Many offer similar features to checking accounts (like the fact that they’re FDIC-insured) and have higher interest rates with low to no fees. Below is a look at some of the best cash management accounts so you can determine whether it’s the right choice for you.

10 Best Cash Management Accounts

1. Wealthfront Cash Account

A popular robo-advisor, Wealthfront offers a high annual percentage rate (APY). There are no limits on the number of transfers you can make, no maintenance fees, and your money is FDIC-insured for up to $8 million. You can now move money between accounts and the account comes with a debit card. The minimum initial deposit is only $1.

The APY applies to all account balances – there is no minimum or maximum balance required. Same-day withdrawals are free, and wire transfers are available for just $10. You can use the account to pay bills and send checks, as well as to deposit checks through mobile deposit. The Wealthfront Visa debit card can be used at 19,000 fee-free ATMs nationwide.

• Rate: % APY
• Fees: None
• FDIC Insurance Limit: $8 million
• Debit Card: Yes

Read our Wealthfront Cash Account Review

2. Betterment Cash Reserve

Betterment Cash Reserve doesn’t have any monthly maintenance or overdraft fees and no minimum account balance requirement. You’ll need $10 to open an account. While you don’t get a debit card, you can also open a Betterment checking account and get a Visa debit card. Extra perk: You can get rewards for using the card.

The account comes with unlimited withdrawals, as well as the ability to create multiple savings goals. Betterment provides automated tools to help you reach those goals.

• Rate: % APY, but currently paying 5.50% for the first three months when you open your first cash account.
• Fees: None
• FDIC Insurance Limit: $2 million ($4 million for joint accounts)
• Debit Card: No

Read our Betterment Review

3. Schwab Bank Investor Checking

Charles Schwab, the largest retail investment broker in the world, offers its Investor Checking account to holders of a Schwab One brokerage account. Not only does it pay interest, but there are also no monthly service fees or account minimums. If you are already a Schwab investor or plan to become one, the account links directly with your brokerage account. That will make for easy transfers between checking and investments.

The account comes with a Schwab Bank Visa Platinum Debit Card, which comes with unlimited ATM fee rebates worldwide, and no foreign transaction fees. You can also take advantage of online and mobile bill pay, and free standard checks. Schwab also offers money funds and certificates of deposit paying much higher rates of interest.

• Rate: 0.45% APY
• Fees: None
• FDIC Insurance Limit: $250,000
• Debit Card: Yes

4. InteractiveBrokers

InteractiveBrokers doesn’t offer a formal cash management account, but it has the equivalent of a brokerage account. You can earn interest on uninvested cash balances above $10,000 at a rate of 4.83% APY. Unfortunately, balances below $10,000 earn no interest.

The account can be used very much like a bank account. For example, you can use it to pay bills to individuals and businesses in the US using electronic checks. You can also accept mobile check deposits as well as automatic payroll deposits. It comes with a Debit MasterCard that features no foreign transaction fees.

• Rate: Up to 4.83% APY on cash balances over $10,000
• Fees: None
• FDIC Insurance Limit: $250,000
• Debit Card: Yes

5. Aspiration Spend & Save Account

What we like about Aspiration is that it’s very focused on its values, while still being able to offer account holders a high interest rate. When you use your debit card, Aspiration gives up to 3-5% cash back (or up to 10% with Aspiration Plus) on purchases at merchants that are part of its Conscious Coalition, including Warby Parker and Blue Apron.

Otherwise, you’ll still earn a decent everyday 0.5% back from larger retailers that scored high on its Aspiration Impact Measurement like Apple, Best Buy, Google, Microsoft, and CVS. Cash back earned is credited to your account monthly.

Choose your monthly fee, even if it’s zero, and get fee-free access to one of the largest (55,000+) ATM networks. All you need is $10 to open an account.

