12 Best Online Banks for Checking and Savings Accounts in 2021

When is the last time you checked to see how much your checking or savings account was earning you, just for having money in it?

If you bank with a traditional brick-and-mortar bank, it might have been a while — and that’s not surprising.

When financial institutions like Wells Fargo and Bank of America offer annual percentage yields (APYs) as low as 0.01% on their savings and checking accounts, it’s easy to become accustomed to your money being stagnant.

But savings accounts and even checking accounts can earn you money if you choose the right bank or credit union. Increasingly, you’ll find the best APYs (annual percentage yields) through online banks. Here are the best of the best for 2021, whether you want to open a checking account, a savings account, or even a money market account:

Best Online Banks of 2021, Ranked

These are the best online banks of 2021 for checking, savings and money market accounts, starting with our top pick.

Editor’s note: APYs are accurate as of July 17, 2021.

1. Axos Bank 

Grade: A-

Why we like this online bank: Axos (formerly known as Bank of Internet USA) tops our list of the best online banks. For starters, it gives consumers plenty of options when it comes to checking accounts:

The Rewards Checking account has the highest APY on our list at 1.25%, but earning that requires that you:

  • Receive monthly direct deposits of $1,000 or more;
  • Use your Axos-provided Visa debit card for at least 10 transactions of at least $3; and
  • Use it an additional five times (for at least $3 each time).

If you just achieve one of the three criteria, the APY is 0.4166%; if you achieve two, it doubles; and when you achieve all three, you get the full 1.25%.

This account also offers unlimited domestic ATM fee reimbursements and promises no overdraft or non-sufficient funds fees.

The Essential Checking account is all about no fees: unlimited domestic ATM fee reimbursements, no monthly maintenance fees and no overdraft or non-sufficient fund fees. You can also get your paycheck up to two days early with direct deposit express.

The Cashback Checking account lets you earn up to 1.00% cash back on all transactions requiring a signature. As with the Essential Checking account, there are no monthly maintenance fees, and you’ll get unlimited domestic ATM fee reimbursement.

In addition, Axos offers specific checking accounts for teengers and senior citizens.

The Axos online high-yield savings account is also impressive, with a 0.61% APY.

Potential pitfalls: Axos offers a lot of options. Just determining the right checking account can be stressful. And once you choose a checking account, you’ve got to keep track of quite a bit to either earn the full APY or to ensure you’re spending enough to make the 1.00% cash back on purchases requiring a signature worth your while. The $250 minimum balance for opening the savings account is also steep.

Pro Tip

Check out our current list of bank promotions for a chance to gain a monetary bonus when signing up for a new bank account.

2. Capital One 360

Grade: B+

Why we like this online bank: Capital One 360 doesn’t have the most attractive APYs for either its online checking or savings account (0.10% for checking and 0.40% for savings), but the online bank makes up for it with the industry’s second-highest-rated app according to J.D. Power, with users citing the app’s speed, easy-to-use interface and self-service options that are simple to use.

In addition, Capital One’s accounts include zero monthly fees and offer easy bank account integration. With the checking account, you have access to more than 70,000 fee-free ATMs, and unlike some online banks, Capital One does have physical branches — and Capital One Cafés, where you can enjoy Peet’s Coffee, take advantage of a shared work space, get one-on-one money coaching, attend workshops and even host events for nonprofits. You can also get your paycheck two days early.

Potential pitfalls: The APY for the savings account is not the strongest on this list. It’s also not possible to categorize your savings into sub-accounts within the app, which makes tracking toward multiple goals challenging.

a woman holds ice cream in one hand as she uses the other hand to make money out of an ATM machine.
Carmen Mandato/The Penny Hoarder

3. Ally Bank

Grade: B+

Why we like this online bank: Ally offers both online checking and savings accounts.

APYs, though now lower because of the pandemic and federal adjustments, are still high, with a 0.50% APY for savings accounts and up to 0.25% APY for checking accounts. You can also apply for loans through Ally, and ATM access is never a problem. That’s because Ally gets you access to more than 43,000 Allpoint ATMs nationwide and reimburses up to $10 in ATM fees each month.

Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.

Potential pitfalls: If you travel outside the country frequently, don’t use your Ally Bank debit card — it carries a 1% foreign transaction fee. Travel credit cards are a better option when traveling abroad.

In addition, don’t be fooled by the draw of a 0.25% APY for a checking account; you need at least $15,000 in the account, or else you’ll earn just 0.10%. However, if you have $15K to spare, you’d be better off storing that in a high-yield savings or money market account.

4. LendingClub

Grade: B

Why we like this online bank: LendingClub Banking (formerly Radius Bank) may not compete with the current savings APYs found at some of the top contenders on this list, but it makes up for that with a unique free checking account that offers 1.00% cash back on everyday purchases. That means for every $100 you spend, you earn $1.

Currently, LendingClub is also offering 1.50% cash back in certain categories, including food, health, entertainment and social good. LendingClub’s checking accounts also offer a 0.15% APY.

LendingClub Bank’s online checking comes with several perks, but ATM usage is one of the best. When you bank with Radius, you can visit any ATM at any time; Radius will reimburse you for all ATM fees.

Other advantages include payment up to two days earlier than your direct deposit, an innovative mobile app with location-based restrictions and spending caps, alerts when you or someone else uses your card and the ability to turn off lost or missing debit cards.

The LendingClub savings account offers either a 0.15% or 0.25% APY, depending on how much you have in the account.

Potential pitfalls: LendingClub requires a $100 minimum deposit for the checking account, and the 0.15% APY for the savings account doesn’t kick in until you have at least $2,500 saved up.

Something that’s likely to be more frustrating to those with imperfect financial pasts are the requirements put in place for the rewards checking account. Not everyone qualifies for the rewards portion of the checking account, meaning you may miss out on the cash back.

However, if you don’t qualify for the rewards checking account now, LendingClub makes it possible to eventually upgrade to that account through its Tailored Checking Account. That account, which doesn’t offer a cash back option, carries a monthly service charge unless for the first $5,000 (all other banks on our list carry no monthly fees), and there are caps on daily deposits and debit card usage. However, if you exhibit 12 months of positive banking history, you may be able to upgrade to the Rewards Checking Account.

5. Alliant Credit Union

Grade: B

Why we like this online bank: ATM access is almost always guaranteed when you bank with Alliant, as it has more than 80,000 ATMs in its network and offers $20 in monthly ATM reimbursement for out-of-network usage. Alliant also operates one of the highest-rated apps for both checking and savings accounts and has physical locations in the Chicago area.

Currently, Alliant’s checking account APY stands at 0.25%. The account has no monthly service fee or minimum balance requirements and comes with a free Visa contactless debit card.

The savings account is equally impressive with a 0.55% APY. Though the account requires a minimum initial deposit of $5, Alliant will pay it for you. (Hey, that’s a free $5!)

Potential pitfalls: Credit unions can be more challenging to join, and Alliant is no different. Overdrafting can get expensive, with high fees and no limit on daily charges. Alliant currently does not participate in shared branching, a system that allows you to conduct your banking business at other credit unions in the same network throughout the country. This is often a hallmark of other credit unions.

young woman mobile depositing a check
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6. Nbkc

Grade: B-

Why we like this online bank: nbkc (the National Bank of Kansas City) keeps things simple by combining checking and savings into one single account, called the Everything Account. You’ll earn an APY of 0.15% across the board with this account.

Even better: there are no fees to bank with nbkc. We’re not just talking monthly maintenance fees; you also don’t have to worry about minimum balance fees, foreign transaction fees or even overdraft fees.

This bank also offers an extensive ATM network (37,000 and counting) with $12 in monthly reimbursements when you use an out-of-network ATM. The mobile app is easy to use, includes Savings Goals for organizing your money, and offers a Pay Bills feature.

Potential pitfalls: Its savings APY (0.15%) is not the most competitive of the accounts listed here. Actual member locations are limited to Kansas City, Missouri. Finally, it costs $5 to open the account. That’s obviously not substantial, but most accounts on our list are free to open.

7. Synchrony

Grade: B-

Why we like this online bank: Synchrony has a healthy 0.50% APY for the savings account, which also includes a convenience card for ATM access.

Though low by 2019’s standards, the fact that Synchrony still offers an APY that’s 50 times larger than Bank of America’s — even amid a pandemic — is quite impressive. Its lack of fees (even for withdrawals past the maximum six per month) is another highlight.

Also noteworthy: Synchrony has joined the ranks of other top banks by creating an app, called Synchrony Bank (not to be confused with MySynchrony, which is the bank’s retail portal).

Potential pitfalls: Synchrony doesn’t offer a checking account, meaning you’ll need to rely on an external account or direct deposit to fund your account.

If you want check-writing capabilities, you can open a money market account — but the APY is lower (0.35%) than that of its savings account. Synchrony also lacks home and auto loans.

8. Chime

Grade: B-

Why we like this mobile bank: Chime is great for first-time savers and spenders. Chime has no monthly service fees, no overdraft fees (you can overdraw up to $100 on debit cards without incurring a fee), no minimum balance requirements, no foreign-transaction fees and access to more than 60,000 fee-free ATMs nationwide.

More importantly, it can be set up to automatically transfer a percentage of any direct deposit into the linked savings account and/or to automatically round up to the nearest dollar on all purchases, depositing the extra change into the savings account. You might also have access to your paycheck up to two days early with direct deposit.

If you’re looking to save, you will want to open a Chime Savings Account (only possible if you have a Chime Spending Account). The savings account has an APY of .50%.

Potential pitfalls: Chime is a newer option and could face growing pains. There is no in-person service, and reviewers regularly complain of slow customer service.

Further, Chime is not a full suite bank (no loans, for example).

More information: Chime Bank review

contactless payment at a restaurant using phone
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9. CIT Bank

Grade: B-

Why we like this online bank: In previous years, CIT offered the highest interest rate for any savings account on our list, but following the fallout from the COVID-19 pandemic, rates have dropped dramatically, far below some of its competitors.

Right now, APYs are set at 0.42% or 0.50%, depending on your balance and/or monthly deposits. While not as high as they used to be, we still appreciate the APYs, especially compared to the national average (0.05%).

Note: These APYs only apply to an introductory period. They then drop slightly.

The eChecking account, a new addition to the portfolio, is attractive, with a 0.10% APY on balances under $25,000 and 0.25% on balances at or above $25,000 — but it rarely makes sense to keep so much in a checking account. The account does pay out $30 a month in ATM reimbursements, and CIT’s mobile app has great reviews on the App Store and Google Play. You can also get home loans through CIT.

Potential pitfalls: CIT’s dip in offered APYs for its savings account is one of the biggest we’ve seen. Further, the CIT Savings Builder account suffers from its lack of ATM access and a minimum balance requirement ($100).

10. Discover Bank

Grade: C+

Why we like this online bank: Discover Bank features both savings and checking accounts. Discover’s checking account is a rewards account, meaning you earn cash back for debit card purchases instead of interest on the money in the bank account. Right now, you can earn 1% cash back on up to $3,000 in debit card purchases each month, for up to $30 a month and $360 a year. You’ll also have access to more than 60,000 fee-free ATMs, and you won’t have to worry about monthly maintenance fees.

Discover’s savings account stands at 0.40% APY. Like CIT, this is a stark drop from previous years, but no online bank has been immune to the effects of COVID-19.

