Frequent Miler on the Air - Up to 4% Back Everywhere: US Bank's Smartly Card | Card Talk Ep10 | 12-19-24

Episode Date: December 19, 2024

Us Bank's Smartly Visa Signature card has no annual fee but also no welcome bonus. Even so, because of a benefit from their savings account which can increase earnings on the card, it's worth a discussion on today's Card Talk episode. (00:21) - What are the basics of the U.S. Bank Smartly™ Visa Signature® Card Learn more about this card here. (01:06) - You can increase earning with a U.S. Bank Smartly Savings account and have certain amounts deposited w/ US Bank... (02:53) - You'll need a Smartly Savings Account (04:13) - But you can point your money toward Self Directed Investing (08:03) - Be careful how you redeem rewards (10:08) - How does the US Bank Smartly Card compare to Bank of America's Platinum Honors?

Welcome to Card Talk, the show where we help you decide if this credit card belongs in your collection. Up to 4% back everywhere. U.S. Bank's Smartly card. Today we're going to talk about U.S. Bank's Smartly Visa Signature card. What are the basics, Nick? All right. So the basics in this card is that, first of all, it has no annual fee. It's got a foreign transaction fee. So if you use your card a lot overseas, then this won't be the one to use for that because it has a 3% foreign transaction fee.

There's no welcome bonus on this card, which is something that usually would mean we wouldn't probably be talking about it because we often talk about cards with big welcome bonuses. But this one is so interesting that even though it doesn't have a welcome bonus, it's still worth considering. It's a Visa Signature card and at a base level, it earns 2% back everywhere. Now, I know you heard Greg say up to 4% back. We'll get to how to do that in a second, but at a base level, it's a 2% back card with no annual fee if you just got the card and didn't do anything else. However, like I just said, you can increase the earnings with a U.S. Bank Smartly Savings account if you maintain certain amounts deposited.

So if you have between $5,000 and $49,999 in your U.S. Bank Smartly Savings account, you'll earn 2.5% back everywhere instead of 2%. Which right there is very, very competitive. It's uncapped, 2.5% everywhere. And a low bar, $5,000 in a savings account. I mean, that's an amount that I'm sure many people have in an emergency savings type of account. So it doesn't require a ton of money for 2.5% back. I think that's really a sweet spot for a lot of people that could make this card more interesting

than any two percent card on the market from any other company. Yeah, exactly. But then if you have more money on deposit, you can earn even more back. So if you have between $50,000 and $99,999 with U.S. Bank, you'll earn three percent everywhere. And if you have $100,000 or more with U.S. Bank, you'll earn 3% everywhere. And if you have $100,000 or more with U.S. Bank, you'll earn 4% back everywhere. So there's your up to 4%. Yeah. I mean, that just sounds like impossible, but they're actually doing this. So let's talk about that threshold, the $100,000 to get 4% back everywhere. Bank of America has a similar program,

and if you just store your money in Bank of America's basic saving or checking account in order to qualify, you get close to 0% in interest. And so there's a big cost to leaving your money there versus in a high yield account or in stocks or whatever now there are ways around that which we'll get to in a second but with bank of america but with u.s bank the default thing is to put your money into a smartly savings account and you do have to have a smartly Savings account for these extra bonuses to kick in. But Smartly Savings does not have a bad interest rate. It's not necessarily the best of the best, but as we're recording this, 3.5% APY is competitive.

Again, not best of the best, but it's up there. But to get that percentage, it's not just opening the account and putting money in. You have to have certain other things, including having the smart leave visa signature card counts as one of the things to get the 3.5%. But the other thing is you have to have a combined qualifying balance of at least $25,000. So if you have those two things, you get that 3.5% APY and you're earning a reasonable interest rate just off the bat. Yeah. So I mean, right with that amount of money, you would be at 2.5% everywhere and earning a decent return on savings. So that makes it pretty interesting, I think, for people who are able to put that much in savings.

But of course, you don't necessarily need to keep that in cash because having money invested through U.S. Bank would also count towards those banking thresholds, right? Right. So you do have to have the smart lease savings account for all this to work, but you don't have to keep your money in there. Like, I think you have to have a minimum of like 25 bucks. But you could put your money instead into self-directed investing. So if you prefer money markets or ETFs or whatever, you can put your money there and presumably, you know, do just as well as wherever else your money might have been.

