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Saving

Banks continue to pay bonuses to attract new customers. The latest offer comes in the form of a CIT Bank bonus of up to $400. If you’re looking for a safe place to tuck away your emergency fund or vacation savings,

Everybody needs a safe place to tuck away their emergency fund or vacation savings. A high yield savings account is a great option. Considering that the average savings accounts earn a measly 0.06%, however, you’ll want to make sure to find the absolute highest rate that you can.

This is where CiT Bank comes in. You may not have even heard of them before. The small bank was founded in 2009 and has only 71 branch locations (all clustered in California). However, they are hanging with the likes of GS Bank and Ally by offering an excellent online savings account rate: 1.05%. While one percent doesn’t sound like a whole lot, this is the top of the line right now, folks. But that’s not all.

There’s also a bonus of up to $400.

Why CiT?

CiT Bank’s high-yield online savings accounts offer competitive perks, including the obvious – a great APY – as well as $0 maintenance fees on your account. There aren’t any fees to open the account, either, and there’s only a small $100 opening deposit minimum.

Other banks offering the same impressive rate of 1.05% include GS Bank, Synchrony, and Ally Bank.. However, if you’re looking to park your money somewhere with a great rate that will also put a little extra cash in your pocket, CiT Bank’s bonus promotion is an excellent opportunity.

How to Get Your Bonus, Up to $400

All you have to do is open and fully fund an account by June 30, 2017. This need to be new funds, not simply moving those that are already on deposit through CiT or OneWest banks. The bonus itself is tiered, based on the amount you deposit and your average monthly balance for the first three months.

The bonus amounts are $100 (for a monthly average between $15,000 and $99,999), $250 (average balance of $100,000 to $299,999), and an impressive $400 (for balances of $300,000 or more). Again, you have to hold this average monthly balance for three full months after you open the account, or the bonus is forfeited.

cit bank bonus

Is It Right For You?

If you have some savings that you’d like to tuck away in a high yield, online savings account – such as your emergency fund – CiT Bank is worth a look. This is particularly true if your savings is greater than $15,000 and you can take advantage of the bonus being offered through June 30, 2017.

No promo code is needed, simply visit their website (or, if you’re located in central CA, find one of their 75 branches) and sign up.

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A while back, I wrote about the opinions of Scott Adams on his eventual success as the creator of the comic strip Dilbert. I focused on the failure aspect of the article he wrote for the Wall Street Journal and I wanted to revisit the topic, as only touched lightly on the success factors. Specifically, I want to talk about systems — a methodical way of approaching any particular effort — as one of the core components of success.

A household uses systems all the time. For example, you may have a system for effective grocery shopping. Perhaps you keep a notepad and pen on the refrigerator, write down anything you need to purchase when stocks are low, and take the list with you on your shopping day. For the most part, this should prevent you from veering away from the list too much when you shop.

Or, you might have a different system for grocery shopping. You may schedule an automatic shipment of groceries to be delivered to you from Amazon.com every two weeks, each time with the same basic order.

Can You Save With Amazon Subscribe-and-Save or Amazon Pantry?

If you read Consumerism Commentary regularly, it’s likely you have at least one system in place to improve your savings over the long-term. It’s a concept I’ve discussed many times in the past. And it’s such a basic piece of financial advice that you’ve no doubt heard of it even if you haven’t been reading my writing for long.

So, why automatic savings? And how can you set up this sort of system for your money? Let’s talk about that a bit today.

You must make your savings automatic.

By creating a system that handles your savings automatically, you eliminate or greatly reduce the chance of not reaching your goals. It’s a technique that someone at any income level can put into practice. Having a bank account (or an account at a credit union) makes it easier because financial institutions have technology that assists in this approach to money management.

Every once in a while, if you read about money management, you might come across a rule of thumb. “You should save 10 percent of your income” is one such common refrain. You can look at this either as a position to start or as a goal that might take some time to accomplish due to other factors. Even starting a savings system with 1 or 2 percent of your income is better than haphazardly setting money aside.

The point here isn’t setting your sights on a particular percentage. The point is to make a habit of savings, even if it’s only a few dollars a week. Luckily, there are plenty of easy ways to make that happen, including:

Direct deposit of your pay. The fewer hands that touch your money from the moment you receive it to the moment it is used, the better. Most modern employers offer direct deposit. Rather than receiving a paper check, you provide your banking information to the employer, and the company sends an electronic payment directly to your bank. In most cases, you receive your pay as much as a business day sooner, so you have the opportunity to pay bills or collect interest faster.

Today, about 82% of workers are paid through direct deposit. Luckily, that makes it easy to build savings. Often times with direct deposit, you can split your income between two or three different bank accounts. So you can have some percentage sent to your savings account before you even see your paycheck.

Even if you can’t sign up to split your check between accounts, moving your money straight to your checking account makes it easier to take advantage of the following options for automating your savings.

Automatic bank transfers. Almost every bank with which I’ve had an account — and that number is likely around forty — has some method of creating automatic transfers.