Potential pitfalls: You cannot get an auto or home loan through Discover Bank. Cash back on checking accounts is helpful, but big spenders will earn more when using a credit card without a monthly limit on cash back.

11. Barclays

Grade: C

Why we like this online bank: Barclays offers a competitive 0.40% APY on its online savings account. While not super attractive, it is still far above the 0.01% you will earn at Chase. Its mobile app is highly rated.

Potential pitfalls: You cannot open a checking account with Barclays, complicating access to funds.

12. Charles Schwab

Grade: C-

Why we like this online bank: Charles Schwab is great for those who like to travel — it has no foreign transaction fees and offers unlimited ATM reimbursement worldwide.

Charles Schwab is, however, more ideally suited for investing than saving and spending, thanks to its wide range of investment options. As such, the checking account — called High Yield Investor — is built with investors in mind with a direct link to a customer’s brokerage account for easy funding.

Potential pitfalls: APYs are low: 0.05% for the savings account and 0.03% for the checking account.

Charles Schwab is great for investors looking for a brokerage account, but savers and spenders looking for basic, high-yield online savings and checking accounts should look elsewhere.

Why We Picked These Banks

To determine the online banks and credit unions for this list, we reviewed nearly 40 of the most popular banks. We chose the 12 banks on our list because of their combination of high APYs, low minimum balances and low or no fees. Customer service, easy (and free) access to ATMs, mobile/online experience and ease of funds transfers were also important considerations.

All banks on this list are FDIC-insured (Federal Deposit Insurance Corporation) or NCUA-insured (National Credit Union Administration) and have no monthly fees (or offer a way to waive them).

Bank Grade Savings Account APY Checking Account APY Mortgage and Auto Loans What Makes This Bank Great And What Doesn’t
Alliant Credit Union B 0.55% APY 0.25% APY Both Great mobile app; access to 80,000+ fee-free ATMs (and limited out-of-network ATM reimbursement); decent APYs and fantastic app Foreign transaction fees; no shared branching; high overdraft fees
Ally Bank B+ 0.50% APY Up to 0.25% APY Both Great mobile app; access to Allpoint ATMs (and limited out-of-network ATM reimbursement); no overdraft fees Foreign transaction fees
Axos Bank A- 0.61% APY 1.25% APY Both Unlimited ATM reimbursement; high APY for checking and savings Poor mobile app; foreign transaction fees; too many choices and guidelines to manage
Barclays C 0.40% APY N/A None Great mobile app Limited access to funds (no checking account)
Capital One 360 B+ 0.40% APY 0.10% APY Auto loans, but no mortgage loans No. 2 mobile app (J.D. Power); access to Capital One and Allpoint ATMs; no foreign transaction fees; unique Capital One Cafe locations Lower APYs than other online contenders; overdraft fees
Charles Schwab C- 0.05% APY 0.03% APY Mortgage loans, but no auto loans Great mobile app; unlimited ATM reimbursement worldwide; no foreign transaction fees Overdraft fees if funds aren’t available in linked account; built more for investing, not spending and saving
Chime B- 1.00% APY 0.00% APY None Encourages first-time savers to be better with finances with Automatic Savings Account; access to paycheck before actual deposit; access to 60,000+ ATMs nationwide Not a full suite bank; slow customer service
CIT Bank B- Up to 0.45% APY Up to 0.25% Mortgage loans, but no auto loans Great mobile app; decent ATM reimbursement plan Dramatically reduced APY over the last couple of years; requires minimum balance of $100
Discover Bank C+ Up to 0.50% APY 1% cash back on up to $3,000 in monthly purchases Mortgage loans, but no auto loans Great mobile app; access to 60,000+ fee-free ATMs; no foreign transaction fees; cash back rewards No traditional APY for checking account, but cash back is still enticing (rewards checking account)
nbkc B- 0.15% APY 0.15% APY Only lending to those in Kansas City, Missouri, area Unique account combines checking and savings; access to Moneypass fee-free ATMs; limited ATM reimbursement; no foreign transaction and overdraft fees Brick-and-mortar branches in KC area only; $5 minimum deposit
LendingClub Bank B Up to 0.25% APY 0.15% APY, plus 1.00% to 1.50% cash back Mortgage loans and yacht loans Fee-free access to ATMs; cash back rewards on the checking account $100 minimum deposit
Synchrony B- 0.50% APY N/A None Convenience card for access to ATMs (nice touch for a savings-only account); no checking account, but can open money market account (0.50% APY) for check-writing capabilities; limited ATM reimbursement No checking account

The Benefits of Online Banking

The biggest allure of online banking is the high annual percentage yield (APY).  APY is the interest (including compound interest) that you’ll earn on your money in a year.

Because online banks rarely have physical locations and need fewer employees, they have low overhead and can pass those savings over to customers.

The average APY for the online banks with checking accounts awarded in our 2021 list is roughly 0.27%; some accounts also offer cash back on debit card purchases. The average APY for our best online high-yield savings accounts is even higher: roughly 0.45%.

A note on lower rates: These APYs are significantly lower than we’ve seen in previous years. In 2019, the average checking APY on our list was 1.40%, and the average savings account was roughly 2.00%. The COVID-19 pandemic has led to lower interest rates across the industry. It is not clear how long these rates will stay so low.

Remember, traditional banks offer interest rates as low as 0.01% for both checking accounts and savings accounts. (The national average for savings accounts is just 0.05%.)

But online bank accounts have many benefits outside of high interest rates. Here are just a few:

  • Low (or no) fees, including monthly maintenance fees (sometimes called monthly service fees or simply monthly fees), overdraft fees, foreign transaction fees and ATM fees. Some online banks even offer reimbursement for out-of-network ATM fees.
  • Low or no minimum balance requirements.
  • Strong online and mobile banking experiences, including apps and two-factor authentication.
  • FDIC and NCUA insurance up to $250,000.
  • Accessible customer service online or by phone.

Drawbacks of Online Banks

Online banking isn’t without its issues, but customers generally find the high-yield returns, stellar mobile experiences and lack of fees more than make up for online banks’ pitfalls.

Below are some of the most common drawbacks of online banks:

Limited Options for Cash Deposits

Depositing cash is the biggest challenge of online banks because they lack physical locations. Even online banks that have partnerships with brick-and-mortar banks for in-network ATMs often cannot accept cash deposits via ATM.

If you intend to deposit cash regularly (like if you’re a server or hair stylist who depends on cash tips) but still want the benefits of an online account, open an account with a brick-and-mortar bank solely to deposit cash and electronically transfer it to your online account.

Challenges With Transferring Funds

Online checking accounts generally make it easy to access your money with debit cards that work at thousands of ATMs. Some also offer checkbooks, no matter how archaic they may seem.

Online savings accounts, on the other hand, can be more challenging to access in emergencies than accounts at brick-and-mortar banks, but thanks to improvements in the speed of electronic transfer (ACH deposits) and new solutions from online savings accounts (like convenience cards), this issue has been largely reduced.

No Face-to-Face Support

If you’re more old school about your money management and like the idea of walking into a branch and singing your sorrows to a bank teller who can help you figure out your financial problems, an online bank might not be for you.

Online banks offer incredible customer service online and over the phone, but you can only get comforting in-person help for your accounts at a brick-and-mortar traditional bank.

A woman smiles as she looks at her phone.
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How to Choose an Online Bank

If an online bank makes sense for your finances, you’re now faced with the task of choosing one. While reviewing our list of the best online banks is a great place to start, you will need to assess your specific needs out of a bank to determine which on our best online banks list actually works best for you.Here are some things to consider:

  • Which bank has the highest APY? If earning the most in interest is what’s most important to you, your task is easy. Do note, however, the APYs can fluctuate. So if two of your top banks are neck and neck, but the bank with the slightly lower APY has better customer service and easier access to brick-and-mortar, it might actually be wiser to go with that one. In a few months, the interest rate may be higher than the current leading bank.
  • Are there other rewards? APYs are only one piece of the puzzle. Certain checking accounts offer cash back rewards, and some accounts — savings, checking and money market accounts — even come with sign-up bonuses.
  • How often do you use an ATM? If ATM usage is a part of your weekly routine, consider only online banks that have free access to a large network of ATMs. Otherwise, fees will add up.
  • What are the fees? The beauty of most online banks is the lack of monthly fees. However, this can vary. If you travel to foreign countries regularly, for instance, and plan to use your bank’s debit card, look for a bank that doesn’t charge foreign transaction fees.
  • Are you a mobile power user? If you live in your financial institution’s app, chances are good you will want one with an intuitive user interface and lightning speed. Check out reviews of mobile apps before committing to a specific bank.
  • How often will you need to talk to a customer service rep? Online banks are known for a lot of things, but stellar customer service is not typically one of them. If you need to chat with someone regularly about your money or tend to ask a lot of questions, look for an online bank with a good reputation for customer service.
  • What about money market accounts? For our list of the best online banks, we primarily considered personal checking and savings accounts. Money market accounts are quite similar to savings, but not every bank offers them.

Online Banking FAQs

Still have questions? You’re not alone. Here are some frequently asked questions about online banking—with answers.

Which Is the Best Online Bank in the U.S.?

This year, we have ranked Axos Bank as the No. 1 online bank in the US. However, these ratings are subject to change, and any bank that made our list of the top 12 online banks is a quality choice.

Are Online Banks Safe to Use?

Yes, online banks are safe to use. Just make sure your bank is insured by the FDIC (or, if it’s an online credit union, by the NCUA). As with all websites, only input financial information if you see the HTTPS and a lock symbol. Don’t use the same password for any other accounts, and consider utilizing a password manager. Multi-factor authentication, as well as biometric screenings, are a great way to protect your account as well.

Which Is the Most Secure Online Bank?

Secure banking hinges upon strong apps, multi-factor authentication and biometric screening. Some of the top online banks that utilize such security practices include Citibank, Bank of America, Starling Bank, Barclays and HSBC. However, every bank included on our list above has been deemed to be tremendously safe and is backed by the FDIC or NCUA.

Timothy Moore is a managing editor for WDW Magazine, and a freelance writer and editor covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications such as The Penny Hoarder, Debt.com, Ladders, Glassdoor, Aol and The News Wheel. 

Source: thepennyhoarder.com

The 6 Best Ways to Save Money for Kids

If you think higher education is in your child’s future, consider a 529 college savings plan.
Ready to stop worrying about money?
If you plan on covering some, but not all college expenses, you can tweak this formula to suit your situation. For instance, Fidelity recommends targeting a savings goal of ,000 multiplied by your kid’s current age if you plan on covering 50% of college costs and assume your child will attend a four-year public school. The financial institution provides a couple of examples of parents covering different percentages of fees and what that would look like at different ages of their children.
First, assess your total financial picture. Take inventory of your outstanding debt, and create a budget if you haven’t already.
If you want to save money, there are many ways you can go about it. Whether you’re thinking ahead to your child’s college education or just want to set aside a little something for when your child reaches a certain age, you have more than a few options to reach your savings goals.
(Have you picked your jaw up off the floor yet? Good. Keep reading.)
As with all investments, there are fees and risks associated with 529 plans.
There are also plenty of child-friendly bank accounts you can choose from to encourage your children to start saving early and often. A savings account is a good start.

Planning for Your Kids’ College Savings and Future Expenses

Source: thepennyhoarder.com
Now on to the good news: You have many options to start saving for your child’s future today, no matter your budget.
Again, that’s just the estimated cost. And there are grants and college scholarships available to help families chip away at the fees.
With this plan, a saver opens an investment account for the beneficiary’s qualified college education expenses, including room and board. This money can be applied toward universities (and some outside the U.S.), and withdrawals can also be used to pay up to K at elementary and high schools.

