Tag Archives: digitalfinance

Addicted to Loyal3 Investing

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My investing hobby started with a few hundred dollars of fun money after maxing out my Roth to invest in individual stocks and ETFs to better understand the stock market. This same Sharebuilder account is now worth $101k and is filled with dozens of stocks and funds. Selling them will be a tax nightmare. I plan to hold them for the long run and sell during a few frugal years in early retirement so they get fairly decent capital gains tax rates.

One thing that always bugged me about my Sharebuilder investments is the trading fees. They used to have a better system where you could pay $12 for 12 auto trades per month — $1 trades weren’t bad, but even with the $1 trades you had to pay $8 or so to trade each individual stock/fund out. Now Sharebuilder got rid of the auto-investing plan and made the cheapest auto trade be about $4. That’s not so bad, but it is bad when you consider the whole premise of Sharebuilder is to build your shares slowly – by investing a little bit at a time. When you really start doing the math you realize these fees are massively cutting into your prospective earnings over time. I often wondered – isn’t there a better way?

The good news is – now there is. Loyal3 (not getting paid for this promo, I genuinely am excited about this company) makes it possible for the average everyday investor to invest directly into companies whenever they want for 100% free trade in and out. The companies are footing the bill to help everyday investors buy their stock. While generally speaking investing in index funds is the best bet, if you’re going to be a hobbyist investor and want to pick up a few individuals stocks without getting jipped on fees, now you have a great resource to do so.

So I got a little carried away tonight and purchase 6 individual stocks. They are limited in what stocks are available – but it turns out about 50% of my existing sharebuilder purchases are available. Unfortunately they don’t allow transfers in (bummer) so I’d have to sell my current shares in order to buy them again and trigger a capital gain just to consolidate my shares, not worth it. But the good news is now instead of wasting $4 per transaction on buying more shares of companies from Coca Cola to McDonalds to Apple, I can just buy however much I want to buy at whatever time and never have to worry about fees again. At least for the companies available to buy… which, granted, is limited at this time, but I bet will grow in the future.

I’m also testing the water for some new investments — I stopped adding new individual stocks to my sharebuilder account because the list was getting ridiculous and I couldn’t justify all the diversification with fees cutting away at my gains… but now diversification is easy, fun, and free. My investments aren’t showing up yet (they take 3 days to transfer in) but tonight instead of splurging on a new pair of jeans I bought some stock for $10 here, $25 there. I’m impressed.

*Note if you are new to investing I still recommend buying Vanguard Index funds!!!

 

 

 

 

Wikinvest / SigFig Teaches Me About Investing

Incredibly enough, I’ve added nearly $150k to my investment accounts across my IRAs, 401ks, and taxable accounts. While I’m still not sure if taking the “select companies” vs index fund route makes a lot of sense, I know I end up putting more money into investments when I feel like I have some control over the fate of my networth, and at the very least, an opportunity to learn more about business and how public markets work.

Of all the finance sites I use, my favorite is Wikinvest (soon to be SigFig, which I received an Alpha invite to this week.) Wikinvest is awesome because, as seen above, it offers a really easy way to track your stocks (and ETFs), including information on P/E, Rev Growth, P/S, etc. These are probably fairly basic things to look at when deciding to purchase a stock. Above, you will see the six stocks I own with the lowest P/Es (and how many shares I own of each).

It’s fun to look at how AAPL, while $493.42 a share, still has a relatively low P/E and its revenue growth was 67.6%! Now, I wish there was more data here regarding what that revenue growth represents (Qtr over Qtr? YoY?) but regardless, this data shows that AAPL stock, despite being pricey per share, may be worth a lot more than some other stocks. I’m still concerned AAPL will lose value (can it sustain such growth) but seeing that it made $3.60 per share vs say, GE’s $1.35 per share makes me feel confident in a long-term AAPL investment. As you can see, I’ve made $15k on AAPL (on paper) with just 79.94 shares.

