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Sound money management is an important part of a solid financial strategy. Youâll want to have some of your money set for retirement in a traditional or Roth IRA. Still, other money might be saved for your kidsâ college, a down payment on a house or other longer-term goals. And then you might have an emergency fund as well as a checking account that you use to pay your monthly bills and expenses. Each of these buckets of money can be in a different kind of account. In this article, weâll look at some of the best checking accounts.
What makes a good checking account
Before we look at some of the best checking accounts, itâs a good idea to talk about what makes for a good checking account. A checking account is an account that you would typically use to pay your ongoing monthly expenses. It is more and more rare to actually write paper checks, and instead, you would typically use a debit card or cashless payment account linked to your checking account.Â
With a checking account, some features to look for include no monthly or maintenance fees, a low minimum amount to open an account, the rate at which they pay interest, and any account opening bonus they might offer. The interest rate that checking and savings accounts pay is tied to the federal funds rate and usually varies over time. As of 2020, the interest rates are quite low, and many checking and savings accounts do not pay any interest at all. Also keep in mind that even if your account pays you 1% interest, youâre still losing money to inflation. So you wouldnât want to keep any long-term investment money in a checking or savings account.
With all that being said, letâs take a look at some of the top checking accounts available.
Discover Cashback Debit
Discoverâs checking account offers 1% cash back on up to $3,000 in debit card purchases each month, which is one of the few debit cards that offer a reward on ongoing purchases. The Discover Cashback Debit account also comes with no monthly maintenance or other fees, no fees to withdraw at over 60,000 ATMs worldwide and no fees for insufficient funds.
CapitalOne 360 Checking
The CapitalOne 360 Checking account has no account minimums or fees. It currently offers a 0.10% APY on balances, though you can also open a no-fee CapitalOne 360 Performance Savings account which offers 0.65% APY as of the time of this writing. CapitalOne also has thousands of branch offices nationwide, so you can do your banking online or in-person. The CapitalOne 360 Checking account offers three different options if you happen to overdraft your account – Auto-Decline, Next Day Grace and Free Savings Transfer.
Fidelity Cash Management Account
Fidelityâs Cash Management Account also offers no account fees or minimum balances. It also reimburses ATM fees nationwide, though only offers 0.01% APY on account balances. Fidelity makes it easy to transfer money between your checking account, savings accounts and any retirement accounts you have with Fidelity. Plus, the Fidelity Rewards Visa offers 2% cash back on all purchases, which you can redeem into your Fidelity Cash Management Account or any other Fidelity account.
Wealthfront Cash Account
Wealthfrontâs Cash Account offers a high-interest checking account (0.35% APY as of this writing) with no fees. And Wealthfrontâs convenient account dashboard lets you easily move money between your checking account and any investment or retirement accounts that you have with them. They also offer a service where you can get access to your paycheck up to two days early if you direct deposit into your Wealthfront Cash Account
HSBC Premier Checking
HSBCâs Premier Checking account also offers no fee on ATMs nationwide or for everyday banking transactions, but does charge a monthly maintenance fee if you donât have at least $75,000 in combined accounts or direct deposits of at least $5,000 monthly. They are currently offering a promotion where you can earn 3% as a welcome bonus, up to $600. Youâll get 3% on qualifying direct deposits, up to $100 per month, for the first six months of having your account.
Chase Total Checking
Chase Total Checking is currently offering a welcome bonus of $200 when you open a new account and have a direct deposit made to your account in the first 90 days. Chase Total Checking is currently paying an interest rate of only 0.01% APY. Also, there is a $12 monthly maintenance fee which can be avoided if you either:
- Have direct deposits totaling $500 or more
- Have a balance at the beginning of each day of $1,500 or more
- Have an average beginning day balance of $5,000 or more in any combination of all of your Chase accounts
The post Best Checking Accounts 2020 appeared first on MintLife Blog.
In March I offered some financial advice to Michelle, a Mint user who was struggling with debt, a lack of retirement savings and a bit of family financial drama amongst her siblings.
Michelle was anticipating a cash bonus from her company and wasnât sure if she should save the money or use it to relieve her debt.
I recommended a two-prong approach where she uses the cash to play savings catch-up in her retirement account and knock down some of her debt, which, at the time, included a $3,000 credit card balance and $52,000 in student loans.
Six months later, Iâve checked in with the 38-year-old real estate developer, to see if any of my advice was helpful and if sheâs experienced any shifts in her financial life.
We spoke via email:
Farnoosh: Have your finances have improved over the last 6 months since we last spoke? If so, what has been the biggest improvement?