5 Ways to Save Money For Your Kids’ College Education

What’s the best type of savings account for a child? We’re glad you asked!

1. 529 College Savings Plans

How much money you “should” save depends on a few factors. For one, there are a lot of variables to consider: How much will a university degree cost in X number of years? How long do you think your child will go to school for? (Two years, four years or more years for advanced degrees.) What amount can you afford to regularly sock away for expenses?
These plans are sponsored by state governments as well, but there are fewer residency requirements. Investments in mutual funds and ETFs are not guaranteed by the federal government, but some bank products are protected.
A Roth IRA is an individual retirement account. You fund it with money you’ve already paid taxes on. So, when the time comes (typically at age 59 ½), you can withdraw your Roth IRA contributions and earnings tax free. However, you can withdraw this money earlier, penalty-free, to pay for higher education costs for your child.

Prepaid Tuition Plan

A 529 plan, or qualified tuition plan, is a tax-advantaged investment account. This means the money grows tax free and you can also take it out tax free. Each state (plus the District of Columbia) offers at least one plan. You can view minimum and maximum contribution limits and other considerations by state here.
With this plan, a saver or account holder can purchase units or credits at a participating university and lock in current prices for future tuition costs for the beneficiary. Typically, this money can’t be used for elementary and high school costs, nor be put toward room and board at college.

Education Savings Plan

While interest rates are low and whatever interest you earn is taxed as income, an FDIC-insured bank savings account is a tried and true (and safe) place to store money — whether yours or your kid’s.
With a Roth IRA, they’ll get tax-free money when they retire. They can also use these funds to help pay for their own qualified college expenses. While your child will have to pay taxes on the earnings, they won’t face an early withdrawal penalty.
You generally have more flexibility with brokerage accounts: You can choose from a variety of investments and make withdrawals at any time. Note: If your child does plan on going to college, the value of this account will be included in financial aid calculations.
There are other online calculators that can help you determine what you should save, depending on what your child’s future education plans might entail (like grad school). Again, a financial advisor or certified financial planner (CFP) can help you plan for college costs in way that accommodates your needs.

2. Roth IRA

Anyone can use a 529 college savings plan (no annual income restrictions!) and you can change the 529 beneficiary to another family member without incurring a tax penalty.
Here are three questions we see pop up time and again when it comes to investing in your child’s future. Oh. And this figure doesn’t even factor into university costs.
Of course, you can invest your money in a few different ways — some combination of a 529 plan; Roth IRA; or, UGMA, UTMA, brokerage or savings accounts — so you have options.

3. UGMA and UTMA Accounts

Sticking with college, here are additional ways to save that you and your child can work toward. Whether you’re a new parent or a year out from sending your kid off to college, consider these opportunities to save money.

Uniform Gift to Minors Act (UGMA)

A brokerage account allows you to invest money in stocks, bonds and mutual funds. Once you deposit your money, you can work with a financial advisor or robo-advisor, or both, to invest and grow your money.

Uniform Transfers to Minors Act (UTMA)

File this under “Things You Already Know” — kids are expensive. What you might not know is the best ways to save money for kids, and we’ve got your back on that.
This account establishes a way for someone under 18 years old to own securities without requiring a trustee or prepared trust documents.

4. Brokerage Account

Here are several ways you can invest and save money for your children, whether you want to open a college savings plan or start a rainy-day fund.
A parent or guardian will need to serve as the custodian, since minors generally can’t open brokerage accounts. Children need to have an earned income (part-time jobs, like babysitting, count) to contribute to it. Like adults up to and under age 50, they can only contribute up to K to the Roth IRA annually. Once the child turns 18 or 21 years old (depending on the state in which they live), control of the account must be transferred to them.
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5. Savings Account

College is an investment, and it can be a pricey one. By saving early (and with the magic of compound interest on your side), you can earn a bigger return on your money down the line.
And, mom and dad, when the time comes, make sure you fill out the Free Application for Student Aid (FAFSA).
There are two types of 529 plans: prepaid tuition plans and education savings plans.
Consider meeting with a financial expert to help you craft a plan that’s best for you.
The cost of raising a child from birth through age 18 is roughly 3,610, according to the United States Department of Agriculture (USDA). To break that down further, that’s around K per year, per kid.

graduation cap filled with money on sidewalk
Aileen Perilla/The Penny Hoarder

Additional Ways to Save Money for College

Save early and save regularly, and you’ll be off to a good start.Contributor Kathleen Garvin (@itskgarvin) is a personal finance writer based in St. Petersburg, Florida, and former editor and marketer at The Penny Hoarder. She owns a content-writing business and her work has appeared in U.S. News, Clark.com and Well Kept Wallet.

  • Ask for gifts toward their education expenses. If friends and family would like to give a gift to your child, ask them to consider putting any money toward their college fund. You can do this for any birthday or holiday, though the earlier you start investing in their education, the better. (Bonus: Your 1 year old doesn’t have the capacity to ask for the latest toy and won’t object to this gift.)
  • Encourage your kid to work and save. Once your child is of legal working age, they can get a job and start saving money for their school expenses. Even saving a small amount per paycheck can help them make a dent in later costs; you might also consider “matching” their savings to incentivize them (for example, give them $1 for every $20 they put away for college).
  • Look to companies and professional organizations. Your workplace may offer opportunities to children of employees looking to earn money for college. Some large companies, like UPS, offer such scholarships. Review your company handbook or ask your HR department about any available opportunities. Professional organizations, like the Rotary Club, are also known to offer scholarships and grants for continuing education. If you belong to any organizations or other clubs, look out for these benefits.
  • Apply for scholarships and grants. Additionally, encourage your high school student to look for scholarships and grants to help mitigate their college costs. Universities typically offer money for students who fit certain criteria — such as transfer students or people in certain majors — and meet other requirements. There are all sorts of weird scholarships, contests and even apps that can help them earn money for school, too. Just make sure they weigh the pros and cons of any entry fees and stay on top of contest deadlines.

If we use the earlier figures from CollegeCalc that forecast what a four-year education will cost in 2039 (5,167.67 / 4 = ,792 a year), it’s recommended you put 1 a month into a college savings plan. This calculation assumes an after-tax return of 7%, an annual tuition increase of 7% and four years of school.

Frequently Asked Questions (FAQs) 

It’s great if you’re able and want to contribute to your children’s future expenses and education fund — student loan debt has surpassed a whopping .7 trillion in the U.S. — but you need to be smart about it. If you put yourself in a precarious financial situation, it can be more difficult for you to course-correct later.

When Is the Best Time to Invest Money for College?

With that said, don’t let getting started “later” deter you from saving at all. It’s kind of like the Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.” You want to save what you can as early and regularly as possible. But if life circumstances prevented you from doing so before, right now is the next best time to start saving.
On average, tuition and fees ran ,411 at private colleges and ,171 for in-state residents at public colleges for the 2020-2021 school year. The estimated cost of a four-year degree, 18 years out?

What’s the Best Way to Invest Money for a Child?

Most prepaid tuition plans have residency requirements for the saver and/or beneficiary, and are sponsored by the state government (and not guaranteed by the federal government). However, not all state governments guarantee the money paid into them, so it is possible to lose money. Additionally, your mileage may vary with this plan if the beneficiary doesn’t attend a participating college, resulting in a smaller return on investment.
First things first: If you have nothing saved for retirement, focus on your own needs before you start saving for someone else. You’re on a more fixed timeline. Plus, you can’t borrow for retirement savings like your child can for their education.
5,167.67.

How Much Money Should I Save for My Child?

Looking for more options that aren’t exclusive to education? You can invest in a taxable brokerage account.
The good thing about putting away money for your children is that there is no one “right” way to do it. You can open a 529 plan for your child early on or later as they get closer to college aid. Or, you can fund a brokerage account so you’re not held to stricter rules about how the money’s spent.
If you want to invest in your kid’s future without choosing an account that’s for education expenses only, look into a Uniform Gift to Minors Act or UTMA Uniform Transfers to Minors Act.
Don’t forget the old standby: a traditional savings account.

The Best Way to Save Money for Kids

This account is similar to a UGMA. However, minors can also own property such as real estate and fine art.
A custodian will also need to be set up for this type of account. Parents can set up a custodial account and then make withdrawals to cover child-related expenses. Once the child is of legal age, the assets are transferred to their name. Since the funds for both UGMA and UTMA accounts are in the child’s name, they cannot be transferred to another beneficiary. <!–

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Varo vs. Chime: Which Online Bank Is Best?

Tired of looking for a branch or navigating a clunky app when you need to manage your bank account?

For anyone who’s ready to walk away from traditional branch banks, an industry of online challenger banks has blown up over the past decade. Technology companies have swooped in to respond to the need for more mobility, better apps and lower fees.

Varo and Chime, two of the top players in the online banking space, compete for customers with no-fee bank accounts and high-yield savings you can set up and manage from your smartphone.

Which is a better fit for you? See how they compare:

Varo vs. Chime Comparison

Varo (previously Varo Money) and Chime each offer checking and savings accounts through user-friendly mobile apps and online banking. Here’s how we rated each company.

Chime and Varo offer most of the same account options aimed at simplifying banking and savings for anyone who’s ready to say goodbye to traditional banks.

  Varo Chime
Checking Account A A-
Savings Account A+ B
Convenience B+ A-
Mobile Banking A B
Small Business Banking n/a n/a
Fees $2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit or withdrawal $2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit; $2.50 + up to $5.95 retailer fee for over-the-counter withdrawal
Average Grade A B+
Full Review Varo Bank Review Chime Bank Review

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Chime Overview

Chime is the leader in online banking, offering a no-frills account with features meant to simplify your money management and help you reach savings goals.

Chime Features and Fees

Chime offers fee-free online spending and saving accounts. It includes built-in automatic saving features, SpotMe fee-free overdraft protection, access to two fee-free ATM networks and more.

Chime is known for fee-free services, so you won’t pay for much. You’ll just pay a $2.50 out-of-network ATM fee, plus any fee charged by the ATM operator. And you could pay up to $4.95 to withdraw or deposit cash through your debit card at a Green Dot retail location.

Chime Bank Review

Is Chime right for you? Read our full Chime review to learn more about its features and see what it has to offer.

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Varo Overview

As of July 2020, Varo is the first banking app to gain approval for a full bank charter in the U.S. That means it’s its own bank, unlike other banking apps, which provide technology and work with national banks to provide the financial services and accounts behind the scenes.

It hasn’t yet taken full advantage of its status to offer a full suite of financial services, but it does offer services beyond its original stripped-down checking and savings account, including a forthcoming credit builder program and small cash advance loans.

Is Varo a good bank? Read our full review to learn more about its features and decide whether it’s a good fit for you.

Varo Features and Fees

Varo offers an online, app-based checking and savings account with built-in automatic savings tools, optional overdraft protection called Varo Advance, access to a network of fee-free ATMs and more. It also offers cash advance loans and is developing a credit builder program called Varo Believe for qualifying customers.

Nearly all Varo features are fee free. You’ll just pay $2.50 to Varo to use an out-of-network ATM, plus third-party ATM fees. And you could pay a third-party fee up to $4.95 to the retailer if you deposit or withdraw cash over-the-counter at a Green Dot location. If you use Varo Advance, you’ll pay a fee between $0 and $5, depending on how much cash you draw.