Let’s take my Wells Fargo account. When I sign in, the option to schedule an automatic transfer is one of the primary options in the menu. With income directly deposited into your checking account, and with a savings account earning at least a little bit of interest, you can create a savings system that you set once and forget about. After a few weeks of regular transfers (completed behind the scenes by the bank’s software), you won’t even notice the money isn’t in your checking account.

But a brick-and-mortar bank might not be the best option for savings. Sometimes your checking and savings accounts will be at two separate banks. In fact, often it’s better to separate these accounts so you can keep your savings in a bank that you’re not tempted to visit every day, like an online bank.

Related: The 4 Savings Accounts Everyone Should Have

Online banks often offer better interest rates, anyway. Over the last few years, the lines between online banks and brick and mortar banks have blurred. More traditional financial institutions are offering accounts you can only use online, for example.

The great part about many of these online banks, such as Capital One 360, is that you can link your online banking account with an account from another bank. You can then schedule automatic transfers to your online savings account, just like you would if your savings and checking accounts were with the same bank or credit union.

Value-added services. A few years ago, Bank of America introduced its “Keep The Change” program. When introduced, it was one of the first programs of its kind. Now, there are numerous banks doing the same thing, but they’re all a great hands-off savings option.

Here’s how it works: Every time you make a purchase with your debit card, the bank will round the transaction up to the nearest dollar and transfer the remainder into your Bank of America savings account. The bank’s savings account earns paltry interest compared to some other banks, but this systematic savings could still be substantial.

It’s like the old coin jar at home. At the end of the day, when you used to take the change out of your pocket and place it in your coin jar, saving your remainders. Since more people have moved away from cash transactions and started exclusively using plastic — credit cards and debit cards — the coin jar doesn’t receive as much attention as it used to.

See How Albert, Another App, Can Save Your Money Automatically

This, despite all the problems with Bank of America, was a clever extension of the coin jar metaphor into the digital age. Keep in mind, though, any interest you earn on savings in a bank account can be easily negated by account maintenance fees. You need access to free banking, especially if your savings isn’t large enough to produce interest that outweighs those fees.

Third-party services. Several penny-rounding and similar apps and services have popped up in recent years. These operate on a similar principle as the Keep the Change program, but are created by other entities.

One such option is Digit. This app tracks your bank account spending to watch for trends and habits. Then, it will transfer small amounts out of the account when you can afford it, to begin building a savings stash. When you’ve built up a little stash of cash (or on a weekly, monthly, or other regular basis), simply transfer it to your savings account and begin earning interest.

Another option is Acorns. This app hooks up to your bank accounts to track your spending. It rounds up the amount of each transaction to the nearest dollar, just like Keep the Change. When you get to a certain level of savings in the queue, it uses those funds to invest in low-cost EFTs.

Acorn is a little more sophisticated than past savings apps, since it invests your money rather than putting it into a savings account. With a $1 per month fee for accounts under $5,000 or .25% fees on balances of over $5,000, you could probably find lower-cost investments elsewhere. But if you have trouble saving, this could be an easy way to start investing without having to change your habits much at all.

There’s a drawback to automatic savings.

The advantage of creating this system for saving money can also create a money management problem. Once you stop actively making one particular decision with your income each pay period, it’s easy to forget what you’re doing and why you’re doing it. You need to continue to look at your financial status on a regular basis. Frequently evaluate whether the choices you made and set into motion with an automatic system continue to be the best options for you.

How Much Should You Be Saving? Check Out the 50-20-30 Rule

If you started by saving 2% of your income but your situation improved, have you also increased your savings rate? Can you get to 10% two years after starting your system? If you have been saving 10% and don’t feel any stress, is it safe to move to a 20% rate of savings? Once your system is a natural piece of your process — so much so that it is invisible to you — you could be giving up some control or awareness of your financial situation.

Personal finance is about making conscious choices with your money. That includes not using money without considering the circumstances. The present scenario changes over time, and a system does not relieve you of the need to see every pay check as a money-saving opportunity.

Automatic saving leads to success.

With that said, automating your savings could lead you to better success with your personal finances. With more savings, you can avoid expensive debt and reach financial independence sooner. Just set a reminder in your calendar to check back on your automated savings plan at least once a year, if not quarterly.

With review and tweaking, a system like automating your savings can make your personal finances less stressful and more successful.

How do you automate your savings?

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While I’m generally happy with my Capital One 360 account for a good portion of my savings, I’m looking to spread the money around to take advantage of some higher interest rates. One of the banks I’ve targeted is FNBO Direct, the online arm of First National Bank of Omaha, currently offering 0.95% APY as of March 2017 (subject to change).

FNBO savings

FNBO Direct is a member of the FDIC, so deposits at the bank are insured. As long as balances stay below the limits set by the FDIC, I won’t have to worry about the safety of my money.

Banking Deal: Earn 1.05% APY on an FDIC-insured savings account at GS Bank.

Opening my account at FNBO Direct

Opening a savings account at any bank takes several days from start to finish, and FNBO Direct is not an exception.

