now. In 1944, the top rate peaked at 94%, and by 1964 it had only gone down to 70%. This doesn’t mean that an individual’s tax bracket will go from 22% to 70%, but there is a lot of room in between where retirees could feel the effects.
When running a financial plan, retirees need to calculate how much taxable income they will have and how much of that will be left after taxes. If tax rates rise, retirees could need to withdraw more from their taxable retirement accounts to be left with the same amount of income, ultimately drawing down their savings faster.
RMDs
Taxes on retirement income can become more burdensome starting at age 72. Most retirees must take RMDs (required minimum distributions) from their traditional retirement accounts starting at age 72, and the amount they must withdraw is based on their age and account balance.
RMDs could force someone to withdraw more than they normally would from their tax-deferred retirement account, causing them to jump into a higher tax bracket. Retirees under the age 72 should look to do careful planning that may minimize this effect by the time they reach this age. (Keep reading for an idea on how to help do that below.)
Taxes and Your Legacy Goals
RMDs can also potentially increase a beneficiary’s tax burden due to the SECURE Act passed in 2019. It ended the “stretch IRA,” which allowed beneficiaries to stretch out distributions from an inherited retirement account over their lifetimes. Now, most non-spouse beneficiaries must empty traditional accounts within 10 years of the original owner’s death.
Those who want to pass on their retirement accounts should consider tax minimization strategies when creating an estate plan. One possibility is a charitable remainder trust.
What Can Retirees Do Now to Prepare for Higher Taxes Later?
Those who will draw a significant portion of their retirement income from taxable retirement account should take note, and work to minimize their overall tax burden. There are many strategies they can employ, including converting part or all of their traditional 401(k) or IRA to a Roth IRA. This involves paying tax on the amount converted and eventually withdrawing it from the Roth tax-free. If we see taxes increase in the future, a Roth conversion at today’s rates could potentially be a good strategy for those whose tax burden won’t substantially decrease in retirement.
In addition to providing tax-free income, a Roth is also exempt from RMDs. This means that the money in a Roth IRA can continue to grow throughout the owner’s lifetime tax-free. When it’s inherited, the beneficiary will have to drain the account in 10 years, as with a traditional IRA. However, distributions from traditional IRAs, distributions from Roth IRAs are not taxable and will not incur an early withdrawal penalty as long as the account is at least five years old.
The Bottom Line for Retirees
Retirees who have both traditional and Roth IRAs can strategically withdraw from each to avoid going into a higher tax bracket, continue to reap the tax-advantage benefits of a retirement account after age 72, and pass on potentially tax-free wealth to their beneficiaries. Those who think tax hikes are on the horizon and who don’t plan to live on significantly less income in retirement should consider tax-minimization strategies such as a Roth conversion.
Investment Advisory Services offered through Epstein and White Financial LLC, an SEC Registered Investment Advisor. Epstein & White Retirement Income Solutions, LLC is a licensed insurance agency with the state of California Department of Insurance (#0K53785). As of March 31, 2021, Epstein and White is now a part of Mercer Global Advisors Inc. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an Investment Adviser with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. The information, suggestions and recommendations included in this material is for informational purposes only and cannot be relied upon for any financial, legal, tax, accounting, or insurance purposes. Epstein and White Financial is not a certified public accounting firm, and no portion of its services should be construed as legal or accounting advice. Please consult with your own accountant and financial planning professional to determine how tax changes affect your unique financial situation. A copy of Epstein & White Financial LLC’s current written disclosure statement discussing advisory services and fees is available for review upon request or at www.adviserinfo.sec.gov.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Founder and CEO, Epstein and White Retirement Income Solutions
Bradley White is founder and CEO of Epstein and White. He’s a Certified Financial Planner™ and has a bachelor’s degree in finance from San Diego State University. He’s an Investment Advisor Representative (IAR) and an insurance professional.
Banks and credit unions have a fair amount in common. Both provide comparatively safe places to hold cash for spending and saving. Both make loans and extend lines of credit. Both provide basic financial services, like cutting bank checks.
Yet these two types of financial institutions are anything but interchangeable. Credit unions aren’t better than traditional banks, nor vice versa. But each has strengths and weaknesses that would-be users need to understand before opening that first deposit account or applying for a loan.
The seeds of this understanding lie in the details of the products, services, and guarantees banks and credit unions offer their members. Fortunately, those details aren’t too difficult to parse. Consider this your guide to doing just that.
Key Features of Banks and Credit Unions
It bears repeating that banks and credit unions have a lot in common, but key differences do emerge upon closer inspection. Credit unions tend to restrict membership in ways that banks don’t, for example, while generally offering higher interest rates on savings deposits and lower interest rates on loans.
Membership Requirements and Account Availability
As you decide between a credit union and a traditional bank, the institutions’ respective membership requirements — or lack thereof — will be among the first points of distinction you notice.