• Rate: 1.00% APY (3.00% APY for Aspiration Plus) in any month you have at least $500 in qualifying card transactions
• Fees: None or $7.99/month for Aspiration Plus
• FDIC Insurance Limit: Up to $1.25 million per depositor by being swept to program banks. (Visit fdoc.gov and aspiration.com/program-banks/ for more information.)
• Debit Card: Yes

6. LendingClub Rewards Checking Account

LendingClub Bank is free but you need to make a $100 opening deposit. Although the APY seems low, you do get other perks such as domestic ATM fee rebates worldwide and unlimited 1% cash back if you use your debit card to make purchases.

To qualify for the account, the account must be open for a minimum of 30 days, and you must either receive at least $1,000 in direct deposits into the account each month or keep an average balance of $1,000 or more in the account.

• Rate: 0.00% on balances below $2,500; 0.10% APY between $2,500 and $99,999.99; 0.15% APY on balances greater than $100,000
• Fees: None
• FDIC Insurance Limit: $250,000
• Debit Card: Yes

Read our LendingClub Bank Review

7. SoFi Money®

SoFi was known initially as a student loan lender but now it’s branched out into other products, like its cash management account. You’ll find many of the same features as you would a checking account except it offers a higher APY and there are no minimum opening deposit requirements. If you use your debit card at an ATM can be reimbursed for third-party fees you might incur.

There are no account fees, and you can use the debit card at more than 55,000 fee-free ATMs. It can accept both mobile check deposits and direct deposits and also provides automated bill pay. If you receive direct deposits of at least $1000 per month, you’ll automatically be entitled to overdraft coverage of up to $50 on debit card purchases.

• Rate: No longer offered
• Fees: None
• FDIC Insurance Limit: $1.5 million
• Debit Card: Yes

Read our SoFi Bank Review

8. Empower Cash

Empower Personal Cash doesn’t have a minimum opening deposit requirement, no monthly maintenance fees and you can make unlimited transactions. You can link the account to a bank account you’ve included on the Financial Dashboard, and transfer funds quickly and easily. The dashboard will also provide you with access to Investment Checkups, the Retirement Planner, and other free financial tools.

Although this account doesn’t have a debit card, Empower representatives say this feature will be rolling out soon.

• Rate: 4.70% APY
• Fees: None
• FDIC Insurance Limit: Up to $5 million
• Debit Card: No

9. Fidelity Cash Management Account

A popular brokerage firm, Fidelity might be for you if you want to work with a full-service company.

Like most of the other cash management accounts on this list, there are no monthly maintenance fees or minimum balance requirements. You’ll also get a debit card and you won’t be charged any ATM fees, plus all domestic third-party fees will be reimbursed.

If you want to make payments, Fidelity offers you free checkbooks, as well as bill pay. You can use the account to accept mobile deposits and move funds into your investment account seamlessly.

• Rate: 2.72% APY
• Fees: None
• FDIC Insurance Limit: $250,000, but may be higher depending on the number of participating banks
• Debit Card: Yes

10. Brex

Brex may be a good choice for a business with a high cash flow since you can open this account complete with a corporate credit card and accounting within minutes. There are no fees, though you’ll need at least $50,000 in your account to be able to access all the features. You’ll need to also give Brex access to your bank information since your credit (officially a charge card) limit will fluctuate depending on factors like your balance.

Brex may also be a good choice if you travel or do business internationally. The spending platform is available in more than 100 countries. You can use your account to invoice customers and clients and take advantage of the bill pay feature.

• Rate: 4.94% APY
• Fees: None
• FDIC insurance limit: $250,000
• Debit card: No, but account holders get a charge card

Pros and Cons of Cash Management Accounts

Pros

• A simple way to invest since many of these accounts are managed by brokerages
• Can offer higher interest rates compared to traditional bank accounts
• Offers benefits that are similar to checking and savings accounts
• Offers FDIC insurance protection through partner banks, often higher than what’s traditionally offered

Cons

• Some accounts may not have as many robust features compared to savings and checking accounts
• These types of accounts are online-only, a downside for those who want in-person services
• High-yield savings accounts may offer better interest rates

How We Came Up with the Best Cash Management Accounts

When doing our research, we wanted to find companies with good reputations and a history of consistent customer service. We also looked at other factors such as interest rates, account minimums, fees, and more.

