It was one of the tools that allowed me to maintain healthy credit card usage habits. In my idle time when messing around on my phone I’d gotten into the habit of just transferring money from my checking account to my credit card, often in excess of my actual balance, so as to cover “pending” purchases.
Not only will my bank no longer let me do that, just to twist the knife a bit, they will let me make multiple payments totaling the pending total due so long as no individual payment exceeds my actual balance.
So it’s not that they can no longer handle negative balances on the card, it’s just that they’ve half-ass made the interface disallow it.
Easy peasy. Instead of making payments to your credit card, transfer the amount to a high yield savings account instead. Then use that savings account to pay your CC once per month. (Savings accounts typically have a limit on debits, but you can usually make as many deposits as you want.)
Enjoy the cashback AND a few bucks in interest AND having your checking account accurately reflect your “real” money at all times.
Where is this mythical high yield savings account?
It’s a common financial instrument. You can find many providers online.
You get a much better interest rate than a typical savings account (I think current rates are around 4% or so), but you are typically limited in the number of withdrawals you can make per month. Banks offer better interest rates because the cash is less volatile and sits in the account longer. They are good for cash you want to park somewhere for a while but that you still need quick, infrequent access to, like emergency funds. Credit card payments are also a fine use for it, though I’d say the benefit is pretty minimal unless you consistently maintain a balance greater than the credit card payment.
They vary wildly. The typical savings account now as about 1% or less. There are some online versions when offer 3.5. There are a few with stipulations: $200,000 in the account or deposits of $5,000 a month. Those are approaching CD type rates with rules.
But they are not particularity common.
One that earns you more than the default 0.15% or so that you earn on most savings accounts.
You have to do a bit of hunting, but for example, I have an account with Citizens Access that earns 3.50% last time I checked. It’s not much, but it’s better than earning nothing on the emergency fund that I want to keep liquid and accessible.
That is a really good rate. Online only version of Citizens bank right? The regular citizens rates are low like everyone elses, I wonder why they are offering such a high rate? You would think online banking wouldnt be that much of a benefit to them anymore but I guess it is. Pretty rare these days!
Yeah, its their online-only bank.
I have no idea why some banks can offer those CD-like rates while others offer virtually zero. Capital One 360 Savings and Ally have similar rates as well.