Debit cards take money out of your bank account when you swipe, while credit cards add debt to your line of credit when you use them. Understanding the differences between debit cards vs. credit cards will allow you to use the right one for your needs.

In this article, we’ll cover:

• Debit cards and how they work
• Pros of debit cards
• Cons of debit cards
• Credit cards and how they work
• Pros of credit cards
• Cons of credit cards

What is a debit card?

While cash is still a viable payment option for most goods, businesses have long been progressing toward digital payment methods. Purchasing trends have also shown an increase in online shopping, even for groceries, making cash and checks obsolete.

A debit card reduces the need to carry cash or physical checks to purchase. Some retailers no longer accept physical checks as payment, which will likely increase with time.

How a debit card works

A debit card is connected to a bank account the cardholder opens up at a financial institution. You can use a debit card in one of three ways: to make purchases at a point-of-sale (POS) system in a physical store, at an ATM to withdraw cash, or to make purchases online.

The amount of money you can spend using a debit card depends on what you have in your bank account. There is no line of credit you can borrow with a debit card. If funds are unavailable in your account at the time of purchase, the transaction will likely be declined or cause an overdraft to occur.

When a purchase is made in person, you use a personal identification number (PIN) set up at the financial institution when the card is ordered. The transaction is then sent through the online network used by the merchant to remove the funds from your account.

Some debit cards allow you to forgo using the PIN and choose the “credit” option, which typically requires a signature. The transaction is then processed through the global digital payment technology company network, where a hold is placed on the amount, processing within a few days.

The benefits of debit cards

Convenience

Debit cards deduct purchases from your account immediately, so you don’t have to wait days for the money to be subtracted from your available balance. Using a debit card for transactions or to withdraw cash provides benefits like convenience and speed, and some even have rewards.

No annual fees

Debit cards do not require annual fees to stay activated. The bank account that the debit card is connected to may have monthly maintenance fees, but there are ways to avoid those fees with direct deposits or other means.

Avoid overspending

Debit cards can help you avoid overspending since you can only spend what is available in your bank account. If there are not sufficient funds to cover a purchase, the transaction will likely be declined. There are exceptions to this, and some financial institutions allow you to overdraft your account, but overdraft fees apply.

No interest

Since purchases are taken directly from your account, debit cards don’t accumulate a balance to be paid. This means debit cardholders avoid having to pay interest on a balance owed.

Debit card rewards

While they are usually not as generous as the rewards offered by credit cards, some debit cards also come with rewards, When you use your debit card for purchases, some banks might offer you cashback or discounts on specific products or services. While these rewards may be smaller, they still provide a little extra something for your everyday spending.

Cons of debit cards

Spending limit

A debit card restricts you to the money you have in your account. There may be instances where you need to spend more than what you have available. You can budget for those larger purchases, but sometimes, some emergencies require immediate funds.

Overdraft fees

If you don’t have overdraft protection on your account, there may be instances when using your debit card causes an overdraft. When an account is overdrafted, a fee is triggered as a penalty. If you immediately bring your account out of the negative, you can avoid future fees. If not, some financial institutions will charge you an additional fee every day the account is overdrafted.

Limited fraud protection

Any time a debit card is lost or stolen, you must notify your bank immediately. According to the Federal Trade Commission, if you report your lost or stolen card within two days, you may still be held responsible for up to $50 of fraudulent charges. If it takes you more than two business days, you’ll be responsible for up to $500, and anything past 60 days could make you liable for all the fraudulent charges on your account.

Don’t build credit

Since a debit card doesn’t allow you to borrow funds, it doesn’t assist in building credit. While debit cards don’t affect your credit score, other lines of credit, including a credit card, will.

What is a credit card?

Similar to a debit card, a credit card is a small rectangular piece of plastic or metal issued to you by your bank or a financial services company. However, how a credit card functions differs from a debit card.

Credit cardholders may also be granted a separate cash line of credit (LOC). In this case, cardholders can borrow a specified amount of money through cash advances at their financial institution, ATM, or by using credit card convenience checks. Cash advances come with terms that typically involve higher interest rates and no grace period.

How a credit card works

A credit card can be swiped, inserted, and tapped at a payment terminal. You can also use them online with the credit card number, expiration date, and security code. The only time you can use them to obtain physical money is through a cash advance.

Once you make a purchase, it will appear as “pending” in your account activity and take a few days to clear. Once the amount is posted, it will be added to your balance owed and removed from your available credit.

Every month, you’re required to make a payment on your credit card on a specific date. You can pay off your entire balance owed, your current statement cycle balance, the minimum payment, or an amount of your choosing. Paying any amount but the total balance will incur interest, and paying anything below the minimum payment will incur fees.

The benefits of credit cards

Build credit

A credit card can build credit. The type of credit built depends on payments being made on time and the balance owed steadily decreasing. You don’t need to maintain a balance owed to build good credit, so paying the full balance every payment cycle is the best and safest approach.

Rewards

Credit cards generally have incentives or rewards for the cardholder to encourage use. The types of rewards will depend on the card, but they can come in the form of cashback, airfare points, a free night stay at a hotel, and more.

Consumer protections

Many credit cards offer cardholders a zero-liability policy if fraudulent purchases are made on the card. In other words, you won’t be responsible for unauthorized charges. You can also dispute a charge if the product purchased was falsely advertised, unsatisfactory, or absent.

Reservations and travel perks

Certain situations require a credit card, like booking a hotel room. Aside from cash, hotels will only accept credit cards as payment for the room and incidentals, should anything in the room become damaged or go missing. Special travel credit cards have useful perks like concierge services, rental car insurance, no foreign transaction fees, and more.

Cons of credit cards

Overspending

The ease of using a credit card with a large credit limit can lead to cons like overspending. Spending to the credit limit could put you in a cycle of only being able to afford to make the minimum payments and incurring interest charges, which causes your debt to grow. High balances on your credit card can damage your credit score.

Debt

Credit cards allow you access to more funds than your budget may allow, which can lead to debt if overspending occurs. Interest charges can be about as much as the minimum payment if your balance is high, making it difficult to pay down your debt.

Interest rates

Credit cards have variable interest rates, which depend on the federal funds rate. Rising interest rates can cause credit card balances to go up, making it harder to budget and pay down debt. If a balance is left after a payment is made, finance charges can increase.

Fees

Many credit cards have annual fees, fees for adding an authorized user, fees for cash advances, foreign transaction fees, or fees for making a late payment. It’s important to review the fees and perks of a credit card, and how they may or may not impact you, so you can decide if the card is right for you.

Debit vs credit: key takeaways

Having the best of both worlds

You don’t have to choose one over the other when it comes to having a credit card or debit card. Each has its benefits and can be used for separate occasions. For example, the fraud protection on a credit card is more robust, making it the safer option for online purchases. Debit cards are more suited for everyday purchases, so you can better control your spending. Many people have both to manage their funds, establish credit, and take advantage of rewards.

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The post Credit Cards vs. Debit Cards: The Differences Can Add Up appeared first on Stash Learn.

What is the FDIC’s purpose?

The FDIC’s primary purpose is to ensure the integrity of the banking system and maintain public confidence in financial institutions. The agency was created in 1933 in response to the Great Depression, when thousands of banks failed and people lost all of the money they’d deposited; millions even lost their entire life’s savings. Congress created the agency to prevent such a profound crisis from happening again.  

The FDIC is responsible for preventing financial institutions from engaging in high-risk activities that put depositors’ money at risk. To accomplish this, the agency inspects and closely monitors banks to prevent risky behavior. The FDIC also has the power to liquidate and close down failing financial institutions in order to safeguard the economy.