Let’s sort by my stocks owned by P/E in the other direction. AMZN has the highest P/E — 135! Compared to AAPL, it’s Revenue Growth was only 40.6%. Even Google, which has a P/E of 20.50 (not too bad, but still higher than AAPL) only increased 29.3%. But it also has a P/S of $5.20, which is better than AAPL. This is where my knowledge lacks and I don’t fully understand the factors which make that possible, or our P/S is determined. More research on my end is required.

In a related note, I am annoyed that I have .44 shares of FTR. That happened when VZ split  with them. .44 shares is pointless, to sell them will cost $8 (more than they are worth) and they just clutter up my account. Looking at FTR, however, they seem to have a 79.7% revenue growth, I wonder if I should just purchase $100 worth of FTR shares and see if they can run up enough where I can sell the stock so it doesn’t clutter my portfolio and I don’t lose $8 on it.

In case you’re wondering, in my taxable account, here are the stocks and ETFs which have been performing best so far:

Announcing the Carnival of Female Personal Finance Bloggers!

Inspired by all you fabulous ladies out there writing about personal finance every day, I decided to start a carnival of personal finance specifically for female bloggers.

I’ll be posting the first Carnival of Female Personal Finance Bloggers in November, please submit your best blog post from October for the first edition.

Also, if you’re interested in hosting future editions, please let me know. Would love to get at least 5 people lined up for next 5 months (doing this monthly for now, could be bi-weekly if I get enough interest.)

Top 100 Female Personal Finance Bloggers 2009

Over the past few years, as a personal finance blogger, I’ve gotten to know a lot of the other main bloggers writing on the topic of personal finance. In fact, it was a random search leading me to a post on An English Major’s Money that inspired me to start blogging about finance in the first place. There have been lists compiled of the best PF bloggers, but never a good, recent one of the list of the best female personal finance bloggers. So, I decided to change that here.

(If you’re a personal finance blogger, also consider adding yourself to The Personal Finance Reader; e-mail me at hereverycentcounts@yahoo.com for details.)

***list has been edited because I accidentally included two males bloggers the first go round. So I need 2 more female personal finance bloggers to add to the list. Any suggestions? Please post as a comment and I’ll update.

