4% APY credit unions

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BogleMelon
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4% APY credit unions

Post by BogleMelon » Wed Dec 12, 2018 9:26 am

Hi,
Just wanted to know what people here think of those credit unions and banks that give 4% APY and sometimes higher interest on your money in the account, but up to specific limit (i.e: simple interest not compounding). It of course comes with hoops and loops such as xx debit card transactions per month, direct deposit..etc
Does it worth it, assuming they could have worse customer service comparing to other players such as Ally?

Here is one example: https://orionfcu.com/checking/
(FWIW, 4% on the first $30,000 and you can still be qualified even not living in these areas mentioned in the website, if you donate, or asked the bank to donate to specific organization)
Last edited by BogleMelon on Wed Dec 12, 2018 9:53 am, edited 1 time in total.
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Jack FFR1846
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Re: 4% APY credit unions

Post by Jack FFR1846 » Wed Dec 12, 2018 9:36 am

Digital Credit Union pay 6.17% on the first $1k in a primary savings account. This is my primary financial institution and we have 4 accounts there (1 per family member) and keep exactly $1k in place per account. The hoop? Sorry, there isn't one.
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k3vb0t
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Re: 4% APY credit unions

Post by k3vb0t » Wed Dec 12, 2018 1:35 pm

You have to balance:
1. The hoops the credit union/bank want you to jump through to earn the higher rate
2. How long each month it will take you to complete said hoops
3. What the reward is for completing hoops
4. How many of these accounts you will need to satisfy your savings/earnings requirement

We used to have 3 accounts across 2 institutions and have trimmed down to 2 at 1. One less login, we easily meet the requirements, "meh" interest rate at this point as they can change it at any time.

discman017
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Re: 4% APY credit unions

Post by discman017 » Wed Dec 12, 2018 3:08 pm

BogleMelon wrote:
Wed Dec 12, 2018 9:26 am
Here is one example: https://orionfcu.com/checking/
(FWIW, 4% on the first $30,000 and you can still be qualified even not living in these areas mentioned in the website, if you donate, or asked the bank to donate to specific organization)
That Orion account sounds pretty interesting.

Usually when I see these high-interest accounts, it's something like this: https://www.myconsumers.org/personal/checking

5% but only up to $10,000, and lots of requirements. If you figure 2% is the going rate for savings these days, you're only getting an extra $300 for your work to meet the requirements. And that's taxable income, so your take-home pay is probably less than $20 a month.

Orion is only 4%, but because the limit is $30,000, that gives you an extra $600 over a 2% savings account. $600 just might be worth it to meet these requirements:

Electronic deposits totaling at least $500/mo (can easily automate this with scheduled transfers from and then back to another account)
Perform at least 8 signature-based card transactions

Some comments here: https://www.depositaccounts.com/banks/o ... union.html

Note the hard credit pull, and also that you can open a second account (without a second hard pull if you do it within 60 days) to double your limit to $60,000.

Jags4186
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Re: 4% APY credit unions

Post by Jags4186 » Wed Dec 12, 2018 3:22 pm

These accounts were good when savings accounts were paying nothing, but now you can get 2.5% on a regular savings account so the hassle to reward just isn’t there. Many times they require significant spending on a credit card and usually their CCs suck so your losing on that side of the ball. I try to focus on long game big wins or short game small wins. These accounts are long game small wins.

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Re: 4% APY credit unions

Post by patrick » Wed Dec 12, 2018 4:48 pm

Jags4186 wrote:
Wed Dec 12, 2018 3:22 pm
These accounts were good when savings accounts were paying nothing, but now you can get 2.5% on a regular savings account so the hassle to reward just isn’t there. Many times they require significant spending on a credit card and usually their CCs suck so your losing on that side of the ball. I try to focus on long game big wins or short game small wins. These accounts are long game small wins.
The CCU reward checking account is the only one I'd heard of requiring credit card spending. This account gives an extra $450 a year in interest over a 2.5% account.

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Re: 4% APY credit unions

Post by patrick » Wed Dec 12, 2018 4:55 pm

k3vb0t wrote:
Wed Dec 12, 2018 1:35 pm
You have to balance:
1. The hoops the credit union/bank want you to jump through to earn the higher rate
2. How long each month it will take you to complete said hoops
3. What the reward is for completing hoops
4. How many of these accounts you will need to satisfy your savings/earnings requirement

We used to have 3 accounts across 2 institutions and have trimmed down to 2 at 1. One less login, we easily meet the requirements, "meh" interest rate at this point as they can change it at any time.
I recently signed up for this account and it doesn't take much time to meet the requirements. I make at least 8 purchases a month anyway so it doesn't take much extra time at all to use the Orion card instead of another one.

