With the oil spill disaster in the Gulf continuing to wreak havoc to our environment and the livelihoods of so many Americans, I continue to get visceral reactions to the images of this catastrophe that are reported by the media. So how have you been reacting to pictures of dirty beaches, toxic brown sludge [...]
Looking to save money on your kids birthday party? Yesterday my co-worker was bemoaning the cost of his girl’s birthday party, apparently his wife went a little overboard and could have used a few tips on cheap party ideas, so I decided to share a few from the recent Star Wars birthday we put on [...]
When I asked Are CDs Obsolete? I mentioned that SmartyPig was an alternative to CDs.
As you recall, when I wrote about my experiences with SmartyPig, I found it easy to use, and its interest rate to be downright irresistible. At the time, the only thing I hadn’t done was actually meet one of my savings goals and withdraw my funds.
I had been saving up for a trip to a wedding, setting my goal of $600 to be reached on May 5. Based on my start date and a twice-monthly withdrawal (to correspond to my paychecks on the 15th and 30th of each month), SmartyPig calculated a twice-monthly contribution of $68.45.
Smarty Pig did withdraw my contributions as scheduled, and accrued interest at the stated rate. But as of April 30, which was my last scheduled contribution before the target date, my account for this goal was actually about $2.00 short of the $600 target. I could have stopped the goal and withdrawn the balance, but chose to wait and see what would happen. This small shortage didn’t really affect me as I already planned to pay for my trip on my credit card (earning rewards points) and use my SmartyPig savings to pay off the bill a few weeks later. But if you are someone who keeps a REALLY tight budget, or the calculation is off by more than a few dollars, you could find yourself in a bit of a pickle if you were planning to withdraw the funds to make an immediate purchase.
On the next regularly-scheduled contribution date (roughly 10 days after my initial target date), SmartyPig initiated another withdrawal from my checking account. I assumed this would be in the amount of the $2.00 and change needed to reach my goal, and was surprised when SmartyPig actually withdrew the entire $68.45, thus putting my total account balance well over my original target. This isn’t necessarily a bad thing (saving more than planned is never bad), just unexpected. Again, if I hadn’t had the cushion in my checking account I could have found myself facing one unpleasant overdraft fee.
Once the final transaction showed up in my SmartyPig account, I received an email telling me my goal had been reached. I logged into my account and clicked “Stop Goal” only to find that I have to wait 4 business days after the final transaction posted to make a withdrawal. This amounts to 7 business days and 9-11 calendar days after the last transaction was initiated, due to the standard ACH wait time. This was another surprise, and again something that could derail someone counting on a specific amount of cash at a specific time. Because SmartyPig only lets you withdraw the entire amount of your goal, this delay meant ALL of my cash was inaccessible, not just the amount of the last transaction.
When my wait time was over, I finally was able to withdraw my funds. I once again clicked “Stop Goal” and was informed that I could split my savings between gift cards to partner retailers (with a bonus), a SmartyPig debit card, and an ACH transfer to my own checking account. I had to press a button to continue. I was then asked if I wanted to put any amount on a retailer gift card. Say No, and you are directed to a new screen. Say yes, and you choose the retailer(s) and amount(s) of your gift card(s), then continue to the next screen. You then go through the same routine on a screen asking about a SmartyPig debit card – do you want one, and if so for how much. The next screen has you select a bank account so that you can transfer any remaining funds in your account. One last screen has you review the options before confirming your selections. I felt the multiple screens were unnecessary – I just as easily could have seen all the options on one screen and entered the appropriate amounts (or 0) for each.
As always, ACH transfers back to your bank account will take 3 business days to post. The gift cards and/or debit cards must be mailed so there will also be a small delay in receiving funds using those methods.
If you do not want to withdraw your whole account balance, you will first have to set up a new goal and transfer the amount you want to keep with SmartyPig, as SmartyPig requires you to withdraw your whole balance. Remember that you can have multiple goals within one account – you don’t have to withdraw all the money in your account, just the amount in the goal you are trying to close.
To be safe, you should set your goal to end well before your actual target date for reaching it – you should allow for one extra contribution before the date you would actually need to withdraw your money. You need a little cushion to make sure you reach your goal, time for the final transaction to post, and then time to get the money out, regardless of the withdrawal method you choose.
Knowing more about how the final postings and withdrawals work, I would be less inclined to recommend SmartyPig for an emergency fund or “just because” savings as you won’t be able to access any of the amount if there happens to be a contribution in progress. As long as you plan for these contingencies, I still recommend SmartyPig as an excellent way to save for targeted goals with specific end dates in mind – just make sure you give yourself a little time cushion if the exact amount is vital to your financial stability!
Written by Jill
Click here to leave a comment on this article.
© My Dollar Plan
Get cash back every time you shop with Mr. Rebates. Sign up now and get a $5 registration bonus!
