I opened up Smartly Checking with USB in Oct. for the $450 SUB and to prepare for opening the Smartly Visa. My plan was to move my E-fund to the Smartly Savings and have a 3% catch-all card. Haven’t applied yet, and now having second thoughts as it looks like they lowered their APY to 3.5%. I’m getting 3.9% at Discover currently. USB Smartly was 3.8% for a while, so figured I’d make up 0.1% in cash back on the CC, but 0.4% less interest on savings changes the math a little bit so I am reconsidering. Thinking about getting the C1 Savor now to add 3% Grocery, Dining, and Entertainment to my 2% catch-all rather than the Smartly. Wondering if anyone else has any thoughts about the new lower savings APY.
It seems the brokerage is the way many people are choosing to go.
I am not in the slightest bit surprised the Smartly savings interest rate keeps dropping, and not just because of the falling interest rate environment.
@Devlin
Yeah obviously savings rates are dropping but if USB will constantly be .25-.5% lower it won’t really be a good savings option versus other HYSAs. Maybe I’ll get the C1 Savor for now and reconsider when my IRA balance is high enough to reach a better tier with USB. Still unsure about their brokerage side though compared to my current traditional brokerage. Was hoping the Smartly Savings was going to be a viable HYSA replacement and make it simple to reach the 3% tier.
@Thames
It’s already not a good option. Almost no big banks are. You can open an account at Fidelity where you have effectively a checking account that gets 4.3 percent, with no minimum and full liquidity. Or there’s a small number of banks like SoFi or whatnot that actually offer relatively good HYSAs.
ETF and chill in the brokerage account is pretty much the only option where you don’t have opportunity cost financially.
@Alston
Is this the cash management account you’re talking about such as the money market fund? the FDIC account I see is 2.35%, so wouldn’t Smartly be higher with the 3.5% since it’s FDIC insured?
Pace said:
@Alston
Is this the cash management account you’re talking about such as the money market fund? the FDIC account I see is 2.35%, so wouldn’t Smartly be higher with the 3.5% since it’s FDIC insured?
If you absolutely want FDIC insurance, then the Fidelity CMA will give you a percentage like what you quoted, and it’s not one of the best FDIC options. It shines if you are willing to accept SIPC insurance instead - then you can have SPAXX as your core position and get 4.3 percent. For a lot of people, with a name like Fidelity, they don’t think FIDC insurance is critical; I’m certainly in that camp - YMMV.
@Thames
I expected it to possibly run even lower still than that relative to HYSAs/CMAs, honestly, once they were out of the loss-leader period.
Probably a card for the sock drawer if you can’t get the highest depository tiers.
@Thames
It was 4.1% when SPAXX was 5%. This is nothing new, it’s a subpar savings account. They’ve never offered competitive rates.
As the Federal Reserve cuts interest rates, all HYSA rates will continue to decline. 3.5% is certainly more competitive than many other big banks (Chase, BoA, etc) but is far from the best available. You’ll have to do the math regarding your own CC spend, anticipated interest based on the size of your emergency fund, etc to determine whether the card makes sense for you. For those who choose to meet the $100,000 using an investment account, the card is a great option.
@Montana
For sure. I know rates will keep coming down but am disappointed USB doesn’t seem like they are going to stay competitive with other HYSAs. I don’t go chasing the highest rates but was hoping Smartly Savings would be a viable HYSA replacement and make it simple to reach 3% tier.
@Thames
If your emergency fund is $25,000, the difference in interest between 3.9% and 3.5% is $100. If you’re getting 3% on Smartly rather than 2% on your current catch-all, your breakeven point is $10,000 in spend (or $833/month). Seems like a viable option but obviously everyone’s individual spend may vary.
@Montana
Yeah but $25k wouldn’t get to 3% CB, I was figuring double that so $20k non-category spend to break even, which doesn’t quite seem worth it for me personally with my current setup. I also have the Costco Citi for 3% restaurants and travel, and 4% gas, so thinking I’m better off with Savor adding 3% Groceries and Entertainment to that and getting a SUB as well.
100k brokerage or 50k IRA are the only viable options for most imo.
The 2.5 and 3 offerings aren’t worth the brokerage fee nor the reduced savings. Even if you did the minimum 5k in there for 2.5 you’d still come out behind the Alliant card most likely.
@davohn
I literally came to the exact same conclusion the other day when I was sketching the math out. 
@davohn
Why 50k IRA? I thought it was $100k to waive the fee. Do IRAs not have that $50 brokerage fee?
Thorn said:
@davohn
Why 50k IRA? I thought it was $100k to waive the fee. Do IRAs not have that $50 brokerage fee?
50k IRA account or 100k regular account waives it.
Thorn said:
@davohn
Why 50k IRA? I thought it was $100k to waive the fee. Do IRAs not have that $50 brokerage fee?
50k IRA account or 100k regular account waives it.
Do you have a source for this?
Nash said:
@Fable
Which money market fund would you like to purchase as USB? I can look it up for you.
I’ve been using TTTXX in my Merrill account. I’m not sure what the appropriate equivalent would be with US Bank, but probably something similar to Fidelity’s SPAXX or Vanguard’s VMFXX?
Alternatively, I would also consider using treasury bills such as SGOV or Vanguard’s new VBIL once that’s available, but my concern for a new investor using US Bank as their primary brokerage is that making these frequent transactions for cash equivalents will eat into their 100 free yearly transactions. (I’m not sure if this is how the rules work for mutual funds in US Bank yet.)
@Baylen
If you can afford the 100k brokerage requirement you could hold SPAXX or VTI or whatever you’d like. There is a $50/annual fee for the brokerage. 100 free transactions if you hold the Smartly savings account.
It’s a sock drawer for investments.
4% CC spend
VTI / SGOV mix at ~100k
$50 annual fee. (Offset by $8k deposit in Smartly checking for $450 bonus delivered in 90 days)
This is a much more compelling deal for high spenders.
@Baylen
Plus Alliant has been sending out like some cashback spending bonus offers that are targeted based on what people have been posting here; it’s just a nice bonus if you get it.
https://www.reddit.com/r/CreditCards/comments/1h1db7r/alliant_signature_visa_cashback_offer/
And no income tax on the Alliant setup so that helps a little bit too.
Disclaimer: I don’t have the card right now but it’s certainly appealing. Having to garden right now.
Should also see another interest rate cut at the next meeting, another quarter point probably.