The one thing that did take a while (but only once) is figuring out which account number to use for the direct deposit. Apparently you can only see the full number (which came out as 200000 prepended to the member number) by clicking "order checks" on the web site.

The biggest problem I've had using this kind of account is that they often change the rules. For instance, Northpointe Bank used to offer 5% interest on checking balances up to $10000, but earlier this year they lowered the rate all the way down to 1% which made the account useless. The Orion account is much better than the others so I presume it won't last long, but maybe I will get lucky and they will only start restricting new applications to their geographical area but leave existing accounts alone.

Tico_75
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Re: 4% APY credit unions

Post by Tico_75 » Sun Jun 09, 2019 10:58 pm

How does the Orion Federal Credit Union financial health look like? Are they investing in CDLs like shadows banking?
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Blue456
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Re: 4% APY credit unions

Post by Blue456 » Mon Jun 10, 2019 10:48 am

There are a couple of credit unions that offer 4-6% interest on savings accounts without much work.

DCU
- flat out 6% on first 1,000
Premier Member CU
- flat out 4% on first 2,000
BEU
- 6% on first 500 on savings
- 4% on first 500 on checking
St Marry's Bank
- 6% on first $500

First 2 don't have any debit card usage requirements. The last 2 requires that you transfer money between your accounts or sign up for ebills but don't require you to get credit card, use debit card for purchases like most banks require.

I personally don't touch any checking or savings account that require me to do monthly work or require monthly usage. I want money to work for me.

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Kevin M
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Re: 4% APY credit unions

Post by Kevin M » Mon Jun 10, 2019 1:12 pm

The numbers are good for the Orion RCA. As already mentioned, rates and balance caps can change, so this might not last long--or it might. Up to you if the hard credit pull is an issue.

I find making 10 small card purchases per month easy, and the monthly ACH requirement is no big deal for me. I use the RCA card only for small purchases, so as not to cut much into my minimum 2% cash-back credit card rewards. Have been using one or another RCA for years.

Mine is paying 3.33% on $25K, so this one is not enough more for me to bother switching. If I didn't have an RCA already, I'd probably give Orion a try.

Customer service shouldn't matter much, as there should rarely be a need for it, other than opening and closing the account.

Kevin
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Northern Flicker
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Re: 4% APY credit unions

Post by Northern Flicker » Mon Jun 10, 2019 1:20 pm

They are basically asking you to do a bunch of debit card transactions and refunding some of the debit card fee to you. You could instead use a cash back credit card for those transactions and get a similar benefit without having to worry about number of transactions per month, or all the other hoops, and the cash back amount is not calculated from your account balance.

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Re: 4% APY credit unions

Post by Kevin M » Mon Jun 10, 2019 1:31 pm

Northern Flicker wrote:
Mon Jun 10, 2019 1:20 pm
They are basically asking you to do a bunch of debit card transactions and refunding some of the debit card fee to you. You could instead use a cash back credit card for those transactions and get a similar benefit without having to worry about number of transactions per month, or all the other hoops, and the cash back amount is not calculated from your account balance.
The underlined part is not true at all. I earned almost $70 on $25K in my RCA for 10 card transactions totaling about $50 last month. My 2% cashback card would have earned $1 on those same purchases. Granted, there is no income tax on the CC cashback, and there is on the RCA reward, but the RCA reward still is far greater than the lost CC cashback.

You get a lot more than just "some of the debit card fee".

Kevin
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BogleMelon
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Re: 4% APY credit unions

Post by BogleMelon » Mon Jun 10, 2019 1:52 pm

Kevin M wrote:
Mon Jun 10, 2019 1:31 pm
Northern Flicker wrote:
Mon Jun 10, 2019 1:20 pm
They are basically asking you to do a bunch of debit card transactions and refunding some of the debit card fee to you. You could instead use a cash back credit card for those transactions and get a similar benefit without having to worry about number of transactions per month, or all the other hoops, and the cash back amount is not calculated from your account balance.
The underlined part is not true at all. I earned almost $70 on $25K in my RCA for 10 card transactions totaling about $50 last month. My 2% cashback card would have earned $1 on those same purchases. Granted, there is no income tax on the CC cashback, and there is on the RCA reward, but the RCA reward still is far greater than the lost CC cashback.

You get a lot more than just "some of the debit card fee".

Kevin
I think he meant to churn new cards for sign up rewards
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Re: 4% APY credit unions

Post by Broken Man 1999 » Mon Jun 10, 2019 1:58 pm

OP, only YOU can determine if jumping through the hoops are worth it to you or not. Clearly there are attractive CD rates out there.