The FDIC stands as a critical safeguard for individual account holders by protecting deposits from loss in the event of a bank failure or widespread financial crisis. In simple terms, this gives you as an account holder the peace of mind that you won’t lose your money if your bank goes under. 

What accounts are insured by the FDIC?

FDIC insurance covers a range of bank accounts that allow you to deposit and withdraw your money. These accounts include:

• Checking accounts 
• Savings accounts
• Money market deposit accounts
• Certificates of deposit (CDs)
• Negotiable order of withdrawal (NOW) accounts

How is the FDIC funded?

The FDIC is the rare federal government entity which draws no funding from the federal budget. Instead, the agency and any countermeasures it takes in case of financial emergency are supported by the Deposit Insurance Fund (DIF). Financial institutions covered by the FDIC are required to pay into the DIF on a sliding scale, based on their size and the riskiness of their investments. If and when the FDIC needs to rebuild its funds after a bank failure or economic crisis, the agency also has the power to raise money by increasing fees for all members, or to sue officers from the failed banks to recoup its deficit. Finally, the FDIC can borrow up to $100 billion from the U.S. Treasury or the Federal Financing Bank (FFB). 

What is the FDIC’s role in case of bank failure?

If a bank begins to falter, the FDIC has the power to step in and institute corrective measures, even up to the point of forcibly taking over the institution. This notably occurred during the 2008 financial crisis, at which time the FDIC liquidated and shut down some failing institutions. 

As a depositor, you have protection from the FDIC during such a crisis, ensuring that you are able to retrieve your money as long as it has been deposited into an account at an insured institution. In such circumstances, your insured funds either moved to another member bank that has agreed to take over your former account, or the FDIC issues you a check for your account balance, up to the $250,000 maximum covered by FDIC insurance. If depositors hold more than the insured limit, the FDIC may still be able to help, as approved and willing financial institutions might be able to buy the additional uninsured amount and return your remaining deposits. However, this process can take years, and there’s no guarantee of retrieving your lost money beyond the $250,000 covered by FDIC insurance.

What is the FDIC’s importance to you?

The security of your money is paramount, so making sure your checking and savings accounts are protected is important. You’ve likely seen the phrase “Member FDIC” on bank websites or your account statements; that lets you know your money is covered by FDIC insurance. This assurance can help you bank more confidently, especially in times of economic uncertainty.

The FDIC plays a crucial role in upholding the stability of the banking system by overseeing major financial institutions and providing insurance for depositors like you. When you bank with Stash, your deposits are covered by FDIC insurance, and you can count on robust security measures to keep your account secure. 

The post What Is FDIC Insurance? appeared first on Stash Learn.

In this article, we’ll cover:

• How early direct deposit works
• The benefits of early direct deposit
• Early access to your money with Stash

How does early direct deposit work?

Employers often offer direct deposit because it can help them cut down on the risks and costs of distributing paper checks and even handle payroll more quickly. Additionally, an electronic record is created for each transaction, allowing the sender and receiver to track funds. To set up direct deposit with your employer, you’ll need to provide them with your banking information: 

• Name of your bank
• Bank’s routing number
• Your account number
• Whether you’re using a checking or savings account

From there, you can choose whether you want to deposit 100% of your paycheck into your checking account or split it between your checking and savings accounts. Your employer might provide a form for this information or ask you to bring in a form from your bank.  

So how do you get paid early? Once your employer or benefits provider process payroll, they will notify your bank of your incoming deposit in advance of your actual payday. When they do and your bank receives the deposit, the bank can fund your account immediately so you don’t have to wait for payday to access your money. Your early pay could be available up to two days before your usual payday.

The benefits of getting paid early

64% of Americans live paycheck to paycheck (Pymnts, 2022), which can make the days leading up to payday stressful if money is tight. Whether your pay period is weekly, biweekly, semimonthly, or monthly, having your hard-earned money available a little sooner can help alleviate some financial stress. Early pay means you may have funds available to pay bills, avoid late or overdraft fees, and more easily cover unexpected expenses. Early direct deposit can give you some peace of mind that your money is available for your most pressing needs. And if you’re trying to save money, automatically depositing a portion of your paycheck into your savings account can make it easier to stash those funds away so you don’t accidentally spend them. 

Top benefits of early direct deposit:

• Pay bills on time
• Avoid overdraft fees
• Avoid late payment fees
• Cover unexpected expenses
• Reduce stress when money is tight
• Initiate transfers before the weekend
• Making saving automatic

Get paid early with Stash

If you have a Stash account, you can set up early direct deposit and get paid up to two days earlier.³ You can even start by allocating a just percentage of your paycheck to your Stash banking account, and increase as you choose. Once you get set up, you should receive your first early direct deposit in one to two pay periods, depending on your company’s payroll policies, and the financial institutions involved. 

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How to set up early direct deposit with Stash

There are two convenient ways to set up early direct deposit with the Stash app. Once you log in to your app, you can choose to receive a pre-filled form to give to your employer or get your routing and account numbers manually so you can fill out your employer’s form. Either way, the process is quick, getting you on the road to an earlier paycheck.

Option #1: Email a PDF. Get a pre-filled form you can send to your employer.

1. Login to the Stash app.
2. Tap Bank at the bottom of the screen. 
3. Tap Direct Deposit.
4. Tap Set up Direct Deposit.
5. Tap Email a PDF. 
6. Check your email! We sent you a form that you can give to your employer.
7. Complete the form and give it to your employer.

Option #2: Copy your account information. Get your account and routing numbers manually.

1. Login to the Stash app.
2. Tap Bank at the bottom of the screen. 
3. Tap Direct Deposit.
4. Tap Set up Direct Deposit.
5. Tap Copy Your Account Information to see your account and routing numbers. 
6. Set up direct deposit with your employer using your routing and account numbers.

Ready to get paid early?

You’ve worked hard for your money, so why not get it into your bank account sooner with early direct deposit? Stash offers banking access that helps you take control of your finances: get your paycheck up to two days early, avoid overdraft fees,² automatically save and invest, and earn stock with the Stock-Back® Card.¹ It’s all part of Stash Core, the world-class infrastructure platform powering our banking and personal brokerage accounts that empower people to build wealth for the long term.

Take charge of your finances.

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The post Early Direct Deposit: How You Can Get Paid Early appeared first on Stash Learn.

At financial institutions, such as banks and credit unions, you can open both types of account, and it may not be a case of ‘checking vs savings’. You might find a place for both in your financial plan.

In this article, we’ll cover:

• Checking account basics
• Savings account basics
• Why you should have both

What is a checking account?

A checking account is an account at a financial institution, like a bank or credit union, that allows you to make deposits and withdrawals, also known as credit and debit transactions. Checking accounts are considered a liquid asset because you can take your money out easily. Generally, checking accounts offer both check-writing capabilities and a debit card. Account holders tend to use this kind of account for everyday expenses and paying bills. 

Banks and credit unions often offer several varieties of checking accounts, some of which may require minimum balances and/or charge fees for things like monthly maintenance, overdrafts, ATM usage, and international transactions. Every institution has different options and fees. 

