Earn 5.12% APY on $5000 in a Savings Account

Yesterday, I got together with five fellow Mr. Money Mustache fans at Lake Merritt in Oakland to talk about money and life.  This was the latest Bay Area Mighty Mustachian Meetup (BAMMM) event, which is to say I sent out an email on the Google Group list, posted in the MMM forum, and created an event in a Google+ Community and some people showed up.  If you'd like to hear about (or better yet plan) future events, tap into one of those channels or (NEW) follow me on Twitter at @BC_ChemE and watch for stuff tagged with #BayAreaMMM.

I don't do affiliate links, so I'm not linking this to make a buck.

The 5.12% Savings Account

The week after I posted this, the Mango Money sign-up page was deactivated!
The week after that, Union Plus sign-up page was also removed.
In August, the Mango Money signup page was back, but the terms have changed:
the savings account interest rate is 6% only with a $500+/month direct deposit.
Otherwise, the interest rate is only 2%.

One thing we discussed was the pain of holding cash in "high-yield" savings accounts that return, at best, 1% now.  I used the opportunity to pitch US Treasury Series I Bonds, which I've always liked for emergency funds because they at least keep pace with inflation.  Another attendee recently became financially independent (dunno if he wants to be publicly outed and not sure if he has a site) and had a more liquid solution with a better rate: a savings account associated with a prepaid debit card company called Mango Money.

The vital details, culled from the AHS Wiki page that serves as my open notebook for these projects:

  • The savings account is FDIC insured and earns 6% on the first $5000
  • A $25+ monthly direct deposit is required to earn this rate
  • To qualify, set up free automatic transfers to Mango Money from your primary bank
  • To contribute to the savings account, you must load it through the prepaid debit card
  • The prepaid debit card has a $3 monthly fee, but no minimums

Sign up for the account, load the card from your current bank account, transfer that money to the card, set up automatic transfers from your existing bank account, and stop in occasionally to siphon off the interest (savings account balances over $5000 earn 0.1%).

What's the total payoff if you store emergency funds in this way?

6% APY → 5.84% APR
($5000 * 5.84%) - (12 * $3 monthly fee) = $256, an annual return of 5.12%

That's a 1990's interest rate!

If you have more or less than $5000 in the account, obviously the fees erode the return:

The 4.50% Savings Account

If $5000 is insufficient and you'd like to stash another $5000 at a decent rate, the same company offers a very similar deal with slightly different terms at Union Plus Prepaid Card.  Pretty much everything is the same, but the advertised interest rate is 5.1% and the fee is $2/month.

How does the math work out?

5.1% APY = 4.98% APR

($5000 * 4.98%) - (12 * $2 monthly fee) = $225, an annual return of 4.50%

Not quite as good, but I challenge you to do better on an FDIC-insured savings account!

If you have $10000 across both accounts, that's an overall APY of 4.81%.


  1. Mango Money company site
  2. Union Plus company site
  3. Bogleheads Forum post on Mango Money (2012-04!)
  4. The Finance Buff review of Mango Money; mentions Union Plus (2014-05)
  5. The Finance Buff review of Union Plus (2012-12!)


I signed up for Mango Money this morning, but I'll have to wait to receive and activate the card and deposit-verify my account before I can personally attest that this works.

It's been three days since I signed up.  I haven't received the card yet, but the transfer was successful from my bank account to the card and then from the card to the savings account.  I've established regular automatic transfers from my Ally Bank account, so we'll see if that successfully qualifies me for the 6% interest rate.  If it doesn't, I've printed out the Direct Deposit form and I'll submit it to my employer and see what happens.

Just got my first 6% interest payment!  It was a partial-month payment because I funded the account on the 7th, but it's the correct size.  Deal verified!  I'll update if anything changes.

The Mango Money terms have changed! The interest rate is now only 6% if you direct deposit at least $500 per month; otherwise it's 2%. I have also discovered other services that offer a similar prepaid-card-plus-savings scheme: NetSpend, NetSpend Western Union, and Brinks Money. All three appear to be run by the same company, and offer a savings account interest rate of 5.0% APY on deposits up to $5k with no monthly fee.  Thanks Danny @ DannyMoreBucks.com for the heads-up!

Annnnd the easy money (mostly) comes to an end.  Today NetSpend, NetSpend Western Union, and Brinks Money reduced the amount you can earn 5% on from $5k per account to $1k per account.  It was fun while it lasted!  Still, it's not a horrible way to earn 5% interest on a $4k emergency fund.

ERRATA: On the first set of calculations, I misquoted the net annual return of the Mango Money savings account as 5.28%.  This is because I incorrectly used the APY instead of the APR in the interest calculation.  The APY is what you'll earn over the year due to compound interest, but compound interest does not apply in this situation because the account balance is kept constant.  Thanks Jason for letting me know!