The number and type of features offered by the account also figured into our decision. The more closely a cash management account matches a checking account in features, the more likely we were to include it.

Cash Management Account vs. High-Yield Checking

A cash management account offers similar features and services to a checking account. However, these types of accounts are provided by financial institutions like investment and brokerage firms instead of banks.

While they offer features and benefits similar to checking accounts, the primary advantage of cash management accounts is often the connection with the brokerage itself, or other unique services offered by the provider.

Cash Management Accounts vs Traditional Checking: What’s the Difference?

Traditional checking accounts often come with no to low-interest rates and are offered by both brick-and-mortar and online-only banks. Your money is FDIC-insured up to $250,000 and features may include a debit Visa card, checks, and more. A cash management account offers many of these same features except that it partners with banks to house your cash. While the cash management accounts aren’t themselves FDIC-insured, partner banks are.

Note: APY rates are up-to-date as of January 6, 2024. Please check each brand’s website for the most updated rates.

Frequently Asked Questions (FAQ)

Should You Use a Cash Management Account?

Cash management accounts are growing in popularity because of the organizations the accounts are attached to. Most commonly, it’s an investment broker. The cash management account provides an excellent opportunity to earn high interest while maintaining liquidity within an investment account. You can transfer funds back and forth between a cash management account and your brokerage account as the need arises. Many cash management accounts now offer services very similar to banks, including debit cards with cash-back rewards, bill pay capability, check writing and mobile deposits.

That doesn’t necessarily mean having a cash management account will allow you to eliminate a traditional bank account. Banks provide many services that are not available with cash management accounts. For example, they offer local branches, certificates of deposit, notary services, and a large variety of loans.

Cash management accounts have certainly expanded their service menus, and have valuable tie-ins to significant service providers. However, they’re not quite at the point of being able to completely replace a bank account.

The post The 10 Best Cash Management Accounts of 2024 appeared first on Doughroller.

In a Nutshell

YNAB is for those who want a comprehensive tool to categorize spending as they go and better understand financial habits.

EveryDollar is for budgeters and beginners who want a simple, affordable, or free budgeting app.

About YNAB

You Need A Budget, or YNAB, has loyal fans who claim it has changed their financial lives. This budgeting style looks at each dollar coming in and out and makes sure you keep track of every single penny. It even works with variable income and expenses.

YNAB is based on four rules to help you get total control of your finances:

• Give every dollar a job: This means taking all the money coming into your bank account and allocating every penny to an expense category.
• Embrace true expenses: Set goals for variable expenses or short-term savings like a holiday gifts fund, an upcoming vacation, or paying for a subscription. This means setting aside an amount each month to go towards a future goal.
• Roll with the punches: Budgeting is meant to be flexible, so it’s okay to allocate more or less money to certain categories as long as you’re not spending more than you make. Did you have an unexpected car repair? That’s okay, but you might have to cut back on your restaurant spending this month to cover your car repair expenses.
• Age your money: The goal is not to spend all your money the second it hits your account. It’s okay to have some breathing room, especially for those who want to get out of the paycheck-to-paycheck cycle.

Learn More: 4 Reasons YNAB Beats Mint Hands Down

About EveryDollar

EveryDollar, founded by finance expert Dave Ramsey, is most known for helping folks get better with their finances using baby steps. This budgeting app claims you can create a budget in 10 minutes.

There are both free and paid versions. With the paid version, you can get additional features, including the ability to sync with your bank to automatically populate transactions.

The type of budgeting EveryDollar uses is called zero-based budgeting (similar to YNAB). With EveryDollar, you take your income and divide it into spending, saving, and debt payoff categories. You have to allocate every dollar (hence the app’s name) until there’s nothing left, or it reaches zero.

YNAB vs EveryDollar: Features

Features of YNAB

YNAB works for beginners or advanced budgeters and it also offers features to help you look toward the long term.

