High-Yield Savings Accounts: Profit per Account

Profit per Account

In the post, “Which High-Interest Savings Account Should I Get?” we listed the best options for ordinary savings accounts and also for mega high-yield options which come with strings attached. With the semi-demise of the Netspend cards, I thought it would be neat to take a look at how much each of these high-yield accounts nets annually in dollars rather than in percentages.

The idea here is that each added account is an additional headache to deal with. All of the accounts have requirements to get the bonus interest rate, such as making 10 or 12 debit card transactions, spending $500 or $1,000 on their card, logging in monthly, 90-day inactivity fees, among other things. And I find that each added account takes up virtual real-estate in my head.

Thus, when determining whether to add an account or not, the decision revolves partially around the net total I’ll get from the account, irrespective of the APY rate offered. Of course, the APY is important too, and so is the level of hassle inherent to the account. Hassle levels vary greatly from one account to the next as some accounts are easier to deal with than others.

In this post, we’ll look just at the dollar net, not at the APY rate or hassle involved. See the original post for more details on those aspects.

Opportunity Cost

To give a baseline for these calculations, we’ll assume that you have a 1% savings account, for example, an Ally Savings account. There are a bunch of other options slightly higher or lower than that, but we’ll use that as an easy vantage point. If you’d put $5,000 in a 1% Ally account, you’ll have $5,050 in the account after a year. We’ll call this Opportunity Cost.

Another Opportunity Cost that comes up occasionally is the need to put spend on the bank’s debit or credit card and forgo credit card rewards. We’ll factor that in as well.

Note that the exact calculations involving APY are difficult to compute since it depends on how often it gets compounded, whether you pull out the interest or reinvest it, among other factors. Hopefully, I got close.

Consumer’s Credit Union – 4.59% APY

Read our post on CCU here

• Interest Rate: 4.5% on $20,000
• Annual Cash Total: $900
• Opportunity Cost: -$200

This account requires spending $1,000 on a CCU credit card. The card earns just 1% cash back so let’s deduct $120 from our Annual Cash Total. (You could do better if you spend at the grocery store and get 3% back, but let’s keep it simple.)

• Opportunity Cost: -$120
• Total Net: $580

For going through the trouble of adding the CCU account to my arsenal, I’ll net an extra $580 annually.

One good thing about CCU is that they recently underwent a devaluation so hopefully the current rates will stick for a while.

Northpointe – 5% APY

Read our post on Northpointe here

• Interest Rate: 4.91% on $10,000
• Annual Cash Total: $491
• Opportunity Cost: -$100
• Net: $391

For going through the trouble of adding Northpointe to my arsenal, I’ll net an extra $391 annually.

Main Street Bank – 2.25% APY

Read our post on Main Street here

• Interest Rate: 2.225 on $25,000
• Annual Cash Total: $556
• Opportunity Cost of 1% Account: – $250
• Final Net: $306

For going through the trouble of adding this Main Street account to my arsenal, I’ll net an extra $306 annually.

Caveat: This account is tougher than the rest since they require that your activity should appear as your main checking account.

Lake Michigan Credit Union – 3% APY

Read our post on LMCU here

• Interest Rate: 2.96% on $15,000
• Annual Cash Total: $444
• Opportunity Cost of 1% Account: -$150
• Final Net: $294

For going through the trouble of adding LMCU to my arsenal, I’ll net an extra $294 annually.

One American Bank – 3.5% APY

Read our post on One American here

• Interest Rate: 3.44% on $10,000
• Annual Cash Total: $344
• Opportunity Cost of 1% Account: -$100
• Final Net: $244

For going through the trouble of adding this One American account to my arsenal, I’ll net an extra $244 annually.

Also note that recently we got one tentative data point indicating opening this account is just a soft pull.

Mango Prepaid Card – 6% APY

Read our post on Mango here

• Interest Rate: 5.85% on $5,000
• Annual Cash Total: $292.50
• Opportunity Cost of 1% Account: -$50
• Monthly Fees: -$36
• Final Net: $206.50

For going through the trouble of adding Mango to my arsenal, I’ll net an extra $206.50 annually.

The caveat here is that this account requires spending $800 per month on the Mango debit card. If you use a debit card instead of a 2% credit card, it will virtually wipe out any gains from this account.  However, if you use it for debit-only transactions which wouldn’t work with a credit card, the account can make sense to get.

Alden Credit Union – 5.125% APY

Read our post on Alden here

• Interest Rate: 5% on $5,000
• Annual Cash Total: $250
• Opportunity Cost: -$50
• Final Net: $200

For going through the trouble of adding this Alden account to my arsenal, I’ll net an extra $200 annually.

Great Lakes Credit Union – 3% APY

Read our post on GLCU here

• Interest Rate: 2.96% on $10,000
• Annual Cash Total: $296
• Opportunity Cost of 1% Account: -$100
• Final Net: $196

For going through the trouble of adding GLCU to my arsenal, I’ll net an extra $196 annually.

Insight Prepaid Card – 5% APY

Read our post on Insight here 

• Interest Rate: 4.91% on $5,000
• Annual Cash Total: $245.50
• Opportunity Cost: -$50
• Final Net: $195.50

For going through the trouble of adding Insight to my arsenal, I’ll net an extra $194.50 annually.

Netspend Prepaid Cards – 5% APY 

Read our post on the Netspend cards here

• Interest Rate: 4.91% on $1,000
• Annual Cash Total: $49.10
• Opportunity Cost: -$10
• Final Net: $39.10

For going through the trouble of adding Netspend to my arsenal, I’ll net an extra $39.10 annually.

Two notes:

• There are actually numerous Netspend cards, and you can net $39.10 from each one.
• Many of us already have some Netspend cards set up and that might sway us to keep the cards for the extra $39.10 profit. Personally, I think I’ll close out all my Netspend accounts so as to simplify my life.

Totals

For easy comparison, here are the profit totals after factoring in opportunity cost (not the actual amount of money you’ll get, but what you’ll get more than using a 1% account):

• CCU: $580
• Northpointe: $441
• Mainstreet: $306
• LMCU: $294
• One American: $244
• Mango: $206.50
• Alden: $200
• GLCU: $196
• Insight: $195.50
• Netspend: $39.10 per card

$5,000 Baseline

Suppose you only have $5,000 to put in a savings account. Here’s the profit you’ll get by using these accounts after deducting the opportunity cost (again, this is not the amount of money you’ll actually get):

1. Mango: $206.50
2. Alden $200
3. Insight: $195.50 (same for Northpointe and for 5 x Netspend)
4. One American: $122
5. LMCU: $98
6. GLCU: $98
7. Mainstreet: $61.25
8. CCU: $55 ($225, minus $120 for the credit card use, minus $50)

Final Thoughts

I actually had a better time putting together this post than anticipated, and I found it interesting seeing how the numbers played out.

We based our Opportunity Cost numbers on a 1% APY account such as Ally. If you have an account that earns more (we’ve seen recently some 1.2% or 1.1% options), the profit numbers calculated above go down slightly.

Also keep in mind that we only went through the nationally available accounts, but be sure to check out the locally available options too to see if you can get something better. There are also a whole bunch more local options that offer 3% APY which we haven’t yet posted about.