Posted by Chuck on July 1, 2016
Checking Accounts

Published on July 1st, 2016 | by Chuck

111

Netspend Neuters their 5% Savings Account, Effective July 1

[Originally posted on 6/1/16, reposting on 7/1/16 since change is now going into effect and is also showing on the Netspend site. Time to unload our Netspend accounts now…]

Netspend is lowering the amount that earns a 5% APY rate on all of their prepaid cards from $5,000 to $1,000. The change will take effect on July 1, 2016, and it applies to all Netspend cards, including Netspend, Brinks, Western Union, HEB, Control, Ace Elite, and the Paypal Prepaid too.

Screen Shot 2016-05-31 at 1.01.57 PM

You can find this update in your Netspend login by going to Move Money > Savings > Savings Terms and Conditions.

While you can keep the accounts for the $1,000 in interest, it’s probably not worth the effort, especially since there is already a slight hassle with keeping it fee-free from the 90-day inactivity fee.

There are still numerous other options which earn above-average interest rates, including Consumer’s Credit Union which earns 4.59% on up to $20,000, and the Mango and Insight prepaid cards. See “Which High-Interest Savings Account Should I Get?” for a run-down of all the options for high-interest accounts and for the best standard rates as well.

How to Unload

On July 1, most of us will want to empty out the balances from the accounts. Interest is paid quarterly so we’ll get a final interest payment for April – June, and we’ll then empty the accounts.

All the Netspend accounts come with an account/routing numbers and are ACH-enabled. Using the account/routing numbers, you should be able to pull the money out into your linked bank account or you can pay your credit card bill on the card issuer’s website. Be sure to first transfer the money from the savings account into the prepaid before making the ACH transfer.

Even savings accounts are getting killed off. 2016 has been brutal.

Hat tip to tbradnc on Reddit

Update 7/1/16: I’ve been having success pulling out money via ACH transfer to my regular checking account; I’ve so far kept my pulls under $2k each so as not to raise any red flags.



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Ben
Ben

Just wow. I sent my wife my referral code to open our 2nd Netspend account right before I came to DoC. Literally, less than a minute ago. That is insane. Guess I’ll be looking into the Insight card now (we already both have Mango).

David
David

Same! I just signed up for four accounts a month ago and my girlfriend is in the process.

tbradnc
tbradnc

I’ve got 6 of these – I’m going ot leave $1000 in each – after all – $6,000 at 5% is the same as $30,000 sitting in Ally earning 1%. I’m already keeping them fee- free with recurring $1 transfers so no extra work involved.

Jake
Jake

This is really disappointing news, but it’s not surprising – the deal was too good to last forever.

I manage 10 NetSpend accounts and have to decide if it’s worth keeping $10k at 5% or if I should just close them out completely. 3-4 times a year I run into some kind of problem with one of my NetSpend accounts (getting frozen, ACH pulls being blocked, etc.) and working through it with their customer service is always a nightmare. For $50k at 5% it was worth the hassle, but I’m not so sure for $10k at 5%.

Thanks for the heads up about these changes!

Wong
Wong

What Netspend accounts did you sign up for to be able to own 10? I assume it’s the same SSN for all of them.

AB
AB

Can uou transfer money directly from netspend to insight?

Craig
Craig

I just finished pulling all my funds from five Netspend accounts after Netspend insisted for 3 months that a “letter of indemnity” from Chase (the funding account in 2014) was required to release the funds on the sixth account that THEY forced me to close. I don’t know why they suddenly mailed a check to me after months of hassling with them and Chase trying to secure the “required” letter; perhaps they saw the funds withdrawals from my other accounts and figured they had achieved their mission…

Rear-view mirror now. Once bitten, twice shy.

petitesybarite
petitesybarite

why did they send you this? was it b/c you had 5 accounts or b/c you parked money in them? i wanted to open 5 netspend accounts after insight shuts down. i saw my savings account is now “closed” but the funds are still in them. i just can’t move money in or out…

Victor
Victor

Crap. Time to invest like a normal person I guess. Thanks for the heads up.

Jonathan
Jonathan

Perhaps not coincidentally, I just today got an email from NetSpend asking me to take a short customer satisfaction survey that included the question below. You’ll never guess what my answer was!

