So I went into a Fifth Third branch on a Saturday and signed up to get a Checking account. They are currently offering $200 to try them out, so I figured I’d give them a shot.
I believe the $200 offer requires you to make three on-line bill pays, and have at least one direct deposit. Also, to avoid a fee, you need to be prepared to leave $1500 in the account at all times.
The experience opening the account was fine. The customer service representative was pleasant to talk to, and she told me about many of their other offerings. She set me up with an online banking account and mentioned their smartphone app. While I waited for her to get my initial deposit done, I downloaded it and logged in. I was actually pretty impressed with their app. It has a very minimalistic feel, but it will show you all of your accounts within the one app, which is very nice. (Checking, savings, credit cards, etc. look to all show up) The interface of the app is very nice.
When she returned, she let me know that my initial deposit was on hold for almost 2 weeks. I wasn’t concerned.
I got back home, logged into their website and saw that it showed that I had $100 available. I thought it was nice that they at least let me have access to the first $100 of my initial deposit. Since it showed money available, I went ahead and set up a bill payment for less than $10.
A few days later, the bill pay went through. Oddly, it showed a negative available balance at this time. The $100 of available funds had disappeared. I was a bit worried by this, and contacted the representative who opened my account. She didn’t seem too worried about it, but said she’d check it in the morning.
Another few days go by, I check things again. The bill payment was reverse, and now the money is back in my account. But wait a minute! I checked the website of the credit card I had paid, and it shows that the payment went through.
I believe by this time it was the Friday after my account was opened. I expected the following Monday that I might find the charge reversed on my card, and hopefully they wouldn’t hit me with some sort of reversal fee.
Monday morning came, and nothing changed. Monday afternoon hit, and I got an email form Fifth Third saying that my account has been blocked from Bill Pay.
I called to find out what went wrong, and was told that the bill pay feature is handled by a third party, and since they were unable to draw the funds from my account (because Fifth Third didn’t let them) and they had already paid my credit card issuer, they were blocking my account from any more bill pays until I got in touch with them to pay them back.
The Fifth Third website showed $100 available in my account. I scheduled a payment (less than $10), and it allowed me to do so. They removed the availability of my money, and didn’t automatically cancel the payment (or alert me to do so), and now I have to call a third party that I’ve not directly dealt with and figure out how to pay them back the money they paid my credit card?
I’m pretty sure this isn’t the customer service experience that Fifth Third’s marketing department meant for me to have, but it’s happening.
The telephone rep who spills this news to me tells me that I may be able to get my branch (who did the original deposit) to make the funds available sooner. According to her, only the original branch can do that.
I call this third party company. They tell me that it hasn’t made it to them yet, the collections department. She tells me they re-try pulling the funds three times, with a day between. Apparently, after it has failed that many times, they give up and go to collections.
Now, I called back the initial rep who opened my account and left a message that all this is happening. Waiting to hear back from her. Since she’s at my branch, perhaps she can clear my check before the last pull attempt and clear all this up.
So far, I’m not recommending anyone use this bank. Hopefully I’ll be able to do three bill pays once all this gets straightened out so that I can get my $200 account bonus. Unless something major changes, I’m planning to close this account as soon as I can. They appear to be at the level that they are too large and they aren’t really focused on the customer.
Never heard back from the customer service rep who opened my account. Fortunately, the third party billing company electronically reversed the payment to my credit card, which allowed me to start making payments again from the website. I’ve gotten numerous payments scheduled, and some have gone through already, so I expect that everything is good now.
However, with the customer service I’ve seen so far, I expect to cancel this account once they have fulfilled the $200 promotion (and the cancellation period is passed). It is a shame too, as I really like their iPhone app, and their website always seems to be very responsive, unlike some other accounts I have.
For years I’ve been doing “automatic” investing via my company’s 401k program. All year long my money goes into various funds without me doing anything other than my daily job. I pay attention to it about once per quarter.
Recently, I started using WiseBanyan to do the same thing myself. Every week,
$25 $30 is automatically pulled out of my checking account and invested in a portfolio of stocks, bonds, etc. Using YNAB, I’m tracking these transfers into an external account. This will let me, at a glance, see exactly how much money I’ve actually deposited into my WiseBanyan account in future months/years and I can simply log into my account to see what the current value is.
Automatic investing is where it’s at…
But Automatic Budgeting?
There are a few services out there, like Mint, that are thrown up as free ways to budget. These services work by linking to your various accounts so they can monitor your transactions and automatically categorize your spending for you. I call it Automatic Budgeting, because you don’t have to do much of anything to track your spending.
However, I think there are two key things wrong with this approach.
1. If this is any sort of budgeting at all, it is rear-view budgeting. You are looking at your spending after-the-fact. No successful corporate entity operates this way.
No successful CEO ever told his management team: Hire anyone you need and spend whatever you have to, just get the job done. We’ll see what you spent and on what when the bills arrive.
To be successful, you have to know where you’re money is going to go before you spend it, so you can plan your spending and ensure you have enough money to do everything you want to do. If you don’t plan you’ll almost certainly end up overspending.
