Comments
+1 agreement vote if planning on switching cards or savings accounts
+2 agreement vote if planning on switching both
+1 agreement vote if planning on switching cards or savings accounts
+2 agreement vote if planning on switching both
+1 agreement vote if planning on donating any resulting savings
(American example based on https://www.effectivealtruismdata.com/ demographics, but same principles apply broadly)
tl;dr save thousands every year with no spending/saving/investing behavior change by switching to high interest saving accounts and cashback credit cards
https://www.forbes.com/sites/ronshevlin/2020/11/09/the-debit-card-explosion-is-going-to-fizzle/
https://www.spreedly.com/blog/credit-card-acceptance-rates-2019-regional-breakdown
https://www.fool.com/the-ascent/research/credit-debit-card-market-share-network-issuer/
https://www.nerdwallet.com/best/credit-cards/cash-back
https://www.bankrate.com/finance/credit-cards/cash-back/
https://nilsonreport.com/publication_chart_and_graphs_archive.php#:~:text=Consumer%20and%20commercial%20credit%2C%20debit,reach%20%2414.075%20trillion%20in%202026.
https://www.stlouisfed.org/open-vault/2020/april/snapshot-record-high-household-debt
https://www.bankrate.com/banking/savings/average-savings-interest-rates/
https://www.bankrate.com/banking/savings/rates/
https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts
https://www.investopedia.com/best-high-yield-savings-accounts-4770633
https://www.wsj.com/articles/the-42-billion-question-why-arent-americans-ditching-big-banks-11670472623
https://www.bankrate.com/banking/savings/savings-account-average-balance/
https://www.nerdwallet.com/article/banking/checking-account-fees-study
If you have non-qualified investments and just keep money in a savings account in case of unexpected large expenses or interruptions to your income, it may be better to instead move the money in the savings account to Interactive Brokers and invest it. Crucially, you can get a debit card from Interactive Brokers that allows you to spend on margin (borrow) at a low rate (~5%, much less than credit cards) using your investments there as collateral. That way you keep essentially all your money invested (presumably earning more than the savings account) while still having access to liquidity when you need it.
I use Interactive Brokers, but I don't use their debit card because I expect their fraud protections are not as good as a credit card, and I don't want to expose ~all my net worth to an easy fraud vector.
I use a checking account and keep enough money for ~2 months of expenses, and keep the rest in my IB account. I don't have a savings account.
I agree it's important to keep the weaker fraud protection on debit cards in mind. However, for the use I mentioned above, you can just lock the debit card and only unlock it when you have a cash flow problem. (Btw, if you don't use your IB debit card, you should lock it even if you aren't using it.) Debit card liability is capped at $50 and $500 if you report fraudulent transactions within 2 days and 60 days, respectively.
That said, I have most of my net worth elsewhere, so I'm less worried about tail risks than you would reasonably be if you're mostly invested through IB.
That's good, I didn't know that!
Agree moving more savings to investments has higher expected value
Different people have different volatility/risk tolerances and experience investing. Wanted to offer a couple quick large tractable gains without any tradeoffs or behavior changes, and better savings accounts can still be combined with investing more
I've been thinking of opening an account at Interactive Brokers. If you want to share your referral link, I'd be happy to use it.
Thanks: https://ibkr.com/referral/charles6837