This past week, I received an e-mail from my employer’s Human Resources department. After years of staying away from them, my company’s 401(k) plan will now give us the option to take a loan from our retirement savings account. It doesn’t really come as a surprise as seemingly all 401(k) plans nowadays are offering personal [...]
Original Post on The Sun’s Financial Diary
Special bonus offers
Welcome to the Million Dollar Journey June 2010 Net Worth Update
With summer underway, it’s the time of year where vacations are plenty and things slow down a bit in online world. Trading volumes decrease, markets slow down, and blog followers are busy enjoying the sunshine. On the same note, my net worth increases continue to be slow, [...]
The current era of historically low interest rates has been great for borrowers, but it stinks for those who’d rather save their money. I was fortunate to find a local bank that offered a money market account at 2.25% last year, but after a couple extensions, I received notice that “bonus rate” was expiring at [...]
Post by Frugal Dad
If you are desperate for some quick cash and you want to find some ways of making money this coming weekend, the best bet is to focus on a yard sale. Provided you have the time to clear out your closets and find a load of stuff to sell, you could have a lot [...]
I receive a number of emails each week from readers and I try to answer all of them the best I can, but occasionally I get questions from multiple people that ask the same thing. In those situations I like to address the question as a post which can hopefully help others who probably have [...]
About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.
Reader Question: I’ve Lost a Lot of Money in the Market. Should I Get Out?
We all know that long term CDs have higher rates than short term CDs… or so we thought. A unique Ally Bank CD set of rules actually lets us take advantage of the higher rates with a shorter term.
Are CDs Obsolete? That’s the question we’re discussing this week. As CD rates remain low, we’re always on the lookout for alternatives.
I eliminated my CD ladders awhile ago due to the interest rates, but my kids still have CDs that are renewing at ultra low rates, so I’m interested in finding a better CD product for their money.
One of the Ally Bank CD strategies that is gaining momentum is to purchase a 5 year CD with plans to pay the two month interest penalty when you access the money, making it financially a better option than short term CDs.
Ally Bank opened the door for this option when they made a standard 6 month interest penalty only 2 months on their CDs.
The 5 year APY is 2.95%. The 1 year APY is 1.49%. The fee to withdraw your CD before maturity is 60 days’ interest.
If at the end of one year, you break your CD, here’s what it might look like if you invested $5,000:
Finding a 1 year CD that pays 2.46% is next to impossible, so it’s a no brainer in my mind.
This example ignores that interest is compounded daily. But it’s a strategy that’s makes the 1 year CDs unnecessary if you want to earn the highest rate.
What if interest rates go up and you don’t want to lock in at such low rates? With the Ally Bank CD, you can break your CD, pay the penalty, and open a new CD at higher rates.
I had my mom open a Ally Bank CD this week, with the intention of keeping the money in the CD for 1-2 years. She reported that it only took a few minutes to open. I’ll be opening mine soon, as soon as each of the old CDs matures.
Have you looked into the Ally Bank CDs? Are you planning to use the penalty feature to get higher rates?
Written by Madison
Click here to leave a comment on this article.
© My Dollar Plan
Get cash back every time you shop with Mr. Rebates. Sign up now and get a $5 registration bonus!
This is an article by regular columnist Clark. Although perhaps a bit off topic, it’s very relevant to readers.
With the use of the Internet for many tasks these days, a primer on securing your web experience would not be out of place. Please note that this article deals only with web browsing security and [...]
It can be difficult to discover careers in an unstable economy, but without the power of the internet, job searching can become even more difficult. Some job sites can help: these five job search websites make the process easier for the unemployed or underemployed – or even someone simply looking for a better opportunity. 1) [...]
5 Best Websites for Job Seekers is an original article from the website brip blap.
I started bracing for the gas price increase that was most assuredly coming after the oil spill disaster in the Gulf many weeks back. But as I stopped at the gas pump just this morning, I noticed something very odd. Gas prices seem to be holding up pretty well; in fact it was [...]
I’m going to blatantly steal Peter King’s shtick today. The difference is that I make no bones about thinking at least 30% less often than him, so you only get 7 things – not 10 things.
I think that, speaking of Peter King, I’ll be very happy when the World Cup is over and he [...]
Related posts:
Utilities are a part of life for almost everyone. Whether you own or rent, you’re responsible for paying for utilities such as electricity, gas, water, sewer, etc. Granted, renters occasionally find leases where some or all utilities are included, but ultimately you’re still paying for them as they are tied into the monthly rent. For [...]
About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.
Whenever I can help the environment and my bottom line, I consider it a win-win. When I can do both of those as well as make my life easier, well, that’s a hands-down homerun! Thankfully, there’s a plethora of ways to do just that when it comes to keeping the house sparkling clean. Another benefit? [...]