Intuitive Interface

When you sign up, you’ll need to add spending categories (you can eliminate or adjust them later). Then you assign money to each category until all your income is accounted for.

The interface is a standout feature, making it easy to see your entire budget in one place. At the top of the dashboard, you can see your total cash flow. On the right, you can see how much you’ve budgeted for the month, the total amount that’s available in your budget.

You can then look closer at your budget and see what happens to it in real time when you adjust your spending categories. It shows you what’s left in each category, allowing you to shift your spending as needed.

Automatically Import Transactions

YNAB users have the option to manually enter their transactions or import them automatically. For the automatic option, you link your financial accounts. If you’re concerned about security, YNAB cannot make changes to your account, only import transactions.

To import your transactions, click on the import button, and any transactions that are at least 24 hours old will populate. This works with some financial institutions better than others. Whether you enter them manually or sync them automatically, you’ll need to assign those transactions into categories.

When you link your credit card accounts, YNAB will also track your cash and credit spending separately.

Age of Money

The Age of Money is a unique feature. YNAB believes the longer your cash stays in your checking account before spending, the better off you are financially. The goal is to be more mindful by spending less or making smarter spending decisions. YNAB encourages you to get to the point where your money is 30 days old. In their own words, “When you are spending money you earned last month, you will have nothing to stress about money-wise.”

The Age of Money indicator will show up at the top right corner of your budget and will keep you updated as you go. It’s meant to motivate you, so shoot for a higher age!

Goals

This feature is exactly as it sounds: create financial goals. It’s a helpful way to clarify what you want and find a way to track the metrics. Ideally, seeing your goals will motivate you to stick to them.

To use, create a goal and select a spending category. This goal will indicate how much money you need to save each month in that category to reach it by your specified date.

You can even set goals for an amount you want to pay towards your debt within a certain timeframe. All you need to do is link your credit or debit accounts though not all accounts can be linked.

Features of EveryDollar

EveryDollar is a simple budgeting app that doesn’t have snazzy features compared to others. Still, it’s a useful tool to help your budgeting game.

Customize Categories

You get to customize the spending categories. You’ll be asked how much you spend in common or major categories like housing, food, and transportation when you sign up. You then add and name additional categories as needed.

Examples include debts, household items, and even your annual HOA fee. You’ll have to make sure you allocate all your money.

Easily Adjust Budgets

Just because you allocate a certain amount of money for each category doesn’t mean you’ll stick to it. That’s why EveryDollar has two columns: the budgeted amount and the amount you’ve spent so far. This allows you to see how much you have left to spend by the end of the month and review your spending habits to see where you may need to make adjustments.

Sinking Funds

You can turn any spending category into a fund, where the money you didn’t spend rolls over to the next month. This feature is useful if you have variable expenses like holiday spending or when paying your property tax bill.

Learn More:

• Best Expense Tracker Apps
• How to Create a Simple Budget in Under 10 Minutes

Automated Syncing of Bank Accounts

The paid version allows you to sync your bank accounts, so your transactions populate automatically.

YNAB vs EveryDollar: Price

How Much Does it Cost to Use YNAB?

YNAB offers a 34-day trial (check it out to see if you like it). After that, it costs $14.99 a month or $99 a year.

How Much Does it Cost to Use EveryDollar?

The good news is there’s a free basic version of EveryDollar. However, you have to input all your transactions manually. This might be an upside if you want to be more hands-on or are new to budgeting.

The Premium or paid version allows you to import transactions directly from your financial accounts. EveryDollar Premium costs $79.99 per year. You can get a 14-day trial to see if you like it, but you must enter a debit card (Dave doesn’t take credit cards!).

YNAB vs EveryDollar: Pros and Cons

YNAB Pros

• Offers tools to motivate you: Sure, you can budget better with YNAB, but the goals function and the dashboard are designed to push you to reach other financial goals, like aging your money.
• Intuitive dashboard: From seeing all your cash flow at a glance, to more detailed spending reports, YNAB has you covered.
• Free trial: you can check out YNAB free for 34 days to see if this app works for you. Paying the membership fee might be worth it if you can save more than $14.99 per month (or $99 per year) by using this tool.
• Continual updates: With each update, YNAB continues to improve, making it more user-friendly for its customers.