Michelle: Yes. I’veÂ aggressively been contributing to my 401(k) â about 50% of my pay – and had hoped to reach the annual maximum of $18,000 by June, but looks like it will be more like October. I also received a $40,000 distribution from a project that I closed.
F: What aspects of your financial life still challenge you?
M: Investing for sure. I never know if I’m hoarding too much cash. I am truly traumatized from the financial downturn.Â I just joined an online investment platform, but it wasÂ also overwhelming. Currently I have $45,000 in a regular savings account that earns 1.5%.
Another challenge is not knowing whether to just bite the bullet and pay off my student loans or to continue to pay them monthly. Â I hate that I’m still paying loans 16 years after I graduated and it’s a source of frustration [andÂ embarrassment] for me. Â I owe $36,000. Often times I have an inner monologue about the pros and cons of just paying them off but then my trauma from 2008 kicks inâ¦and IÂ decide to keep my $45,000 nest egg safely where I can check the balance daily.
F: I recommended allocating $45,000 towards retirement. Was that helpful? What are some ways you’ve managed to save?
M: Yes, I recall you saying you recommended having a total of $100,000 towards retirement for a person my age. Currently, I have $51,000 in my 401(k), $35,000 in a traditional IRA and $17,000 in my Ellevest brokerageÂ account, so I’ve broken the $100,000 goal.
I did add a car note to my balance sheet. My old car suffered a total loss (major electrical failure due to a sunroof leak!) and the insurance gave me a check for $9,000.Â I used it all towards the new vehicle (aÂ certified used 2014 Acura) and I’m financing $18,000.
F: Your dad’s home was a source of financial stress, it seemed. Were you able to talk with your siblings and arrive at a better place with that?
M: My dad actually has passed since we last spoke. He passed in February and so his will went to probate. My siblings and I have decided not to make any decisions about the house for at least one year. Yes, this is kicking the can further down the street however, they recognize that I maintain the house and pay the real estate taxes and so they are not pressuring me to move or to sell.
The new deed has been recorded and the property is under all our names and so everyone seems ok with knowing that I can’t do anything regarding a sale or refinance unilaterally.
So, for now, I live rent free other than payingÂ utilities, miscellaneous maintenance on the houseÂ and real estate taxes quarterly. This, too, is helping me saveÂ aggressively.
Also, the new car note has replaced the hospice nurse contribution so I’m not feeling that my budget is overburdened with the new car.
I think ultimately I will buy out at least two of my siblings and stay in the house. Verbally they have expressed being okay with this.
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at firstname.lastname@example.org (please note âMint Blogâ in the subject line).
Farnoosh Torabi is Americaâs leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, sheâs become our favorite go-to money expert and friend.
The post Mint Money Audit 6-Month Check-In: How Did Michelle Allocate Her Windfall? appeared first on MintLife Blog.
Whereas Dave Ramseyâs Baby Steps have often been dissected one at a time, my goal in this post is to give an overview of the steps as a unit and explain why the order is essential.
Hopefully, these steps can help you create a focused life plan for your finances, regardless of your age or financial well being.
First, the Baby Steps:
- Step 1: $1,000 in an emergency fund.
- Step 2: Pay off all debt except the house utilizing the debt snowball.
- Step 3: Three to six months of savings in a fully funded emergency fund.
- Step 4: Invest 15% of your household income into Roth IRAs and pre-tax retirement plans.
- Step 5: College Funding
- Step 6: Pay off your home early.
- Step 7: Build wealth and give.
The Power of Focus
Daveâs premise with the Baby Steps is that people can accomplish great things IF they can just be focused. When you read over these seven steps, you think, âYes. I need to be saving. But I also need to be investing for retirement. I should get my house paid off early. But I also need to be getting out of debt and saving for my kidâs college.”
You would readily agree that all of these goals are important for successful financial planning. The problem is that your stress level kicks into overdrive with the prospect of doing them all. You clench your jaw and do what you are capable of doing while feeling anxious about the goals you place on the back burner.
The Baby Steps plan works because when you stay focused on one step at a time, you can knowingly put some important goals on hold without the nagging feeling that you are leaving something undone.
You can also check out my YouTube video where I break down each of Dave’s Baby Steps here:
Because accomplishing each step puts you in a great position to accomplish the next one.
You begin to feel an empowerment and a sense of control as you get one step behind you and start the next one. You are making progress instead of treading water.
Why Are the Baby Steps in the Order They Are In?
Steps 1 and 2: $1,000 Emergency Fund and Debt Snowball
Notice that Steps 3 through 7 are all about using your money to do something positive for you and your family. Of course this money comes from your income, but the problem with most of America is that we are using our income on debt payments.
