1.55% Return: Stop letting the big banks fleece your savings account

1.55% Return: Stop letting the big banks fleece your savings account

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Every so often I switch savings accounts because I’m forever chasing the highest yielding savings account. Why let the big bangs fleece your return from you?

There was a time where I didn’t know what the interest was on my savings account. I was in college and just opened a bank account because I had moved and my local credit union didn’t exist at the college I was at. Funny enough, the big bank I signed up with had a higher interest than my local credit union back home. I thought I was getting a good deal. Oops?

The first savings account I ever got in college was from a very large bank that everyone has probably heard of. I won’t name them here but my interest was something like .1 percent. Yes, it was laughable. I never got back more than a few dollars in a year.

7 years ago starting college I had to open my account in person. However, in the passing years, a ton of online banks have come out that are only online and I can open my account online in less than 5 minutes. That’s perfectly fine with me, because I basically never go to a bank in-person anyway.

FYI, the online banks offer you a MUCH BETTER return on your money, and they usually have better tech. I went with CIT Bank, since it was the highest return I could find at 1.55%, with a low $100 minimum. There are no monthly fees and generally good reviews no the UI and usability of the product. 

Other banks with high-yielding, but slightly lower rates than CIT’s 1.55%:

  • Barclays – 1.5%
  • GS – 1.5%
  • Ally – 1.45%
  • Amex – 1.45%
  • Discover – 1.45%

Notice how every one of these banks doesn’t have a physical branch in the US? Digital banks are the new wave of banks. Brick and mortar banks will never be the same. It’s because of rent, in-branch employees, capex, etc which all cost money. That’s why you get your puny .1% interest. I’ll sit here with my 1.55% interest happily even if it means I can’t go to a branch.

The pros:

  • Only $100 minimum to open
  • 1.55% yield, 26x the nationwide average on savings accounts
  • No fees
  • All-online
  • Open your account in less than 5 minutes

Cons

  • No physical branches
  • No ATM cards
  • CIT does not offer checking accounts

Opening the Account

To open the account, click here.

Choose the savings account, which they call a “Premier HYSA”. Your account will yield 1.55% with just a $100 minimum. In your face, bank-who-must-not-be-named who only paid me .1%, I’m now getting 1.55%!

After answering all the normal like your name, address, number, etc, you’ll get to a page where you need to answer 4 security questions that only you would know. You have 60 seconds for each question.

After this, you go through a few disclaimers and legal documents before you fund your account. I made mine via electronic transfer, which means you transfer directly from another bank account you have at another bank. While the screenshot says it will be subject to a 5-day hold, mine was available in 12 hours after I verified my micro transfers.

They even prompt you to add a beneficiary! Wow. Earlier this year I had to go and add beneficiaries to all of my accounts because no one had ever asked me to put down beneficiary information.

I’ve never had a financial institution make my make a username with numbers AND letters. It shows me they take their security seriously.

 

The first time you sign in, you’re also going to get a phone call to your cell phone and need to enter a 5 digit numerical code they provide. I like the 2 factor authentication they provide.

Security

The bank is FDIC insured up to $250k for yourself and $500k for you and your partner if you’re married. Most people simply have 3-6 months of expenses in their emergency fund though. Set up your emergency fund properly and invest the rest for financial independence at your earliest.

CIT Bank does the standard 2 micro deposits and you verify them so that CIT knows you control the accounts you linked.

There’s an encrypted app so you can track your account on mobile.

Psychological Effect

There’s no savings account ATM debit card with the account, so you’d need to initiate a transfer if you need to withdraw money. You also cannot open a checking account with them, which is fine because this way I can’t be tempted to use money from my savings account. With most banks, it’s pretty damn easy and tempting to move money from your savings to checking when you need it. C’mon, we’ve all done it.

NOTE: You SHOULD NOT be dipping into your savings account/emergency fund unless it is an actual EMERGENCY. It’s there for security and peace of mind in case something catastrophic happens, not because you don’t have enough money for a coffee or pair of shoes that day.

If you’re ok with not having a debit card, not being able to have a checking account with CIT bank, and not having a brick-and-mortar branch for your savings account, take a look at CIT bank. Only $100 to open, 1.55% yield, and can be done all online.


*A bank called UnitedBank offered 1.61% but according to some reviews, jerked the return up and down randomly. Another one was Colorado Federal who offered 1.65% but required a $50k min.