Features of a checking account

Having a checking account makes it easy to deposit and withdraw your money as frequently as you need to. While every bank offers different options, most checking accounts come with a set of basic features: 

• Automatic payments: Often, you can use your checking account to set up recurring payments to merchants or other service providers. Automatic payments can be a convenient way to handle utility bills and other monthly expenses. 
• Checks: A check is a legal document that instructs your bank to pay a specific amount to a designated payee. While paper checks are less common these days, most banks offer them as an option with checking accounts. 
• Direct deposit: You may authorize your checking account to receive a direct electronic transfer of funds, as opposed to a physical check. For example, many employers give employees the option to have their paychecks deposited directly into their bank accounts instead of being paid with a paper check.
• Debit card: Your debit card draws money electronically from your checking account for making purchases; you can also use it to get cash at an ATM.
• Mobile/online banking: Many banks offer the option to access your checking account from your mobile device or computer with a secure login and password. There are also many online-only banks, which have no physical branches. 
• Overdraft protection: Also referred to as cash-reserve checking, overdraft protection is a service that provides a cushion in the event that there are insufficient funds in your checking account to complete a transaction. Many banks offer this option and may charge a fee for the service and/or require you to have a savings account at the institution.

When you’re shopping around for a checking account, keep an eye out for the features that matter most to you based on your personal circumstances. For example:

• If you use cash frequently, you might benefit from an account that provides reimbursement for ATM fees. 
• If you don’t have a lot of money left over at the end of each month, you might prioritize an account with no minimum balance requirement. 
• Another consideration is monthly maintenance fees and other types of fees the bank charges; they can eat into your balance over time.  

Common types of checking accounts

There are a variety of common checking account types. While they all serve the same basic purpose, each provides different options that may be beneficial based on your individual needs. 

• Basic checking: This type of account allows you to do the primary things you expect a checking account to do: deposit and withdraw money, write checks, receive direct deposits, and use your debit card. Some banks offer a basic checking account with no monthly maintenance fee; be aware that even if such an account is advertised as “free checking,” it may still come with fees for things like overdrafts or foreign transactions. 
• Student checking: Designed for students in high school, college, or vocational school, this type of account works like a basic checking account but offers perks for people under the age of 25. These features might include low or no monthly fees or minimum balances, or connection to a student ID to make on-campus purchases more convenient.
• Rewards checking: Some checking accounts provide rewards like points, cash, or stock for debit card purchases. The advantage of these accounts is that you get something of value without having to do anything other than use your account for your regular spending. 
• Interest checking: Some institutions offer checking options that pay interest on the money in your account, typically on a monthly basis. This can be appealing if you often keep a higher balance in the account. Bear in mind that interest rates vary from bank to bank, and they fluctuate based on the state of the economy.

What is a savings account?

A savings account is a deposit account, usually interest-bearing, held at a financial institution. Though the interest rate for savings accounts is often modest, it allows your money to grow while it’s sitting in the account. Savings accounts provide a safe way to stash money away for short- to mid-term financial goals, like a vacation or down payment on a car. Savings accounts are also ideal for putting aside money that you can access quickly for emergencies. 

Just like checking accounts, you’ll find various options for savings accounts at different financial institutions. You’ll commonly need to deposit a minimum amount of money to open the account and maintain a minimum balance. Fees vary based on the institution and account type and may include charges for things like monthly maintenance, excessive withdrawals, and inactivity.   

Features of a savings account

The main difference between a checking vs. savings account is that the latter is designed for keeping your money in the account for a longer time period instead of spending it frequently. Some of the common features of savings accounts reflect this purpose: 

• Interest: Nearly all savings accounts are interest-bearing; the longer you leave your money in the account, the more it will grow. Interest rates vary by the financial institution, and they can go up or down at any time, usually based on inflation or other changes in the economy.
• Withdrawal limits: Many savings accounts charge a fee if you make more than six withdrawals per month. This limit was once required by the Federal Reserve; it’s now optional, but several banks still impose the limit. 
• No debit card: Most savings accounts don’t come with a debit card since they’re not intended to be used for regular spending. That said, if you have a checking and savings account with the same bank, you might be able to use your debit card to deposit or withdraw money from your savings account at an ATM. 

Savings accounts do share some common features with checking accounts, including the option to receive direct deposits and access mobile/online banking. 

Consider your reason for saving and personal circumstances when looking at options. For example:

• The longer you can leave your money in the account, the more it grows, and the more you benefit from compound interest. So if you’re saving up for a specific goal, you might want to look for accounts with higher interest rates.   
• If you’re using your savings account as an emergency fund and are concerned that you may need to make a lot of withdrawals if disaster strikes, you may want an account with no fees for excessive withdrawals. 
• If you don’t have a lot of money you can put into savings at first, look for options with a low or no minimum amount required to open the account so you can start earning interest right away.  
• You also might want to compare any account maintenance fees with the amount of interest your balance will earn. If you’re spending more on fees than you make in interest, an account without maintenance fees may be a smarter choice.  

Common types of savings accounts

As with checking accounts, there are several types of savings accounts available to meet your specific needs and priorities. 

• Traditional savings account: This standard account is an accessible way to store your money and grow it with modest interest. You’ll find lots of options with different minimum balance requirements and fees at different financial institutions, so if you’re new to saving or don’t have a lot to put aside right now, this can be a good option to start a savings habit. 
• High-yield savings account: This account helps your money grow more quickly because the annual percentage yield (APY) is usually 10 to 20 times higher than that of a traditional savings account. High-yield savings accounts often have a higher minimum balance; if you have enough money to meet the requirement, you can benefit from the higher interest rate.
• Money market account: Money market accounts can be seen as a sort of hybrid of checking and savings accounts. They come with checks and, often, debit cards, like a checking account. They’re similar to savings accounts in that they earn interest and generally have transaction limits. Money market accounts usually have higher interest rates than traditional savings accounts, and often have a tiered system in which interest rates vary based on your balance. This type of account can be useful if you want the benefit of earning interest and the convenience of spending money with checks or a debit card.

Checking vs savings accounts: the importance of having both

When you’re looking into banking options, it’s not a question of choosing a checking vs savings account. They each serve a different purpose and having both can be an important way to manage your money and work toward your financial goals. Your checking account allows you to easily pay bills and day-to-day expenses with your debit card. If you use a budgeting app, you can connect it to your checking account to help plan and track your spending.  

By also opening a savings account, you can tuck money aside for the future in a spot where you won’t accidentally spend it, and reach your financial goals faster by earning interest. A savings account can also help you feel more financially secure, since you can easily access the money you’ve put aside in case of an emergency.

Stash offers online banking designed to help you manage your spending, save for goals, and build your investment portfolio with the Stock-Back^® card. It’s all powered by Stash Core, a world-class infrastructure platform that’s designed to empower everyday Americans to invest and build wealth.   

FAQ

What is better, a savings account or checking?

It depends on what you want to use your bank account for. A savings account is designed to put away money for short- or mid-term goals, like saving up for a new fridge or tattoo. A checking account is ideal for your regular expenses, like paying bills and buying groceries. In many cases, it’s useful to have both.

Is a savings account the same as a checking account?

No, they are different types of accounts, with different features and requirements. Checking accounts usually have no limit on transactions and come with a debit card you can use for spending. Savings accounts often limit the number of withdrawals you can make and usually don’t allow you to use a debit card for making purchases. 

Is a debit card checking or savings?

Debit cards usually come with a checking account. Most savings accounts don’t come with a debit card, but some banks offer one. 

Is money safer in checking or savings?

As long as you’re banking with an FDIC-insured institution, which includes most banks and credit unions, your money is equally safe in a checking or savings account. The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.

Should my paycheck go to checking or savings?

You can have your paycheck directly deposited to either a checking or savings account. Many people have their paycheck go to their checking account because they want the money available to spend right away. Some employers will split your direct deposit between two accounts, so you could have a portion go into your savings account and the rest into checking. This approach can help you stick to your savings goals by removing the temptation to spend money you were planning to put aside.  

Should my checking and savings account be at the same bank?