Maybe you have your money in an IRA somewhere. You could theoretically just move it over to a US bank. So the point is, whatever yields you're expecting, if you have your money in the markets, you should be able to get that here. Some caveats. There is a $50 annual fee for self-directed investing with U.S. Bank. But there's a footnote on their application page that says that that fee may be waived if you have a combined balance of $250,000 or more. But I read a thorough review from someone on Reddit who invested $100,000,

who says the $50 fee was waived for him. He talked to multiple reps about it who said that that footnote that said it was 250,000 was wrong, that they had changed it to $100,000 threshold, and they just hadn't updated the website yet. So I think that all sounds plausible. I mean, I don't see why this person would have had any incentive to lie about that. So if we take that at face value and that means the 100k gets you you know waived annual fee on the self-directed investing and so you just put your if you if you're just going to put your money there and and leave it um then you're as good it's as good there as anywhere else right um unfortunately there are other fees so if if you're like into day trading

or you know you trade frequently then you're going to worry about these fees there's um stocks and uh exchange traded funds uh and closed-end funds there's 4.95 per trade you do get 100 free online stock or etf trades per year um options are 4.95 per trade plus a dollar per contract. And then there may or may not be fees for mutual funds depending on the mutual fund. So I don't think that all sounds bad. It's just not as good as some other self-directed investing where pretty much everything is waived. Yeah, I mean, I could see moving.

I have a couple of investment accounts, though, where I'm not buying or selling anything. It's just money that I'm holding until I need it someday when I retire or whatever. So I could see moving one of those over where I'm not doing any trading anyway. And so either 100,000 of that or if not 100,000 of that, even if it's less, I think you probably could do the math and figure, well, if you kind of mentally consider the $50 self-directed investing fee as sort of like an annual fee on the credit card, it may still be worth it depending on where you're going to end up in the thresholds for how much you'll earn. So I mean, even if you only had 25 or 50, let's say, then you're looking at still earning two and a half or 3% everywhere. And maybe that's worth $50 a year to you if you don't have the $100,000 to put in there.

But if you do, then great. And again, not good if you're trading a lot. But if you're not trading a lot, if this is like a retirement and IRA type account where you're just going to leave it forever or for years and years anyway, then that could be a relatively easy requirement. However, we do need to mention on the reward side that when you go to redeem your rewards, then I'm saying the rewards earned on your credit card spend, the 3%, 2.5%, 4%, whatever we're talking about, depending on the threshold

you're at, keep in mind that you will only get the full value for those rewards if you redeem them for a deposit into a U.S. bank deposit account, if you redeem your rewards for things like statement credits or gift cards, things like that, it's a reduced redemption rate. So the 3% or 4% that we're talking about will become less if you try to redeem it for a statement credit on a credit card or for gift cards. You instead want to always redeem that for a deposit to a U.S. bank deposit account, your smartly checking account or smartly savings account, which is not a particularly difficult requirement. It's just something you have to keep in mind. Right. Now, it reminds me a lot about how all the points currencies try to incentivize you,

try to encourage you. They don't incentivize you. They encourage you to use your points for things like Amazon purchases where you're getting less than a penny per point value. And I think we're going to see the same thing here. I think we're going to see a lot of like, if you have the card, you're probably going to be getting a lot of notices like, why don't you use this at Amazon or wherever, use your rewards there and um the bad thing about that that's encouraging you to use your your rewards at suboptimal value the good thing is if they get enough people besides yourself to do it it means it's sort of funding you in a way your your rewards because this is

not sustainable if if everybody was earning you know two to 4% back on this card and not paying any other fees and, you know, redeeming at full value, I cannot see how US Bank could sustain this card. Hopefully, you know, they'll figure out a way to make it sustainable that won't hurt any of our listeners because they'll know how to redeem the rewards correctly. Let me talk a bit about comparing this to Bank of America. So Bank of America has their platinum rewards elite system where if you have platinum honors, you get a 75% bump in your rewards for certain credit cards. And it has the same threshold.

The $100,000 is how you get to that top as cash back for all spend outside of category bonuses is 2.62%. So you compare that to 4%, that sounds pretty bad. However, there are some cards that have different category bonuses where you can earn more. So like the premium rewards card, you earn a little bit more for dining and travel. There's some other cards where you earn within different categories and you can earn up to, with 100K of savings, you can earn up to 5.25% back. But those are capped how much spend you could do in those categories but here's here's the kicker where bank of america has a big advantage is there's no foreign transaction

fees so if you're going to be using one of these cards internationally a lot bank of america has the edge um the uh where where uh u.s bank has another edge though is if you just want to do the easy thing and keep your money in their savings account at least you're earning a decent interest rate whereas bank of america has like they list their interest rates but it's so tiny that it might as well be zero i mean it's really really tiny rates and uh now with bank of america here's a slight advantage you can instead put your money into merrill edge and merrill edge has virtually no fees that you have to worry about. So if you do want to trade more often and everything, then Merrill Edge is probably a better place for your money than U.S. Bank's self-directed accounts. Um, so, you know, I think that kind of sums up, uh, where we are with these things that, that, you know, us bank much higher potential for your overall all spend cash back. They both have the a hundred K, uh, you know, threshold of savings in order to get to the