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Author: Olivia

Olivia worked in finance and wants you to learn the secrets of financial independence. She’s on track to reach financial independence before 30, and she wants to teach you how you can retire in less than a decade as well.

She thinks everyone needs an emergency savings fund and uses CIT Bank . They have the highest yielding rate at 1.55% and only require a minimum of $100. No monthly fees or charges like other big banks!

Her favorite free investment plan is from Ellevest. Go to Ellvest and click “Get Started” to get yours.

Her favorite personal finance tool is Personal Capital, which allows her to track her spending, historical net worth, and monitor her credit cards. It’s an upgraded version of Mint, in her opinon.

14 thoughts on “1.55% Return: Stop letting the big banks fleece your savings account

  1. We now keep our emergency fund in CDs. Marcus by Goldman Sachs. We split it into smaller amounts and opened multiple CDs. Did everything online. If we need the money, we can just cancel some of them. We get 2.5% interest. And cancellation penalty is 9 months worth of interest. It works for us.

      1. Didn’t calculate. For us, it is very unlikely that we will actually need that money. One of our salaries is more than enough for us. And if one of us loses our job, we will probably stop investing and paying extra towards our mortgage. And we will ofcourse cut our costs a lot. So a month or two of lag between both of us loosing our jobs will help us have a buffer of another two months of living costs. We should be okay.

        1. Ah, very interesting. I guess it is true. As you make more money/have skilled work, it might make sense to have a smaller/riskier emergency savings account. I get it :).

  2. Nice post! I’ve been looking into switching to the online banks as well for the higher rates but had a few questions.

    Do you know if you could open multiple savings accounts if you wanted to track money separately?

    Also, do you still have a checking account at one of the big banks so you can withdraw/deposit money easily if needed?

    1. Doooo it! What’s your current yield?

      I don’t see an option to do that with CIT, but I just sent them a message to ask. Will let you know their response!

      Yes, my checking account is still with my big bank since that’s where my direct deposit is set up. I don’t think I’ve ever withdrawn/deposited cash because I just don’t use it. I try and avoid cash only restaurants (sadly sometimes I miss out on delish Chinatown). Usually just use Venmo to split payments with friends/family. Occasionally I’ll get a check and just scan it with my phone into the checking account.

      1. Yes let me know!

        I’m with the big banks and the yield on my savings is something laughable like .1% or something less. I used it out of convenience when I was moving around but no more!

        I rarely use cash too and deposit cash maybe 1-2 times a year, but it’s nice having the peace of mind that it’s accessible if I ever need it in an emergency

        1. I just tried this for fun lol. You can create 2 savings accounts, you just go through the link twice. The account didn’t show up immediately in the interface though – I did it yesterday in the afternoon for fun, and I just checked my account now and there are 2 savings accounts.

          I did have to make a deposit to the second account, so I think you need $100 min for each savings account you open. Hope it helps :)!

          Exactly! The big banks were convenient but no more! I still use a big bank checking account because it’s free with direct deposit even though I don’t really leave money in there (transferred to brokerage/retirement accounts). In the extreme case I need cash there’s still a place to go. Don’t move your checking account to an online bank, just your savings.

    1. Angela! You’re a PF blogger! You have to be optimizing all your money! Cross it off the list lol. Yeah, I know, I put it off for a while as well but eventually made it a quarterly thing to look for the best rate due to the Fed hikes in the past year. But CIT has raised their rates in tandem with the Fed hikes for the past few quarters so I don’t really worry about finding a better one now. I kinda trust them to raise it when the hikes come.

    1. They do have great service! I’ve used them prior. But they had a lower rate even if you deposited $25k it was still only 1.5%. For the $5k level I think it was 1.25% and below that was 1.15%. That’s why I switched haha. For the higher rate :).

  3. I have a capital one 360 account and I think that’s around 1.4% these days. I’ve recently had some issues with my online account access that’s taking forever to iron out so I may be looking for a new bank soon enough.

    1. Interesting, what kind of issues (if permissible to say?)? Just curious where a bank can go wrong there. Well, give it a try, it’s a $100 min so not the worst thing to try. I’ve also tried GS and was surprised by the lack of UI intuitiveness for a bank that is prided on so much tech. Amex + Barclays I’ve heard good things about with the service.

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