Because we are paying others instead of ourselves, we need to get rid of our debt (Step 2) in order to free up our income for Steps 3-7.
âWhat if I could use all the money I am currently paying to creditors to start âpaying myselfâ?
For many people this is $1,000 to $3,000 a month.
Baby Step 2 debt snowball is designed to do just that. Step 1 is necessary before Step 2 because you donât want to start paying off debt without having a small cushion to absorb the little unplanned expenses that will occur during Step 2.
Step 3: 3 to 6 months of Savings
After completing the first two steps, you are out of debt (except for your house) and now have that cash flow you dreamed about: all of the money you used to pay others is at your disposal. The temptation is to start investing for retirement or saving for your kid’s college or pay off your house early.
NOT SO FAST! You will get to those, but doing so prematurely is way too risky.
Stop, take a deep breath and use that cash flow to build up your emergency fund so you will indeed be ready for emergencies. This fund needs to be liquid (in a top savings account or money market account).
If you skipped the step and started any of the ensuing steps, how would you handle emergencies? Pull money from your retirement account? Rob the kidâs college savings? Borrow money against your house? All bad ideas.
Step 3 is therefore always ahead of the following steps
Steps 4, 5, and 6: Saving for Retirement, College Funding, Pay Off Home
You may be asking,
âWhy is retirement ahead of college funding? Wouldnât a good parent put his children ahead of himself?â
Good question. But what if you end up without sufficient retirement income because you made college funding a higher priority? Who will you be depending on in your later years? Your kids!
The thing about retirement planning is that you only get one shot at it. The years go by and you will someday be retirement age. You donât have a choice. On the other hand, college funding is full of choices: kids can get scholarship, they can work, they can attend community colleges, they can find work/co-op programs, etc, etc.
Step 4 is therefore ahead of step 5. But notice that Step 4 is 15% of your income. If you have cash flow greater than 15% you can apply that to college funding immediately, and if you have more than enough cash flow to accomplish both steps 4 and 5, you can use all of the extra to pay off your house early (step 6).
Note that Step 6 comes behind retirement and college funding because reversing the order could possibly give you a paid for house at the expense of a dignified retirement or helping your kids through college. Most of us wouldnât want that.
Not sure where to start investing for retirement? Here are some tips:
- Best Places to Open a Roth IRA – Figuring out where to start investing your 15% of income can be confusing. A great place to start is a Roth IRA, but deciding a broker is confusing. This list will help you pick the best broker for your Roth IRA.
- Best Online Stock Broker Sign Up Bonuses – You can get hundreds of dollars or thousands of airline miles just for opening up a brokerage account.
- Beginner Investing Strategies – If you’ve never invested before it can be overwhelming. This list breaks down getting started into manageable pieces.
Step 7: Build wealth and give.
Life is now very good! You have no debt, a great emergency fund, and a paid for house. All of the cash flow that used to go toward debt reduction and house payments is now at your disposal.
This, by the way, is the step Mandy and I are on. Being semi-retired, we donât have a huge income, but it is very sufficient because we also donât have any debt. We continue to invest every month and we are able to give more than we have ever given before.
Once we got our house paid off, we started to budget âblessâ money, which we put into an envelope every month just to have available so we can bless others as we see the needs. We are also able to help our grown daughter and daughter-in-law cash flow their college.
As I said, life is good. Mandy and I are experiencing great financial peace and we are very grateful for Dave Ramseyâs Baby Steps.
I wish the same for you.
This article is a general overview of what Dave Ramsey has to offer and is not intended to replace his course, nor is this sponsored or endorsed by Dave Ramsey or the Lampo Group.
The post Dave Ramseyâs Baby Steps Explained appeared first on Good Financial CentsÂ®.
Heading off to college is exciting. Really exciting. You finally have freedom! You’re out on your own for the very first time, managing your studies, managing your social life and… managing your finances.
Despite being a big part of your newfound independence, personal finance is a subject you probably won’t find on your course schedule. If you didn’t take a personal finance class in high school and never had money lessons from your parents, you may not know how to manage a checking account as a college student.
“College students have very different needs for their checking account than their parents or other adults,” says Tommy Martin, CEO of Clear Path Financial Planning and a finance blogger at TommyMartin.com. If you live in a different city during the school year than you do during winter and summer breaks, for example, you may be after a bank for which location doesn’t matter.
