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Short Summary
Main recommendation: Use a well-established, FDIC-insured, nationally available high-yield savings account to hold cash like an emergency fund, not as a substitute for investing. Graham Stephan's list of top picks for 2019 is Ally, Marcus by Goldman Sachs, CIT Bank, Redneck Bank, and Wealthfront, with T-Mobile as an honorable mention. He stresses that these accounts mainly preserve value rather than build wealth, since rates like 2.5% often barely beat inflation.
Key Points
- Stephan's criteria: a well-known bank, verified legitimacy, availability to anyone in the US (not restricted by state), and FDIC insurance (he jokingly listed a fifth 'criteria' as liking the video).
- Ally pays a 2.2% interest rate on savings with no minimums or fees; Stephan says he uses it for his rental income but notes its rate has fallen behind competitors.
- Marcus by Goldman Sachs pays 2.25% with no fees, but he criticizes the lack of mobile check deposit.
- CIT Bank pays 2.4% if you keep a $25,000 average balance or deposit at least $100 per month, and it offers mobile check deposit.
- Redneck Bank pays 3% on checking up to $10,000 and 2.5% on savings up to $50,000.
- Wealthfront pays 2.5% on its cash account; Stephan opened an account and is splitting funds with Ally for diversification.
Detailed points:
Details Worth Noting
- Concrete instructions: Check each bank's rate, balance requirements, and deposit limits before opening an account. For CIT Bank, meet either the $25,000 average balance or the $100 monthly deposit to get 2.4%. For Redneck Bank, expect 3% on checking only up to $10,000 and 2.5% on savings only up to $50,000. For T-Mobile's 4% checking account, you must deposit $200 monthly and the rate applies only to the first $3,000. Stephan also warns about fake social media accounts asking people to pay in cryptocurrency, which is unrelated to these banks.
- Wealthfront claims $1,000,000 FDIC coverage by splitting deposits across affiliate banks; Stephan says this seems somewhat 'sketchy' (about a 3 out of 10 on his scale) and he'd like direct FDIC confirmation, though it's just his assumption.
- Rates were described as valid at the time of filming in 2019 and may have changed.
- Stephan notes that after inflation at around 2%, a 2.5% rate yields only about 0.5% real return.
Bottom Line
High-yield savings accounts are best used to park emergency funds or money earmarked for near-term purchases, where preserving value matters more than growth.
