Savings Interest Rate Too Good To Be True | BeatTheBush

There are more savings accounts than stars it seems. And a class of them specializes in much higher interest rates than normal. Lets look into why that is so.

How’s it going everybody this is beat the bush today let’s talk about very high yield savings account sometimes you might run across very high yield savings account where they advertise something like 2 to 6 percent but typically really high savings that can only yield 1.05 so how come they’re able to offer so much more the deal with all these really high interest

Rate savings account is that there’s always a maximum limit at which you can qualify for this high savings rate after you reach this limit you usually drop down back to something like point o 1% which is basically nothing it’s often tempting to go and sign up for one of these but you really have to watch out for the criteria is that they require in order for you to

Get this interest rate oftentimes they would require a really large direct deposit sometimes you put money in it gets trapped in there and whenever you take it out you have to take it through a car and they’ll link a little and dime you with fees other requirements could be something like 10 or more debit card purchases per month if you don’t meet that threshold

Your savings rate also drops now another requirement is that they could have a credit card attached to the savings account where they actually require a minimum spending every month and if you don’t meet this minimum spending well you don’t get that high interest rate as well so really on the surface they advertise a really high rate however when you dig deeper

They make you do all these little things in order to qualify for it by the time you’re done with it you have like a long list of to do things every single month and to me this long list of requirements is a bit intrusive and basically it’s not really worth your time let me go through three very high savings account just to show you an example first let’s talk

About mango savings where they give you a 6% apr on up to $5,000 well at first glance that sounds pretty good because 6% of 5,000 is $300 a year if you go over just 500 well you’re not going to get much you’re going to get 0.1% on any balance over that so this account requires a direct deposit of $800 a month that’s pretty heavy and after six months you’re going

To get very close to the $5,000 limit if you never would draw from this account sending up a direct deposit is somewhat of a hassle most the time because you have to fill out all these paperwork and most the time if you have a paycheck there’s a limited number of direct deposits that you can funnel your paycheck into on top of this whenever you do a withdraw from

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Their mango card okay you actually have to pay a $2 fee there’s also a monthly fee of $3 a month which means it’s $36 a year you can see 36 out of this 300 well it’s going to start eating into this interest rate so your effective rate is already like five point four percent or risk and on top of that let’s say six months later you’re going to hit the five thousand

Dollar limit if you don’t ever would draw anything then you’re going to go oh i got this direct deposit set up somehow you need to withdraw that $800 so that you won’t go over that five thousand because once you go over it you’re not going to get much of an interest savings rate so then maybe you start using your mango card doing withdraws in cash and every time

You do that you’re going to incur some fees and after that you’re going to eat also into your interest rate that you’re going to make for $300 a year after you jump through all these hoops you might be able to get away with maybe 220 dollars worth of benefit over the course of an entire year where you have to go and shuffle around money you can quickly see they

Make you jump through all these hoops and you actually have to do it perfectly for an entire year before you can actually get just 220 dollars out mix there’s this bank called bcu they have an advertised rate of 2.5 3 percent and that other times they might advertise is 5 point 1 2 percent wow this sounds really great compared to 1.0 5 percent right but when you

Dig deeper you can see that 5 point 1 2 percent is actually for the first 750 dollars ok that’s really low if you have you know a couple thousand dollars that you want to put in you’re not going to get that after seven hundred and fifty dollars it’s going to drop to 0.05 percent which is just basically any really crappy savings account if you look how much you earn

On the $750 at the rate of five point one two percent well you’re going to get 38 dollars and 40 cents per year well you know at that rate do you really want to open it an town just to get that amount every single year i don’t know it starts to have a time cost versus benefit and the time cost is starting to weigh in a little bit because the amount that you get

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Is not that much it’s interesting to me how they somehow came up with this 2.5 3% they really just use an estimated deposit of $1,500 i have no idea why they came up with this why do they want you to put in $750 and thinks that you’re going to put in another $750 for this point well five rick so basically yeah you’re going to take this and then divide by two so

Then you get about 2.5 3% i’m thinking maybe they’re doing this to make it seem like it’s not as big because you have a 5% interest rate and the current norm is about 1.05 on the street for you know one of the best savings account around then when you have 5% people are going to be a little bit skeptical and there you’re going to go logan there’s probably something

Weird or wrong with it you’re going to make us do a lot of jump through the hoops just to get this 5% well the hoop here is that there’s a very low limit for at which you would earned a tie interest rate and from that you only get what some $38 the third and final example is the consumer credit union where they advertise a 4.5 9% on up to a deposit of $20,000 that’s

A pretty good buffer room for most people where you can store a good amount of the emergency fund in there then you can calculate oh yeah every year you can earn about 918 dollars a year in interest wow that’s really good and every month is roughly about 76 and 50 cents per month but the gotcha is in all the fine print which is pretty hard to meet let me show you

Why the first group you have to jump through is every single month you actually have to spend $1,000 on their credit cards $1,000 is a lot of money to spend and if you are spending $1,000 on their credit card it means you won’t be getting the cash back you would if you use it on other credit cards so in effect that’s an opportunity cost if you get five percent

You’re probably going to get $50 so it instead of 7650 a month you’re really going to get twenty six fifty a month if you’re able to do the five percent cashback thing the second hoop that they make you jump through is you have to use the online bank once a month if you always use their online banking that might not be a problem but sometimes you just don’t use

Their online making you forget maybe three months in you just go on to visit you don’t you didn’t logged in well just because you didn’t log in you’re not going to get this four point five nine percent they do have different tiers i think the next lower tier is like three point five nine where you have a five hundred dollar minimum spend and you know a couple of

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These requirements but the point is there’s a long list of requirements you have to meet every single one kind of like you got to do a perfection thing where you have to do all of these imperfections before you can get this four point five nine percent for that single month and you have to keep on meeting it every single month just to get that the third hoop is you

Have to do 12 debit cards users per month if you’re using your debit card you’re not using your credit card where you’re going to get cash back so that kind of takes away from using your credit card so is another opportunity cost right there the poor thing is your usual direct deposit or automatic clearing house things well setting this up is kind of difficult and

Well you should be rewarded somewhat for this as a signup bonus or whatnot and if you have to do all these it kind of mold it out so this four point five nine percent thing it’s kind of like well you got to do all this work in order to get this and by the time you factor in all these things that you’ve got to do every single month i’m not sure if it’s worth this

Amount especially with this credit card thing here the last group is of course key statements that’s probably pretty easy to do where you can just sign up for it initially when you sign up for that account so i hope this helps you evaluate any kind of new savings account that you come across you’ve got to be quite suspicious whenever it’s way over the realistic

Interest rate of about one point oh five percent don’t forget to check out my audible link down in the video description below or if you go through that link you can actually get a free audiobook and even if you cancel the free membership you can still help benefits don’t forget to give me a like over here comment down below let me know if this helps you evaluate

Some of these really high interest rate savings account that kind of looks fishy i do have a patreon link over here if you’re interested in supporting this channel and don’t forget to subscribe over here thanks for watching

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Savings Interest Rate Too Good To Be True | BeatTheBush By BeatTheBush

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