Membership Requirements and Account Availability at Banks
Banks tend to be more open to new customers than credit unions. To the extent that banks restrict membership or account availability at all, it’s on the basis of geography — that is, community banks or regional banks may not accept applications from would-be customers in states where they don’t have a physical presence. (Online banks like GO2Bank usually don’t restrict applications by geography.)
Otherwise, individuals and couples with Social Security numbers or taxpayer identification numbers and U.S. addresses can generally apply for deposit accounts without restriction.
Membership Requirements and Account Availability at Credit Unions
Credit union customers are known as “members,” which hints at the potential restrictions around opening accounts with this type of institution.
Historically, credit unions restricted membership in fairly drastic ways. For example, some were open only to employees of particular companies or members of particular labor unions, while others accepted members only from very narrow geographical areas.
While some smaller credit unions continue to restrict membership, many larger ones now have gaping loopholes in their membership criteria that allow basically anyone to join. For example, Andrews Federal Credit Union, which has about 120,000 members and a branch network serving the mid-Atlantic states, only asks that prospective members join the American Consumer Council and pay the organization’s nominal membership fee.
If you live in an area served by multiple credit unions, membership requirements aren’t likely to pose a serious hurdle to joining one that fits your needs. In more sparsely populated areas with limited local credit union coverage, you may need to join an out-of-state institution and potentially pay a nominal fee to secure your spot.
Branch and ATM Access
Most credit unions and many banks have physical branches where customers can make deposits, get cash, speak with loan officers, and conduct other financial business in person. Virtually all credit unions and banks also have their own branded ATMs or belong to low-fee or free ATM networks.
Banks’ Branch and ATM Networks
Banks’ branch networks come in all shapes and sizes. National and multinational giants like Bank of America and JPMorgan Chase have thousands of locations littered about the country, while single-branch community banks might serve a single small town or handful of rural communities. That said, more traditional banks have regional, superregional, or national branch networks than credit unions.
Most banks also belong to national ATM networks that include thousands or tens of thousands of in-network ATMs that charge few if any fees for cash withdrawals and other basic financial transactions. These networks may be entirely in-house — for example, Chase Bank has thousands of branded ATMs scattered about the United States — or shared by many different banks, like the Allpoint or MoneyPass networks. Most branchless banks (online banks) belong to one of the major fee-free ATM networks.
Credit Unions’ Branch and ATM Networks
Even larger credit unions that accept members nationwide tend to have smaller physical footprints, either in contiguous geographies (Andrews Federal Credit Union’s branches extend from the D.C. area in the south to New Jersey in the north) or clustered in areas where lots of members live and work.
However, hundreds of U.S. credit unions participate in the Co-Op Financial Services shared branch network, which has more than 5,000 branches across the United States. Co-Op Financial Services credit unions offer reciprocity to members of other participating credit unions, allowing them to deposit and withdraw funds and perform other basic banking tasks while traveling or otherwise far removed from their own credit union’s home territory. And the Co-Op Financial Services has about 30,000 fee-free ATMs in its network, just a bit fewer than Allpoint and MoneyPass.
Financial Products and Services Available
All banks and credit unions offer one or more types of deposit accounts, most often checking accounts (spending accounts) and savings accounts. Many banks and virtually all credit unions also offer credit products, including home loans (mortgages), auto loans (car loans), credit cards, and personal loans.
Financial Products and Services Available at Banks
Every bank, from the leanest mobile bank to the biggest multinational, offers some sort of deposit account. Some stop there, while others offer less common types of deposit accounts (such as money markets) and investment (brokerage) accounts, along with credit products ranging from credit cards and personal loans to secured loans like mortgage and auto loans. Most traditional banks do make loans, historically a key revenue stream for financial companies; some online banks don’t issue loans directly.
The biggest financial institutions typically have the widest breadth of financial products and services, often complemented by private banking or wealth management services designed to craft bespoke financial solutions for wealthier clients. If you want to do all your banking, investing, and financial planning in a single location, you might naturally be drawn to a traditional bank built to do just that.
Financial Products and Services Available at Credit Unions
All credit unions offer savings accounts. These are usually known as “share” accounts because a portion of their balance — usually $5 or $10 — represents the member’s ownership stake in the institution.
Virtually all credit unions also offer checking accounts. And, as the “credit” in “credit union” suggests, virtually all issue mortgages, auto loans, business loans, and other common types of credit products.
Credit unions generally can’t match big banks’ breadth of financial products and services, however. Although some credit unions offer in-house financial planning and wealth management services, they rarely operate their own brokerages — a disadvantage for self-directed investors — and may not offer access to alternative asset classes like forex or cryptocurrency. And credit unions’ credit options might be of the one-size-fits-all variety, with just one or two credit card options available at small and midsize unions, compared with dozens of choices from national issuers like American Express and Chase.