YNAB Cons

• No investing features: This might not be a downside if you’d rather just have budgeting software, but those who want more need to look elsewhere to actively track their investments.
• Takes a while to get used to: YNAB is great once you get the hang of it, but you might encounter some challenges when getting started. Not a dealbreaker, but keep this in mind when you start using the app.
• Not many ways to contact customer service: You can’t call or email YNAB to answer any questions. Only live chat is available.

EveryDollar Pros

• Simple to use: You can get everything set up with EveryDollar within a few minutes, assuming you know how much you want to allocate to each category. Plus, the interface is user-friendly.
• Focuses on budgeting only: No need to worry about all the other shiny features if you don’t want to, since EveryDollar does what it does best: helps you create a budget.
• Syncs with Dave Ramsey’s Baby Steps: The app has a section where you can learn the additional baby steps, such as saving for an emergency fund. That way, you can continue to get better with your money.
• Ad-free: you don’t have to worry about being bombarded with ads like other types of free budgeting software.

EveryDollar Cons

• Paid version doesn’t offer much more: Sure, you can sync your transactions, automatically, but to pay $79.99 a year for the privilege might not seem worth it.
• The free version is limited: You’ll need to manually enter transactions which could be a turnoff for many budgeters, and you must enter a debit card.

Related: Best Online Budgeting Tools

Why Choose YNAB

If you’re someone who is detail-oriented and wants to improve your financial well-being with a better budgeting tool, YNAB is for you. The dashboard allows you to see how each dollar is accounted for and whether you’re reaching the financial goals you set.

Why Choose EveryDollar

EveryDollar is best for those who are beginners and want something simple to get started with. Plus, if you’re a Dave Ramsey fan, this budgeting app is a great choice because you can learn about the Baby Steps all in one place.

YNAB vs EveryDollar Which One is Best?

The best budgeting app ultimately depends on what features you want, how you work best, and the price tag. For instance, EveryDollar is a simple budgeting app that focuses on making sure you’re following the amount you give it for the month. It’s also the less expensive choice.

YNAB, on the other hand, is a more complex budgeting app that doesn’t offer a free version, but you’ll get to allocate all money coming (in detail), and you get more snazzy charts and tables.

The best budgeting app is one you will use. So start with one, see if you like it and if you need to change your mind, do so.

The post YNAB vs EveryDollar Comparison – Which Budgeting App Is Best for You? appeared first on Doughroller.

While it seems simple enough (after all, it’s just filling in paperwork right?), opening a business checking account can be more complicated. That’s because banks will run a report on you when you apply for an account to see your past history when it comes to your checking and savings accounts. This is called your ChexSystems report.

What this means is that if you’ve been rejected for a business bank account, it’s most likely because of your ChexSystems report. Not to worry though, because you have options. There are plenty of business checking accounts that don’t use ChexSystems.

Let’s take a look in more detail at what ChexSystems means in regards to your business, how you can still open an account, and how you can make sure to get your ChexSystems report on the up and up.

What is ChexSystems For Business?

ChexSystems is what banks use to gather consumer banking information basically, a reporting agency. The type of information collected includes any negative banking activity. While there are other reporting agencies such as TeleCheck, ChexSystems is the most popular and widely used by financial institutions.

ChexSystems is used to look at potential banking customers. When applying for a banking account, a customer will show up in the system if a financial institution reported them for negative banking activity. This includes insufficient funds, bounced checks, writing checks from a closed bank account, bank accounts that have been closed involuntarily, and unpaid banking fees. These negative reports will remain on your ChexSystems report for up to five years.

ChexSystems also generates a number, called a consumer score based on the reported information. Think of it like a credit report, where credit reporting bureaus such as Experian base your score on your credit activity. Instead, your consumer score will range from 00 to 889, with a higher score meaning that you’re a responsible banking consumer.