TOP 100 FEMALE PERSONAL FINANCE BLOGGERS
1. Boston Gal’s Open Wallet: the ongoing chronicle of a single 30-something Bostonian
2. Mrs. Micah: Finance for a Freelance Life: a 20 something freelancer planning for grad school
3. The Digerati Life: Money and Personal Finance Blog in Silicon Valley
4. Well-Heeled With a Mission: PF Nerd, shoe aficionada, food lover…
5. HowISaveMoney.net: Tips and tricks to save money, manage credit and reduce debt
6. Krystal at Work: a journey out of debt into the sexy world of financial independence
7. Frugal for Life: Send less. Waste less. Save more.
8. Saving 4 Later: Day to day spending, saving and living.
9. Chief Family Officer: Find tips of food, finances, and fulfillment
10. Penny Foolish: the life of a girl bad with the pennies
11. My Open Wallet: An New York tells the world how much money she earns, spends and saves
12. Fabulously Broke in the City: Trying to find balance between being a Shopaholic & Saver
13. Little Miss Money Bags: a 20-something living in NYC working in publishing
14. Almost Frugal: learning about frugality
15. Beach Girl’s Budget Blog: DC-based blogger paying off law school debts
16. Brown Eyed Girl and Money: a Canadian girl working hard for her money
17. Brunette on a Budget: 27 year old writer / journalist living in DC
18. SF Money Musings: 20-something girl in San Francisco on the road to happiness
19. Blogging Away Debt: female construction worker seeking to pay of debts
20. Counting My Pennies: a blog about saving for the future and spending today
21. Dog Ate My Finances: 20-something, debt-free, married and laid off
22. Feminist Finance: Sex, Gender, Cash.
23. Frugal Babe: A rich life without a lot of money
24. The Frugal Duchess: a finance journalist with fine tastes and a small budget
25. Cents to Save: Saving money is enjoyable
26. Ginger Won’t Snap: 20-something gal on personal finance
27. Frugal Zeitgeist: Money, saving, personal finance, and being happy with what you have
28. Grad Money Matters: Filling up the holes left behind by the grad curriculum
29. Living Almost Large: a 30-something women searching for true financial freedom
30. Gluten Free Frugal: a family with gluten-free kids’s quest to pay off debt
31. Stinkykat’s PF Blog: 30-something’s journey to happy spinsterdom
32. Mrs. Nespy’s Frugal World: Georgia-based mother and engineer
33. Mapgirls’ Fiscal Challenge: Tidbits about money and finance
34. Living Off Dividends: Make your money work hard, so you don’t have to
35. Poorer than You: Money issue massage s for college students and 20-somethings
36. FruGal: A FruGal’s musings on money…
37. MoneyMate Kate: tales of a self employed therapist in NYC
38. The Frugalista Files: The frugal side of fabulous (Miami Herald)
39. Sallie’s Niece: paying back college debt
40. Stacking Pennies: 20-something L.A. gal navigating the perplexing world of PF
41. Miss Thrifty Blog: Saving money with frugal tips
42. Single Broke Female: incessant ramblings of an indebted single 20 something
44. Shopaholly: her shopping ban is finally over
45. QuarterLife Finances: just a girl in the world, taking charge of her life
46. Paranoid Asteroid: mid-20s female engineer, married, blogging about saving
47. The Baglady: a “secret baglady” 20-something managing money like she’s about to retire
48. Money Magpie: For a richer life
49. The World of Wealth: a blog about wealth-getting it, having it, and sharing it.
50. A Gai Shan Life: Continuous improvement: in life, in finances
51. One Frugal Girl: a married girl keeping things frugal
52: GRACEful retirement: single mom, aged 60, getting a late start on retirement
53. Debt Free Kid: 30 something Canadian, single mom, seeking to get rid of debt by 2010
54. Frugal Chick: misadventures in life, one cloth napkin and penny at a time
55. You Have More Than You Think: A reality check to financial freedom
56. Musings of a Midlife Mom: trying to stay free of debt and to live simply, raising 4 kids
57. 2 Nickels Making a Dollar: making money online
58. Amelia’s Health Life: Exploring intuitive eating and personal finance
59. Seattle Girl: Adventures in Life and Finance
60. Berry Makes Cents: one girl’s journey to pay off student loan debt by making money online
61. Carrie… On the Cheap: A Personal Finance Lover in Kansas City
62. Reconciling My Gross Habits: Champagne Taste meets beer budget
63. Reality Cheque: reclaiming her emaciated dreams of financial freedom
64. The Budgeting Babe: Illinois-based 29-year old PR professional
65. My Crazy Debt: Blog about life and getting out of debt
66. Don’t Mess with Taxes: Texas journalist helps explain how taxes effect you
67. Savvy Saver: Making smart money decisions
68. Common Sense with Money: Better Living Through Wiser Spending
69. CalGirlFinance: 20 something’s journey to being free from the corporate world
70. Manisha Thakor, CFA: blog of an author, speaker, and financial literary advocate
71. The Grocery Cart Challenge: feeding a family on $60 a week
72. Living on a Dime: Making the most of what you have
73. All Doors Considered: tales of a middle-aged multimillionaire
74. Ugly Debty: one girl’s journey to freedom from an evil amount of personal debt
75. Saving Veronica: A debt blog of a single 40-something
76. Debt Hater: She’s gotten out of debt, now on to her dreams
77. Money Saving Mom: Helping you be a better home economist
78. No More Spending: Getting debt free
79. Notes from the Frugal Trenches: A Downshifting Journey
80. Squawkfox: Where frugal living is sexy, delicious, and fun.
81. The Hustle of Sistah Ant: Woman in debt in her late 20s living in Philadelphia
82. Bouncing Back from Bankruptcy: Going through bankruptcy and reclaiming her life
83. Fighting Foreclosure: her goal to fight foreclosure by earning $900 more per month
84. Modern Gal: Healthy living without breaking the bank
85. Gailvazoxlade.com: The value of money is that with it you can tell anyone to go to hell.
86. Moneymonk: 34 year old Capitalist saving 30% of her gross income
87. Bargain Briana: Because bargains don’t find themselves
88. Fabulous Financials: 30 something single mom building a $MM net worth
89. Alpha Consumer: Kimberly Palmer writes about PF (from U.S. News & World Report)
90. The Grass is Greener: a mother or two that is in debt no more
91. Little Miss Fortune: Living Large on a Budget (@Glamour)
92. plonkee money: an english-er’s thoughts on personal finance
93. All About Appearances: high class, low cost.
94. The Mother Load: The MomAdvice.com blog
95. Penny Golightly: the guide to the nicer things in life for less
96. Savings not Shoes: a blog about not spending your life savings on Manolos
97. Saving to Pay Down My Home: (formerly Saving For a Home) 20-something grad student paying for a condo
98. My Frugal Freedom: a girl, a cat, a stationary RV, and a frugal dream
99. Paying Off My Future: Working a little harder now to play a little harder later
100. Girls Just Wanna Have Funds: Breaking financial ceilings one stiletto at at time