Interest Rates, Account Yields, and Account Fees
It’s worth drilling down a bit more on what bank and credit union customers can expect to pay or receive, respectively, on credit and deposit balances. Credit costs and account yields vary subtly but noticeably by institution type, although it’s also true that prevailing benchmark rates and applicant creditworthiness are far more important determinants of borrowing costs.
Bank Interest Rates, Account Yields, and Account Fees
Banks are for-profit institutions that answer first to their shareholders, not their customers. Unfortunately, this often manifests in higher interest rates on loans, relative both to credit unions and direct lenders, and higher account fees than credit unions. It’s not impossible to find free checking accounts at big banks, but customers often have to jump through hoops like minimum balance, monthly direct deposit, or transaction requirements or hold substantial assets across multiple accounts to avoid monthly service fees.
Likewise, traditional banks often pay lower interest rates on savings accounts than credit unions. Big-bank savings accounts have particularly low yields that make them more-or-less useless in the eternal fight against inflation.
Credit Union Interest Rates, Account Yields, and Account Fees
As nonprofit, member-owned institutions, credit unions aren’t as focused on the bottom line as for-profit banks. This enables them to charge lower rates on credit products and levy fewer (and lower) account fees relative to banks.
Credit unions may also pay higher interest rates (yields) on deposit account balances, although many online banks outcompete brick-and-mortar credit unions on this point. More sophisticated credit unions that market digital money management services on a national basis, like Signature Federal Credit Union, generally offer yields on par with or better than online banks.
Financial Technology
At this point, virtually all banks and credit unions operate secure websites that offer basic online money management services (online banking) and enable remote customer-staff interactions. But customers should be aware that the sophistication and scope of these capabilities can vary significantly by institution type — and by size, with many smaller banks having more in common with small and midsize credit unions on the technology front.
Financial Technology Available at Banks
Online banks and larger traditional banks have the resources and technical ability to design sophisticated online banking portals and mobile banking apps that can replicate most if not all of the in-branch banking experience and offer convenient services like early payday, instant person-to-person transfers, digital bill paying, and built-in savings buckets. To be sure, larger credit unions are increasingly attentive to the tech demands of younger digital natives and can compete with bigger or online-only banks at this game, but most smaller and midsize credit unions can’t.
Financial Technology Available at Credit Unions
Many credit unions still don’t have mobile banking apps and offer only rudimentary digital banking platforms that leave out capabilities most consumers take for granted, like peer-to-peer transfers. If you expect to be able to do most of your day-to-day banking digitally, you should investigate the tech capabilities of any credit union you’re thinking about joining and steer clear of institutions that don’t seem up to snuff. A general rule of thumb: If the credit union’s website feels dated and doesn’t work well on a mobile device, it probably won’t offer a quality digital banking experience.
Deposit Insurance
Rest assured: Whether you keep your money with a bank or credit union, it’s insured against institutional failure up to legally mandated limits. Some banks, especially, are even more generous with deposit insurance than legally required.
Deposit Insurance Available at Banks
All reputable U.S.-based banks carry deposit insurance through the Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $250,000 per account type, per institution. Some financial institutions, especially those that offer cash management accounts, go even further. Deposit insurance limits of $1 million or more are increasingly common on this type of account.
Deposit Insurance Available at Credit Unions
The National Credit Union Administration (NCUA) provides an identical level of deposit insurance on member balances at participating (“member NCUA”) institutions: $250,000 per account type, per institution. Higher limits aren’t as common, but the $250,000 threshold is more than enough for most account holders.
The Verdict: Should You Choose a Bank or Credit Union?
It’s clear that banks and credit unions are distinct in important ways. It’s equally certain that neither is better or worse than the other — just that each is different. Your choice will depend on your personal finance needs, preferences, and priorities.
You Should Choose a Bank If…
A bank could be a better fit for your financial needs if you value any of the following.
Doing All Your Banking and Borrowing in One Place. Many credit unions offer a solid mix of basic financial products and services: checking accounts, savings accounts, CDs, mortgages, auto loans, personal loans, SBA loans. But few if any can match the breadth and depth of products and services available from major consumer banks. If you want to be able to do all of your banking, borrowing, self-directed investing, and financial planning in one place, you’re better off in the banking world.
Excellent Online and Mobile Functionality. As a group, banks offer a better online and mobile banking experience than credit unions. There’s a great deal of variation within the banking sector, of course, with traditional, branch-based community banks noticeably behind online-only and nationwide banks on the tech front. But many credit unions are even further behind, to the point that they’re simply not useful for people who prefer not to bank in-branch.
Few Eligibility Requirements to Open an Account. With notable exceptions like age-restricted senior checking accounts, banks generally don’t restrict account availability or membership except by geography — and people who do business with online banks don’t have to worry about that. By contrast, all credit unions impose some sort of restriction on membership, although it’s often possible for the general public to join by making nominal donations to affiliated organizations.