Years ago, people had to shop round for the best CD rates, very time consuming, without info that is widely available on the 'net today. Every few months I would receive a signature card mailed to me by my father, as he searched and opened accounts for CDs here and there. I finally advised him to simply ask his favorite bank to match current rates available when one of his matured. That worked out very well.

My goal is to simplify our portfolio, something I think will be appreciated by those involved in my estate. And, I am closing in on what I want our portfolio to be when it grows up.

So, for me these CDs specials are not enticing. In fact, I'm not sure when the last time was when I bought a CD. Certainly hasn't been recently.

If you have time, and are willing to bounce around looking for yield, I see nothing wrong with that approach at all. FDIC insured, a little bit more yield, many people desire that type investment.

Make sure you don't exceed the FDIC protection ceiling.

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Re: 4% APY credit unions

Post by Kevin M » Mon Jun 10, 2019 2:33 pm

BogleMelon wrote:
Mon Jun 10, 2019 1:52 pm
Kevin M wrote:
Mon Jun 10, 2019 1:31 pm
Northern Flicker wrote:
Mon Jun 10, 2019 1:20 pm
<snip>You could instead use a cash back credit card for those transactions and get a similar benefit without having to worry about number of transactions per month, or all the other hoops, and the cash back amount is not calculated from your account balance.
The underlined part is not true at all.<snip>
I think he meant to churn new cards for sign up rewards
That's not what was said. What was said was "use a cash back credit card for those transactions". Churning new credit cards is another form of "hoops".

Kevin
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Re: 4% APY credit unions

Post by Kevin M » Mon Jun 10, 2019 2:36 pm

Broken Man 1999 wrote:
Mon Jun 10, 2019 1:58 pm
OP, only YOU can determine if jumping through the hoops are worth it to you or not. Clearly there are attractive CD rates out there.
<snip>
So, for me these CDs specials are not enticing. In fact, I'm not sure when the last time was when I bought a CD. Certainly hasn't been recently.
<snip>
The post is not about CDs, it's about reward checking accounts (RCAs). Of course you probably feel the same way about RCAs as you do about CDs.

Kevin
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Re: 4% APY credit unions

Post by Broken Man 1999 » Mon Jun 10, 2019 2:45 pm

Kevin M wrote:
Mon Jun 10, 2019 2:36 pm
Broken Man 1999 wrote:
Mon Jun 10, 2019 1:58 pm
OP, only YOU can determine if jumping through the hoops are worth it to you or not. Clearly there are attractive CD rates out there.
<snip>
So, for me these CDs specials are not enticing. In fact, I'm not sure when the last time was when I bought a CD. Certainly hasn't been recently.
<snip>
The post is not about CDs, it's about reward checking accounts (RCAs). Of course you probably feel the same way about RCAs as you do about CDs.

Kevin
Kevin M wrote:
Mon Jun 10, 2019 2:36 pm
Broken Man 1999 wrote:
Mon Jun 10, 2019 1:58 pm
OP, only YOU can determine if jumping through the hoops are worth it to you or not. Clearly there are attractive CD rates out there.
<snip>
So, for me these CDs specials are not enticing. In fact, I'm not sure when the last time was when I bought a CD. Certainly hasn't been recently.
<snip>
The post is not about CDs, it's about reward checking accounts (RCAs). Of course you probably feel the same way about RCAs as you do about CDs.

Kevin
Ah, that is what happens when you assume CDs are being discussed. But, you are right, no additional accounts for me.

Carry on!

Broken Man 1999
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Re: 4% APY credit unions

Post by Northern Flicker » Wed Jun 12, 2019 12:39 pm

Kevin M wrote:
Mon Jun 10, 2019 1:31 pm
Northern Flicker wrote:
Mon Jun 10, 2019 1:20 pm
They are basically asking you to do a bunch of debit card transactions and refunding some of the debit card fee to you. You could instead use a cash back credit card for those transactions and get a similar benefit without having to worry about number of transactions per month, or all the other hoops, and the cash back amount is not calculated from your account balance.
The underlined part is not true at all. I earned almost $70 on $25K in my RCA for 10 card transactions totaling about $50 last month. My 2% cashback card would have earned $1 on those same purchases. Granted, there is no income tax on the CC cashback, and there is on the RCA reward, but the RCA reward still is far greater than the lost CC cashback.

You get a lot more than just "some of the debit card fee".

Kevin
Yeah, I was ignoring that the CU benefit is commensurate with account balance and the CC reward is commensurate with aggregate purchase amount.