Runners Up…
(Because not everyone can make the top 100, but there are a lot of great female personal finance writers out there. These are definitely worth a read too! Next year I’m going to try to have a reader vote for the best female personal finance blogs because they’re all so good and it’s hard to rank ’em on my own.)

** Her Every Cent Counts (yes, I’m female, and I’m all about shameless self promotion)
** Mrs. Accountability @ Out of Debt Again
** Me in Millions
** Always the Planner
** Daria @ Daily Money Dish
** Jessica @ PennyWise Family
** Lucia @ Money Strands
Any others I’m missing? Please comment on this post if you are a female personal finance blogger or know of any that should be on the list. There are some older lists floating around on the Interwebs, but many are out of date and include bloggers that haven’t updated since 2007! All of the authors on this list have updated after July 2009, with most updating even more recently than that.

Watch Your Back Lending Club, Prosper is Back, at least in California

It felt like Prosper was in a quiet period longer than George Bush was in office, but the P2P lending site is now back online. I’ve invested with both Prosper and Lending Club, so I’m excited to continue my trial of both services to determine which is better.

The relaunch brings about some changes for Prosper. Most notably, the site has a new service that will help financial institutions take loans they’ve already made and resell them to Prosper investors.

Wait a minute… that kind of sounds like they’re trying to sell US their toxic assets. Hopefully they’re also offering up high-quality loans where personal lenders can get a piece of the action.

According to the Wall Street Journal, Prosper investors benefit with potentially higher interest rates on loans that have already been vetted by a financial institution, are current and have at least three months of payments that have already been made.

Still, risks are inevitable when you’re lending to who knows who, regardless of their credit score (uh, speaking of that risk, an “A” rating loan that I had going on Prosper for a while just went late 4 of My Loans on Prosper are now Late (not counting the one that already defaulted) — 3 of those 4 Loans are “A” rated and one is “B” rated — they were fine before Prosper relaunched – wonder if they hadn’t been updating defaults in their quiet period. Starting to think P2P lending is a bad idea!)

According to the WSJ, the average lender return since the company’s inception in 2006 is 2.8%, after defaults. But since March 2007, when the company starting providing more information about borrowers’ credit and employment histories, average lender returns have improved to 4.8%.

Since Prosper’s Securities and Exchange Commission registration process is still going on, it is operating under an intra-state exemption from the California Department of Corporations. That means that, for now, only California residents and businesses will be able to lend or invest in Prosper loans, although borrowers nationwide can apply for a loan. Once the company completes its registration process, other financial institutions and lenders in other states will follow, says Chris Larsen, Prosper’s chief executive.

Haven’t read anything yet about that ridiculous $100k networth (beyond your home price) to be a lender, like the rules over at Lending Club. I wonder if Prosper has added that in the fine print. I’ll let you know if I find out anything more.