Related: 5 Options When You Can’t Open a Bank Account

How Does It Affect My Business?

We already mentioned that ChexSystems can affect your business if you’re a sole proprietor who needs to rely on their Social Security number to open a business bank account. It may sound strange, which is why we’re going to break down why a bank would look at your ChexSystems report depending on your business’s legal structure.

Repeating what we said above, ChexSystems uses your Social Security number to access your report. If you’re a single-member LLC or operate as a sole proprietorship, your Federal ID tax number may be the same as your Social Security number. That’s why when you use this piece of information to apply for a business bank account, banks will consider your ChexSystems report.

However, if you’re a single-member LLC with a separate Federal ID tax number, also known as an EIN (Employer Identification Number), it probably won’t come up in ChexSystems. This also goes for other legal business entities like partnerships or S-Corporations who use a separate federal tax ID number.

That being said, most financial institutions that offer business bank accounts have terms that hold the business owner accountable for the company finances. In this case, you may be asked to provide your Social Security Number even if you have an EIN when you apply for a business checking account.

What this means is that no matter how you structure your business, a bank may look into your ChexSystems report. The good news is that you can look for a no ChexSystems bank if your report isn’t that great.

Important Features to Look For in a Non ChexSystems Bank

If you want to open a business checking account, you can look at your local bank or use our list below. The important thing is to look for a bank that doesn’t have stringent requirements to open a business checking account. More specifically, one that won’t look at your ChexSystems report.

Aside from that, you’ll want to look at features such as monthly fees and minimum balance amounts. You’ll find that many banks offering second chance accounts will have higher monthly initial deposit amounts or even charge a monthly maintenance fee. Luckily, there are plenty of online banks that don’t have these high minimums or charge exorbitant fees.

Other things to think about are what features you’ll use the most. For instance, if you’re planning on opening a business savings account, see if you can link it to your business checking account for overdraft protection. Or if you need paper checks, a debit card, or surcharge-free ATMs, there are banks out there that’ll offer them to you.

Best Business Accounts That Don’t Use ChexSystems

Novo

Novo is a Fintech company that targets small business owners and freelancers. Novo makes it easy for you to open a bank account. Plus you can manage it easily online or through their app (like when you need to deposit paper checks).

There are no minimum balance requirements, though you do need to open the account with at least $50. We also like that your account can integrate with other apps like TransferWise, Slack, and Zapier, making it a breeze to automate some of your business tasks.

Though there are no monthly fees, you won’t earn any interest with Novo’s checking account. That isn’t a major deal breaker if you’re just starting out or not planning on keeping a lot of money in the account. Read more in our Novo Review.

Bluevine

What’s great about Bluevine is that it operates online but offers plenty of features you would find with more traditional and bigger banks. For instance, you can get free paper checks, free cash deposits, small business financing, and earn interest from your checking account balance.

Currently, Bluevine offers [ct_brand_render field=ctsavings_interest_rate id=128004465 /] interest for those with balances up to $250,000 – Eligibility requirements apply. That’s higher than many online savings accounts at the moment. You’ll even get your first set of 200 paper checks for free.

If your business uses a lot of cash, Bluevine is for you. You can access over 90,000 Green Dot locations throughout the U.S. for free and be able to deposit cash payments. Read more in our Bluevine Review.

LendingClub Bank

LendingClub Bank is also online-based and it’s easy to open an account. After filling out your personal details and linking an external account, you can make your initial deposit.

Some of the best features of the LendingClub Bank business checking account include the ability to make cash deposits for free at any participating NYCE and MoneyPass ATMs, unlimited transactions (including ACH and account transfers), and unlimited worldwide ATM fee rebates.