Ok, so how do I manage my checking account in college, you ask? First, don’t get overwhelmed. Learning how to manage money while in college and getting a handle on checking account basics is simpler than you might think (oh, and the skills will serve you for years to come). Second, you can kick off your checking account education with these tips for managing a checking account in college:
1. Compare checking accounts before signing up
While your college life may center around your school campus, you should consider venturing off-campus to pick the right checking account for your lifestyle.
“Students typically sign up with a bank that’s on campus or close to campus,” says Sahil Vakil, a financial planner and president of MYRA Wealth in New Jersey. However, the nearest bank might not be the one that best fits your needs, he adds.
Instead of picking a bank based solely on proximity, consider all of your options, including banks with off-campus locations and online-only banks.
Martin agrees, saying that learning how to manage money while in college means considering all of your banking options rather than “automatically enrolling or choosing the official school bank just because it has the school logo on it.” There are other ways to show your school pride, after all.
2. Learn about checking account fees and rewards
Vakil and Martin both say a tip for managing a checking account in college is to consider an account’s fees before signing up. Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time. When you are choosing a checking account in college, consider fees for:
- Monthly maintenance (essentially keeping your account open)
- Minimum balance (not maintaining one)
- ATM usage
- New checks
- Wire transfers
- Online bill pay
- Replacement debit cards
Martin says a checking account with no minimum balance requirement or minimum number of transactions could be a good fit for students. “It allows them to focus on their education” instead of worrying about incurring penalties, he says. “Even a $5 fee on a checking account with $60 in it can be devastating.”
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Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time.
Martin also suggests finding an account that has a large network of no-fee ATMs located across the country to better manage your checking account as a college student. “Especially if you’re going to a school in a different state, the local bank from home might wind up costing you a lot in terms of ATM fees,” he says. If your parents plan to wire you money, find an account that doesn’t charge incoming wire fees, Martin adds.
While fees should be a focus when you are learning how to manage money while in college, don’t forget about incentives. You may be able to find a checking account that actually helps you grow your balance by paying interest or offering a cash back rewards program.
“If you have to pay for books or supplies, at least you can get some cash back and use it for a free dinner,” Martin says. Discover Cashback Debit, for example, offers 1% cash back on up to $3,000 in debit card purchases each month.1
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3. Track your checking account balance
Luckily, you don’t need to take Banking 101 to figure out your funds, and tech makes tracking your balance and account activity easier than ever. Most banks let you log in to your account online (don’t get distracted in class!), and with a bank’s mobile app you can transfer money to friends, pay bills, deposit checks and check your balanceâall while you’re on the go.
Knowing your balance at all times is a tip for managing a checking account in college because it can help you avoid overdrafts and insufficient funds fees. It can also help you forecast your income and expenses to ensure you’ll have enough money to cover future costs. Surpriseâthat’s budgeting!
There’s no one-size-fits-all budgeting program or system, though. You can go old-school and track your budget on a printed-out budget sheet, or you can go tech-savvy with a budgeting and spending app. “What’s best for you is the one you’re actually going to use,” Martin says.
If you learn how to manage money while in college and make a practice of maintaining your budget, the habit will follow you after graduation.
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âCollege students have very different needs for their checking account than their parents or other adults.â
4. Secure your account
One of Vakil’s tips for managing a checking account in college is to make sure your account stays secure. Create a unique account name and password that you use only for your checking account, and never share your credentials.
Vakil says you can also enable two-factor authentication if your bank offers it and you’re looking for another way to improve the management of your checking account as a college student. “This additional layer of protection safeguards your sensitive financial data and strengthens the security of your account by requiring two methods of verifying your identity.”
For example, if you log in to your account from a new device, you may be sent a text message with a code that you’ll need to enter to access your account.
5. Keep an eye out for debit card holds
No matter where you bank, a merchant may place a hold on funds in your checking account when you use your debit card. Generally, a hold is placed for travel-related purchasesâsuch as at rental car companies, hotels and gas stationsâand used by merchants to protect against fraud and errors.
“Holds on a debit card can make it tricky for you to manage your finances,” Vakil says. For example, “when you rent a car, the car rental company might put a $500 hold on your account. If the balance in your account was $550, now you can only use another $50.”
Being aware of holds can be particularly important if you are managing a checking account as a college student and tend to have a low account balance.
If a merchant will be placing a hold, it will generally post a sign to notify customers. The hold will typically be removed after the funds are transferred to the merchant from your financial institution, typically within three to four days.
Knowing when a hold will be placed, the amount of the hold and how much money you have in your checking account can help you manage your checking account as a college student by avoiding overdrafts and missed bill payments due to insufficient funds.
