Also:
Are you sure it’s because they “caught on”? My applications are often not instantly approved, because my existing credit lines are at the limit of what the issuers will lend, so I have to call recon and ask for lines to be allocated from existing accounts. Sometimes I call to lower existing lines in advance.
Good idea. I reduced a credit line on an existing NW card in order to get another NW card. That was at a rep’s suggestion after he told me what they could offer. I might try it with NFCU.
What issuer is “NW”?
Northwest FCU.
What cards of interest do they have?
Credit Cards New | Northwest Federal Credit Union - these don’t seem that interesting?
The 2% card with the $150 bonus was interesting to me. It helped I had another card for 15 years.
I prefer credit unions to big banks like Citibank, Chase, etc.
I also prefer credit unions, but banks have way bigger sign up bonuses, so i make more money off them.
This one feels like it has the potential to be huge. 4% cash back, no cap, requires $100k to get the full 4% back. Their savings account has a competitive rate and apparently investments count towards the relationship requirement. US Bank hasn’t released the card yet but I suspect this will be the best option for Team Cashback, beating out BoA’s Platinum Honors.
Looks interesting but not sure if U.S. Bank can sustain a 4% cash back for all purchases. The corresponding rate for BofA is 2.625%.
USB might be looking for deposits from higher net worth individuals. This would be an interesting way to do it - while the savings rate offered is competitive, it’s still a percentage point behind treasury bills and surely much less than what they are offering borrowers on products like auto or personal loans.
If investment holdings count (and that is a big IF), there is no need to put money into the savings account, so it doesn’t matter what the savings rate is.
You need at least $100k in deposits in Smartly Savings Account (which pays 4.1% APY currently) to get 4% cashback.
From US Bank’s standpoint, all these deposits would allow them to offer more loans. At a standard loan-to-deposit ratio of 70%, for each $100k deposit, they can loan out $140k at say 6.5% APR (current 30-yr fixed mortgage rate w/perfect credit), which equates to 5% (or $5k) returns on the $100k deposited (6.5% x 1.4 - 4.1% x 1). I ignored the ~1% default rate for borrowers with FICO > 750).
Assuming they get on average 2% in interchange fees (probably a bit more), it’d take $250k in annual spending for the extra 2% in cashback they offer to cost them $5k. I’m guessing they estimated that the average $100k depositor won’t use the card that much unless they MS.
Especially since from a user standpoint, you need much less to break even vs a regular 2% cashback card. Assuming you lose 1% vs T-bills on $100k deposits earning only 4.1%, you’d only need $50k spend to break even. Sizeable but only 20% of what it’d take to make it unprofitable for US Bank.
P.S.: The difference with BoA offering only 2.625% for $100k invested at Merrill Lynch, is that you can probably find fixed income investment options earning more than 4.1% APY.
Agree that it is not that great if the money has to be kept in their savings account at 1% below the treasury bill rate.
Nevertheless, the fine print of the offer says
Have “Combined Balances” with U.S. Bank in open consumer checking account(s), money market savings account(s), savings account(s), CDs and/or IRAs, U.S. Bancorp Investments and personal trust account(s) (business accounts, commercial accounts, and the Trustee only (IFI) client relationship do not qualify)
So it may be possible to have the balance in an USB investment account. But it is not clear to me if the investment account can be “self-directed” without additional fees. Things will become clearer when this is rolled out and people posts their feedback.
I dunno… I’d rather get a higher credit card rewards rate as opposed to a higher savings rate. Our spend at this point in our lives is high, and our marginal tax rate is also quite high.
Adding in net investment income tax for us… Uncle Sam gets about 40% of whatever extra interest this account generates. The IRS wouldn’t see a penny of the credit card cash back. This is why I prefer to chase credit card SUBs as opposed to bank account SUBs.
Fidelity had offered a 3% cashback credit card if you become their wealth management client with >$2m. However, the enrollment is paused for now. Post on DOC:
You can also invest it in the stock market for that part of your portfolio. I got the $100K by investing in VTI, which has had a return much larger than fixed income.
Interesting, I hadn’t noticed they paused enrollment.
I have sizable assets at Fidelity but no desire to have them manage any of it. Here’s to hoping that they change the requirements… would love to see requirements involving minimums in their funds rather than active management. FZDXX continues to be my preferred holding for cash, at least until the fed starts making moves.
I’m in the same boat. I’m not willing to pay the advisory fee for their wealth management services (minimum $2M). Fees based on AUM have the wrong incentives for my purposes anyway.
It’s also much more cost effective for me to pay an hourly fee every now and then when I need financial planning advice and manage the rest myself. Paying $5k one-time for a CFP to draft a complete retirement + estate plan that I can then execute is much more cost-effective than giving Fidelity (or others) 0.5-1% annually on $2M+ under management each year for holding my hand through trivial tasks (rebalancing, taking withdrawals, etc).
I’m not sure why they paused the service to be honest. An extra 1% cashback is not that great considering the requirements and associated costs.
My issue with FZDXX is the low percentage held in Treasuries. I am in a high state income tax state, so that matters to me. They have FDLXX and FSIXX.
Ah, I’m in an income tax-free state so that is not an important consideration for me.