- [Host] How's it going today guys?
Welcome back to the channel.
Hope you're having a great day so far.
So, in this video we're gonna be talking about
a brand new checking account that is being offered
by one of these brokerage companies out there
called M1 Finance and it is really quite interesting
what they are putting together here.
And I'm gonna be honest with you guys,
after the whole deal with Robinhood
trying to offer that 3% checking account
and all of the stuff that went down there,
when I found out that M1 finance was offering
their own similar type checking account,
I was very skeptical.
I did a lot of research on this, and I kinda want to clarify
what it is that they are offering,
how this is different than what Robinhood is trying to do,
and whether or not this may or may not
be a good fit for you.
So, for those of you who are not familiar, M1 Finance
is one of these roll board visor brokerage accounts.
I have a number of different reviews on my channel.
I'll link up to one in the description below
if you guys wanna learn more about M1 Finance
but I really like the brokerage platform.
In my opinion it's one of the best ones out there
for beginners because it helps you build
a well diversified portfolio and automate a lot of the tasks
involved with your investing.
So M1 Finance also has M1 Borrow which is essentially
an area where you can get a loan
against the securities in your account
and soon they're going to be releasing the third piece
of this which is M1 Spend and we have the basic account here
which is going to be completely free
but then you have the M1 Plus account
which does have an annual fee but it comes with some serious
perks that you might want to consider looking into.
So, what they're going to be releasing is a checking account
that directly ties in or integrates with both M1 Finance,
the investing platform,
as well as the M1 Finance borrowing platform.
It is going to be backed by the Lincoln Savings Bank
and it is FDIC insured which is the huge component that
Robinhood was not able to tie down with their platform.
With the Robinhood Checking account they were trying to get
the SIPC insurance, SIPC said no we're not insuring this,
and now it's basically been crickets,
we have no idea what's going on with that so,
for now, that 3% checking account is still a piped dream.
So, now we find out that M1 finance is going to be launching
their own checking account but they do have
that FDIC insurance and they are backed
by a legitimate financial institution
so I do believe this is going to be going over
a lot better than the Robinhood deal did.
Now, it's not yet released, there is a link
in the description if you guys wanna join a waiting list.
I am affiliated with M1 Finance,
if you guys don't wanna use my link you don't have to
but it certainly does help me out and I do appreciate that
as it's a way to kind of give back to me
for putting together these videos.
So, first of all let's talk about the basic M1 Spend
which is going to be completely free
and it integrates directly like we said
with the M1 Finance account.
It is FDIC insured.
Like we said, it is completely free.
You're gonna get a debit card as well as a checking account.
No minimum balance.
No Maintenance fees and you get one
ATM reimbursement per month.
So, why would you want this in the first place?
Well number one, the main reason here is that it
directly integrates with your M1 Investing account,
so I don't know if you guys have ever invested
in the stock market,
I'm guessing you have if you're watching this channel,
but one of the biggest pain in the butts
is when you transfer money from your bank
over to your brokerage account
and you have that three day hold on your funds.
Well, if you already have money within your M1 Spend account
you can invest that without having to deal with that three
day transfer and that can be a huge time saving advantage,
especially if you're looking to make a quick move
in the stock market and capitalize on a certain opportunity.
Now, where it gets interesting is when we talk about M1 Plus
which is the premium version they're going to be offering
of this checking account.
M1 Plus is also FDIC insured.
They do have a fee of 125 per year,
but they're lowering that to $50 for early bird access
if you guys want to sign up for that waiting list
to get this card, 50 bucks for the first year,
you're gonna get debit and checking,
you're going to get a 1.5% APY on this account,
which is unheard of when it comes to checking accounts,
you're also going to get unlimited 1% cash back
on any purchases you make with that debit card
and you get four ATM reimbursements per month.
So, as I'm sure you can imagine, that $125 annual fee
begins to disappear as you factor in
that cash back incentive, as well as that 1.5% rate
that you're getting from that account.
So, let's go ahead and run through a cost benefit analysis
here of the M1 Plus checking account
and if you guys wanna run through with your own numbers,
they have a great calculator on their site
I'm gonna link up in the description below
where you can put in your own figures
and it will show you whether or not it makes sense for you
to have an M1 Spend account as far as the Plus version
if you're going to be making more in cash back
and a return from your interest income
than that $125 annual fee.