Debit card lovers will enjoy the fact that they can earn unlimited 1% cash back on signature-based and online-based credit transactions. However, you’ll need to maintain a $5,000 average monthly balance. This applies if you want to earn 0.10% APY on your account as well. Read our full LendingClub Bank Review

How We Choose This List

We want to make sure you are banking with reputable financial institutions, which is why we took the time to research dozens of companies to see features such as types of bank accounts, fees, interest rates, and most importantly if they use ChexSystems.

We narrowed down our list to the ones you see above because we believe that they’ll offer you some of the best services around. Keep in mind we may receive a commission (at no extra cost to you) if you sign up for an account through our link. However, we would still recommend these financial institutions regardless of commissions.

Learn More: Best Business Checking Accounts For Freelancers and Entrepreneurs

How to Open a Business Checking Account With No ChexSystems

Opening a business checking account with no ChexSystems can be relatively simple depending on the bank you go with. In most cases, you can head to the bank’s online application form, fill out the required information and submit documentation as necessary. Then you’ll need to create login information and make your initial opening deposit.

However, if you’re opening a business checking account that will pull up your ChexSystems report, you’ll need to clean up your report. Even if you go with any of the above options, it’s still a good idea to improve your report – you never know when you’ll need to work with a bank that requires it.

Here’s what you need to do:

• Get your ChexSystems report: you can request a report from the ChexSystems website. Its free once a year. However, if you’ve already been denied a bank account, this report should indicate the reasons why that happened.
• Dispute and correct any errors: If there’s anything that’s inaccurate on your report, make sure it is indeed an error. Then, you can contact ChexSystems to dispute it. You can even contact your bank to see what’s going on. Whoever you contact, make sure you provide your Social Security number and contact information. Correcting disputes could take 30 days or more.
• Pay off outstanding bank fees: For those who have reports of unpaid bank fees or other types of debts leading to a negative report, pay them off. That way, you can increase your ChexSystems score
• Give it time: The truth is that it could take a few weeks for unresolved disputes and changes in your score to take effect. The key is to be patient and check your report in a few weeks or months.

Which No ChexSystems Business Bank is Best For You?

The best bank will depend on factors such as the size of your company, whether you want access to business loans, and other features like an interest-bearing account. Your final choice should take into consideration how your business operates.

Frequently Asked Questions

Is ChexSystems the same as my credit report?

No. Your credit report is completely separate from your ChexSystems report. Information from your ChexSystems report won’t be reported to the credit bureaus — only banks, creditors, and lenders.

Do I have to be in ChexSystems to open a bank account?

Not necessarily. There are some banks that tend to not use ChexSystems when screening applicants which could make it easier for you to open a business bank account. If you happen to be in ChexSystems, it does open up more options for you. That’s because there are plenty of banks that will use your personal information and check it using ChexSystems before approval.

Is there a way I can find out if I’m in ChexSystems?

You can go to the ChexSystems website to take a look at your report. It’s free every 12 months. However, most who know if they’re in ChexSystems are applying for a bank account and getting denied. The bank in question needs to tell you the reason you’re denied so if it’s based on your ChexSystems report, you’ll know.

Summary

It can feel discouraging when you’re trying to open a business checking account only to get denied because of an issue with your ChexSystems report. Although you may need to take some extra steps, it is possible to set up your financial systems.

If you’re a solo business owner or someone whos self-employed, you can open a business bank account online. Those with larger companies may be able to as well, though there may be more paperwork and other hoops to jump through.

No matter the size of your small business, you can open a business checking account with no ChexSystems verification. That way, you can tick that off your to-do list and work on other aspects of your business, like marketing or helping your customers.

Related: Best Banks for Small Business

That’s not to say you need to completely ignore your ChexSystems report. What it means is that you can use your time to learn from your past financial and banking mistakes to improve your ChexSystems report. That way, if you need to open other accounts or conduct any other form of business banking, you can.

Related:

• Best Small Business Credit Cards
• Opening a business bank account
• Best Small Business Loans
• Best Bank Account for Startups

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Since it’s so important that your deposits are FDIC-insured (the equivalent for credit unions is NCUA, or the National Credit Union Administration, which also operates similarly), let’s take a look at exactly what it is, what it covers, and how to ensure your hard-earned money is safe.