Mint.com Launches Financial Fitness Feature: Interview w/ CEO

Mint launched a cool new feature today that helps you plan your financial fitness strategy. Y’all know I’ve been a fan of Mint since their private beta in 2007, and it has been exciting to see them grow over the past few years.

The new feature is brilliant from a business standpoint for them. Continuing on their money-making concept of high-profit referrals to financial accounts, the financial fitness tool suggests places to tune up your fiscal health. I hate the term win-win situation when describing product features, but if there ever was one it would be this, and all of the related features Mint rolls out.

Mint CEO Aaron Patzer took the time to chat with me via phone yesterday to show me the new feature and answer my questions.

The new feature is basically a page that offers 12 different steps to get your finances in order, and you get points and other sorts of rewards for getting closer to your goals. Game theory at its finest. For us personal finance bloggers / blog readers, the steps are not enlightening in their own right. (Check your credit report. Get cheap health insurance. Set up an emergency fund. Pay off debt.) But what is really neat about this feature is that Mint can access your bank accounts and tell you exactly what you need to do where to get financially fit.

Patzer admits this feature is designed mostly for 20-somethings who are in debt and not 30 or 40 somethings who have more complicated finances, adding that in the future they will add even more features to help people without debt look at ways to grow their networth and invest.

“The next phase of Mint is financial goals,” Patzer told me. “It’s what do I want, when do I want it? I want to retire by 50, put my kids through college, what are trade offs for all those goals, what do I have to save each month in order to achieve them. How can Mint help me find ways to save for my longer term goals?”

(I’m looking forward to that!)

I grilled Patzer a little bit on if the offers are really the best for the users (or just the ones they’d make the most profit on) and he said that they do get offers that are actually good for users — for instance, they went with Annual Credit Report which is “truely free” as opposed to FreeCreditReport.com which costs money after seven days.

With 1.1 million registered users, it looks like Mint won’t be going anywhere. While there are lots of other personal finance startups out there, their only real competitor these days seems to be Quicken Online. But that product, while similar, is really suited for a different audience… one that’s older, and that might not be so hip to the web. Plus, 40% of Mint’s users are using their recently-launched iPhone app. (That actually says a lot about the type of person who would use Mint, since the iPhone crowd, which I don’t currently belong to, is definitely a cult-like group of uber hipness.)

One interesting point Patzer noted is that their female adoption has gone up since they launched – it started out as 85% guys, 15% gals and now they’re at a 60/40 split. Count my mom in to that mix, I signed her up for Mint and am teaching her the ropes of personal finance that she needs to learn now that my dad has taken ill. It’s also nice to hear that other women are really getting empowered to take charge of their finances with the help of Mint.

“Even if you go to Quicken Online or Microsoft money, the color scheme, product design… the way it’s positioned is for 45 to 60 year old man that has a half million dollar networth and manages stocks all the time,” said Patzer. “Mint is really more about where do you spend your money, where do you cut back, and that appeals to a younger audience and to women.”

There are still some features I hope Mint adds, and some kinks that need to be worked out, but overall I’m still a fan. Will keep y’all posted on new features they roll out, as long as they keep me posted. Thanks to their PR firm for reaching out to little ‘ol me for the interview, and for Patzer to take time out of his busy schedule to chat.

Broke Piggy Teaches Teens About Money Matters

Y’all know I’m a huge supporter of teaching your kids / teens / self about personal finance early (long before you rack up huge debt), so I wanted to let you guys know about a new site launching today called BrokePiggy.com. Broke Piggy’s goal is to help teens learn “the ropes of personal finance.” Site founder Grant Baldwin is also the author of Reality Check, a book about helping students transition into the real world.

I chatted a bit with Baldwin about his site, why he put it together, and what BrokePiggy is all about. Here’s what he said…


HECC: What inspired you to launch Broke Piggy?

Balwin: As a youth speaker and author, I see firsthand the challenges facing teenagers today. By the time they graduate, students are very educated in the usual subjects but unfortunately are taught little to nothing about personal finance. You look at what is going on in the economy today, and I got to believe that some of that has to do with people who are uneducated about how to handle their money. I hope that Broke Piggy provides a place to not only educate students about money but helps them find the answers to the questions they’re asking.