Varo Bank Review

Is Varo a good bank? Read our full Varo review to learn more about its features and decide whether it’s a good fit for you.

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More Details: Chime and Varo Bank Account Features

Both accounts offer these features:

Fee-Free Checking and Savings Accounts

Both Chime and Varo include a debit account (a.k.a. checking) and optional savings account, both with no monthly fees.

Automatic Savings Tools

Both accounts include simple ways to automatically build your savings account by setting rules to move money from checking to savings when you get paid and when you shop.

High-Yield Savings

Both savings accounts offer higher-than-average APY on your savings account balance.

Chime offers 0.50% APY on savings with no minimum balance requirement.

Varo offers 0.20% APY on savings to any customers, and you can earn 3.00% APY in a given month if you receive at least $1,000 in direct deposits, maintain a minimum balance of $5,000 and keep both of your accounts above a $0 balance during that month.

Early Direct Deposit

As with many online banks, both accounts make your paycheck available up to two days early if you get paid through direct deposit. The money is available in your account as soon as your employer processes payroll, which could be up to two days before the scheduled payday.

Overdraft Protection

Through Chime’s SpotMe overdraft protection program, the company will spot you up to $20 with no fee as long as your account has at least $500 per month in direct deposits. That limit can go up to $200 based on your account activity.

Through Varo Advance, you can add instant overdraft protection through the app with a small cash advance loan of $20, $50, $75 or $100, for a fee of $0, $3, $4 or $5, respectively.

Cash Deposits

With both Varo and Chime, you can deposit money into your bank account at more than 60,000 retail locations with Green Dot, which is a function many online banks don’t allow.

Bill Pay

With either account, you can pay bills through ACH transfer by giving companies your bank account and routing numbers, or mail a paper check.

Secure Deposits

Both companies provide FDIC-insured accounts up to $250,000 (the typical amount for any bank account). Chime partners with The Bancorp Bank and Stride Bank, N.A., and Varo Money is backed by its own Varo Bank.

Instant Money Transfer

With both Chime and Varo, you can send money instantly with no fees to others who use the same app. Varo Bank also works with Zelle for money transfers to folks who use other banks, though it admits the connection isn’t always reliable (and is working to fix that).

Second-Chance Banking

Neither company uses ChexSystems, which many traditional financial institutions use to determine your eligibility for a bank account, so a bad banking history won’t necessarily disqualify you for these accounts. Neither company checks your credit report for a banking account or credit builder card, either.

A woman with a yellow blouse and red book bag uses an ATM machine.
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Free ATM Withdrawals

A Chime account gives you access to 38,000 fee-free ATMs in the United States through the MoneyPass and Visa Plus Alliance networks. Varo’s account connects you to more than 55,000 fee-free Allpoint ATMs in the U.S.

Live Customer Support

Talk to a real person from either company via chat in the app, email or on the phone seven days a week.

Reach Chime customer service via email at [email protected], or by phone at 844-244-6363 during business hours: Monday through Friday 6 a.m. to 10 p.m. Central, and Saturday and Sunday 7 a.m. to 9 p.m.

Reach Varo customer service via email at [email protected], or by phone at 800-827-6526 during call center hours: Monday through Friday 8 a.m. to 9 p.m. Eastern, and Saturday and Sunday 11 a.m. to 7 p.m.

Push Notifications

Stay on top of your Varo account balance with optional notifications anytime money moves in or out of your account. Chime gives you the option to receive  a push notification when a direct deposit hits.

Credit Building Programs

Both companies offer a new, secure way to build credit.

Chime’s Credit Builder Visa credit card is a secured credit card with no annual fee, no credit check to apply and no minimum required deposit (an unusual feature for a secured card). It works like a debit card that lets you build credit.

Through the program, Chime members can move money into their Credit Builder account to back the card, make purchases with the card and have the balance automatically paid off from their Credit Builder account. Chime reports activity to credit bureaus, so the card is a less risky way to build or rebuild your credit.

Varo’s forthcoming Varo Believe program is nearly identical, backing a secured credit card with a dedicated amount of your choice from your Varo Bank account.

What They Don’t Offer

Neither platform offers these features:

  • Joint accounts or additional authorized debit card users.
  • Other financial products, like personal loans, auto loans and mortgages.
  • Refinancing.
  • Small business banking services.
  • Paper checks (though you can use bill pay to have the banks send checks for you,

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Which Is Better: Varo or Chime?

Chime and Varo bank account features are nearly identical, with details that could sway you one way or the other.

Checking

Varo Bank Account: A

Chime Spending Account: A-

Both banks offer a fee-free checking account for deposits and spending. In both cases, you’ll automatically apply for this account when you set up your account in the app (or online). You can fund it through direct deposit or transferring money from an external bank account.

Both Chime and Varo eschew traditional banking fees, including monthly maintenance fees, minimum balance fees and overdraft fees.

Both accounts let you get your paycheck up to two days early compared with a traditional bank, because they release the funds as soon as your employer initiates the deposit.

Both accounts come with a Visa debit card you can use for transactions anywhere Visa is accepted, and for ATM withdrawals. Both are also connected to the Green Dot network, so you can deposit or withdraw cash at retail locations around the U.S.

Overdraft Protection

Both Chime and Varo charge no overdraft fees and offer optional overdraft protection — but eligibility and details vary.

  • Chime SpotMe: Chime will spot you for an overdraft up to $200 and take it out of your next deposit. To be eligible, you just have to receive $500 in direct deposits every month.
  • Varo Advance: You can opt into overdraft protection as you need it with Varo Advance, a small paycheck advance you select instantly through the app. Choose an advance of $20, $50, $75 or $100, and pay a fee of $0, $3, $4 or $5, respectively. You’ll choose an automatic repayment date anytime between 15 and 30 days of the advance. To qualify, you have to have at least $1,000 in direct deposits within the past 31 days.

Savings

Varo Savings Account: A+

Chime Savings Account: B

Both Varo and Chime offer optional savings accounts that facilitate automatic savings and yield competitive interest rates.

Funding the Account

You can only fund a Chime Savings account by transferring money from your Chime Spending account — not through direct deposit or an external bank account. To add money from another source, you must first deposit it into your Spending account, then make an instant transfer.

You can deposit money into a Varo Savings account from your Varo Bank account in the app or directly from an external account through ACH transfer.

Savings Account Interest Rates

Both Chime and Varo savings yield interest at an annual percentage yield (APY) above the 0.06% national average for savings accounts reported by the FDIC.

Chime Savings offers a 0.50%% APY with no additional requirements.

Varo Savings offers a 0.20% APY with no requirements. You can earn up to 3.00% APY on balances up to $10,000 by receiving at least direct deposits of at least $1,000, maintaining a minimum $5,000 balance and keeping both your Bank and Savings accounts above $0 for the month.

Automatic Savings

Chime and Varo each let you select one or both of two savings “rules” that automatically move money into your savings account. Varo’s options are slightly broader than Chime’s.

  • Chime: Save when you get paid by transferring 10% of any direct deposit of $500 or more into savings. Save when you spend by rounding up Chime debit card transactions to the nearest dollar and depositing the digital change into savings.
  • Varo: Save Your Pay lets you set a percentage of your direct deposits to automatically transfer to savings. Save Your Change rounds up every transaction from your Varo Bank account — including debit card purchases, bill payments and transfers — to the next dollar and deposits the difference into your savings account.

Convenience

Varo: B+

Chime: A-

All online-only banks are convenient relative to traditional branch banks, unless you prefer face-to-face service from bank tellers at a brick-and-mortar bank.

Each bank’s mobile app lets you manage your account 24/7, including mobile check deposit and money transfers, and live customer service agents are available if you need questions answered.

Varo and Chime accounts offer features many online banks don’t, including cash deposits via Green Dot, early paycheck access and flexible overdraft protection.

Mobile Banking

Varo App: A

Chime App: B

Chime and Varo both offer mobile banking apps that are more user-friendly and easier to navigate than what you’ll get for most traditional bank accounts. However, both are pretty simplistic, lacking the budgeting tools you’d find in a lot of mobile apps.

In both apps, you can:

  • View and manage your accounts.
  • Transfer money between savings and checking, to and from external accounts, and to other customers of the same bank.
  • Deposit checks using your smartphone camera.
  • Locate in-network ATMS.
  • Freeze your debit cards.
  • Manage overdraft protection.
  • Contact customer support (via chat or email).

Push Notifications

Both apps give you the option to stay on top of your bank account balance by receiving a push notification every time money moves in or out of your account — via deposit or withdrawal, debit card purchase, or over-the-counter or ATM cash withdrawal. Chime also sends daily account balance alerts.

Small Business Banking

Neither Varo nor Chime offer small business banking accounts or products and services.

Account Fees

Both companies tout fee-free banking that eliminates many of the costs associated with traditional banks — largely because they don’t bear the expense of running brick-and-mortar locations.

You’ll pay no maintenance fees, overdraft fees or foreign transaction fees, and you can avoid ATM fees by using in-network ATMs.

With both banks, you’ll just pay for:

Out-of-network ATM: $2.50 for using an out-of-network ATM, plus any fee the ATM owner charges.

Cash deposit: You’ll pay a retailer fee up to $5.95 to deposit cash via Green Dot.

OTC cash withdrawal: You’ll pay a retailer fee up to $5.95 for a cash withdrawal via Green Dot. Chime also charges a $2.50 fee for over-the-counter withdrawal, while Varo does not.

Varo Advance: You’ll pay between $0 and $5 to use overdraft protection with Varo, while Chime’s SpotMe overdraft protection is free.

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How They Differ: Choosing the Right Bank for You

Overall, Chime and Varo offer similar banking products that will likely appeal to the same types of banking customers — but each has slight differences that might appeal to certain customers.

Who Should Join Either Bank?

You might prefer either account over traditional banks if:

  • You prefer the easy access and mobility of online banking.
  • You regularly run your account balance close to $0 or live paycheck to paycheck.
  • You’re often paid through direct deposit — you could benefit from an early payday!
  • You’re often paid in cash but want an online bank account.
  • You want an easy way to save money automatically.
  • You want a flexible and secure way to build credit without the risk of accruing debt.

A traditional bank or credit union is probably a better fit if you want to manage your checking, savings, loans, credit cards and investment accounts all in one place.

Who Should Join Varo?

Varo is better than Chime if:

  • You want to build an emergency fund. Varo’s Save Your Pay rule lets you set aside any percentage of your paychecks you want, so you can set it above Chime’s 10% Save When You Get Paid rule to help you reach your savings goals faster.
  • You want to make the most of your savings. Varo offers six times Chime’s interest rate on savings for qualifying account holders, though the rate comes with balance requirements.
  • You live in the Mountain states. Although services in general tend to be limited in this region, Allpoint’s ATM network has a little more coverage than both MoneyPass and Visa Plus Alliance in Montana, Idaho, Wyoming, Colorado, Utah and Nevada.

Who Should Join Chime?

Chime is better than Varo if:

  • You run on a tight budget. Chime provides overdraft protection with just $500 in monthly direct deposits compared to Varo’s $1,000-deposit requirement. It covers you up to $200 compared to Varo’s $100 and doesn’t charge a fee for the service.

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FAQs

Are Chime and Varo the same?

Chime and Varo are distinct companies operating online banking apps, but they each offer similar services.

Is Varo Bank a good bank?