You don’t have to use the same bank for checking and savings. Doing so could make it faster to transfer money between the two accounts, and you might find it more convenient to have a single login for accessing all your bank accounts online. However, you may find that one bank offers the best checking account for your needs, but the ideal savings account is at a different institution. 

The post Checking Account vs. Saving Account: What’s the Difference? appeared first on Stash Learn.

The economy couldn’t function without a solid banking system, but the financial services sector is much more than just banking. The sector also includes alternative lenders, credit card companies, financial service providers, and increasingly, fintech and cryptocurrency businesses, and more. 

However, banks are the backbone, holding and providing the money that consumers spend to keep businesses open. Banks also help people invest money, and potentially build wealth. Additionally, banks provide loans and financial services to businesses which can help them grow and stay in business. 

This sector, which employs over 8.5 million people in the U.S. as of September 2021, keeps money flowing between businesses and people. Financial services contribute about 8% to the gross domestic product of the U.S. And as of the second quarter of 2021, finance and insurance businesses accounted for almost $3.6 trillion of GDP.

As of 2020, there were 4,377 commercial banks insured by the Federal Deposit Insurance Corporation (FDIC) in the U.S., with almost 75,000 branches across the country. And total assets held by U.S. banks totaled almost $22.6 trillion. In 2020, the four biggest banks in the country—JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—held a record $10 trillion in total assets. 

Source: Federal Reserve, June 2021

How do banks earn money?

Banks earn money in a variety of ways. You may not know it, but when banks take your money as a deposit, they also lend it out to others and make money from the interest they charge on the loan.

That interest can be for loans such as mortgages and credit cards. But banks can also charge fees on checking and savings accounts, such as overdraft or under limit charges.

Banks that issue credit cards also collect a portion of interchange, which is a fee charged to merchants for accepting cards for payment.

And many of the largest banks, known as Wall Street banks, have prominent investment divisions, which charge for stock and bond trading, as well as for their services involved in bringing companies public, through a process called an initial public offering (IPO).

A changing landscape for financial services

Since the financial sector is so essential to the economy, it tends to be heavily regulated, both at the state and federal level. Those regulations ensure that banks meet capital requirements that ensure they have enough cash on hand to meet their obligations to consumers and businesses. They also help to diminish some of the risk they might otherwise take in their investments. Yet other regulations also lay out principles that ensure they behave ethically toward consumers, for example by lending fairly.

The two main overseeing bodies for commercial banks are the Federal Deposit Insurance Corp.(FDIC), which insures consumer deposits, and the Office of the Comptroller of the Currency (OCC)which tests the solvency of banks.

Following the financial crisis of 2009, regulators put in place a new set of requirements called the Dodd-Frank Act that protect consumers from abusive lending practices, and that prevent banks from getting “too big to fail.”  In 2018, however, Congress voted to roll back some of the restrictions outlined in Dodd-Frank for banks with less than $250 billion in assets, easing their reporting requirements and capital restrictions. 

Role of the central bank

There’s another component to the financial sector in the U.S. that’s important to know about.

It’s called the Federal Reserve System.

The Federal Reserve, also known as the Fed, is the central bank of the U.S. It comprises 12 district banks located throughout the country, which together are responsible for the monetary policy of the U.S.

The Fed’s mission is to oversee the health of the nation’s financial system. It attempts to keep the economy strong and growing by enacting policies to maintain low inflation and healthy employment levels. It does this primarily by adjusting interest rates and lending money to the nation’s banks.

The Fed sets something called the overnight funds rate, which is also known as the federal funds rate. This rate dictates how much it costs for banks to lend their money to other banks, specifically the central bank. The Fed can manipulate the rate in certain ways, which can have effects throughout the economy.

For example, at the start of the pandemic, the Fed lowered the federal funds rate to almost zero percent to stimulate the economy with so-called cheap money in the form of low-interest loans.  The Fed has kept the rate there, and has been hesitant to increase it, since the economy is still recovering. But that influx of cash has push inflation up, and maybe keeping inflation higher than normal.

The future of banking 

While commercial banks and the Federal Reserve make up the traditional banking sector, new technology is shaking up the banking industry. And new financial services companies (such as Stash), known as FinTech companies, are disrupting the market.

Today, there are hundreds of such companies changing the way we bank, spend, lend money, accept payments, finance our businesses, apply for mortgages, and more.

Perhaps the oldest and best-known is Paypal, which in the early days of the Internet allowed people to pay for things online in a secure manner, using either a credit card or a bank account.

Paypal is a multibillion-dollar company. It’s also facing disruption by a host of startups including Stripe, Venmo, Dwolla, and Square.

In short, the financial services industry is moving beyond handing hand-written checks to your local bank teller. Banking is becoming global and mobile, giving more people the ability to access their money from wherever they are in the world.

Cryptocurrency and financial services

Cryptocurrency, a digital asset that doesn’t rely on physical currency, is also changing the financial services sector. Cryptocurrency uses something called blockchain, or distributed ledger, software. That means code produces an encrypted record of the value of each virtual coin and the transactions it’s involved in, distributing that record across numerous networks on the Internet. Distributed ledger is different from the way your bank keeps track of your dollars, in a centralized database that only it controls, cryptocurrency experts say. Since its introduction in 2009, more than 2,000 types of cryptocurrency have emerged, including Bitcoin, Ethereum, Stellar, and Binance Coin. 

Cryptocurrency has also opened the door for something called decentralized finance, or DeFi. DeFi is an economy that’s entirely online and based on cryptocurrency, typically Ethereum. Businesses in the DeFi industry, often called DeFi apps or dapps, operate by taking out the middleman: traditional banks. Rather than requiring the many steps banks use, DeFi uses the technology behind cryptocurrency to securely and automatically carry out financial transitions, such as loans, peer-to-peer transactions, and more.

It’s important to remember, however, that cryptocurrency isn’t recognized as an official currency, and it has a tendency to be highly volatile. So you should keep that in mind if you’re interested in cryptocurrency or participating in DeFi.  

Investing in financial services

Banks aren’t just places that hold and move your money. They’re businesses, and you can invest in them. You can invest in individual stocks of financial services. Stash also offers exchange-traded funds (ETFs) within this sector. 

If you do decide to invest in financial services, you should know that investments in this sector tend to be cyclical, meaning that they respond to changes in the economy. When the economy is doing well, financial services also tend to perform well, and vice versa. 

Following the Stash Way can help protect you from market volatility. You can follow the Stash Way by investing regularly in a diversified portfolio that includes stocks, bonds, and ETFs across a variety of sectors. 

The post What the Financial Services Sector is All About appeared first on Stash Learn.

So why use percentages to help you budget rather than simply allocating a dollar amount to each of your expenses? The answer: Your income and expenses can change—sometimes by a lot. As a result, you could potentially come up short on some expenses if they’ve increased, or with extra income with nowhere to go if you suddenly get a raise.  Percentages can help you maintain guardrails around your spending and saving as your income and expenses fluctuate.

How budget percentages help

Budget percentages can offer a quick and easy way to help you gain insight into how your financial security relies on your income and expenses. Let’s say your rent is $1,500 a month, which is 30% of your hypothetical $5,000 monthly take-home pay. Now say your landlord increases your rent by 10%, to $1,650. Overnight, your rent just became 33% of your budget, so  you’ll need to cut 3% from another portion of your budget.

Some budget percentage goals are meant to keep you on track through life, while others are useful in specific circumstances, such as when you’re buying a home or considering other major purchases. Percentages can create a balance during all life phases. Here are some popular and proven budgets.