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What is FDIC Insurance?

In 1929, a major event called the Stock Market Crash occurred, leaving many Americans panicked. Having so many banks fail throughout the Great Depression and the other financial blunders during that era created a financial shockwave.

These banks ended up closing or suspending operations because they didn’t have enough money in their vaults to meet the demands of their depositors. Doing so meant that many folks had lost their savings.

In response, the FDIC was created. This was part of the Banking Act of 1933 put in place after almost 10,000 U.S. banks suspended operations or failed.

The FDIC was designed to prevent future panics in the banking industry. It guarantees or ensures the value of certain deposits up to a predetermined amount, and the total number has been growing steadily since 1933. Since the insurance debuted in 1934, the FDIC had guaranteed depositors’ funds due to bank failure. Banks pay the insurance premiums instead of consumers.

What Does FDIC Deposit Insurance Cover?

In October of 2008, Congress decided to increase the limit of FDIC insurance up from $100,000. Before 2006, the FDIC financed itself through the Savings Association Insurance Fund (SAIF) and the Bank Insurance Fund (BIF). These two entities held the insurance premiums charged by the FDIC to banks that are members to keep their funds safe.

FDIC insurance covers up to $250,000 per institution, per ownership category, and depositor. It’s a mouthful, so let’s break it down: each person who makes a deposit can be covered up to $250,000 at each separate bank and per account category.

These categories aren’t the same as the type of account, so checking and savings accounts owned by one person at one bank don’t necessarily count as two different categories.

The FDIC generally breaks down ownership categories into single accounts, joint accounts, trust accounts, certain retirement and employee benefit plan accounts, business accounts, and government accounts.

Remember, this insurance only kicks in when a bank fails. As in, it cannot meet its obligations. If the bank is declared as having failed, the FDIC takes over and then will start selling off the bank’s assets to pay back any debts owed.

Account holders typically get their deposit funds back quickly, up to their insured amount. They may be able to get deposits that exceed that limit but may need to wait until the FDIC sells off the entirety of the bank’s assets and recoup excess funds.

Certain assets aren’t covered by the FDIC, including the contents inside your safe deposit box at the bank and most investment accounts, even if you purchased from them a bank that’s FDIC-insured.

Example of an FDIC-Insured Account

If you have a single savings account at ABC Bank and have $250,000 deposited, with no other accounts, then you’ll be insured for $250,000. However, if you have a few accounts, it can get tricky.

Let’s say you have multiple accounts with one FDIC-insured bank. You have $100,000 in a checking account, $50,000 in a CD account, and $200,000 in savings. Now you have a total of $350,000. In this instance, FDIC only covers you up to $250,000, so you’d be out $100,000 if your bank fails.

Or let’s say you have savings accounts in multiple banks $200,000 in one and $100,000 in another. Because your funds are at two different financial institutions, the entire amount can be covered under FDIC insurance.

Can I Get More Than $250,000 Worth of Coverage?

Getting more than $250,000 worth of FDIC coverage is possible as long as you make sure you spread your money across multiple banks. Using the above example, if you move your $200,000 in savings to a new bank, leaving the CD and checking account with ABC Bank, all of your money can now be insured.

You can also ensure that all your money is insured by having different ownership categories. For instance, if you have a joint account and an account only in your name, those are two different categories.

For example, you decide to keep all your cash at one bank. Instead of having the savings account (with the $200,000) in your name, you open a joint account shared with your spouse. All your money is protected as long as the CD and checking account are only in your name.

If you decide to open a joint account, ensure it’s with someone you trust, especially if it’s not your spouse or family member.

Final Thoughts

Protecting your money is crucial, so it’s important to see if your bank is FDIC-insured. You can do so by contacting the bank yourself (the bank should have signs at their branches or on their website) or go to FDICs BankFind tool to make sure. If you have more than $250,000 on deposit, the best way to guarantee that your funds are insured is to spread them across multiple banks.

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