Varo Money is a reputable and popular banking app backed by FDIC-insured accounts through Varo Bank. The mobile bank is a good option for anyone who likes online banking and has simple banking needs that don’t require all financial services to live under one roof.

Is Varo an actual bank?

Yes, Varo Bank, N.A. received approval for a U.S. bank charter in July 2020 and is an FDIC member. Varo Bank is a wholly-owned subsidiary of the financial technology company Varo Money, Inc., which operates the Varo Money banking app.

Which bank is better: Current or Chime?

Current is an online bank account that offers many of the same features as Chime and other neo bank competitors. Current stands out for offering “savings pods,” which help you save toward specific goals, and separate accounts for teens; but it charges fees to access those unique features.

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Bottom Line

You can sign up for either Varo or Chime by downloading their mobile apps or visiting their websites.

Neither account requires a minimum opening deposit, but you can connect an external bank account to transfer money in right away or set up direct deposit to fund your account when you get paid.

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Our Bank Review Methodology

The Penny Hoarder’s editorial team considers more than 25 factors in its bank account reviews, including fees, minimum daily balance requirements, APYs, overdraft charges, ATM access, number of physical locations, customer service support access and mobile features.

To determine how we weigh each factor, The Penny Hoarder surveyed 1,500 people to find out what banking features matter most to you.

For example, we give top grades to banks that have low fees because our survey showed that this is the No. 1 thing you look for in a bank. Because more than 70% of you said you visited a physical bank branch last year, we consider the number of brick-and-mortar locations. But more than one-third of you use mobile apps for more than 75% of your banking, so digital features are also considered carefully.

Ratings are assigned across the following categories:

  • Personal checking accounts
  • Personal savings accounts
  • Small-business banking
  • Convenience
  • Mobile banking

Credit card and loan products are not currently considered.

Dana Sitar (@danasitar) has been writing and editing since 2011, covering personal finance, careers and digital media.

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Source: thepennyhoarder.com

Best Money Transfer Apps: How They Stack Up

In July 2019, Venmo surveyed 1,000 users and then partnered with an etiquette expert to help create some modern money manners.
International transfers: You can transfer money internationally, but if you’re sending money to someone outside of the United States, be aware that you’ll be subject to a different fee structure.
Sadly, that depends on the app. In some cases, you can contact customer service and they can help reverse the process. In others, you have to rely on the honesty of the wrong recipient to decline the transfer

How Money Transfer Apps Work

How it works: Facebook Pay isn’t a standalone app, but rather an enhancement to those primary social media apps, so you’ll need to set it up in each app.
To set up Facebook Pay: Pros and Cons: The fact Venmo feels like social media can be both good or bad, depending how you look at it. Others you are connected to will know who you’re conducting business with and when. For those of us who are bad at math, a function of the app will help you split bills. It is also easy to request money from people within the app.
When someone sends you money through the app, you can get access to the money by initiating a transfer to your bank account. Some apps allow you to store money with their service for easy access.
Pros and Cons: PayPal has many protections in place to keep you from losing money. If either the sender or recipient has an issue, PayPal will put a hold on the funds. There are also business accounts to pay for goods and services, but the fees are higher than for personal use.

What to Look for With Money Transfer Apps

Zelle is part of most banking apps and allows you to securely send money almost instantly between bank accounts. It works with hundreds of US banks.

  • Fees: Some apps charge a fee for paying someone by credit card or sending money internationally.
  • Transfer time: How long does it take to get your money? Some are instant, while some take some time.
  • Security: Is the transaction encrypted on both ends?
  • Limits: Some apps limit the number of transactions you can do in a set period of time. Others limit the amount of money you can send.
  • Customer service: How can you contact someone if there is a mistake with a transfer or a transfer happens that you didn’t authorize?
  • Protection: Unlike bank accounts, many balances in money transfer apps are not insured against loss or fraud.
  • Correct information: Make sure you check and double check the recipient’s information before you confirm a payment. Once you send a payment, is it often impossible to get it back unless the recipient refuses it.

How the Best Money Transfer Apps Stack Up

From our research, you don’t need dedicated international money transfer apps. One of the apps discussed in this story will work as an international money transfer service.

App Fees Speed of Transfer Best Feature Protection & Security
Zelle None for transfers between bank accounts; can also enroll debit cards tied to a bank account Almost immediate Most accommodating Uses bank’s security infrastructure, so it is as secure as your bank
PayPal New as of Aug. 2, 2021: Free for linked bank account, 2.9% for credit or debit card A few days for bank account, instant transfers cost 1.5% Most experienced Encryption, fraud protection, dispute resolution, purchase protection
Venmo New as of Aug. 2, 2021: Free for linked bank account, 3% for credit card 1-3 days for standard transfer, instant transfer for 1.5% fee Most like social media Uses PayPal security features
Cash App None for linked bank accounts, 3% for credit card A few days, instant transfers are 1.5% Most global friendly Encryption, security locks, fraud protection, account notifications
Facebook Pay Uses credit cards, debit cards, or PayPal account, does not link directly to a bank account; No fees Up to one business day Most socially connected Can create a PIN or use device’s biometric security
Google Pay No fees With debit card up to 24 hours; 3 to 4 days with bank account Most adaptable Multiple layers of security protection
Apple Pay No fees 1 to 3 days or 30 minutes with Instant Transfer linked to eligible debit card Like Google Pay, also an adaptable app Multiple layers of security protection

PayPal: Most Experienced Money Transfer App

How it works: You need an email address or a phone number to send money. The sender and recipient don’t need to be customers of the same bank; they only need to both be enrolled in Zelle.
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In today’s world of instant gratification and constant connections, what is proper money transfer etiquette?
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The best app for you might not be the best for someone else. It all depends how you plan to use them. Chances are, you’ll use different ones for different purposes.
Tiffani Sherman is a Florida-based freelance reporter with more than 25 years of experience writing about finance, health, travel and other topics.
Source: thepennyhoarder.com
Pros and Cons: It’s super-convenient to be able to send money, donate money, and buy things from whatever app you might be using and familiar with. You might want to set up extra security features just in case someone gets a hold of your accounts. Customer support is available 24/7 via chat or email.
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You can also get special offers called “cash boosts,” which can include discounts like 20% off DoorDash or 15% off Chipotle. The cash boosts change regularly, which many users say makes the app worth checking out on a regular basis.
Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Three men look at one of their phones while hanging out in a dorm.
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Venmo: Most Like Social Media Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Zelle: Most Accommodating Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Cash App (Formerly Square Cash): Most Global-Friendly Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

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Facebook Pay: Most Socially Connected Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Google Pay and Apple Pay: Most Adaptable Money Transfer Apps

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Transferring Money Internationally

As for advice from the etiquette expert, Venmo suggests:
International transfers: Facebook Pay is expanding to other countries outside of the United States.
PayPal is the grandparent of money transfer apps, as it’s been around the longest and is probably the most familiar to many people.

  • WorldRemit: People in more than 50 countries can send money to people in more than 130 countries  using a phone or computer. Many of the transfers happen instantly. Fees vary. One recent change is WorldRemit no longer accepts Google Pay.
  • Western Union: Has been around for years and works in more than 200 countries and territories.
  • OFX: Competitive rates compared to banks and has a minimum of $1,000.
  • Azimo Money Transfer: The first two transfers are free. Instant or one-hour transfers are possible to many countries.
  • Remitly: This app adds the possibility of physically delivering the money to the recipient’s home instead of just a cash pickup or depositing it into a bank account. The rates vary by country.

People can also request payments through PayPal.

Money Transfer Etiquette

All of the apps mentioned have several security features in place to keep your account numbers and personal information private. Just make sure you send money to the right person. Once you tap send, it’s sometimes difficult to get the money back.
How it works: PayPal is secure and you can send money both domestically and internationally, although fees apply for international transfers. You can also use PayPal online and not just from a phone app.
However, popular apps for international money transfers are:

  • 75% said it’s appropriate to wait 24 hours before issuing a request for payment.
  • 24 hours is the longest you should wait before paying someone.
  • 42% said the person who pays for dinner when the check comes back for the entire group should be paid immediately — before anyone leaves the table.
  • 24% said no amount is too small to ask for, even $1 to $5.

Fees: There is no fee to send or receive money through Facebook Pay.

  • Practice social awareness: When using apps that have a social component, be careful of emojis and inside jokes that could embarrass someone. You never know who might see it.
  • Respond quickly: If you can’t pay someone within 24 hours, send the person a text or email saying why you can’t pay them back.
  • Stay in contact: Don’t just ghost someone and make your friends and family track you down. It isn’t fun.
  • Discuss: If you’re going to split payments, discuss this plan before an event. Don’t surprise someone with a money request. Also, if you pick up the check and say something like “I got this,” don’t expect people to pay you back.
  • Correct mistakes: If a money request has the wrong amount, politely point out the discrepancy, and decline the transaction. Send back money if someone sends you more than you were expecting.

Like the other apps, Cash App is secure and transferring your money to your bank account is free but can take a few days. Instant cash outs will cost 1.5% with a $.25 minimum.

A man checks his phone while laying in the grass on a blanket.
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Frequently Asked Questions (FAQ)

What Is The Safest App to Transfer Money?

PayPal also offers business accounts, which can be a simple way to get paid for goods and services you provide through your job or business. Please note the fees are different for merchant accounts. Many fees for business users increase Aug. 2, 2021.

What App Transfers Money Instantly to a Bank Account?

How they work: Now they’re also handling peer-to-peer payments, which means you can send or receive money if you have the other person’s email address or phone number.

What Happens If I Send Money to the Wrong Person?

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Do I Need a Smartphone to Use Money Transfer Apps?

Money transfer apps are an easy, secure way to exchange money between friends or family. By downloading an app on your phone, or in some cases going to a web site, you can send money to people. All you need is their mobile phone number or email address.
Transferring the money from PayPal to a linked bank account is free, but can take a few days. Instant transfers are available for a 1% fee. That fee increases to 1.5% on Aug. 2, 2021. You can also have PayPal mail a paper check to you for .50.
Cash App allows you to use your money to buy stocks or convert dollars to bitcoin, but there are fees associated with these services.

4 Tips to Avoid Having an At-Fault Accident Wreck Your Finances

Think you live in a safe neighborhood? Whether it’s a result of dropping your guard in familiar territory or inevitable due to frequency, most car accidents tend to happen within just a few miles of home.

You don’t have to be near your house for an accident to hit close to home, in another sense. We all know how much a fender bender can ruin your day. But what do you do when you’re at fault in an accident that could potentially ruin your financial stability?

Don’t let down your guard when you’re on the final stretch home. And don’t leave home again without reviewing these four tips protecting your finances in case you’re ever responsible for an accident.

Tip No. 1: ‘Right-Size’ Your Auto Insurance

They essentially mean the same thing, but there’s one critical distinction between “responsibility” and “liability” when it comes to auto accidents. It’s OK if you’re responsible for a car accident, as long as there’s an insurance company that’s liable for it.

Liability insurance is as essential as wearing a seatbelt when operating an automobile, because it can help you protect your assets if you’re ever responsible for property damage or bodily harm.

You need to choose enough liability coverage to pay any damages you might incur in an at-fault accident. But if you’re paying too much for auto insurance, you might be tempted to choose a low dollar amount of liability insurance.

When’s the last time you checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

Tip No. 2: Cover Your Life, Not Just Your Car

Let’s just say it. Death, death, death — it’s an uncomfortable word to use, and it’s a topic many of us would rather skirt.