Which of the following card account features is MOST important to you?
– Getting paid faster with direct deposit
– Using my card anywhere Visa or MasterCard is accepted
– Disputing unauthorized transactions
– Shopping online
– Paying bills
– Withdrawing cash at an ATM
– Withdrawing cash inside a bank branch
– Using the overdraft service
– Access to a purchase cushion
– Getting money back with Payback Rewards
– Access to a savings account that pays me interest
– Using a virtual card number
– Having a custom card with a picture I choose
– Sending money to other people

anthonyjh21
anthonyjh21

While I’m also considering Consumers CU it’s worth noting that the 4.59% rate isn’t as good as it seems when you factor in the opportunity cost of having to use a 1% cc in lieu of a 2% alternative (such as FIA, Citi etc).

If you park $20k in this account the real rate is closer to 4% after $10/month lost from the $1,000 in cc spend. Anything lower than $20k only worsens the 4.59% option. Not to mention the fact that even if you combine a hard pull (TU) you’re still going to take a ding to your AAOA by opening a cc for the sole purpose of satisfying the 4.59% rate that can change at any time (and it has from 5% already).

I definitely need to re-evaluate my options. It’s looking like I may opt for the 3% rate with a few of the Banks/CU out there and not jump through more hoops for 4.59-5% rates. I already have LMCU and am happy with the current requirements for the 3%.

Anthony
Anthony

Hi Anthonyjh21. What’s the name of LMCU? What are the requirements for 3%?
Thanks, Anthony

Jacob
Jacob

Honestly, read the post that is linked in this very article. For the sake of us all, stop asking silly questions.

Eric
Eric

lake michigan credit union it’s called Max checking

DD
10 debit card postings
paperless statements

anthonyjh21
Anthony
Anthony

Thanks!

MB
MB

Don’t forget that Consumers CU comes with 3% on groceries up to $6000/year. So that’s 6 months of 3% at $1000 to meet the monthly requirements.

LMCU = Lake Michigan Credit Union

David
David

I believe I just read that they radically changed the limit from $6000k/year that you could GET to $6000k/year that you could SPEND–meaning you can only get $180/year.

anthonyjh21
anthonyjh21

True there is 3% on groceries but odds are most people have a grocery card (amex most likely) that already earns 3%+ for grocery spend. If someone spends near $1k/month on groceries and doesn’t have an alternative 3%+ card for grocery spend then this would work out well for them and there wouldn’t be much in the way of opportunity cost here.

Then again, if you’re spending $1k/mo at grocery stores you should probably pick up the Amex BCP card that has an effective 4.8% cb rate on the first $6k/year and usually has better than standard amex offers.

The way I look at this is am I willing to take a ding to my age of credit and spend $1,000/month (cost of $10 cc cb) for roughly net 4% APY? Right now the answer is no. If alternatives continue to drop off or create more hoops to jump through then I may very well change my tune. Or I might just park it in a 1% savings account and carry on with no strings to tie up every month.

MSiino@markspaneth.com

hanks for your life story, mate

Jac
Jac

Anyone still seeing $5000? I tried refreshing the page multiple times in both normal and incognito modes. I still see $5000

Sa
Sa

I still see 5000 online.
If one goes to netspend landing page and scrolls down to “managing your money”, the savings still shows as 5% for the first $5000.
What was the source of that image/text that Doc posted?

David
David

It doesn’t kick in till July 1st, as the post indicates.

Den
Den

Oh, thank you! I had plans to open 5 NetSpend accounts and load it with $25000. Now it is good only for $5000. $16.67/mo… Not worth the hassle (loading, unloading, activity) for me. Thank you again!

David
David

Once you get it setup, it’s no hassle at all. Just set your ordinary bank account to automatically push $1/month into each Netspend account and then automatically pull it out a week later.

Den
Den

David, thank you for the advice. Maybe later.

Ugly
Ugly

Damn it! I just got my accounts activated! Oh well. I’ll collect my referral bonus and probably just close the account at the soonest opportunity. None of my regular banks even allow me to ACH to a Netspend account anyway.

Octavio
Octavio

I started getting the notices today. I figure NetSpend was not making money out of the smart consumers who parked $5000 in the savings account and didn’t use the card, so they had to neuter it. I’ll be keeping my 10 accounts on am automated setup.

shaky02dd
shaky02dd

got an email from netspend and from paypal.

john555
john555

I would NOT recommend mango as the interest is not paid consistently and support is useless. Save yourself the hassle and just put the money in Ally or something similar for 1%.

Ken
Ken

Oh well, I’ll get about 1 month of 5% and less for others since some cards I just received in the past week.

Dana
Dana

I just activated my Netspend account yesterday. AHHH! I’ll probably still drop $1K in there. Already signed up with Insight, now the wait for that card…

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