The 50/30/20 Budget

Back when she was a Harvard professor, Massachusetts Senator Elizabeth Warren studied how and why average Americans get into financial trouble. In 2006 she wrote a book with her daughter, Amelia Warren Tyagi, called All Your Worth, in which she introduced the 50-30-20 budget, a percentage plan that’s now considered standard advice.

People and families can potentially live more easily within their means by dividing their expenses into three simple percentage groups. Here’s the breakdown:

• 50% of your take-home pay goes to “must-haves,” meaning necessary expenses like housing, transportation, groceries and insurance. Housing should include property maintenance and taxes.

• 30% goes to spending for “wants”, like vacations, restaurants, and other non-essentials.

• 20% goes to saving for the future.

To some, this breakdown might seem tricky—especially residents of big cities, where housing costs alone can easily consume half your pay. But the 50/30/20 budget is really more of a set of guidelines than firm commandments. If, right now, you need to spend 60% of your budget on essentials, you can cut discretionary spending to 20%. The point is recognizing that all the categories must add up to no more than 100%.

Zero-sum budget

One more budget to know about is the zero-sum budget, also called the zero-based budget, because the goal is to get to $0 every month—in other words 100% of your monthly take home pay is allocated to some part of your budget. It may sound scary, but it’s really not.

With the zero-sum budget, you’ll assign the specific percentages and categories for your entire monthly income, whether that’s paying back your debt, paying for your groceries, or even just buying something you want, such as a new shirt or dress. The zero-sum budget gives every dollar you take home a specific function and leaves you with no unused cash at the end of the month.

You can find out more about that here. 

The 28/36 rule

A general rule of thumb says you should spend no more than 28% of your total income on housing costs, including rent, the principal and interest on your mortgage plus property taxes and home insurance (also known as PITI), as well as utilities and any condo fees.

And you should aim to spend no more than 36% on your total debt payments each month. These debts include student loans, revolving credit card debt, car and personal loans, and your mortgage or rent. 

Both numbers can factor into your debt-to-income ratio (DTI), which banks and other lenders use when considering how much mortgage to extend to you. And they also can be good lifelong percentages to remember for keeping housing costs within your budget range.

These percentages are not arbitrary. Years of data collected by the U.S. Census and the Department of Housing and Urban Development show that households tend to wind up in financial trouble when DTI extends beyond these percentages.

The 20/4/10 Car Loan Rule

If you drive a car, making monthly payments for your car is something to consider when budgeting. 

Car loans are inherently risky because, unlike real estate, cars are guaranteed to lose value over time. If you’re not careful, you could easily find yourself owing more on your loan than your car is worth. When that happens, you can’t just sell the car and pay off your loan.

With that in mind, according to the  20/4/10 Car Loan Rule, you should try to pay a minimum down payment of 20%, and take out a loan with a maximum term of four years that features a total monthly payment worth no greater than 10% of your gross income.

How to make budget percentages  work for you

The good news about percentage budget goals is that you don’t need to pick just one. They can all work together. You can start by trying out a couple of formats and adjust accordingly.

To start percentage budgeting, organize your expenses into the basic categories of needs, wants, and savings. After that, you can refine within each category toward a total budget plan. 

And don’t worry—as your income grows, your housing costs could gradually become a smaller percentage of your budget, leaving more money for savings and fun.  Percentage goals can be flexible— and hopefully they won’t leave you with a drawer full of unmatched socks.

The post Budgeting Percentages for Your Goals appeared first on Stash Learn.

Now that the summer is drawing to a close, I wanted to take a moment to reflect on some of the important market-related events of 2020.

What a market year it’s been so far. After falling more than 30% in the early spring, markets not only recovered their losses, but they made substantial gains.  By early September, the S&P 500 had increased more than 60% compared to its low in March. One of the big reasons: Giant tech companies have been on a tear. In fact, just a handful of companies, including  Amazon, Apple, Facebook, Google, and Microsoft have driven most of the market momentum.

There are numerous other causes for the market rally, including some fundamental improvements for companies that benefit from people staying and working from home, government stimulus programs, and technical trading factors. But a lot of the uncertainty from the beginning of 2020 still remains today.  Specifically, investors are questioning if the economy will continue to rebound, what will happen with Covid when kids go back to school and people start heading back to work, and who will win the November election. Sometimes concerns over the future can cause the market to become volatile, especially after a very dramatic move in one direction. 

Invest for the long term

So here’s our message for you today.  Consider your long game, and continue investing regularly. Market volatility and market turbulence like we’re seeing today is normal. Markets go up, they go down, and they sometimes go sideways, it’s impossible to predict where the market will go in the short term.  

Here’s what we recommend. First, turn on Auto-Stash. Consistent investing—regularly buying quality companies and funds you believe in—and playing the long game is much better than trying to time the market. Don’t focus on the daily ups and downs. Remember, investing is about time in the market, not timing the market. Think of every trading day, regardless of whether markets are up or down, as an opportunity to add small amounts to your positions. 

Also remember, all investing involves risk, and while you can make money, you can also lose money that you put in the market. 

How Auto-Stash can help

When markets go down, you should stay the course. Specifically, we think it’s best for you to keep investing in a diversified portfolio and turn on Auto-Stash.  It can be your best friend right now. I want you to look back at this time in a few years knowing you picked up investments during all the market cycles. A diversified portfolio can include bonds and stocks that are global.  Stash now offers a new tool called portfolio diversification analysis¹ that can help you stay on track, offering your current portfolio a score and suggestions about how to stay properly diversified. 

Then, simply consider investing small amounts–even $1–on a regular basis.  We make this easy with Auto-Stash. Now, more than ever, it’s time to set it and let Auto-Stash work it’s magic.

If you had invested $10 per week in the market, using Auto-Stash’s Set Schedule feature from the end of 2007 through the first week in March 2020*, you could have more than doubled your investment to have nearly $14,000 in your portfolio. That includes all the market dips, including the most recent Covid-19 pandemic.

Turning on or updating your Auto-Stash is the easiest way to add small amounts of money to your investments on a regular basis. This way, you’ll avoid the emotional aspect of investing and won’t get fooled into trying to time the market.

Remember the Stash Way

Then follow the Stash Way, which includes regular investing, proper diversification, and taking a long-term view. By taking a long-term view and consistently investing small amounts, you can allow your money to work for you.

It’s the best guidance we can give for investing in up markets and down markets. Just a few words more about each of these ideas:

• Invest regularly: Even if you take small amounts and invest them every week or every month, that can add up through the power of something called compounding. Remember the Stash investing minimum is less than one dollar.
• Invest for the long term: Over the years, market gains have outpaced standard savings rates in bank accounts. Looking ahead, experts expect markets to return about 5%. With the power of compounding and regular investing, you have the ability to build wealth for the financial future you want.
• Diversify: Diversification means you’re not putting all of your eggs in one basket, so you can better weather the stock market’s ups and downs. That means you won’t put all of your money in too few stocks, bonds, or funds. 

Stash is your financial partner, and we are here for you—to help you meet your most important financial needs and goals during these challenging times. We have some exciting new features in the pipeline and cannot wait to show you really soon!

Thanks for being a Stasher!

The post Markets Rise, Markets Fall appeared first on Stash Learn.

Online banking has revolutionized the way many people manage their finances. Just like traditional brick-and-mortar banks, customers can open checking and savings accounts, pay bills electronically, and transfer funds with an online bank. Many online banks accept mobile check deposits and issue debit cards linked to customers’ online checking accounts. Many offer loans and investment options. Some digital-only banks even accept cash deposits via an ATM. 