While it’s inevitable our time will come someday, there are preparations we can make now to help our loved ones cope in a world without us.

While there are exceptions, typically debt doesn’t disappear when you die.

Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school?

Life insurance can help you leave money behind for your loved ones. In many states, this money is protected from lawsuits.

So now you’re probably thinking: I don’t have the time or money for life insurance. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.

Rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

Tip No. 3: Gas Up Your Emergency Savings

It’s probably not likely you’ll want to tap your emergency savings to pay out a settlement if you’re at fault in an auto accident, unless the damages owed are minor. But being without a car, even temporarily, can be expensive. That’s where your emergency savings could help.

You’ve probably heard the best way to grow your money is to stick it in a savings account and leave it there for, well, ever. That’s bad advice, especially if you’re just trying to start an emergency fund or nurture a fledgling savings account.

Maybe you’re just looking for a place to safely stash it away — but still earn money. Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, 0.06% is nothing these days.)

But a debit card called Aspiration lets you earn up to 5% cashback and up to 16 times the average interest on the money in your account.

Not too shabby!

Enter your email address here, and link your bank account to see how much extra cash you can get with your free Aspiration account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”

Tip No. 4: Carpool Your Debt with Consolidation and Refinancing

Personal loans aren’t just for bougie people who want to update every surface in their kitchen with massive granite slabs, status seekers who really shouldn’t be buying that car on that salary or the “all gas, no brakes” types that rack up massive amounts of credit card debt.

Personal loans are just that — lines of credit offered for a wide variety of personal reasons. There aren’t many better uses for a personal loan than keeping a personal injury lawyer from turning your life into a massive estate sale.

If you need a personal loan up to $50,000, AmOne can match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.

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Source: thepennyhoarder.com

Afraid of Burnout? Here’s How to Build Up Savings Just in Case

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You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.
Think of all the times you’ve overpaid… and how much money you could have saved in your emergency fund, if someone had just told you before you swiped.

1. Figure Out Your Bare-Bones Budget and Start Saving

Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.
Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”
But you don’t need to feel guilty about it anymore. Research companies will actually pay you to go down these video rabbit holes.
Just add it to your browser for free, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

2. Start Your Burnout Emergency Savings Account in a High Yield Interest Account and Earn 16x the Average Interest

So while we hope to never experience burnout, the possibility is very real — and making sure your finances will be able to handle the lack of income is super important. Here are the best ways to give your money a buffer while you give your mind and body a chance to heal.

If you don’t have an account for your emergency burnout fund, get one. Keeping cash under your mattress or in your sock drawer isn’t very safe at all, plus it’ll get you nothing in interest — which honestly isn’t much less than an average savings account.
Using Insure.com, people have saved an average of 9 a year.
Start with your car insurance. When’s the last time you even checked car insurance prices?

3. Stop Paying Your Credit Card Company

You can get started in just a few clicks to see if you’re overpaying online.
You just have to answer honestly, and InboxDollars will continue to pay you every month. This might sound too good to be true, but it’s already paid its users more than million.
We’ve all been there. You sit down at the end of the day to unwind on your phone, and suddenly it’s two hours later, and you’re in the weird part of YouTube again. How did I even get here?
There are some bills you can cut down now, without having to sacrifice anything.
In the last year, this has saved people 0 million.
People were working harder, but with zero work/life balance or space separation and fewer ways to relax and release stress. Burnout was almost inevitable for some.

4. Get Money Back Every Time You Go Grocery Shopping

If you owe your credit card companies ,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
It takes about one minute to sign up and start getting paid for your nightly zone-out.
If you’re burned out and quit your job (or take an unpaid leave), how long will it take you to recover? The answer is: You just don’t know. But a good rule of thumb is to have enough money stashed away for six months.
Ready to stop worrying about money?

5. Earn Up to $225 For Your Burnout Preparedness Fund Just For Going Down a Rabbit Hole on Your Phone

You could add up to 5 a month to your pocket by signing up for a free account with InboxDollars. They’ll present you with short video clips to choose from every day, then ask you a few questions about them.
And if you were to quit your job as you bottomed-out mentally, your cash flow would come to a screeching halt — likely adding more stress to your already frazzled self.
But don’t panic — it’s not six months of your usual expenses. It’s six months of covering your basic needs and giving you the freedom to chill out. Think of it as your mental health emergency fund.
Capital One Shopping compensates us when you get the extension using the links provided.
Once you’ve created this essentials-only monthly budget, multiply it by six. That’s what your savings goal should be. Hopefully it will give you enough time to relax, recharge and refocus your career if you ever need it.

6. Cut Your Bills Now to Help Save For Later

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.
So how much is that? It includes your essentials — groceries, rent, medical expenses, utilities and minimum debt payments — and ditches the things you can live without. You won’t need all of your subscriptions or a line item for clothing. Your mortgage company may have forbearance options, so that’s something you can take into consideration, too.
But a website called AmOne wants to help.
You know couponing is a guaranteed way to save more money when you go grocery shopping — but it’s downright time consuming. Instead, you could just get rewarded for buying what you already shop for. No clipping required, and you’ll still be able to add more money to your emergency fund every month.
By slimming down these monthly payments, you can save more money immediately and have less to worry about if you ever need to take a break from the daily grind. A win-win.
You don’t need a perfect credit score to get a loan — and comparing your options won’t affect your score at all.  Plus, AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.
Yup. That could be 0 straight into your emergency fund just for taking a few minutes to look at your options.

7. Find Out if You’re Overpaying

A free app called Fetch Rewards will reward you with gift cards just for buying toilet paper and more than 250 other items at the grocery store.
That’s exactly what this free service does.
The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.
It takes less than a minute and just 10 questions to see what loans you qualify for — you don’t even need to enter your Social Security number. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.
Your credit card company is ripping you off with insane interest rates — some up to 36% — making you pay extra money each month that could be going to your burnout emergency savings instead.
You can download the free Fetch Rewards app here to start getting free gift cards. Over a million people already have, so they must be onto something…
Source: thepennyhoarder.com <!–

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Here’s how it works: After you’ve downloaded the app, just take a picture of your receipt showing you purchased an item from one of the brands listed in Fetch. For your efforts, you’ll earn gift cards to places like Amazon or Walmart.

Take This 7 Day Minimalism Challenge and Maximize Your Savings

Ah, the American Dream: making lots of money to buy a big house with more toilets than people living in it, then acquiring cars and lots of pretty things to look at.

But as we’ve spent more time than we ever expected in our homes with all of our stuff, we’ve found it’s not our shoe collections or hundreds of kitchen gadgets that bring us joy. It’s our connections with family and friends and creating new memories as we experience the world.

That’s why the minimalism movement has made such an impact on our lives recently. By selling and getting rid of *stuff*, we’re able to free up our cash to put into savings and investments and use it to see the people and things we care about.

So we’ve created this one-week minimalism challenge to cut the excess from our lives and maximize our money. To be able to free ourselves from physical objects weighing us down and grow our cash to be able to do the things we want.

See if you can complete the challenge in seven days!

Day 1: Cut Your Excess Bills

No, we don’t mean cancel your Netflix subscription — art is something that will continue to bring us joy, without taking up any space in our home.

But sure, if you don’t use Amazon anymore, you can cancel your Prime account (it may help you stop buying so much online), but we suggest cutting the bills that make no sense being so expensive. Like your car insurance.

When’s the last time you checked car insurance prices anyway?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

Day 2: Minimize Your Online Spending

Extreme minimalism might not be up your alley, so we challenge you to alter your spending just a little to make your money go further.

For example, when you do your necessary online shopping, make sure you have an alarm ring when you’re about to overpay and save you hundreds every year.

That’s exactly what this free service does.

Just add it to your browser for free, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.

In the last year, this has saved people $160 million.

You can get started in just a few clicks to see if you’re overpaying online.

Capital One Shopping compensates us when you get the extension using the links provided.

Day 3: Just Let it Go

One way people kick off their minimalist lifestyle is by doing a 30-day minimalism challenge. Here’s how it works: Every day for 30 days, get rid of something in your house that doesn’t bring you joy. That’s it.

Today is your day to start — and you can make money doing it.

The broken lamp you’ve been thinking about fixing your months/years? Trash it.

The hand-me-down baby toys your kid doesn’t play with? Give it away on your local Buy Nothing Facebook group.

The clothes hanging in your closet that don’t fit or aren’t your style anymore? Sell them! Here are a few easy ways to get cash for your stuff:

  • Order a clean-out bag from ThredUp and fill it with your clothes and shoes in good condition. Your mail carrier will pick it up for free and Thredup will pay you. It’s a pretty easy way to clean out your closet and make some cash.
  • List your high-ticket clothing items on a website like Poshmark. It takes more effort to create an account, market your items and mail them to buyers yourself, but you can potentially make more money than other resale options
  • Have other good condition items you want to get rid of? Sell them on eBay, Craigslist or  Facebook Marketplace to clean out your stuff locally.

Day 4: Say Goodbye to Credit Card Debt

Having credit card debt is a surefire way to minimize your savings. The interest rates your credit card company is charging you makes you feel like you’re never going to escape.

And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates — some up to 36%. But the sooner you get rid of your debt, the sooner you can start maximizing your money.

A website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

You don’t need a perfect credit score to get a loan — and comparing your options won’t affect your score at all.  Plus, AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes less than a minute and just 10 questions to see what loans you qualify for — you don’t even need to enter your Social Security number. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

Day 5: Minimize Your Family’s Worries

Speaking of debt, even if you don’t have any now — you don’t want to create any for your family later. All your hard work to adopt a financially minimalist lifestyle could be crushed.

Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.

You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.

Rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

Day 6: Maximize Your Cash Back

No matter how much you minimize your finances, you’re still going to need to spend money. It’s just a fact!

But here’s the deal: If you’re not using Aspiration’s debit card, you’re missing out on extra cash. And who doesn’t want extra cash right now?

Yep. A debit card called Aspiration gives you up to 5% back every time you swipe.

Need to buy groceries? Extra cash.

Need to fill up the tank? Bam. Even more extra cash.

You were going to buy these things anyway — why not get this extra money in the process?

Enter your email address here, and link your bank account to see how much extra cash you can get with your free Aspiration account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”

Day 7: Maximize Your Investments

Now that you’ve minimized your finances all week long, you’re able to maximize your future net worth — by owning a company.

That may sound expensive at first glance — we’re not Warren Buffet or Elon Musk — but with just a few dollars to start, it’s not totally out of reach when you use an app called Stash.

Stash lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.

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Source: thepennyhoarder.com

How to Write a Check: 6 Easy Steps to Follow in 2021

When it comes to the banking and financial world, writing checks is not a popular pastime anymore. In fact, many people under 30 — or even 40 — may not even have checks.

We live in a world where we can pay with a debit card or credit card for just about everything — and in some cases, simply swipe a phone over a payment terminal to access your cash before whooshing out the door. Sitting down every month with your checkbook to write out paper checks to pay bills? A thing of the past with automatic bill pay.

But it’s not a bad idea to have some on hand, especially when a new employer asks for a voided check to use for direct deposit information.

We don’t exactly expect a resurgence of check writing, chances are good that the time will eventually come when you need to write a check.

Maybe it will just be a monthly rent check. Maybe it will be a down payment for something exciting, like a car or a house. Maybe you’ll be feeling benevolent and want to write up some snazzy-looking birthday gifts. Maybe you shop at a small business in a small town and realize you don’t have enough cash to cover your purchase.