Step 1: Visit FNBO Direct and fill out an application [click to continue…]

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Whether you’re taking care of multiple children, a disabled spouse, or elderly parents, you’ve likely experienced the high cost of dependent care firsthand. With expenses from babysitters to after school programs, it can be difficult to stay ahead of all your other financial obligations while spending on dependent care.

To help make dependent care more affordable, President-elect Donald Trump has included a new provision in his child care plan: the Dependent Care Savings Account. It’s a tax-favored account that anyone with dependents can contribute to in order to save for eligible expenses. Read further to learn exactly what it is, how it works, and who will benefit from it.

What Is The New Dependent Care Savings Account?

Trump’s child care proposal includes creating a Dependent Care Savings Account (DCSA). Parents can contribute up to $2,000 per year to this tax-favored account. Contributions are tax deductible and grow tax-free. Much like a Health Savings Account (HSA), money in a DCSA doesn’t expire. Unused contributions can even be used for a child’s college education expenses once he/she reaches 18.

How Does The Dependent Care Savings Account Work?

DCSAs will be available to everyone regardless of employment status. They won’t be tied to employer accounts.

As previously stated, the maximum annual contribution for DCSAs will be $2,000. Unlike employer-sponsored Dependent Flexible Spending Accounts, unused money in a DCSA will be allowed to carry over year after year. In this way, substantial amounts of money can be accumulated for future dependent care expenses.

Examples of eligible dependent care expenses include:

  • Children
    • After school programs
    • Babysitters
  • Disabled  Spouse
    • In-home care
  • Elderly Parents
    • Adult day care
    • Assisted living

The exact details on how claims will be processed and reimbursed have not been released yet. We suspect it’ll operate similar to an HSA, but on a federal level.

Who Does The Dependent Care Savings Account Benefit?

Anyone who spends money on dependent care can take advantage of the DCSA and reap the tax benefits.

It should be noted that dependents include disabled spouses and elderly parents, not just children. This broadens the applicability of the money put into the account and makes it all the more easy to use it for eligible expenses.

Low-income parents will receive an additional benefit when using DCSAs. The government will match half of the first $1,000 contributed each year. That’s $500 in additional benefits each year.

Trump hasn’t laid out the specific details on how he plans to fund the government match for contributions made by low-income parents. That, however, would come at a large cost. Over 40% of American households have children. If every low-income parent contributed to DCSAs up to the government match, he would need to find a viable way to fund all of those accounts.

His general answer to the funding question is that it’ll be “offset by additional growth.”

Final Thoughts

It’s important to note that in order for DCSAs to have a large scale impact in reducing the cost of dependent care for American families, parents will need to take advantage of the account and contribute to it. Given that participation in FSAs and HSAs has been increasing, the outlook seems promising.

The $500 government match for low-income parents is a lofty provision but may be underutilized in reality. Low-income families may have a hard time coming up with the disposable income to contribute to a DCSA in the first place.

President-elect Trump’s child care plan, specifically the creation of the Dependent Care Savings Account, depends largely on utilization rates. We have our eyes peeled to see how this change affects finances for the U.S., especially families with children or elderly parents.

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Financial Upgrades You Need After Becoming Parents

by Robert DiGiacomo

New baby? No doubt this new arrival has turned every aspect of your life upside down in the best possible way. Now is the time to make sure your financial house is in order. Here’s a 10-step account and financial checklist to lay the groundwork for your little one’s successful future. New account checklist for […]

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Best Online Savings Accounts of 2017

by Richard Barrington

The best high-yield online savings accounts offer strong interest rates and great customer service, making them a popular option for savers. Studies also show online savings accounts often come with lower fees. Read More “High-yield” is unfortunately a bit of a misnomer these days; a decade ago, interest rates were 4 percent and 5 percent among select […]

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New 529A Plans Help Disabled People Save Tax-Free

by Luke Landes

Now that the government backed down on its proposed changes to 529 plans for future education expenses, we can expect the same tax benefits present for education to be applied to families and individuals who face expenses caring for disabled people. Families will be able to deposit funds into special savings accounts, called 529As, and […]

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Prize-Linked Savings: Win Money For Opening a Savings Account

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Since December, federal banks and credit unions have been allowed to offer savings accounts that include a raffle element, after some states have allowed accounts like these for some time. The goal of these lottery-like accounts is to encourage more people to save money, particularly those households with low and moderate incomes. This was the […]

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What Is the Best Savings Rate?

by Luke Landes

People like rules of thumb and quick answers. When a complicated question can be answered by an authority with a simple response, the reaction is likely to be one of two possibilities: a feeling of well-being and satisfaction if the questioner is meeting the requirements, or motivation to improve if the ideal situation is not […]

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Should You Open an IRA With Your Bank? Ally Bank Offering $250 Bonus

by Luke Landes

It’s easy for me to look back in time and analyze the faults of my twenty-two year-old self. If only I had started saving and investing sooner, I’d be in a better financial situation. My younger self would assume I had forgotten what it was like for me during that time period, when I had […]

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