Original Post on The Sun’s Financial Diary
Special bonus offers
Once upon a time, Certificates of Deposit (CDs) were a great way to put away money for a fixed period of time. A CD ladder could help you get the overall best interest rate by locking in funds for longer amounts of time while still giving you access to portions of your cash every month or year. I used to use CDs as a way of earning a higher interest rate than I could earn on the money sitting in my savings accounts. But as interest rates have dropped, CD rates have plummeted as well. The last two times I’ve had a CD mature, I’ve simply left the funds in an online savings account.
INGDirect is perhaps the best known online savings bank. It boasts an interest rate of 1.10% for its high-yield savings account. Contrast this with CDs – for the “privilege” of locking your money away for 6 or 9 months, ING will pay you .75% – a whopping .35% less than keeping your money completely liquid and accessible! 12- and 18-month term CDs pay 1%, while 24- and 30-month CDs earn you the same 1.10% as the savings account. The only way to get a higher rate is to choose a 36-month CD, earning a rate of 1.25%. But of course, interest rates will almost certainly be higher by then and you’ll have lost out on the opportunity for more interest in either a CD with better terms or a higher-yielding savings account.
Our CD rate tracker paints a similar picture – the highest rate you can get for a 1-year CD is 1.55%, and many banks are paying less. Compare this with SmartyPig, where you can earn 2.15% if your account is worth less than $50,000, and you may start to question, as I did, whether CDs make sense in the current economic environment.
Only 5-year CDs are paying a truly desirable rate of up to 2.99% at Ally Bank. Again, to earn this rate you must be willing to lock your funds away until 2015, paying a penalty if you decide to take them out earlier, and missing out on any interest rate increases in the meantime.
CDs still make sense for people who need a more disciplined approach to saving money – if you honestly have a hard time leaving your savings account untouched, locking up the funds in a CD is a good way to limit the temptation.
CDs may also make sense if you believe interest rates will fall – locking in a higher rate now will give you a better long-term return.
The average saver/investor probably won’t find it beneficial to lock your money into a CD at today’s low rates. Instead, consider keeping savings and the cash portion of your investing portfolio in savings bonds or at a bank like SmartyPig (currently paying 2.15%) or Sallie Mae (currently paying 1.40%).
What do you think – will you continue to buy CDs in the current interest rate environment? Tell us why or why not in the comments!
Written by Jill
Click here to leave a comment on this article.
© My Dollar Plan
Get cash back every time you shop with Mr. Rebates. Sign up now and get a $5 registration bonus!
Monday’s can be tough because you have to get back into the work routine after the weekend. Many people don’t look forward to Mondays because it means you have a whole work week ahead of you. Although Monday mornings can be toughh, you can also look at Mondays as a fresh start, a chance to [...]
With all the news these days about the oil spill, one has to wonder if BP will find a way out of the hole that they dug themselves into. It’ s difficult to estimate what the total cost of the spill will turn out as no one really knows how bad it will be when [...]
For some, the idea of walking away from a mortgage presents quite a moral dilemma. Others feel duty-bound to fulfill their contractual obligation to continue making payments to the lender, regardless of how much (or how little) their home is worth.
Personally, I believe if one has the ability to pay their debts, any debt, they [...]
Post by Frugal Dad
New investor here. I wanted to use this place as a platform for boosting my investment education. It’s no secret that I’m pretty green when it comes to the world of investments, but I’m making some progress. Or at least I thought I was until I started digging into mutual funds. I thought [...]
King Henry V: Once more unto the breach, dear friends, once more; Or close the wall up with our English dead. In peace there’s nothing so becomes a man As modest stillness and humility: But when the blast of war blows in our ears, Then imitate the action of the tiger; Stiffen the sinews, summon [...]
once more into the breach, and links is an original article from the website brip blap.
“Would you like to save 10% on your next purchase?”
How many times have I heard those words come from the nice lady at the register? My not so fond memories used to stem from the mall where the high end department stores wouldn’t let you go until you listened to their sales pitch. [...]
If you’ve blogging long enough, and you make any kind of significant money, you most likely know two people… John Chow and Shoemoney. Each of them make very, very good incomes essentially telling people how they make incomes. One of my friends would call it a lot of chest-thumping because often the tips [...]
Related posts:
If you live in the Midwest you can probably relate. Since about last Friday we’ve seen round after round of severe weather. Tornadoes, 90 mph straight line winds, and large hail. Of course, just one storm wasn’t enough. Instead, we had to get hammered with an incredible storm last Friday evening only to get hit [...]
About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.
SWe all know that Bank of America has a broker unit which also offers commission-free equity trades. However, to qualify for the 30 free trades per month, you will have to have at least $25,000 combined assets in deposit accounts with BofA. Though the dollar amount required for free trades is the same as Zecco [...]
Original Post on The Sun’s Financial Diary
Special bonus offers
Merrill Edge: Latest Discount Broker for Free Equity and ETF Trades