So we would still advise you to learn the easy and important skill of how to write a check. Many people don’t learn how until college, so don’t feel bad if you’re reading this while shielding your computer screen from passersby.

Other Things to Consider

This post also provides information on Security Tips for Writing a Check and How to Write a Check From an Online Account.

Pro Tip

Need some physical checks? Read our how to order checks guide to help get a new checkbook without excessive fees.

Here Are the Parts of a Check

What are all these lines, boxes and numbers? Stop guessing. We’ll tell you.

The graphic shows the parts of the check.
Getty Images and Chris Zuppa/The Penny Hoarder
  1. Your info: This includes your full name, address and sometimes your phone number. If this isn’t printed on the check, many vendors ask you for it at check out, so having it printed there saves you time.
  2. Check number: This is to help you keep track of the checks you write so you can check them against your monthly bank statement; the vendor doesn’t use it.
  3. Date line: This records when you wrote the check.
  4. Recipient line: For the person or business you write the check to.
  5. Payment amount box: To include the numerical amount of the check for additional clarity.
  6. Payment amount line: To spell out the amount of the check.
  7. Your bank information: Including the name and address of the financial institution.
  8. Memo line: To explain what the check is for, for your and the recipient’s reference.
  9. Signature line: For you to sign to verify you’re authorizing the check.
  10. Your bank’s routing number: This helps the computers know which institution holds your money.
  11. Your checking account number: This helps the computers know which account to pull the money from.

How to Fill out a Check: Our Step-by-Step Guide

Writing a check is easy if you know these steps.

Step 1. Write the Date in the Upper Right Corner

the graphic shows the date circled on the check
Getty Images and Chris Zuppa/The Penny Hoarder

If you want the recipient to wait until you have money in your checking account before depositing the check, you might post-date the check.

You might post-date a check if you’re paying ahead of time for a service. For example, if your rent is due on the first of the month, but you mail your check on the 15th of the previous month because you’re going on vacation, you would postdate the check for the first of the next month.

Step 2. ‘Pay to the Order of’ Means the Person or Business You’re Paying

the graphic shows the pay to the order circled on the check
Getty Images and Chris Zuppa/The Penny Hoarder

Write the name of the person, company or payee in the field labeled “Pay to the Order of.”

If you’re not sure of the correct title, organization or business name, make sure to ask before writing out the check to ensure they can deposit it. Never leave this line blank when you write a check — you risk someone taking the liberty of finishing writing that check out to themselves!

Step 3. Write the Dollar Amount You’re Paying by Check

the graphic shows the amount on the check circled.
Getty Images and Chris Zuppa/The Penny Hoarder

Write the cash amount in words on the next line directly below the payee name (including dollars and cents). You might write “twelve dollars and eighteen cents,” or “twelve dollars and 18/100” — either is fine as long as it’s clear how much you’re paying.

If your words don’t take up the whole space, draw a straight line through to the end of the field so no one else can edit what you wrote.

Pro Tip

You’re doing this in pen, right? Pencil is too easy to alter. We used to be advised to write checks in cursive, but now, writing in pen is enough to indicate legitimacy.

Step 4. Write the Same Amount in the Box on the Right Side of the Check

the graphic shows the amount circled
Getty Images and Chris Zuppa/The Penny Hoarder

Now write the numerical dollar amount of the check in the box next to the dollar sign. Noting the amount in two ways gives the person cashing it a safeguard to ensure it’s correct.

Be sure to fill the whole box so the amount can’t be altered. It’s more important to align your dollar amount all the way to the left side of the box so no one can change your $12.18 to $112.18, for example.

Step 5. Write a Memo If You Want To

the graphic shows the memo section of the check circled
Getty Images and Chris Zuppa/The Penny Hoarder

The lower left line of the check, labeled “Memo,” is for your reference and the recipient’s. It’s a way to record exactly what the money’s for.

For example, you might make a note that you purchased “Mom’s birthday present.” This is especially helpful if you write a lot of checks in a day and have a checkbook that makes carbon copies.

More likely, if you’re using checks to pay bills, the recipient might ask you to include identifying information like a billing account number.

Step 6. Sign the Bottom Right Hand Corner of the Check

the graphic shows the signature section of the check circled
Getty Images and Chris Zuppa/The Penny Hoarder

Here is where you need to sign your name. Your recipient can’t deposit the funds unless you’ve signed the completed check!

P.S. Make sure you’re keeping track of the times you make payments via check in your checkbook’s ledger, a paper register that comes with the checkbook.

This way you can keep track of your available balance and check it against your checking account to avoid any accidental overdraft fees from banks or financial institutions.

Security Tips for Writing a Check

Checks are legal tender anyone can use to make a purchase or receive cash. Treat them like a legal document, and fill out each line carefully to ensure they can’t be used if they get into the wrong hands.

Include Your Information on the Check

When you order checks, have your name, address and telephone number printed on the check. Vendors and banks tend to ask for I.D. when taking checks, so this helps protect you from identity theft if someone gets hold of your blank checkbook.

Double Check All the Information

This is the simplest and best way to ensure your check is cashed for the correct amount by the intended recipient is to fill out all the information correctly.

Double check after you’ve written the check that everything is correct:

  • Include the correct payee name for the person receiving the money.
  • Include the exact amount of the check, and make sure the written amount is the same as the numerical amount.
  • Draw a line to fill any empty space along the payment amount line, and fill the payment amount box.

Keep a Good Record

Immediately document the check amount, date and payee in your check register, so you can track it and make sure it’s cashed for the correct amount.

Don’t Write a Post-Dated Check

In many cases, you have the option to post-date your check to encourage the recipient to wait to cash it until you have the money in your account. However, this isn’t foolproof.

In some states, businesses aren’t technically allowed to accept post-dated checks, and in almost all cases, banks aren’t required to honor the future date for cashing. You might think you’re writing a check that won’t be cashed until after payday, but the bank could legally pull money out of your account before you planned — potentially risking overdraft fees or a rejected payment.

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How to Write a Check From an Online Bank Account

Knowing how to write a check is still an important skill to know… even though we’re all writing fewer checks than ever. Debit cards and online banking have all but eliminated the need for this tedious payment process.

If you have to make a payment with a check — for something like rent or an odd bill — and all you have is an online bank account that doesn’t issue checkbooks, you usually still have the ability to write checks.

Ask your bank about one of these options:

1. Order Checks From a Third Party

Tons of online businesses, and even Costco and Walmart, print checks with your personal information and bank routing and account numbers.

Check the FAQs for your online bank checking account to make sure your account information works for these services. Some don’t, and they should say that explicitly.

2. Schedule a Check to Be Sent

Even if you can’t order checks for yourself with your bank account, nearly every checking account in existence lets you schedule checks just like you make digital payments.

Log into your account through the bank’s app or website, and search for a section on “bill pay” or “mail a check.” This will give you the option to fill out the payee and amount, and schedule a date for the check to be sent. The bank will print the check with the information filled out and mail it to the payee for you.
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The 5 Best Banks for Small Businesses in 2021

There’s no one “best bank for small business,” so it’s important to take inventory of what you want and need when it comes to business banking. With that said, keep reading for our picks for the best banks for small business owners.
No matter what’s on your checklist, the options listed here should give you an idea of where to look next. If Wells Fargo and Chase were catching your eye, for instance, it might be worth comparing offerings from other big banks like Bank of America and Citibank as well. To be clear, none of these companies paid The Penny Hoarder to make the list. And a reminder: We don’t know your business finances or your cash flow like you do. The best bank for your small business is going to depend on your specific situation.
In general, it’s a good idea to look for business bank accounts that offer the following:
Navy Federal offers credit cards from Visa and Mastercard. The details:

What is a Business Bank Account, and Why Do You Need One?

You have many options when it comes to small business bank accounts. And your mileage with different banks and business checking accounts will vary depending on your wants and needs.
You can select this type of account to build cash reserves and earn interest on your money. And similarly, some banks offer more than one type of account (ranging in monthly maintenance fees) based on how much money you plan on saving and the number of transactions you make in a month.
The Spark 1.5% Cash Select card requires an Excellent credit score and offers:

Banks for Small Business Owners

Axos Business Savings requires a ,000 initial deposit. The account comes with:
There are three main ways you can borrow money for your business. We compared what banks offered across these three categories:
The Spark 2% Cash card requires an Excellent credit score and comes with:

Common Types of Business Checking and Savings Accounts

Do you want to use the same bank for your personal account, for example? Are you willing to step outside of the free checking options to earn more perks? Are you holding out for a debit card you can put your dog’s face on?

Business Checking Account

Ready to stop worrying about money?

Business Savings Account

Unlimited and free transactions (or banks that offer a reasonable limit for your needs) are also good to look for. Related, if your small business is verging into medium-sized-business territory, you might be eligible for free XYZ until you reach a certain limit. In that case, it may be worthwhile to move up to the next business checking account level to match your needs.

Business High-Yield Business Savings Account

The Business Market Rate Savings Account also includes a minimum opening deposit. The account comes with:
Most major banks offer business accounts, as well as many credit unions. You can opt to open an account with an online-only bank or solely brick-and-mortar institution, or choose one that offers a hybrid model.
Capital One offers equipment loans, business installment loans and lines of credit that start at ,000. Loan term lengths and repayment terms vary.

How We Picked the 5 Best Banks for Small Businesses

Navy Federal also offers money market accounts that begin paying dividends at ,500.

Small Business Checking and Savings Account Options

Axos also offers lines of credit and commercial loans. Both require your business to have been in operation for at least two years.
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  • A low minimum balance requirement
  • A low monthly maintenance fee (or one that can be easily waived)
  • Minimum monthly service fees (bonus for no monthly fees!)
  • Free business checking
  • A business debit card
  • Free cash deposits (at least up to a point)
  • Online banking
  • Mobile banking (an app)
  • Online bill pay
  • Payroll services

With Capital One Business Advantage Savings, you:

Small Business Lending

If that’s your speed, a credit union like Navy Federal might be right for you. These member-owned nonprofits can provide a comfort and familiarity that the big four can’t offer.

  • If you’re a qualified small business owner, you can take out SBA loans, which are backed by the Small Business Administration and, as a result, come with lower interest rates.
  • You can also secure a business term loan, which operates in the same way as a personal loan.
  • You can secure a business line of credit, which can provide you with flexibility if you’re not sure how much money you need.

Business Credit Cards

Your money will earn a high APY, but you’ll have to earn your fee waiver.
No matter how big or small your operation is, it’s strongly recommended that you open a business bank account. At a minimum, a business checking account; it’s a good way to stay organized, period. You want a place to keep track of all the money coming in and out of your business and have a clear-cut record of your finances.

The 5 Best Banks for Small Business Owners

Axos does not offer credit cards.
If that minimum opening deposit is a deterrent, you may consider the Business Interest Checking account instead. The account only requires a 0 minimum deposit and comes with:
The right bank for your business and personal finances is out there. You’ve just got to hunt it down.

A Wells Fargo bank sign.
Tina Russell/The Penny Hoarder

1. Wells Fargo: Best Overall Bank Account for Small Business Owners

Because we’re talking to SMBs about business savings and business checking accounts, we leaned into information specific to that audience. Meaning, we focused more on banking services that cater to those just starting out and whose cash flow might not be cracking six figures yet.
BlueVine is FDIC insured and its online-only structure could mean convenient mobile banking for you. If a brick-and-mortar location isn’t a top priority, add this one to your list.