You Should Join a Credit Union If…
Consider joining a credit union if you see your financial priorities represented here.
Personalized Service and Responsive Staff. If there’s an upside to being behind the times technologically, it’s that most credit unions still invest heavily in branch-based service and local support staff. If you value the opportunity to meet with a banker or get one on the phone basically on demand, a credit union is likely to be a better fit than a bigger, more impersonal bank.
Lower Loan Rates (On Average). A nonprofit, customer-centric business model allows credit unions to undercut for-profit banks with lower interest rates on loans and other credit products, including credit cards. Not all credit unions actually do charge lower rates; you should always shop around for the best rates rather than assuming your credit union is the best you can do. But the average credit union user does see real financial benefit from membership — a 2018 analysis by the Credit Union National Association found that the average New York State credit union member reaped benefits worth $85 per person or $178 per household, per year.
Simpler Account Terms With Less Nickel-and-Diming. Although plenty of banks distinguish themselves with simple, reasonable fee structures, credit unions make a business model out of it. As a credit union member, you’re unlikely to pay a monthly maintenance fee on a checking or savings account, and you’ll probably pay lower fees for things like overdrafts and returned checks too.
A Member-Owner Model. The typical credit union member doesn’t see any obvious benefit from being a member-owner — it’s not like credit union shareholders get eye-popping dividend checks every year, as big shareholders in corporate banks do. But, on top of the lower rates and fees the model allows, it can feel good to be part of a like-minded credit union community.
Both Are Great If…
Both banks and credit unions are excellent options if:
You Want a Safe Place to Hold Money for Spending and Saving. Both banks and credit unions carry ample deposit insurance — at least up to $250,000 per account type, per institution, and more at some banks. If your bank or credit union fails, you won’t have to worry about losing insured deposits.
You Want Access to Lots of ATMs. As long as your credit union is a member of the Co-Op Financial Services network, you’ll have access to tens of thousands of ATMs across the United States — just as you would as a customer of a bank in the Allpoint or MoneyPass ATM networks.
Final Word
Since the turn of the 21st century, the widespread adoption of online and mobile banking has fueled pronounced shifts in the broader public’s financial behaviors and expectations, upending consumer finance. Parallel changes have come about thanks to regulatory reforms and consumer protection legislation implemented in the wake of the global financial crisis of the late 2000s, such as the creation of the Consumer Financial Protection Bureau.
One of the more noticeable consequences of technological and regulatory change has been a convergence — if not a total melding — of banks’ and credit unions’ respective business models. In terms of technological sophistication and product scope, larger credit unions now resemble midsize banks. Meanwhile, smaller, leaner, higher-tech banks and fintech platforms seek to replicate credit unions’ customer experience and stand apart from big, impersonal banks.
This is all to the benefit consumers, who have more choice than ever — and more reason than ever to expect financial institutions to treat them with the respect they deserve. Whether you ultimately decide to use a bank or credit union for your day-to-day and long-term financial needs, you can surely agree that’s good news.
Living styles can vary greatly from one person to the next, especially when it comes to cleaning and tidiness. Many times it is beneficial to discuss these traits before moving in with a roommate — if you’re a self-described “neat freak,” you might find it easier if your cohabitant is on the more organized side of things as well. That’s not to say that clean and messy roommates can’t successfully live together.
Maybe your roommate is just messy, a sentimental collector or a little bit of a packrat. If this is the case, there are plenty of ways to work through your differences and find a way to live peacefully together. But when is your roommate’s mess potentially the sign of hoarding?
Messy and disorganized
If you’re noticing more mess than usual or if it seems like your roommate is struggling to keep up with normal housework, it might be a sign that something else is going on in their life that is causing stress or taking all of their attention.
Stress and other bigger issues going on outside your home can often disrupt normal patterns, with cleaning and organization falling to the bottom of the priority list.
If personal items are stacking up on tables and counters, more than a day of dirty dishes are piling up in the sink or you notice some extra loads of unwashed laundry from your roommate, you probably don’t have anything to worry about.
The mess (and maybe a slight smell) might be a nuisance, but try to check in with your roommate to see if anything has changed recently that might be causing them to neglect their housework.
If they are apologetic or willing to cooperate with your requests, you’re good to go.
When it becomes hoarding
There are a few red flags that are cause for concern — especially if you notice multiple signs or extreme conditions.
Overwhelming smells or visible mold, mildew or pests
Rooms or common areas become difficult to navigate
Unnecessary items rapidly accumulating in outdoor or garage areas
Denying access to certain rooms or areas
Vehicle full of personal belongings and other items
Unwilling to cooperate with cleanup requests or giving constant justifications for the mess
Noticing any one of these signs doesn’t necessarily mean your roommate is struggling with hoarding, but they are usually good indications that the problem is heading in that direction.