And online banking can give its customers tools so that they can take care of their banking strictly through an online platform or mobile app. For the one in five Americans who fully bank online, digital banking has eliminated the need to visit a physical branch, fill out a deposit slip, and wait in line just to deposit a check.  Online banks have made paying bills, following a budget, and saving easier and less error-prone. 

One thing to note: Online-only banks offer only digital access. While online bank customers can typically reach a customer service representative when needed, they won’t be able to walk into a branch and speak with a teller face-to-face. For those who want that flexibility, many traditional banks have online platforms and apps where customers can access their accounts, allowing them to share in the convenience of online banking. 

Convenience is the big appeal

In some ways, consumers see online banking as more convenient than banking with a traditional brick-and-mortar institution. In fact, the introduction of online banking has contributed to a decline in bank branch visits, which in turn has led to the closing of more than 8,000 physical bank branches across the U.S. between 2014 and 2019.

But convenience is just one of the reasons Americans choose to switch from traditional banks with brick-and-mortar locations to online-only banks. Here are some of the other advantages online banks have. 

Higher interest rates

Some online-only banks can offer higher interest rates on deposit accounts than their traditional counterparts.¹ They can do so because they operate with lower overhead, which allows them to bump up the interest earnings on checking, savings, and money market accounts, as well as certificates of deposit and other products. 

With online banks, some customers may see interest rates that are 10 to 20 times higher than the nominal interest rates offered at brick-and-mortar banks. That can make a real difference when you’re working toward important savings goals.

Lower fees

Thanks to their lower operating costs and lack of physical branches, online banks can also sometimes offer reduced fees. Where traditional banks can tack on costs for banking needs such as ATM withdrawals and account maintenance fees, some online banks have eliminated many of those. And when online banks do charge, fees tend to be lower than what their traditional competitors charge. 

Early pay day

Some online banks and financial services companies, including Stash², can offer direct deposit up to 2 days early. This means your paycheck can be available to you when your employer deposits it, which is typically a couple of days before it would show up via traditional banks. Instead of waiting for your money to finally land in your account before you can use it, early direct deposit can allow you to pay bills, make transfers, start earning interest or take out cash sooner. 

Online bill pay

The convenience of paying bills without writing checks or licking envelopes can also attract customers to online banking. Online banking can allow you to pay bills in a few clicks or to set up automatic payments for all sorts of bills like credit card payments, utilities, insurance and recurring subscriptions. The simplicity of online bill pay can save you the chore of keeping track of bills and remembering to pay on time, which means you can avoid late fees. 

Simple tracking

Keeping a close eye on your accounts can be critical to maintaining a budget, catching faulty charges, and ensuring that your finances are on the right track. That’s why easy access to your account can be so important. Online banking platforms typically make viewing your account and transaction details simple online or by app, so you can pull up the information you need anytime—and, if you’ve got your phone on you, anywhere. Many also provide tools for setting and tracking goals, so you can see how you’re doing and adjust your spending to reach your goals. 

Improved recordkeeping

Whether you need to dispute a charge, verify a transaction or collect documentation for taxes, having all of your bank records accessible and searchable online can make the process simple. 

Easy transfers

Traditional banks sometimes make transferring funds to another account—or another bank—cumbersome and expensive. On top of high fees, in some cases you can expect a several-day wait before the money reaches your intended destination. With online-only banks, transfers can be faster—and less expensive.  

Mobile deposits

While direct deposit has already eliminated the need for some trips to brick-and-mortar banks, paper checks still exist. That’s where mobile deposits come in. Online banking apps can allow you to deposit printed checks into your checking or savings account by taking a photo. There doesn’t have to be all the driving to the bank, filling out a deposit slip, or standing in line while you wait for a teller to help you. 

Ability to sync with other banking apps

Many online banking platforms integrate with other financial institutions. That can be important if you use a different app to track your budget, check your retirement savings, or manage a different account at a separate bank, but still want to monitor all your money in one place.

What about cash?

Good to know: One big difference between traditional banks and online banks is that you can’t go to an online bank to cash your paycheck and walk away with physical cash. While the use of cash has decreased in recent years, this difference may be a drawback for people who still rely on cash for some purchases. However, some online banks do use an automated teller machine network, allowing you to use certain ATMs to withdraw or deposit cash. Some online-only banks will even reimburse you for any fees you’re charged when you use another bank’s ATM.

Bank from anywhere

Under the traditional model of brick-and-mortar banks, where an in-person visit was required, banking while managing work, school, travel and home life wasn’t always easy. Customers were limited to traditional business hours to open an account, apply for loans, or transfer funds. And if you weren’t near a bank branch or you were busy during operating  hours, finding a way to take care of banking could be a hassle. 

Online banking can solve that problem by allowing customers to log on and do their banking whenever and wherever it works for them.

 Find out how Stash can help you manage your finances online.

The post Here’s Why You May Want to Bank Online appeared first on Stash Learn.

And banks and other financial services companies, which often have a  troubled history when it comes to race, are no exception. 

In fact, it can still cost Black people and other people of color more to bank than their white peers—the average minimum balance in Black neighborhoods was $871 to avoid fees, compared to $626 in mostly white neighborhoods. Meanwhile, there is a persistent wealth gap between Black and white Americans. White households in the U.S. reportedly hold seventeen times more wealth than black households do. 

What Stash’s Survey Tells Us

A July, 2020 survey of nearly 10,000 Stash customers¹ about their relationship to their primary bank outside of Stash showed feelings of mistrust when it comes to their main financial institution:  1 in 5 people said they think they’ve been denied financial products and services due to their gender, race, or income level. Among Black Americans specifically, the percentage jumps to 35%, compared to 17% of white Americans.

Roughly half of Black survey respondents (15 percentage points more than other racial groups) said they think that demographic factors affected how they’re treated by their banks. Over 20% of respondents also said they think that their bank has treated them differently based on income level.

At the same time, respondents suggested that banks can have an important role in helping people of color become more financially whole. When it comes to financial guidance, 15% of respondents said they feel that their banks don’t provide them with sound advice and education and 12% believe that their banks aren’t transparent with them.

More on financial inequality and the wealth gap 

And data shows that there is a difference between the way white and Black customers are more generally served by banks. Forty-seven percent of Black households are unbanked or underbanked, meaning that either no one in the household has a checking or savings account or that the household has an account at an insured institution but also has financial products or services outside of the banking system. Just twenty percent of white households are unbanked or underbanked.

At the same time, Black Americans earn less on average than white Americans do. White men in the U.S. earn an average of  $2.7 million throughout their careers, compared to Black men, who earn an average of $1.8. This number dips further for Black women, who earn an average of $1.3 million compared to white women who earn $1.5 million.

Banking with Stash²

While banks and other financial services alone won’t be able to solve the problem of the wealth gap or financial inequality, they are a critical part of the solution. With Stash, regardless of your background, you can get a checking account with no account minimums³, no overdraft fees⁴, and no monthly or annual maintenance³. 

Plus, with Stash, you can make sure you’re not falling behind when it comes to investing. On Stash, you can start investing in ETFs and stocks on Stash with any dollar amount. Stash also provides customers with education on personal finance and investing so that you can build a healthy financial home.

The post How Race Can Affect the Ability to Bank appeared first on Stash Learn.

We’d like to explain. There are basically two ways to move money from your external bank account into your Stash banking account. One way is through the Stash app, the other way is through your external bank’s app/website.

Read on to find out more.

Quickest method

From your external bank account:

In your bank’s app/website, you’ll find a page to make a transfer. You’ll need to manually enter your Stash banking account and routing numbers (you can find that info in your debit settings: “account and routing numbers”). The bank then sends the money to Stash electronically and it should arrive in one to two business days (depending on the bank and time of day). FYI, about a third of users prefer this method.