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Re: 4% APY credit unions

Post by Kevin M » Wed Jun 12, 2019 1:02 pm

Northern Flicker wrote:
Wed Jun 12, 2019 12:39 pm
Kevin M wrote:
Mon Jun 10, 2019 1:31 pm
Northern Flicker wrote:
Mon Jun 10, 2019 1:20 pm
They are basically asking you to do a bunch of debit card transactions and refunding some of the debit card fee to you. You could instead use a cash back credit card for those transactions and get a similar benefit without having to worry about number of transactions per month, or all the other hoops, and the cash back amount is not calculated from your account balance.
The underlined part is not true at all. I earned almost $70 on $25K in my RCA for 10 card transactions totaling about $50 last month. My 2% cashback card would have earned $1 on those same purchases. Granted, there is no income tax on the CC cashback, and there is on the RCA reward, but the RCA reward still is far greater than the lost CC cashback.

You get a lot more than just "some of the debit card fee".

Kevin
Yeah, I was ignoring that the CU benefit is commensurate with account balance and the CC reward is commensurate with aggregate purchase amount.
Yes, which is why the ideal strategy includes doing only small purchases with the RCA debit card, to minimize the CC cashback rewards lost. I try to keep my RCA purchases under $10, with an average of about $5 or less.

Kevin
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Re: 4% APY credit unions

Post by TheOscarGuy » Wed Jun 12, 2019 1:10 pm

BogleMelon wrote:
Wed Dec 12, 2018 9:26 am
Hi,
Just wanted to know what people here think of those credit unions and banks that give 4% APY and sometimes higher interest on your money in the account, but up to specific limit (i.e: simple interest not compounding). It of course comes with hoops and loops such as xx debit card transactions per month, direct deposit..etc
Does it worth it, assuming they could have worse customer service comparing to other players such as Ally?

Here is one example: https://orionfcu.com/checking/
(FWIW, 4% on the first $30,000 and you can still be qualified even not living in these areas mentioned in the website, if you donate, or asked the bank to donate to specific organization)
I tell myself that the amount I hold in cash does not generate that much interest to begin with. After I have paid taxes its even less. For a few hundred dollars more, I would rather have peace of mind instead knowing that the customer service/website design/interaction is much better with my current bank than these CUs. I hold my cash for emergencies in Ally, and am quite happy with their service.

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Re: 4% APY credit unions

Post by Northern Flicker » Wed Jun 12, 2019 5:07 pm

Yes, which is why the ideal strategy includes doing only small purchases with the RCA debit card, to minimize the CC cashback rewards lost. I try to keep my RCA purchases under $10, with an average of about $5 or less.
Ideal with respect to interest earned. It does take time away from potentially more meaningful life activities.

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Kevin M
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Re: 4% APY credit unions

Post by Kevin M » Wed Jun 12, 2019 7:57 pm

Northern Flicker wrote:
Wed Jun 12, 2019 5:07 pm
Yes, which is why the ideal strategy includes doing only small purchases with the RCA debit card, to minimize the CC cashback rewards lost. I try to keep my RCA purchases under $10, with an average of about $5 or less.
Ideal with respect to interest earned. It does take time away from potentially more meaningful life activities.
Not if your lifestyle includes making these purchases anyway, which ours does, so it doesn't take time away from anything.

Kevin
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Re: 4% APY credit unions

Post by Ron Ronnerson » Wed Jun 12, 2019 8:34 pm

Northern Flicker wrote:
Wed Jun 12, 2019 5:07 pm
Yes, which is why the ideal strategy includes doing only small purchases with the RCA debit card, to minimize the CC cashback rewards lost. I try to keep my RCA purchases under $10, with an average of about $5 or less.
Ideal with respect to interest earned. It does take time away from potentially more meaningful life activities.
This is a fair point. I try to approach it in a calculative way. I have an account at Orion Credit Union that is paying 4%. I'm in the 12% federal and 2% California tax bracket. So, with a total tax rate of 14%, the interest we earn is 3.44% after taxes are factored in. I keep around $30k at Orion so the interest earned after accounting for taxes is around $1k per year. It takes maybe 5 minutes to meet the requirements each month for a total of 60 minutes per year (just pulling out the right card from my wallet when buying a cup of coffee). Since I could earn a bit above 2% at Ally or a similar bank, Orion is really only making me $300-$400 a year. Still, not a bad hourly rate. I put that $300-$400 a year into retirement accounts and let it compound.

Doing this allows me to work less to meet my goals and actually ends up saving me time. This is low-hanging fruit for us. Depending on one's income and how much spare time one has, it may or may not make sense to go after these types of deals.

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