Knowing some of the warning signs can help you come up with an action plan before the situation gets out of control.
How to handle hoarding
If you do suspect your roommate is struggling with hoarding tendencies, it’s important not to make quick judgments.
Someone unorganized, messy or has trouble letting go of extra personal belongings may get overwhelmed or stressed about something going on in their lives, but individuals struggling with hoarding might be dealing with a bigger mental health issue, finding it difficult to make changes or set limits without help.
A little empathy and patience can go a long way in getting cooperation from a messy roommate.
Try to find out the root cause of the problem and see if you can offer your roommate any support. Let them know that the clutter is beginning to affect you. See if you can agree on a cleaning schedule and set other expectations that you can both agree to.
Find a starting point that focuses on immediate items related to your health and safety including issues like addressing any mold or mildew. Focus on common areas since that is a shared space between the two of you. Suggest beginning with less daunting tasks like removing and emptying all garbage or organizing entryways and walkways.
If your roommate is seriously struggling with hoarding, don’t be afraid to ask for outside help. Your landlord is a good place to start. They may have suggestions or even be able to point out cleanliness clauses written into your lease agreement.
Storing your cash in a duffel bag under the bed has its perks — immediate access when you need it and the feeling of completely controlling your own finances.
But hoarding hard-earned money in your own home puts it at risk of theft or loss to natural disasters, and it’s doing you no favors in terms of interest.
Savings accounts at an FDIC-insured bank, on the other hand, keep your money secure and can earn you more money in the process.
Nowadays, the best savings accounts are typically with online banks due to higher interest rates, but brick-and-mortar banks still have some (though not many) benefits.
So which savings account should you choose? We’ve ranked the very best savings accounts available today to get you started.
What is a Savings Account?
A savings account is a bank account where you store your money until you need it. To see a detailed explanation to how it differs from a traditional checking account, visit our checking vs savings account comparison.
The best savings accounts are secured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. That means that if you store your money with a bank and it goes under, you won’t lose your money.
Savings accounts are perfect for achieving your savings goals — for a car, a house, a wedding, vacations, you name it. More importantly, they are the best tool to build your emergency fund.
Most experts agree your emergency savings should total six months’ worth of necessary expenses in the case of job loss or another unpredictable emergency. Necessary expenses might include rent/mortgage, car payments, insurance, medical bills, utilities and groceries.
Don’t sweat it if you don’t have six months’ worth saved up. It takes time to build up your savings. Even if you can deposit $50 a month, you will eventually reach your goal.
One thing a savings account is not is an investment account. Savings accounts have historically low interest rates (or APY — annual percentage yield), but they are inherently low risk.
Pro Tip
After you have padded your savings account with enough cash to cover emergency expenses and your other savings goals, your money is better spent on investments like IRAs, 401(k)s and stocks.
Common alternatives to savings accounts include certificates of deposit (CDs), where you store your money for a fixed term for a slightly higher interest rate, and money market accounts, which typically offer a higher APY but have significantly higher minimum balance requirements.
So just how much interest will you earn in a savings account? That depends on the amount you’ve saved and your APY.
Online Banks vs. Brick-and-Mortar Banks
Before the advent of the internet, brick-and-mortar banks (and credit unions) were the only place to store your money, if not in your duffel bag.
But over the last couple decades, online banks have transformed the way we think of safely storing our money, and because of their low overhead (fewer staff and few or no physical locations), they can offer much better interest rates on savings accounts.
Pros of Online Savings Accounts
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When online savings accounts first surfaced, bank customers were hesitant to store their money with companies they had never heard of and were fearful of internet security issues.
Today, many of these same customers now see far more pros to online savings accounts than their traditional physical banks.
Higher Interest Rates
This is easily the most important distinction between brick-and-mortar banks and online banks. The national average APY for a savings account is 0.70%, but many brick-and-mortar banks offer just 0.01% interest rates on their savings accounts.
Online banks, on the other hand, tend to offer savings rates that are better — sometimes a lot better
Availability
Online banks are always open. The most competitive online banks offer around-the-clock service over the phone or online, and typically have more user-friendly apps and websites.
Some national banks and credit unions may offer 24/7 service, but their physical locations are typically limited to the 9-to-5 business hours.
Pros of Brick-and-Mortar Savings Accounts
There are advantages to brick-and-mortar banks. However, if these benefits do not hold massive weight for you, we highly recommend an online savings account.
Easy Access to Account Funds
Emergencies wait for no one. If you have an unexpected need for $10,000, it would be nice to be able to immediately access that.
Many online savings accounts take several days to get you your funds via ACH deposit or a written check, though wait times for ACH deposits have dramatically decreased in recent years.
(You can also speed up the process by opening a checking account with your online bank or choosing an online savings account with ATM benefits. Prioritize online banks that offer free checking accounts or ATM convenience cards.)