HECC: What do you think is the hardest part about educating teens about finance?

Baldwin: The challenges with personal finance for teenagers are the same challenges facing adults. I think issues like personal responsibility for your finances and learning to delay gratification are two big ones. Everyone is looking for a bailout in today’s economy, but I hope to challenge students to take responsibility for their own life regardless of their situation. In addition, no matter how old you are, we all want what we want, and we want it now! We hope to teach students to do what you have to do so you can do what you want to do.

HECC: What other resources do you recommend for teens (and anyone else) to learn about personal finance? (websites, books, people, etc)

Baldwin: There is certainly no shortage of resources available for the subject of personal finance. Unfortunately, only a small number of those are directed at teenagers. I like Dave Ramsey and what he teaches. Suze Orman has some solid thoughts directed at teens and 20-somethings, although I don’t agree with all of her philosophies. And of course there are several blogs I follow on the subject. The Helpful Links section on Broke Piggy has more of my favorites.

HECC: What do you wish you knew when you were a teen that you didn’t about personal finance?

Baldwin: I’m of the mindset that there isn’t really anything I would change about my life. Because each and every moment of life (both good and bad) have helped and shape who I am today. If I had never gone $25,000+ into debt, I may never have grasped the significance of teaching students about money.

HECC: How should parents educate their kids about finance? Any tips?

Baldwin: One of the biggest things parents need to know is it’s never too late to start educating their kids about money. You don’t have to have a Masters degree in Finance to help your teens learn about money. Money is something every single one of us deal with, and we’ve all learned a thing or two about what to do and what not to do. Be honest and transparent with your teens, and teach them from your experience. Teach them how to budget, pay bills, prepare their taxes, and other “adult” stuff that they may not learn elsewhere.

HECC: Is it ever too late to learn about personal finance? What about for 20-somethings who are currently deep in debt?

Baldwin: Of course it’s never too late! Unfortunately by the time most of us figure out what we need to know about personal finance, we feel like it’s too late. We’re left wondering why no one told us this information before! Again, that’s where BrokePiggy.com is trying to bridge the gap. We all have to start somewhere and some people learn about this stuff sooner than others. Whether you’re 15, 25, or 85, you still need to know how to handle money. Start where you’re at.

HECC: What can the current state of the economy teach us about personal finance? Is the recession a good thing for youngins?

Baldwin: Our current economy can teach us that personal finance is a big deal. Sure there are banks and major companies that have a large hand in this, but much of it comes down to you and I making poor decisions about how we handle our money on a daily basis. If we handled our money better, we wouldn’t buy things when we didn’t have the money. We wouldn’t take out mortgages we couldn’t afford. We would save, invest, plan, and do things that now we realize we should have been doing all along. I think a recession is good for everyone, because it gets our attention, wakes us up, and shows us we need to pay attention to how we handle our money.

HECC: Where do you see brokepiggy.com in 1-2 years — any larger plans for the site? What are your goals?

Baldwin: To be honest, I’m not sure yet. Right now, I know students have questions about handling money, and I hope BrokePiggy.com can be the place where they can find answers. I love what I get to do as a speaker and author for teens, and I hope that BrokePiggy.com can be an extension of that work.

HECC: What’s one personal finance tip (140 characters or less, tweet style) that you’d impart if you could only give just one?

Baldwin: Avoid debt…live on less than you make…use a budget…START NOW!

HECC: Where are you at, personally, regarding finance. Do you have any goals / regrets lately with your own personal finance journey?

Baldwin: It was just a few years ago that my wife and I had accumulated $25,000 worth of debt in various forms. It took us two years of hard work and sacrifice, but we were able to pay off every dime of that debt. That experience taught us a lot and helped shape who we are. I do have several goals for my personal finances as well as my business as a speaker. So far, 2009 has been a great year!