2. You aren’t invested in the method. This may seem counter-intuitive, but if you get a free budgeting solution, whether it’s Mint.com, or someone gives you a copy of YNAB, or whatever, you aren’t invested in it. Without a financial cost, you may quickly quit, thinking to yourself “At least I didn’t waste any money on that!” However, if you invest money on a solution, you are more likely to give it a real shot at working.
I tried Mint.com years ago. I signed up, linked an active account or two, and checked in here and there. My spending habits didn’t change one bit.
To Sum Up:
Automatic Investing: Good!
Automatic Budgeting: Bad!
Sometimes budgeting can be discouraging.
For me, that happens when goals suddenly change. In my most recent case, I had two major expenses change in big ways on the same day.
One expense turned out to be $400 more than I expected. Let’s call that Expense A.
Expense B was also about $400 more than expected and could not be paid the way I had planned. This expense is one that gives a discount if it’s paid early. My plan to pay it was to charge it to a 0% credit card, then start paying it down in a few months, and pay it off over about 9-10 months. Unfortunately, payment by credit card was not allowed as it had been in the past. This meant I had to overhaul my budget so that I could save up several thousand dollars in the next 6 months to meet the “early” deadline.
The overhaul required taking money out of my Emergency fund, stripping out my rainy day funds (money being saved for Christmas, Home Insurance, Property Tax), and take contributions out of my car replacement category (driving an ’06 now), and a few other smaller categories intended for home improvement projects.
Now, my Christmas, Home Insurance, and Property Tax categories must be completely funded during the last 6 months of this year. My new plan shows me putting a whopping $162.37 in my car replacement category by December 31st. In August, I start saving about $600 a month for Expense A for next year.
It’s only January 27th, and my financial year looks pretty bleak.
But, there is hope. Thanks to my budget, I have a plan!
Trying to handle these expenses without a budget… Well, that would just be crazy. I’d end up putting lots of spending on credit cards, building up debt. I’d be very worried about making sure all the bills were paid. It would be much more stressful, especially when additional surprise expenses show up (which they always do).
So, while I do see some woe, I also see the hope. And I know that I would not be able to do the things I’m doing with my money without a budget.
I looked into a service called Betterment some months ago. It’s an interesting concept whereby you set up regular deposits into your Betterment account, and they invest all of your money in a diversified portfolio for you, automatically. Your $25 or $50 deposit can get invested immediately in a diversified basket of stocks, bonds, REITS, etc.
Sounds like an excellent idea for auto-investing, but here’s the rub. They have fees. These fees aren’t so bad when you have a big chunk of change invested with them, but since I had a pretty small amount to get started with, I’ve avoided them so far.
About two months ago, I read about a service called WiseBanyan.com. Essentially, they are exactly like Betterment, with one big difference. They are completely fee free.
One thing I wasn’t excited about with WiseBanyan was the waiting list. They are rolling their product out over time, and are allowing you to “skip the line” by getting 5 friends to sign up. If you want to skip the line, now that I’m a member, you can use my link to get an account right away: Skip the line at WiseBanyan!
Once I had my invite, I had to pick my account type. Fortunately, they offer a full range of account types: Personal Investment, Roth IRA, SEP IRA, and Traditional IRA. You can even do a roll-over, but I think that’s a more manual process.
After selecting my account type, I filled out a questionnaire to determine my risk score. This score is the “dial” that you have control over, to select your investment mix. You can’t specify your exact asset allocation. No matter what your score is, the funds your money is invested in are exactly the same. Based on your risk score, it changes the percentages that go into each investment. The higher the risk score, the higher your investment in stocks. The lower your score, the more you invest in bonds and other low risk investments. If you don’t agree with the risk score that is assigned when filling out the questionnaire, you can simply select the value you prefer.
It took about 5 business days to get my account set up. After your account is set up, you can log into it and see your actual allocation. Aside from seeing your current balance and mix of investments, their interface lets you alter your risk score, set up additional accounts, and perhaps most importantly, you can deposit additional funds on a one-time basis (minimum $10 deposit), or setup/adjust your auto-deposit amount and frequency. You can opt to auto-deposit money Weekly, Monthly, or Quarterly. The last option is “Pause”, if you wish to stop the auto-deposit process for a time.
I was originally signed up to have a $100 auto-deposit once per month, but changed it to $25 weekly for two reasons:
1. Dollar-cost averaging. By putting in smaller amounts of money more frequently, I’m likely to pay a lower overall cost for my basket of investments.
2. I am paid every two weeks, not once per month. This means I’ll be able to contribute an extra $100 per year, probably without even missing it.
I’ve had the service for about two weeks, and I’ve seen the value of my account dip down about two percentage points, but now it has reversed course and I’m on the plus side, though just barely. Of course, that’s just the market. Overall, I’m extremely pleased with the service.
Just a quick update. My Robinhood account was opened early last week and I started the process of transferring a little money to it. Transfers to the service seem to take about 3 business days, which seems a bit longer than other similar services. So far, they don’t seem to take it on faith that you have the money, so you can’t start trading with it the same day you initiate a transfer, but you have to wait for it to clear. Perhaps that will change once I’ve been with the service for a while.