Brick-and-mortar banks, however, can allow major withdrawals at any of their locations. No waiting necessary.
In-Person Support
Some people prefer to resolve their issues over the phone or online, but many others find comfort in face-to-face communication. By opening a savings account with a bank that offers physical locations, you’ll be able to get in-person help from financial experts during regular business hours.
… And a Toss-Up
When it comes to access to ATMs, there is no clear winner. Obviously, brick-and-mortar banks and credit unions offer ATMs at all their locations, where you can easily withdraw your money.
Many online banks, however, offer fee-free withdrawals at select ATMs, and the best online banks will reimburse you for fees incurred out of network.
Best Savings Accounts of May 2021, Ranked
So what are the best savings accounts of May 2021? That depends on what you value most.
In determining our top nine, we reviewed more than 20 popular savings accounts and considered what elements seem to be most universally important:
Best savings rates
Stellar mobile app and/or web experience
Convenience of transfers (easy access to funds)
We considered only savings accounts that were FDIC-insured or NCUA-insured and had no monthly fees.
Because physical branch access is becoming increasingly less important, all accounts on our list are online or hybrid (online with some brick-and-mortar bank locations).
So what didn’t we consider when making our list that you might also want to look for?
Bonuses: Because banks regularly add, remove or replace their bonuses, we did not include them in our criteria. If you’re stuck between two or three comparable savings accounts, see which one offers the best sign-on bonus. We highly recommend checking out our current bank promotions list to help earn bonus cash or incentives when signing up for a new savings account.
Customer service: Quality of customer service is subjective. Read reviews and ask friends and family about their experiences when considering banks.
To truly determine how you feel about the level and quality of customer service, give the bank a call and ask some questions about the account. From that interaction, you should be able to feel out how much each bank values customers and prospects.
1. Synchrony Bank High-Yield Savings Account
We ranked Synchrony’s account as the very best savings account of May 2021 because it has the perfect combination of the most important elements of a bank.
APY: 0.40%.
Monthly fees: None.
Minimum balance requirement: None.
Additional fee for withdrawals: None.
ATM card: No fee for in-network ATMs, $5 monthly reimbursement for out-of-network ATM fees
Access to funds: ATM, electronic transfer to an external account, wire transfer or a paper check in the mail.
Mobile app: Yes. At the time of this writing, the app has a 4.5 rating on the App Store and 3.7 on Google Play.
Details: Synchrony Bank High-Yield Savings account.
2. CIT Savings Builder Account
CIT Savings Builder is another solid account option, but you have to meet certain conditions to earn it:
APY: To earn up to 0.40% APY, either your account needs $25,000 in it, or you must make a monthly minimum deposit of $100 to the account. The latter option should be more feasible and is a good incentive to save each month.
Minimum balance requirement: $100.
Additional fee for withdrawals: None.
ATM card: None.
Access to funds: Electronic transfer, wire transfer (free if you have $25,000 or more in the account) or paper check.
Mobile app: Yes. At the time of writing, the app has a 4.6 rating on the App Store and 4.2 on Google Play.
Details: CIT Savings Builder.
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3. Ally Online Savings Account
Though savings accounts are different from checking accounts — and thus should not be thought of as a place to quickly and easily get money — Ally does make it easier than most to access your funds when you need them. Just open a free checking account (ranked 5th in the best online checking accounts of 2020), and you can easily transfer your money over.
APY: 0.50%.
Minimum balance requirement: None.
Additional fee for withdrawals: After the six permitted withdrawals a month, you’ll pay $10 per transfer with Ally.
ATM card: None.
Access to funds: You can transfer money via direct deposit, electronic transfer, wire transfer or paper check.
Mobile app: Ally’s mobile app is highly rated at 4.7 stars on the App Store and 3.7 on Google Play.
Details: Ally Online Savings account.
4. Alliant High-Rate Savings Account
The Alliant High-Rate Savings account is offered via the Alliant Credit Union, so instead of FDIC insurance, it carries insurance through the National Credit Union Administration, but the benefits are the same.
Because it is a credit union, joining Alliant can be a little more challenging. You need to fulfill one of these four requirements:
Be a current or retired employee of a business that is partnered with Alliant.
Have an immediate family member or domestic partner who banks with Alliant.
Be a member of an Alliant-related organization/association.
Become a member of Foster Care to Success, Alliant’s partner charity.
Live in one of the communities near the Alliant headquarters in Chicago, Illinois.
APY: 0.55%. You need an average daily balance of $100 for the APY to kick in.
Minimum balance requirement: $5.
Additional fee for withdrawals: Hard limit on six federally regulated withdrawals.
ATM card: Money access is super convenient with a free ATM convenience card that qualifies at more than 80,000 ATMs nationwide.
