- So in this video today we're going to be talking about
the best place to put your short term
or emergency fund savings.
So a lot of people out there,
including myself,
have a decent amount of cash saved up
that you don't necessarily want to
go out there and invest in the stock market
or real estate because this is money
that you wanna have set aside
in case of an emergency,
or just to have a rainy day fund.
Now most people, unfortunately, even if they do have
their rainy day fund,
they place this in a traditional bank savings account,
which typically pays around 0.05% interest.
And as we know inflation sits
at around two percent per year,
and as a result they are losing money
every single year because of inflation.
Now there are a couple of different online savings accounts
that are able to offer significantly better rates,
primarily because they don't
have any physical branch locations,
which saves a huge amount of money.
Now in the past Ally Bank
was like the go to bank for online savings.
But then in June of this year
they had a very surprising announcement,
and it was one of the first times
that they had a rate change towards the negative.
So they were paying an APY of 2.2%.
However, then in June of this year
they lowered that rate to 2.1%.
So Ally bank used to really be leading the pack here
with the online savings account,
offering a very competitive rate,
but they've kind of fallen out of favor here
with this rate change,
and we've seen some pretty big people,
including Graham Stephen, even talking about
potentially changing over to
a different online savings account
because of this difference in the rate.
And it may not seem like a lot of money,
but when you have tens of thousands,
or even hundreds of thousands of dollars in some cases
sitting in an online bank account,
the difference of half a percent
could be a significant chunk of change,
making it worth potentially switching over
to one of these different online savings account options.
About three weeks ago we heard about
a completely different option that seemed very appealing.
And that was something called the Wealthfront cash account
being brought to us by Wealthfront,
which is an online robo-advisor.
And essentially what they were offering here
is a 2.57% APY, which is significantly better
than the 2.1% being offered by Ally Bank.
Now beyond that there were actually a couple
other areas where this online bank account
was superior to what Ally Bank was offering.
So through the Wealthfront cash account
you could get FDIC insurance up to one million dollars.
On top of that you got unlimited free transfers,
whereas with Ally bank you were limited
to six transfers per month.
You also got zero fees with a $1 minimum,
and of course that very appealing 2.57% APY.
Well shortly after this announcement,
here we are about a month later,
and we have a third option,
which is even better than Ally Bank and Wealthfront,
and in case you guys haven't guessed it already,
it comes to us from their biggest competitor,
known as Betterment.
So Betterment released something about a year ago
called Betterment Smartsaver.
I actually talked about it on this channel here,
but it caught a lot of flack because
of the fact that this account did not
have FDIC insurance.
So Betterment went back to the drawing board
and they decided to come up with a better option,
which does have FDIC insurance,
and on top of that this account allows you to earn
up to 2.69% APY,
which is significantly better than Ally Bank at 2.1%,
and it's even better than what Wealthfront is offering
through the Wealthfront cash account.
So this service is being labeled Betterment Everyday.
Right now they are only offering online savings accounts,
but down the road later this year
they will also be releasing an online checking account,
which will also come with a debit card
to do your purchases right through
your Betterment Everyday account.
And this will integrate directly
with the Betterment robo-investing platform.
And a lot of people are probably wondering
why is it that Ally Bank
can't pay a rate like Betterment Everyday
or the Wealthfront Cash Account?
And it primarily has to do with
the stages these companies are in.
Both Wealthfront and Betterment
are still in the growth stage,
and they have a lot of venture capital behind them.
And as a result they can afford
to pay significantly higher rates than their competitors
who are more established.
So through Betterment Everyday Savings,
what you're getting is FDIC insurance
up to one million dollars,
which is the same thing being offered by Wealthfront.
You're getting your zero fee platform,
so there are no fees whatsoever
for using Betterment Everyday,
not a $1 minimum, but they dropped it down
to a $0 minimum balance.
And then of course that 2.69% APY.
And like I said, this will ultimately be replacing
that feature known as Smartsaver.
But as of right now this is one
one of the most appealing and attractive
savings options paying the highest APY.
So one of the questions you probably have
is will I be switching over from Ally Bank?
And unfortunately one of the rules Betterment
has for their affiliates is that their affiliates
are not allowed to have a Betterment account.
It's really kind of annoying and I love Betterment
and what they're offering,
but unfortunately, because
of my affiliate relationship with them
I am not allowed to have an account.
But I may be switching over to Wealthfront's Cash Account
since it is a higher APY
than what I'm getting with Ally Bank.
But overall what I would say here is people
who are looking to maximize and get that highest APY,
Ally seems to be falling from the front of the pack
towards the middle of the pack in terms of their rates.
And we are seeing significantly better rates
from Betterment for example, as well as Wealthfront.
If you guys do decide that you want
to learn more about this,
and potentially sign up for the Betterment Everyday Savings,
that's the top link in the description below.
As I mentioned already, I am affiliated with Betterment
so if you do use my link,
at no additional cost to you,
I get a small commission in the process.
Totally up to you if you guys wanna use that link or not.
At the end of the day I just wanted to
bring these options to you guys
just to show you that there are online savings options
that are paying significantly better rates than Ally Bank.
But anyways guys that's gonna wrap up this video.
Let me know in the comments section down below
where do you do your banking
and what kind of rate are you seeing
with your savings or your checking account?
I would love to hear what options you guys are using.
But thanks so much for watching this video.
I hope you enjoyed it.
And I will see you in the next one.