The Personal Finance Reader…

Hey Her Every Cent Count readers… I just wanted to let you all know that I recently purchased the domain name ” www.PersonalFinanceReader.com ” – my personal finance blog reader will be moving there shortly (not hereverycentcounts.com – this is the blog that you can find by clicking “PFBlogs” in the tab at the top-right of this page.

Thanks to all of you who requested to be added to the feed. The idea of it is that you can find the latest posts from your favorite (and the best) personal finance bloggers, or just get a quick summary of all the posts written that day and decide which ones to read.

I use this to keep track of my favorite PF blogs. There was a little bug with blogger that removed the blogs I had on the page when I purchased a domain name for the blog, so I apologize if I added you and now you’re missing again. I’ll be fixing that asap.

I’m still open to adding blogs, so if you didn’t leave me a note in my last post and want to be added, just leave a comment with your blog link. As long as you’re not a spammer and you have a good personal finance blog, I’ll add it. 🙂

Do you want to be included in The Personal Finance Reader?

If you haven’t seen, I added a link to my “Personal Finance Reader” up top (yup, up there, to your left right (i am so dyslexic)) a while back. This is basically an updated blogroll including my favorite personal finance blogs.

If you want to be included in the list (which will update with a link to your blog whenever you update your blog), leave a comment here or e-mail me at hereverycentcounts@yahoo.com

Want to keep up to date on the best of the personal finance blogosphere?

Bookmark:
http://personalfinancereader.blogspot.com/

***Please leave your blog address in your comment so I can add it.***

6.01% APY on your Checking Account! Wait, it is too good to be true.

So… this seemed too good to be true. I just found out, it is. The offer is only available for people who live in the bank’s county in Illinois. So much for 6% APY. There’s nothing like that around here!

———-
I was listening to my favorite talk radio program – The Ray Lucia Show – yesterday, and a guy called in to ask about a 5% APY checking account he saw advertised on the Internet. He wanted to know if it’s legit.

Since I haven’t seen any set APY rates of 5% since three years ago, when I saw those rates on a CD, I was intrigued. The “Brain Trust” team at the radio station did a little research and found out that, indeed, this offer was through an FDIC insured bank and it was legit. Of course there was a catch – you have to 1, have direct deposit and 2, use your debit card at least 10 times per month/billing cycle.

That left me with the question – what happens if you don’t. So I did some research online and found that many smaller banks are offering up these high interest checking accounts to lure in new customers. Smart for them.

I just opened a 6.01% APY (!!!) checking account with First Robinson Savings Bank. Read through the fine print, and so far it seems pretty straight forward. The rewards are only on cash under $25,000 — but that’s ok, I’m not ready to save more than $25,000 in a checking account anyway. You do need direct deposit (I’ll have to get my work account to switch over from my Bank of America – thank goodness I’m now a full time employee!), and you do need to make 10 transactions a month (I could buy gum ten times and that’d be fine.)

Some other banks are offering similar rates, more in the 5% range…

Union State Bank is offering 5.01% APY with similar rules and AmericaNet is offering 5.25% APY.

I’ll admit, I’m a little nervous opening up a bank account at a small bank in some random Midwestern state (not that I have anything against the midwest!) but these rates might not be too good to be true, just too good to pass up.

Given that my Chase Freedom card rewards are about $20 a month, on month’s I spend a lot, I figure I could probably make a similar amount in this checking account and not risk forgetting to pay my bills on time and getting hit with late fees.

From the fine print, it looks like if you fail to make your 10 transactions per month you just get only .25% apy for that month – so basically, you don’t get any interest. But you can start over the next month.

Considering I barely ever use cash, my debit cards always get a lot of action. This sounds like a good way to earn at a good rate while also starting to exit Bank of America. Right now I have a checking account, savings account, and CD at BoA. If this 6.01% rate turns out to be legit, I’ll move my CD over there once it expires, and possibly move the cash I’ve been saving at ING there too — since it’s only earning like, 2%.

Have any of you opened up / used one of these high interest checking accounts before? Any horror stories I or my readers should be aware of?