Access to funds: If you live in the Chicago area, you’ll even have access to brick-and-mortar locations.
Mobile app: It’s got a solid app (4.7 on the App Store and 4.6 on Google Play)
Details: Alliant High-Rate Savings account
5. Discover Savings Account
The Discover Savings account offers a substantial APY and easy access to funds via a rewards checking account.
APY: 0.40%.
Minimum balance requirement: None.
Additional fee for withdrawals: The bank may refuse to pay transactions that exceed the six monthly permitted withdrawals.
ATM card: While Discover doesn’t offer an ATM card for its FDIC-insured savings account, you can sign up for the Discover Cashback Debit (it’s free!), which earns up to 1% cash back on up to $3,000 a month.
Access to funds: The linked debit account provides an easy way to transfer funds; otherwise, you can rely on electronic transfers, wire transfers and paper checks.
Mobile app: Discover’s app has a 4.8 rating on the App Store and a 4.5 rating on Google Play.
Details: Discover Savings account
Learn more: Discover Bank review
6. Capital One 360 Savings Account
While it’s certainly not the savings account with the best interest rate, it makes up for it with no monthly fees, easy integration with other Capital One 360 accounts (including a checking account for easy funds transfer) and a killer app.
APY: 0.40%.
Minimum balance requirement: None.
Additional fee for withdrawals: Hard limit on six federally regulated withdrawals.
ATM card: None.
Access to funds: If you don’t open a linked checking account for the easy ATM access, you can still access your funds via the traditional (but slower) means.
Mobile app: In 2018, the Capital One 360 mobile app was ranked No. 1 in customer satisfaction in the banking category for the second year in a row in J.D. Power’s U.S. Banking App Satisfaction Study.
The app has a 4.8 rating on the App Store and a 4.7 rating on Google Play.
Details: Capital One 360 Savings account
7. Barclays Online Savings Account
Barclays has its cons, like challenging access to funds, but its high APY and strong mobile app earned it a spot on this list.
APY: Barclays is one of three banks on this list to offer the competitive 0.40% APY.
Minimum balance requirement: None.
Additional fee for withdrawals: Withdrawals that exceed the monthly limit will result in a fee.
ATM card: None.
Access to funds: You can deposit and withdraw funds in a number of ways, through direct deposit, an electronic transfer, paper check and more.
Mobile app: Yes, but the Barclays US Online Savings mobile app is not the most user-friendly based on its ratings: a 3.7 on the App Store and a 2.4 on Google Play.
Details: Barclays Online Savings account
Learn more: Barclay’s Bank review
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8. American Express Personal Savings Account
You might rely on American Express for your credit card, but the bank offers an online savings account worth your consideration as well.
APY: 0.40%.
Minimum balance requirement: $1.
Additional fee for withdrawals: Hard limit on nine withdrawals, though this is more than most of its competitors.
ATM card: A major drawback of the American Express account is the lack of ATM card.
Access to funds: Electronic transfer, wire transfer and paper check are the only ways to access your money.
Mobile app: It currently has a 4.9 rating on the App Store and a 4.2 rating on Google Play.
Details: American Express Personal savings account
9. Marcus Online Savings Account by Goldman Sachs Account
Our final online savings account is by Goldman Sachs. It offers a competitive APY and fairly new mobile app.
APY: 0.50%.
Minimum balance requirement: None.
Additional fee for withdrawals: Due to a change in federal law, Goldman Sachs currently doesn’t impose a limit on withdrawals.
ATM card: None.
Access to funds: Withdrawals are limited to electronic transfer and wire transfer (you also cannot deposit checks via the app).
Mobile app: Yes. It has a 4.9 rating on the App Store and a 3.9 rating on Google Play.
Details: Marcus Online Savings Account
6 Tips for Choosing a Savings Account
You should be aware that banks can change interest rates, develop better apps and update their bonuses, so it is important to understand how to determine the best savings account for yourself.
Here are a few tips:
1. Consider Your Needs
We prioritized high savings rates, ease of funds transfer and mobile apps in our rankings, but maybe for you, two-factor authentication and customer service are top considerations.
Build your own ranking system based on your top two or three criteria. You won’t find a perfect bank that offers everything, but at the very least, you’ll find banks that can meet all of your top needs.
2. Stick With Online
Put your money in an online savings account, unless you have a good reason not to, such as a high interest savings account at a brick-and-mortar credit union or a regular need to get in-person help.
3. Save Only With Insured Banks
Do not put your money into any bank that is not insured by the FDIC. Or, if you go the credit union route, make sure it is insured by the NCUA. We did not include any banks on our list that were not insured.
4. Don’t Be Tempted by Sign-on Bonuses Alone
Earning cash for starting an account with a bank feels awesome, but don’t let the appeal of $100 now prevent you from putting your savings into an account that will earn you $500 over a couple years.