My first trades
Friday morning, I was able to complete my first trades with the service. I was able to set Limit orders and the IOS app sent me a notification when my purchases went through. Market orders seem to go through almost instantly.
Over the course of several hours, I purchased 8 different stocks, as few as 3 shares per order. Sadly, 7 of them ended the day down, not that Robinhood had anything to do with that.
First of all, there’s only an IOS app today. I know android users are feeling left out here, but I understand they are working on that. Personally, I prefer a web platform. Maybe I just like seeing more information on the page at a time than you get with an IOS app.
News? What news? I’m used to the IOS Stock tracking app, which lets you easily see news stories about each stock. I’d like to see something similar in Robinhood, so I don’t have to go to other apps to see what’s going on with my stocks. Of course, this could encourage frequent trades, so perhaps this is really a plus.
I can’t buy every stock I want… I added all of the stocks I’m currently interested in to my watchlist, and one of them does not show up with a “BUY” button. I’m not sure which exchange it’s on, but it seems that there might be some exchanges Robinhood doesn’t cover yet. The actual stock I have this issue with is CLB.
I’m impressed. So far, everything is as advertized.
This looks to be a great way to purchase small orders of stock with no fees. That’s extremely important if you are an investor without a lot of money to invest at once.
Basically, this is replacing long-term savings for me. I’m likely to add a few hundred per month to my account, and pick up a couple of shares of stock with it. I don’t plan to do this with money that I’ll need in the next 6 months or so. Instead of socking my long-term savings away in an account earning a *YAWN* whopping 1%, I can put it into a stock, bond, REIT, ETF, etc. And while these investments can lose value, if invested in a diversified manner, it is likely to return far more than 1% a year. Heck, it’s likely to earn about 10% a year if you just invest in an index fund.
Another thing – Robinhood will let me take full advantage of dollar-cost averaging, something I have been hesitant to do with other services due to the $10.00 fee for each trade. With Robinhood, as soon as my deposit clears, I can start buying without worrying about paying junk fees.
I recently ran across a review of a free service called WiseBanyan that lets you invest in a diversified portfolio of ETFs (a mix of stocks and bonds).
They ask you a series of questions to determine how risk averse you are, then it weights each ETF to achieve your desired level of risk. You can even adjust this risk level manually. You end up with an ETF blend of US Stocks, Foreign Developed Market Stocks, Emerging Market Stocks, US Government Bonds, Investment Grade Corporate Bonds, Emerging Market Bonds, Municipal Bonds, TIPS, REITS, and Commodities. The ETF funds all have very low expense ratios (ranging from 0.08 to 0.14%).
When you get dividends, WiseBanyan reinvests them for you automatically. If your investment mix gets out-of-sorts (due to a portion of it growing unevenly), it will re-balance it for you. You can put in very small dollar amounts.
I had previously looked at a service called Betterment that is very similar. The difference with WiseBanyan is that they don’t charge for their service.
In a way, this seems like an idea that should have been around already… I mean, software is very good at doing this sort of thing. Just have an algorithm run against every account on a periodic basis (daily, weekly), and automatically make adjustments.
The big surprise is that this service is fee free. Honestly, this sounds like about the best after tax investment you can make for a large percentage of the population.
The only down side is that they are slowly rolling out the service. You can’t just sign up and start investing today. You have to sign up and you’ll get a spot within about a month, or sooner if you get 5 other friends to sign up…
I’m ready to invest… I just need four more friends, or to wait another couple of weeks. If you’d like to help me out, please sign up for their waiting list (no obligation) using my referral link.
Just the other day, I read that Discover was effectively making their CashBack bonus redeemable in any denomination. I read it about their Discover cards, but they offer a cashback on their Checking account too. Since a new month has just turned over, I decided to try it with my Discover Checking and I’m happy to report that it works.
The Discover Checking account doesn’t pay interest, but they have very low fees and offer free checks, plus they pay you for using them. For every check you write or payment made through their online bill pay, they give you $0.10 in cashback bonus. Previously, you had to build up $20 in this bonus to do anything with it. Now, you can apply it directly to your account.
So what does this really mean?
Before I started using Discover Checking, I did the vast majority of my checking with a local credit union that paid .10% interest. Several months back, this was between about $0.50 – $0.70 cents per month. I started moving my saved cash to a Barclays savings account paying .9% interest. Now, I’m getting about $5 per month out of that money. Since my credit union isn’t holding on to very much of my money for long at all now, the interest I’m earning there dropped down to a paltry $0.08 last month.
But, that’s ok. In November, I earned $5.19 in interest from Barclays and $4.50 in cashback bonus from my Discover Checking account.
So, just by moving my money around a little, I took cash that in a typical year would earn me less than $10 and supercharged it so that it will earn me around $100 (assuming my cash reserves stay relatively flat).
In the grand scheme of things, $8 – $10 a month is not much money, but it’s something. Add that to the $20 per month my shiny new Santander Checking account should start producing soon, and I’m closing in on $350 a year in additional income. All possible because I’m using YNAB to keep close track on my money.