So, let's say for example you have somebody who has
a $5,000 carrying balance in their account,
over the course of a year that's the average amount
that they carry, well at the 1.5% APY
they're going to earn interest income of $75.
So, now moving on let's talk about the spending
that is going on within this account.
Let's say this person is doing $2,000 per month in spending
and that's honestly not a lot between your mortgage payment,
your car payment, and groceries,
that's typically what a lot of people are spending
and that is going to be yielding you
at $2,000 per month, 1% cash back, $240 per year.
Now I apologize, I did make a mistake here,
putting it at 75, the annual fee is 125,
so after you consider your interest income and the cash back
on a very small amount of spending,
and a low carrying balance, after that annual fee of 125
that is $190 per year as a benefit of what you would be
earning from having that M1 Plus account.
So, that being said, is this a good fit for you?
Is it not a good fit for you?
In my opinion it's a really good checking account
that they're offering here, probably the best one out there
that I have seen, but it may not be the right fit for you.
Number one let's talk about cash back from credit cards.
A lot of people like to play the rewards game there,
they like to do cash back on their purchases,
and you can probably find a better rate than 1% cash back
on your purchases if you go through a credit card.
But the thing is, do you trust yourself with credit cards?
Some people have really good self-control,
they pay their bill every month,
they pay nothing in interest,
and they play the credit card game,
and they make all of this cash back.
But some people may not have that level of self-control
or they're just afraid of credit cards
and they're stuck spending money
through a checking account earning nothing previously.
So, for people who may not wanna have a credit card,
but they still wanna earn some kind of cash back
on their purchases, this would be a perfect fit for them,
because there's no situation where you could be
paying interest because you're spending your own money,
you're not spending somebody else's money.
The second thing let's talk about here is Ally Bank.
A lot of people love Ally Bank,
I have a lot of my savings with them
because the online savings account is offering a 2.2% APY.
Now, why doesn't everyone just go dump
all of their money into that?
Well you can't have a debit card on that account
and you're limited to just six transfers per month
so you can't be moving money in and out
more than six times every single month.
So, you can't put all of your money in there
but a lot of us put a good chunk
of our money there of our savings.
Now, Ally Bank does offer
an online checking account as well,
but it's pretty lousy to be honest with you.
It's not nearly as bad as the traditional
brick and mortar banks offering .05%,
but Ally Bank offers you a 0.1% APY
if you're balance is under 15,000
and if your balance is over $15,000
that bumps up to a 0.6% APY.
But my question is, if you have over 15,000 in checking,
why wouldn't you just move that
to your Ally savings at 2.2%.
So, it doesn't really make sense to me.
The comparable Ally product here,
not really such a great option but still
it is a little bit better than what
your traditional bank is going to offer you.
So, there's two different strategies here that I like.
Number one, for people who are afraid of credit cards
or they don't trust themselves with having that potential
to spend money that they don't have,
this could be a great way for them to earn cash back,
without having to worry about going into debt
or trusting themselves with that large balance
they could put on their credit card.
Number two, another good option here
is for people who have a large balance.
They can put their money into an online savings account
like Ally Bank, but then they can move that money
into a checking account like this and earn that cash back.
So, I wouldn't leave a ton of money in here
because that 1.5% APY you can do better
with an Ally Bank account or another online bank.
But, for your general day to day spending,
this is honestly a pretty decent option
and most people based on their spending and their
carrying balance would offset that $125 annual fee.
But anyways guys, that wraps up the video here,
that is a review of the M1 Spend account.
Like I said, they haven't quite released it yet
but if you do want to sign up for the M1 Plus account,
they are offering a $50 for the first year
instead of 125 as an early bird discount.
That link is in the description below
if you're interested in checking it out.
Like I said, it's an affiliate link,
you guys don't have to use it if you don't want to
but it does help me out and helps to support my channel
and it allows me to make more videos like this.
But thank you guys so much for watching.
Let me know in the comments section below
what you think of this new checking account.
I would love to hear what you guys think
and if not I will see you in the next video.