5. Find a No-fee Account
Be wary of accounts with monthly maintenance fees, statement fees or any other miscellaneous charges. You’re more likely to find these fees with a brick-and-mortar bank.
Ideally, find a bank that has an associated free checking account for easy and fast funds transfers.
6. Read the Fine Print
Know what you are signing before you sign it.
If an APY sounds too good to be true, it’s possible there are strings attached — or that the rate is only temporary.
Ask questions and do research when you are confused by any of the terms and conditions, and don’t deposit your savings until you are satisfied with the agreement.
Any conversation about cryptocurrency has to start with Bitcoin. It was the first crypto (it’s been around since 2009), it is the most valuable (worth over $1 trillion), and it’s the most traded (over $60 billion in daily volume). It also has the most spinoffs, or “forks,” that have become widely-used cryptos in their own right.
Perhaps the most well-known forks are Bitcoin Cash (BCH), which came out in 2017, and Bitcoin Gold(BCG), which was the product of a fork from Bitcoin a few months later.
What is Bitcoin Gold?
Bitcoin Gold was a hard fork from Bitcoin with the intent of further decentralizing Bitcoin. The idea was to use a new algorithm for the mining process that would not prioritize major mining operations, as some believed Bitcoin did.
Bitcoin Gold was an implicit criticism of Bitcoin, essentially arguing that it had betrayed or at least strayed from its initial roots as a decentralized currency with its increasingly centralized mining operations. Even if anyone can buy Bitcoin, it’s much harder (or at least not profitable) for anyone to create it.
Developers wanted to make it easier for normal computer users to mine on their own machines, a contrast to the massive Bitcoin mining industry, which is mostly done on specialized computer equipment purchased and operated by big-time operators in places like Iceland, where electricity is cheap. With Bitcoin Gold, however, the humble graphics card could carry the load.
Bitcoin Gold Controversy
Bitcoin Gold has been controversial almost since its inception. Typically with hard forks, owners of the initial cryptocurrency also receive units of the new one. For example, when Bitcoin Cash forked from Bitcoin, all Bitcoin owners got Bitcoin Cash.
When the Bitcoin Gold fork occurred, on the other hand, Bitcoin owners did not immediately get their new cryptocurrency. Instead, developers kept the Bitcoin Gold blockchain private for a few weeks so that they could mine BTG without competition—which they described as a “premine”. Critics opposed this practice, as it left fewer coins available for others to mine and also amounted to “free money” for the BTG developers.
As a result, cryptocurrency exchange and service provider Coinbase said it would not support BitcoinGold, explaining that because developers hadn’t made the code available for review by the public, it posed a security risk.
BTG Security Issues
Bitcoin Gold was worth over $8 billion when it launched, but fell dramatically in value as security issues emerged.
BTG has experienced multiple “51% attacks,” where an entity or individual or hacker is able to do the one thing that cryptocurrency is supposed to prevent: take control of transactions and “double spend” them, essentially stealing money. After one of the attacks, Bitcoin Gold was delisted from some exchanges.
In 2020, the developers behind Bitcoin Gold were able to fend off another attempt on the cryptocurrency’s network. In early March 2021, the Bitcoin Gold team posted on its blog that its “hibernation has come to an end”—the 51% attacks that plagued the coin last year were ultimately defeated by the BTG miners and community.
What is Bitcoin Gold Worth Now?
Bitcoin Gold is ranked 73rd among cryptos according to CoinMarketCap (as of late April 2021) and has a total value of around $1.6 billion and a value per coin of around $90. Bitcoin Gold’s value was over $470 per coin at least twice in 2017, but has been under $100 since early 2018.
Bitcoin Gold vs. Bitcoin Cash Value
When comparing Bitcoin Gold vs Bitcoin Cash, the numbers speak for themselves: the original fork has a total value of almost $11 trillion, volume of almost $3 billion, and a value per coin of over $500. Bitcoin Cash is about 87 percent from its absolute peak value but is still substantially more valuable than its forked cousin on a “per coin” basis, at least so far, when it comes to Bitcoin Cash vs Bitcoin Gold, Bitcoin Cash is winning.
How to Invest in Bitcoin Gold
Bitcoin Gold is not available to buy and sell on mainstream exchanges like Coinbase, but, according to its organizers, it is available to trade on exchanges like Binance and Bitfinex.
The Takeaway
Bitcoin Gold is yet another hard fork of Bitcoin, like Bitcoin Cash. What distinguishes Bitcoin Gold is its intent: To further decentralize and democrative mining, making it more accessible to individual miners, rather than large groups with massive computing power.
For investors interested in building a crypto portfolio, buying crypto on SoFi Invest® can be a great way to start trading crypto. You can get started with just $10, we keep your crypto secure and protected from fraud, and you can manage your account in the SoFi app.
Find out how to invest in crypto with SoFi Invest.
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