top level of earnings. But if you want to spend overseas, you're, or internationally, you're better off with the bank of America card. All right. So I got to ask you, Greg, if you had to pick one or the other, if you had $100,000 and only $100,000, and so you got to decide, you know, where should I put my IRA money, which like Greg mentioned, you could theoretically transfer over to U.S. Bank. It's called a transfer of custodian. So you change the custodian. And if you have an IRA somewhere,

you could at least theoretically move it to U.S. Bank. I haven't done haven't done that with US Bank, so I can't speak to the process with them, but I've done it with other institutions and it's been pretty easy to move around an IRA. So anyway, let's say you got an IRA with 100,000 in it and you're like, well, do I move it to US Bank? Do I move it to Merrill Edge? Maybe you already have it in US Bank and Merrill Edge, and you're like, oh, should I move it to US Bank? What do you think? Which would you pick? What would you take here? Yeah. I mean, I think for most people, getting 4% everywhere is really compelling. And so if you're a, you know, you invest and just leave the money there type of person, moving that into US Bank to me makes a ton of sense

in getting this card, 4% everywhere. You can't beat that. Yeah, I mean, even if it's an IRA you're continuing to invest in and you get the 100 free trades a year, so that's probably enough for people that are doing like a retirement account type of a thing. Yeah, so anyway, yeah, that's interesting. So now, how does this affect your perspective on other cards? Like, would you still be using some other card to earn 2x or 3x when you could be earning four percent everywhere i know that that's that's the thing if you're earning four percent cash back everywhere um then or you have the ability to earn four percent cash

back everywhere and you're wondering whether you use your Double Cash or your Capital One card or your Amex Blue Business Plus card, all those cards that earn 2x transferable points, by using the transferable points card instead of your U.S. bank card, you're basically paying $0.02 per transferable point, which that's a lot to pay per point unless you really need those points. So there are definitely opportunities to get more value than that for your points. But if you have other ways of getting those points, like signup bonuses, referral bonuses, all those kind of

things, I really think you should be doing that instead and earn your cash back from, from a U S bank. And then, you know, when there's great sales on points, you might actually want to just buy points. We frequently see, you know, air Canada or aero or life miles selling their miles for like less than 1.3

cents per mile. And, and so you're getting something like three miles per dollar by earning 4% cash back and then using it to buy during those sales. Yeah. Yeah, that's interesting. So now last question I got to ask you, U.S. Bank Smartly card or U.S. Bank Altitude Reserve, which is the better card to have? Well, I mean, for domestic spend, I'd go with the Smartly card because, yes, the altitude reserve, you can earn 3x on a lot of spend and you can. Those points can be worth one and a half cents each. So it's a total of four and a half percent back.

But you got to jump through some hoops to make that actually work. Whereas this, there's no hoops. You just redeem to your bank account and you're done. Internationally, though, the altitude reserve has no foreign transaction fees. So that's a better bet there. Yeah. I mean, I feel like that's, I think most people probably don't need to have both cards or might not be able to justify the cost of having both cards. But I think we might and man, because I'd be, this is one of those ones where I'm like, wow, it's going to be really hard to justify spending on other cards with the ability to potentially earn 4% back. And right now, I don't have that money with US Bank, but this certainly has me considering it. I don't know that this is sustainable, but I don't know that that will stop me from taking advantage of it while I can.

One last question for you. Do you know? I assume the answer is yes. Do you know, can you product change to this card from a different existing U.S. bank card? Like I have a U.S. bank card I'm not using very much. Can I theoretically product change that to the Smartly card? I mean, that seems likely, but no, I don't know off the top of my head. Yeah. Usually if you want to change products you can call the bank and ask for a product change and i would expect you probably can with this one even though neither of us have done that yet yeah all right yeah this is uh yeah really great card potential uh player two uh savior so so i know some couples where where the the you know person

who's not as into the reward stuff is being told which card to use for each type of purchase and can get frustrated when you know when when when the the player one the person who is into it says well why didn't you use your gold card you were at the grocery store and they said but it was for food you told me for restaurants to use this other card you know whatever yeah and and you could have you could have all those fights but but now with a card like this uh the player two could just have a four percent everywhere card and then the one rule is use something else when you're traveling internationally yeah yeah i think that's a great point this would be a great card for us to have specifically for that reason so

yeah all right very interesting from US Bank here with the Smartly card. If you want more information about this card, don't forget, you can find a direct link to our site in the show notes. Just expand the description box to find a link to our site. That's frequentmiler.com. You can join our email list at frequentmiler.com slash subscribe, and we'll see you next time.