Longer method

From the Stash app:

If you make a transfer through the Stash app, Stash sends an electronic request to your external bank. It takes two to four business days to get confirmation from your other bank and move the money. It’s crazy that it takes this long in the 21st century, and lots of companies are working to change that, but it isn’t quite here yet.

How Stash is making money transfers faster

To speed things up, we advance money to the majority of banking customers before we receive the confirmation from the other bank that the money is there. If you make the transfer before 1 p.m. EST, we’ll usually get you the money the next business day. We’re working hard to make these transfers even better.

What can you do to get faster money?

It’s likely that our data science models don’t have enough information about you yet. To change that, make a couple investments on Stash and give it a little time to build up your history. Once we have the necessary information, we can make a more informed decision and you may then be able to get your transfers faster.

There are also lots of other ways to get money into your Stash account. These include: cash deposit at a participating retailer, transfer from Venmo or Square cash—and the simplest way to get money into your account is direct deposit. With direct deposit, the money comes straight from your employer and you may be able to get your pay up to two days early (four days early for government benefits).

How much money can you move?

We can accept up to $50,000 when you make a transfer from your external account. It’s the same story for direct deposit. You can also make transfers from the Stash app.

Stash wants to be your financial partner for the long haul. And we want to help you simplify your financial life and consolidate your investing, saving, and spending into Stash.

The post Faster Ways to Move Money Into Your Stash Banking Account appeared first on Stash Learn.

Stash is excited to announce partitions², a new cash management tool that helps you create different categories within your Stash account. Partitions allow you to put money toward any financial goal you choose, from paying down your educational debt to money for groceries, even saving for a vacation. 

In conjunction with partitions, Stash also offers spending insights¹, a tool that comes with your Stash banking account that tracks how you spend the money in your account so you can visualize your money habits as you develop budgeting and saving goals with partitions.

What is partitions and how does it work?

As of March 31, 2020, you can find partitions in the Spend tab of your Stash account, as long as you have an account with an activated debit card. If you’ve already created a Spending Cushion for short-term savings, that Cushion will become one of your partitions now. 

When you start to create your partitions, take a look at your spending insights, which you can find in your transactions details under the Spend tab in the app. This tool sorts how you spend your money in a given month into a visual pie chart of categories such as groceries and restaurants. Looking at those insights can help you build your partitions. 

For example, if you know you spent $500 on groceries last month and you want to cut down on that spending, consider putting $400 (or whatever amount you decide) in your Groceries partition for the next month. 

You can also label each partition in your account to reflect any of your budgeting goals. For example, you may want to call one Emergency Fund and another one Credit Card Bills. You could even set one up as Trip to Europe, and one for Buying a House. Partitions allow you to save for both your short-term and long-term goals by allocating your money accordingly. 

Say you decide that you want to save more money towards buying a house. You can instantly move money from your Trip to Europe partition or any other one. These partitions aren’t different bank accounts. You can think of partitions as different files in a filing cabinet, with your Stash account as the cabinet.

Currently, you can create up to five partitions in your account. While you can’t delete a Partition yet, you can rename a partition as your needs change. You can also move money instantly between partitions if needed.

When you set up a partition, you can also create a reminder to tell yourself to add more money to it on a schedule that suits you. Plus, if you have Direct Deposit set up with Stash, you can automatically split each paycheck into different partitions, so you can continue achieving your financial objectives. 

Why use partitions?

Stash created partitions to help you stay on track with your budgeting and saving. And if you use a budget template such as the 50-30-20 budget or the envelope method, you might find partitions familiar, because you’re already saving money in different buckets every time you get paid. 

Partitions can help you save for specific goals, while you stay on top of saving.

We’re excited for you to get started!

The post Get Ready for Stash Partitions! appeared first on Stash Learn.

Does your credit score have more dings than a beat-up Chevy? A bad credit score may cause your landlord to raise an eyebrow and keep you from getting that car loan. But some banks may also give you a hard time when you go to open up an account. 

Don’t despair, you can still open a bank account even if you’ve got bad credit, typically defined as a credit score below 670. 

Why do banks care about my credit score? 

Banks, like most financial institutions, take on risk when you become a customer. They want to be sure that you will pay your bills and won’t bounce checks. In short, they want to make sure that they won’t be chasing you down for unpaid fees, or that you won’t be constantly overdrawing your account.

Not all banks will check your credit score. But if they do, having a bad score can also add to the list of things that can cause you to be rejected. 

How do banks check my credit? 

Banks are checking up on more than just your credit. When you apply for a credit card, the company will check your credit report by looking it up at credit bureaus including Equifax, Experian, and TransUnion. Your bank will check your banking behavior with agencies like ChexSystems, Early Warning System, Telecheck, or Certegy. These agencies track your deposit history with banks and credit unions. 

What are banks looking for? 

When you apply for a checking account your bank will enter your name and Social Security number to conduct a routine financial background check using ChexSystems, or one of the consumer reporting agencies mentioned above, to scope out any negative banking history.

Here are some things that can affect your chances of opening a checking account. 

• Overdrawn accounts: When you make a withdrawal and  your account dips below zero.
• Bounced checks: When you write a check for money you don’t have. 
• Suspected check fraud or identity theft: If you’re flagged for illegal activity
• Security alerts: If your account is constantly being compromised.
• Account freezes: When the bank stops all transactions related to your account.
• Excessive withdrawals: If you’re taking or transferring money from your savings or money market account too many times in a month. (This doesn’t include withdrawals using a bank teller or from ATM withdrawals.)

Good to know: You can request a free copy of your credit report from each of the three credit bureaus once every 12 months, Under the Fair and Accurate Credit Transactions Act (FACTA). You can also get a free copy of your ChexSystems report annually here.

Oh no, I was rejected. What do I do now? 

There are a few options. You can get in touch with the bank that you’d like to do business with and nicely request for them to reconsider. Just be prepared to face up to your past mistakes when they go through your history. 

You can also look into second-chance banking. Second-chance checking accounts are bare bones versions of standard checking accounts, typically with fewer features and lower spending limits. Not all banks offer this service, but the ones that do can offer you a clean slate and the chance to rebuild your financial history. 

Banks that offer second-chance accounts minimize their risk by offering you less favorable benefits compared to those with traditional bank accounts. For example, a second-chance banking customer may have a minimum balance, higher service fees, and access to fewer ATMs. Each second-chance bank is different, so be sure to ask a lot of questions when and if you choose this option. 

Are there any other options? 

You can still apply to open a Stash online banking account² if you have bad credit. Stash does not perform traditional credit checks prior to or after account openings, but it does go through standard customer identification and verification procedures first. 

Stash offers a network of ATMs. Stash subscribers get a bank account that comes with flexible money management, early payday⁴, and a debit card that can earn you rewards³.

The post How to Open a Bank Account With Bad Credit appeared first on Stash Learn.

But we also want you to have confidence that when you use Stash, you know that we take the security of your money, accounts, and personal information very seriously. That way, you can rest assured that your experience with us will always be a great one.

Here’s how Stash works to keep you safe:

Protecting your money

• Your Stash debit account¹ is insured by the Federal Deposit Insurance Corporation, a federal agency that protects consumer bank accounts against loss.
• Your investments are held by our custodian Apex Clearing Corporation, a third party SEC registered broker-dealer and member FINRA/SPIC.
• Apex Clearing is a member of the Securities Investor Protection Corporation (SIPC). This means your investments in your account are protected up to $500,000 total (including $250,000 for claims for cash). For details, please see www.sipc.org.