Business Checking and Savings Accounts

Like with personal accounts, you have many options when it comes to choosing a business bank account. Here are the basics when it comes to business banking:

  • A $10 monthly service fee that’s waived if you maintain an average balance of $500 over the month
  • 100 free transactions before you incur a transaction fee
  • $5,000 in free cash deposits per month

Some banks, specifically larger ones, may offer a variety of business checking accounts. Depending on factors such as your daily minimum balance, the number of transactions performed in a month and the amount of services you need, you can choose a checking account to fit your needs and budget.

  • A $5 monthly fee that’s waived if your average balance is at least $300
  • 20 free deposited items each month
  • $5,000 worth of free cash deposits each month

Small Business Lending

To be clear, BlueVine is a fintech company, not an online bank (The Bancorp Bank provides banking services). While it doesn’t offer credit cards, you can get a business debit card. And BlueVine offers something you can’t find with most banks: 1.0% interest on your business checking balance up to 0,000.

  • Loan amounts range from $5,000 to $100,000
  • Terms range from one year to five years, with no scheduled annual review
  • Fixed interest rates start at 1.75%

If you’ve started your own company — or you’re considering the move — you’ve likely marveled at the logistics required to pull it off.

Business Credit Cards

There are several angles you could take to determine the best bank offers, depending on the business needs of your company. To help you choose the best banks for small business, we focused on three banking services:

  • 1.5% cash back on every $1 spent
  • A sign-up cash back bonus between $300 and $500, depending on the card you apply for
  • The Wells Fargo Business Platinum card offers 0% interest for the first nine months — after that, APRs range from Wells Fargo Prime (3.25%) plus 7.99% to 17.99%

2. Capital One: Best for Low Fees

Popular first-time small business owner (SMB) questions include:

Business Checking and Savings Accounts

Full disclosure: The perks are not going to match the big four. Membership is also not available to everyone. Only veterans, active-duty military, employees of qualified government agencies and immediate family of Navy Federal members can apply to this credit union.

  • Unlimited business transactions
  • Free cash deposits up to $5,000 each month with no fee
  • Online and mobile pay, mobile deposits and online bill pay

It will only cost you to open an Initiate Business Checking account at Wells Fargo. The account comes with:
The checking and savings offerings fall short of Capital One’s and Wells Fargo’s, and there are no credit cards. But if you’ve been in business for a few years, are looking for more substantial lending and don’t have a considerable sum of transactions each month, it’s worth a look.

  • Only need an opening deposit of $250
  • Get a promotional interest rate guarantee for the first year (0.20% APY for 12 months)
  • Can have six free withdrawals a month
  • Free Capital One ATM usage

Navy Federal’s Business Checking account comes with:

Small Business Lending

You can likely guess that the “credit cards” category landed Capital One on the list, but the checking and savings account options are worth a nod as well. If your main priority is credit cards, Chase may beat Capital One out, but if you’re looking for comprehensive service (read: better savings and checking options), read on.

Business Credit Cards

The small business checking account, Chase Business Complete Banking, comes with:
With over 4,900 brick-and-mortar locations and 13,000 ATMs across the country, the other appeal is convenience. Customer service is around the clock, and you can handle all your business banking needs in one location.

  • 1% cash back on all purchases
  • No annual fee
  • Free employee cards with spending limits

While we don’t advocate spending just to get credit rewards, there’s no reason to leave perks for your existing expenses on the table. We looked at the annual fees, interest rates and perks each bank offers with their small business credit cards.

  • 1.5% cash back on all purchases
  • A $200 cash bonus if you spend $3,000 in your first three months
  • 0% APR for the first nine months; 13.99% to 23.99% APR after that
  • No annual fee
  • Free employee cards with spending limits

The Spark 1% Classic card requires a Fair credit score and offers:

  • 2% cash back
  • $95 annual fee
  • Free employee cards with spending limits
a man and woman withdraw money from chase bank ATMs automatic teller machines.
Sharon Steinmann/The Penny Hoarder

3. Chase: Best Credit Card Offerings

With this type of account, you have an opportunity to earn higher interest rates on your money. Typically, there is a higher minimum deposit required and tighter restrictions around the number of monthly transactions allowed for this account.

Business Checking and Savings Accounts

A business bank account is where you keep your money for the company. It’s an account used specifically for the business — so, separate from your personal checking or savings accounts — where you hold your earnings, pay for related expenses (supplies, vendor services, utilities, etc.) and more.

  • A $15 monthly fee that’s waived with a minimum daily balance of $2,000
  • 100 free transactions each month
  • Same-day deposits into your Chase Business Complete Banking account for no additional fee

And if you like the idea of Navy Federal, search for credit unions in your area to compare. If your small business is location-based and caters to a local client, working with a neighborhood credit union might benefit you in other ways a bigger bank cannot.

Small Business Lending

The Axos Basic Business Checking account requires a ,000 minimum opening deposit and comes with:

  • Loan amounts start at $10,000, with varying interest rates
  • Terms range from 12 to 24 months
  • Lines of credit up to $350,000 are also available through Chase’s SBA Express

Business Credit Cards

You have lots of options when it comes to banks for small business, so do some research.
If your business can keep a reliable daily balance, Wells Fargo’s business accounts come cheap.

  • No annual fee
  • A $750 cash back bonus if you spend $7,500 in your first three months
  • A 12-month introductory period of 0% APR
  • APRs ranging from 13.24% to 19.24% after the first 12 months (the average business credit card APR is 15.37% as of June 2019, according to ValuePenguin)

Many banks offer business loans and business credit cards (more on those next) and certificate of deposit (CDs). You also want to keep an eye out for new-business-account bonuses (usually in the form of a couple hundred dollars) for owners just opening their account.
Chase’s Business Total Savings charges per month, which is waived if you maintain an average balance of ,000.

4. Axos: Best High-Yield Savings Account

Wells Fargo’s small business credit cards offer:
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Business Checking and Savings Accounts

Your needs may be more complicated, but they likely include these basic merchant services. So here’s how the best small business banks stack up.

  • No monthly maintenance fees
  • Visa debit card
  • 200 free payments and cash deposits each month — after that, you’ll pay 30 cents per transaction

Since vetting banks and business checking accounts probably isn’t how you want to spend your time when you’re self-employed, we did the leg work for you. But first, let’s cover some basics.

  • 0.81% APY — considerably higher than most accounts
  • A $10 monthly maintenance fee that’s waived if you maintain an average daily balance of $5,000
  • 50 free payments and deposits each month; after that, you’ll pay 50 cents per transaction

If you’re willing to pay an annual fee of for the Ink Business Preferred card, the perks go up from there.

  • 0.20% APY
  • $5 monthly fee if your average daily balance is below $2,500

Small Business Lending

While the Ink Business Unlimited will give you 1.5% cash back on all purchases, the Ink Business Cash earns you 5% cash back on select categories.

  • Lines of credit and commercial loans start at $250,000
  • Line of credit terms are generally one-year terms
  • Commercial loans offer three-, five- or seven-year terms

Business Credit Cards

As another “big four” bank, Chase Bank offers familiar perks: a reliable brand and enough resources to keep things convenient. Chase Bank has 4,700 branches and 16,000 ATMs across the country, and its customer service runs around the clock as well. But Chase’s credit card offerings are particularly worth noting.

5. Navy Federal Credit Union: Best Credit Union

Navy Federal offers the following small business lending options:
Capital One offers three business credit cards and includes information upfront about the credit score you need to possess to qualify for each one. Here they are at a glance:
Keeping these transactions separate is helpful come tax time. If you choose to apply for a business loan (some banks require you to have an account for a designated time period) or relief funds down the road, you’ll also need an account to share your financials and house the money.

Business Checking and Savings Accounts

There is a a month fee to maintain the account, but you can waive that by having a ,000 minimum balance for 30 or 90 days.

  • Free starter checks
  • No monthly service fee
  • Navy Federal GO BIZ™ debit card
  • 30 free non-electronic transactions — after that, you’ll be charged 25 cents per transaction

That’s right, you need a business account.

Small Business Lending

Ultimately, only you can determine the best business bank account for you and your business.

  • Secured and unsecured business loans starting at $35,000
  • Term length can match borrower needs
  • Annual fee of $325 for equity up to $100,000

Business Credit Cards

If you need financing for a business vehicle or equipment, you can apply for Business Equipment Financing as well. Details vary depending on the industry, equipment and services.

  • No annual fee or foreign transaction fees
  • You’ll earn one rewards point for every dollar you spend
  • Interest rates start 5.99% (but will fluctuate)

Honorable Mention: BlueVine

With Capital One Spark Business Basic Checking, you get the following:
Now, here are our five favorites.
You probably hear the name Chase and think of credit cards, so it’s no surprise that its offerings in this category are robust — in fact, they’re why Chase made the cut.

Pro Tip
We looked at balance requirements, (monthly) fees and transaction and deposit limits.
A barber shop owner trips a customer's hair.
Getty Images

How to Choose the Best Small Business Bank Accounts

If your personal bank offers business bank accounts, that might incentivize you to open an account with your current organization — but run the numbers first. While you may have access to the merchant services you’re accustomed to and be able to link accounts (and seamlessly transfer money from your business bank accounts to your personal checking account, for example), there may be higher transaction fees or hidden costs.
The Ink Business Unlimited and Ink Business Cash cards come with:
There are many changes when you run your own show. And when you become a business owner, your banking needs to change, too.
Wells Fargo also offers unsecured business loans for various business purposes. At a glance:
You’re a small business owner now. Maybe you don’t want to do business with a multibillion-dollar corporation.
Chase offers a variety of small business loans. Here are the details: <!–

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BlueVine’s free business checking account has no monthly fees, no monthly transaction limits and no minimum balance requirements. You can pay vendors and bills by ACH, wire or check and set up recurring payments. You can also apply for credit lines up to 0,000 with rates as low as 4.8%.

Acorns Spend Will Give You a Free $75 Just for Setting up Direct Deposit

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.
Acorns invests your money in popular ETFs, or exchange-traded funds, which are collections of hundreds or thousands of stocks and bonds. The app has a handful of different portfolios, depending on how much risk you’re willing to take on. You can even have Acorns invest a percentage of your direct deposits as soon as they land in your Spend account.
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Because the money comes out in increments of less than , you’re less likely to feel an impact in your bank account. (Although you can always turn off the digital “round-ups” for a while, if you’re in a pinch.)
That’s the idea behind Acorns Spend. It’s a checking account that’s linked to an investment account that automatically invests your digital “spare change.”
Wouldn’t it be awesome if a checking account handed you a bonus just for setting up direct deposits?

One of the Easiest Ways to Start Investing

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It costs just per month, and there are no overdraft fees or minimum balances required, plus, you can use your Acorns Spend debit card fee-free at any ATM that accepts Visa cards.
What if that account also made it super easy to invest your money and grow your wealth?
Getting started takes just minutes. Click here to enter your email address and set up your account, then set up direct deposit and be on your way to a free .
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If you’re not already investing, this is one of the easiest ways to get started. With Acorns, you don’t have to choose exactly where to invest your money. Instead, you’ll answer a few questions about your goals, and Acorns will build your investment portfolio options — which range from conservative to aggressive. If you really want to know the details, the app breaks down which types of funds make up your portfolio. If you don’t want to dive into it, you don’t have to.