6. Don’t let one mistake throw you off track
If you can learn how to manage a checking account as a college student, and more generally, how to manage money while in college, you can lay the groundwork for a solid financial future. Checking account mistakes may occasionally happen (oops, I didn’t budget enough for that spring break trip), but don’t let them discourage you to the point of apathy. Instead, try to continually expand your knowledge and practice healthy financial habits.
1Â ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as VenmoÂ® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.
The post 6 Tips for Successfully Managing a Checking Account in College appeared first on Discover Bank – Banking Topics Blog.
2020 has shaped all of us in some way or another financially. Whether it is being reminded of the importance of living within our means or saving for a rainy day, these positive financial habits and lessons are timeless and ones we can take into the new year.Â
While everyone is on a very unique financial journey, we can still learn from each other. As we wrap up this year, it’s important to reflect on some of these positive financial habits and lessons and take the ones we need into 2021. Here are some of the top financial lessons:
Living Within Your Means
Itâs been said for years, centuries even, that one should live within one’s means. Well, I think a lot of people were reminded of this financial principle given the year weâve had. Living within your means is another way of saying donât spend more than you earn. I would take it one step further to say, set up your financial budget so you pay yourself first. Then only spend what is leftover on all the fun or variable items.
Setting up your budget in the Mint app or updating your budget in Mint to reflect the changes in your income or expenses is a great activity to do before the year ends. Follow the 50/20/30Â rule of thumb and ask yourself these questions:
- Are you spending more than you earn?
- Are there fixed bills you can reduce so you can save more for your financial goals?Â
- Can you reduce your variable spending and save that money instead?
The idea is to find a balance that allows you to pay for your fixed bills, save automatically every month and then only spend what is left over. If you donât have the money, then you cannot use debt to buy something. This is a great way to get back in touch with reality and also appreciate your money more.Â
Have a Cash Cushion
Having a cash cushion gives you peace of mind since you know that if anything unexpected comes up, which of course always happens in life, you have money that is easy to liquidate to pay for it versus paying it with debt or taking from long-term investments. Having an adequate cash cushion this year offered some people a huge sigh of relief when they lost their job or perhaps had reduced income for a few months. With a cash cushion or rainy day fund, they were still able to cover their bills with their savings.
Many people are making it their 2021 goal to build, replenish, or maintain their cash cushion.Â Typically, you want a cash cushion of about 3- 6 months of your core expenses. Your cash cushion is usually held in a high-yield saving account that you can access immediately if needed. However, you want to think of it almost as out of sight out of mind so it’s really there for bigger emergencies or opportunities that come up.
Having the right asset allocation and understanding your risk tolerance and timeframe of your investments is always important. With a lot of uncertainty and volatility in the stock market this year, more and more people are paying attention to their portfolio allocation and learning what that really means when it comes to risk and returns. Learning more about which investments you actually hold within your 401(k) or IRA is always important. I think the lesson this year reminded everybody that itâs your money and it’s up to you to know.
Even if you have an investment manager helping you, you still need to understand how your portfolio is allocated and what that means in terms of risk and what you can expect in portfolio volatility (ups and downs) versus the overall stock market. A lot of people watch the news and hear the stock market is going up or down, but fail to realize that may not be how your portfolio is actually performing. So get clear. Make sure that your portfolio matches your long term goal of retirement and risk tolerance and donât make any irrational short term decisions with your long-term money based on the stock market volatility or what the news and media are showcasing.
Right Insurance Coverage
We have all been reminded of the importance of health this year. Our own health and the health of our loved ones should be a top priority. It’s also an extremely important part of financial success over time. It is said, insurance is the glue that can hold everything together in your financial life if something catastrophic happens. Insurances such as health, auto, home, disability, life, long-term care, business, etc. are really important but having the right insurance policy and coverage in place for each is the most important part.
Take time and review all the insurance coverage you have and make sure it is up to date and still accurate given your life circumstances and wishes. Sometimes you may have a life insurance policy in place for years but fail to realize there is now a better product in the marketplace with more coverage or better terms. With any insurance, it is wise to never cancel a policy before you a full review and new policy to replace it already in place. The last thing you want is to be uninsured. Make sure you also have an adequate estate plan whether itâs a trust or will that showcases your wishes very clearly. This way, you can communicate that with your trust/will executorâs, beneficiaries, family members, etc. so they are clear on everything as well.Â
Financial lessons will always be there. Year after year, life throws us challenges and successes to remind us of what is most important. Take time, reflect, and get a game plan in place for 2021 that takes everything you have learned up until now into account. This will help you set the tone for an abundant and thriving new financial year.Â
The post Financial Lessons Learned During the Pandemic appeared first on MintLife Blog.