Protecting your personal information

• Stash has undergone an extensive internal examination called a Payment Card Industry Data Security Standard audit (PCI DSS), which all merchants and organizations that store, process or transmit credit and debit data must perform. It ensures your cardholder data is stored and safeguarded against malicious attacks.
• We use 256-bit encryption, an industry-standard, to protect information as it moves across the network, and to encode information such as your Social Security number and transaction history.
• We also use something called Transport Layer Security (TLS), which protects your information when you’re communicating with Stash via the Web or your mobile device.
• Biometric recognition: You can use your fingerprint—to log into your Stash account. Since your fingerprint is unique to you, it can provide greater account access security than simply using a password.
• Access controls: Stash times your sessions, and will automatically log you out after a set period of inactivity.  We also continuously monitor log-ons for access from unauthorized users.

What you can do

You can also take action to make sure your account stays secure. Here’s how:

• Don’t use easy-to-guess passwords, such as your birth date, your name, or names of friends, as well as current or past addresses.
• Use complex passwords that combine upper and lower case letters, numbers, as well as symbols.
• Don’t use the same password for multiple web sites or apps.
• Change your passwords every 90 days.
• And remember, Stash is always here to help. Contact us 24 hours a day if you suspect fraud or other suspicious activity related to your account.

Email: Support@stash.com
Phone: 800-205-5164

You can find more information on the Stash security page.

The post What Stash Does to Keep You Safe appeared first on Stash Learn.

We’ve all been there—when you take a look at our bank statement or account balance, only to find that you have less money than you thought. Where did it go?

Then you see it: Your bank has hit you with fees that you never anticipated. It could be for simply accessing your money, having too low a balance, or even receiving your paper bank statement. It’s enough to make you want to keep your money in your mattress.

A dollar here, $20 there—these bank fees can really add up. In 2022, the average overdraft fee was $33.58—and that’s just one of many kinds of fees banks typically charge.

Here are five of the most common fees banks like to charge, and ways to avoid them.

1. ATM fees

• What it is: A fee for withdrawing money from an ATM machine.
• Average fee: $4.59, according to recent industry data

How to avoid it: Banks typically charge ATM fees when you’re withdrawing money from an out-of-network machine—or, an ATM that’s owned or operated by another institution.

To avoid ATM fees, get cash from your own bank’s machines, or go inside and do it the old-fashioned way: Speak with a teller. (Just make sure your bank doesn’t charge a teller fee, see below.)  You can also get cash back when you make a purchase with your debit card to get cash or switch to a bank that refunds ATM fees.

You can also shop around for a bank that covers a certain number of out-of-network ATM fees.

The Stash debit card gives you access to thousands of fee-free ATMs around the U.S.² You can deposit cash to your account through your linked bank account, via direct deposit, or at participating CVS Phamacy®, Rite Aid and Walgreen stores³.

2. Account maintenance fees

• What it is: A fee levied to service your account, typically your checking account. Maintenance fees are sometimes called minimum-balance fees.
• Average fee: Variable (Bank of America and Chase, for example, charges $12 per statement cycle for balances under $1,500;  Wells Fargo charges $10.

How to avoid it: If your bank charges custodial and maintenance fees, ask if they have a different kind of checking account option that doesn’t have minimum balance fees. If not, the easiest way to dodge them is to switch to a bank that doesn’t charge them in the first place. Otherwise, you’ll need to abide by your bank’s rules in regard to balances and deposits.

As a last-ditch effort, you can try arguing with your bank to get these charges refunded. The customer service agent may be kind and refund a month or two to keep your business—but that probably isn’t going to prove a fruitful long-term strategy.

3. Overdraft, and/or non-sufficient fund (NSF) fees

• What it is: A charge for overdrawing your account, and for the bank covering the difference.
• Average fee: $33.58

How to avoid it: One of the biggest money-makers for banks, overdraft fees are also the hardest to swallow. If you overdraw your account, you’re basically borrowing money from your bank—and your bank is happy to lend it to you at an incredible markup.

The difference between an NSF and overdraft fee is small but important. When you’re charged an overdraft fee, the bank covers the charge for you. When you’re charged an NSF fee, the transaction isn’t approved, as the bank declines to pay it on your behalf. You’ll be charged one or the other, depending on which action your bank takes.

If you write a check for more than your account balance, it’s possible that you’ll be hit with an NSF fee or overdraft fee, and the recipient will also be levied a returned-check fee. This is a fee charged by the recipient’s bank for depositing a bounced check.

One way to think about it is if you borrowed $24 and were hit with a $34 overdraft fee, you’d be paying 17,000% APR, according to the Consumer Financial Protection Bureau.

How can you dodge these fees? You’re entitled to decline or cancel overdraft coverage. If you cancel the coverage, the transaction will be declined, saving you from overdrawing.

A word of caution: Always, be aware of your account balances and plan purchases accordingly.

4. Paper statement fees

• What it is: A fee incurred for receiving a paper statement from your financial institution
• Average fee: Varies, but usually around $2

How to avoid it: It’s simple: Sign up for electronic statements, delivered via email. This is as easy as it gets, and while it may only save you a buck or two a month, it’s another dollar that can go toward your investment portfolio or retirement savings. Electronic statements are also good for the environment because they don’t require paper.

5. Teller fees

• What it is: A charge for talking to a live person—be it a teller or another bank representative
• Average fee: $3-$5, depending on account type

How to avoid it: Teller fees aren’t new, and the concept has been around since at least the mid-90s. They’re generally associated with online-only accounts, which typically don’t include in-branch services.

If you think you’ll need more than attention than an online-only account provides, opt for a traditional checking or savings account to avoid teller fees. Eighty-three percent of bank customers still visit their bank in-person, so be mindful of these teller fees if you do sign up for an online-only account.

Bank with Stash

Stash banking can help you avoid excessive bank fees. It won’t cost you anything to set up, there are no minimum balance requirements, and we won’t charge you any monthly or annual fees to maintain the account1.

Here’s a rundown of what we have to offer:

• No overdraft fees.¹
• No monthly maintenance fees.
• No minimum balance fees.
• Access to thousands of fee-free ATMs.
• Early payday—get paid up to two days early.³
• Stash Stock-Back®⁴—Why not earn stock when you spend? If you enroll in the program, every time you make a qualifying purchase at your favorite stores using your Stash debit card, you’ll earn a percentage back as stock.

The post 5 Bank Fees You Should Never Pay Again appeared first on Stash Learn.

But it’s often the things we need to take care of right now that can give us trouble. Life happens, and unplanned expenses arise. Even things like weddings and holiday gifts can affect our financial lives.

That’s why Stash is introducing something called Spending Cushions. It’s a way to separate your debit account into two different buckets, so you can create a place for short-term savings* that can help you plan for the near future.

Short-term savings can be used for things like a repair after you accidentally drop your phone and crack the screen, or for the vet bill after your puppy has eaten a box of crayons, or even that special dinner out to celebrate your child’s high school graduation.

How Cushions work

If you have a Stash Debit card, you can use the app to create a cushion. Simply go to the debit settings, and tap on the Create Cushion prompt. That will set up a special partition for your short-term savings. You can then transfer in as much money as you like, as often as you like. You can even set reminders for when your cushion gets low, to transfer money in again.

The money is always there for you to use. Simply transfer it from your Cushion to your Stash Debit account. Transfers are immediate, so you don’t have to worry about delays in using your money.

With Cushions, you can always be sure you have the savings you need to meet your short-term expenses when they arise.

We’re really excited to introduce you to Cushions, our newest banking feature. We hope it will help you save money in the short run, while you plan for the financial future you want.

The post Get Comfy with Spending Cushions! appeared first on Stash Learn.