And here’s the thing: You don’t need to be a T-Mobile customer
By David Enna, Tipswatch.com
Back in mid-February, my cellphone carrier T-Mobile sent me an intriguing email about what seemed to be a new service offering: T-Mobile Money, an FDIC-insured savings account that paid 4% on deposits up to $3,000 and 1% on all balances above $3,000.
Was there a catch? Of course there was a catch. To get the 4% “perk” you had to make at least one $200 deposit a month into the account, either through transfer or direct deposit. Plus, you had to be an existing T-Mobile customer. Since I was already a customer — of both the company’s excellent cellular service and the ill-fated TV streaming service — I jumped aboard. I opened an account. I deposited $3,000. Then I set up an automatic transfer of $200 a month into the account.
Bingo … I earned 4% on my initial investment for the partial month of February. This was so simple! This was so great! The requirement to make one $200 deposit a month was no barrier. I loved this!
Then … less than a month later came the bad news. T-Mobile was changing the terms for the 4% perk, effective March 31. The new terms were onerous: To earn 4% on the first $3,000, I had to make 10 purchases a month using the provided MasterCard debit card. And that meant “purchases,” not simply using the ATM card to withdraw cash. So the 4% perk was now useless to me. I rarely use a debit card for purchases (especially during a pandemic) and my credit cards already provide 1% cash back.
T-Mobile continued to advertise the old terms ($200 deposit a month) well into March. My initial reaction to all of this was to throw a fit, stomp my feet, and accuse T-Mobile of a “bait and switch.” This was happening at the same time T-Mobile was dissolving its TVision television streaming service, which I was using and actually liked. Grrrr!
Count to 10, Dave, and … calm down
After a bit of research, I realized that T-Mobile Money had actually launched in 2019 and so the change in the long-standing 4% perk couldn’t really be classified as a “bait and switch.” It was a “change in terms.” Throw out the 4% perk, and what remains? 1% on all deposits, with full FDIC insurance. Does that make sense as an investment? Yes, it does.
Once you retire, you get obsessive about hoarding some level of cash, even beyond the “emergency fund” recommendations of 6 months of expected spending. Having one or two years of “after tax” cash allows you to ignore stock market fluctuations and plan for vacations, big-ticket purchases, home repairs, etc., without needing to tap retirement funds or stock investments — incurring a tax consequence.
The problem right now is that you can earn next to nothing on cash in highly safe investments like bank CDs, short-term Treasurys and money-market accounts. The typical rate paid by your brokerage or bank account is something like 0.005%, if that. So T-Mobile Money’s offer of 1% in an FDIC-insured account is way more attractive.
Here’s a comparison of potential earnings for “cash-like” investments with very little risk, showing why this T-Mobile Money account stands out in a barren wasteland:
As the amount invested increases, the value of the 4% perk declines, because it only applies to the first $3,000. T-Mobile Money, paying 1% interest, easily outshines other very safe cash-like investments. So I stuck with it, and added funds to the account. Everything can be handled on the T-Mobile Money website, and through its excellent phone app.
Do you need to be a T-Mobile customer to open an account? No you don’t. The 4% perk is limited to existing T-Mobile customers, but everyone gets the 1% interest on all deposits.
Questions and answers about T-Mobile Money
Is the T-Mobile Money account FDIC insured?
Yes. The account is actually held at BankMobile, a division of Customers Bank. The FDIC certificate number is 34444. This means your deposits are insured by the Federal Deposit Insurance Corporation up to $250,000 per customer.
Can anyone sign up for a T-Mobile Money account?
The 4% interest up to $3,000 is only available to T-Mobile customers, but you don’t need a wireless plan with T-Mobile or Sprint to sign up for a T-Mobile Money account. To sign up for an account you must:
- Be of legal age
- Have a US government-issued ID or state-issued driver’s license/ID
- Have a Social Security number
- Have a street address within the U.S. and Puerto Rico, excluding other U.S. territories
What are the monthly fees?
There are no monthly fees or minimum balance fees, no overdraft fees, no transfer fees. For ATMs, there are no fees at 55,000+ in-network Allpoint ATMs worldwide and no T-Mobile Money out-of-network fees. However, customers may incur fees from ATM providers when using out-of-network ATMs or international ATMs.
How can I deposit money?
The business model seems to be set up around direct deposit of your paycheck or government payment and then use of the ATM card. So, direct deposit is allowed, and the website and app clearly show you your account number and routing number.
You cannot deposit checks at an ATM, but you can deposit them through the T-Mobile Money app on your phone, using the phone’s camera. Mobile check deposits are limited to $3,000 a day.
You can do bank transfers into T-Mobile Money in the app, but these are limited to $3,000 a day. However, you can also set up T-Mobile Money to receive an incoming deposit from your bank or brokerage. Then the amount can be higher, up to the bank or brokerage’s outgoing per day limit. (I have tested this and it works.)
Depositing a large amount of cash? Forget it. You’ll need a money order, check or direct transfer to make a deposit.
How can I withdraw money?
It’s a similar situation to depositing money. If you are initiating a withdrawal from inside the T-Mobile Money app or website, you are limited to withdrawing $3,000 a day. But if you initiate the withdrawal from an outside source (such as your bank or brokerage connected to T-Mobile Money) you are only subject to that account’s incoming limits.
So, advice: Make sure to set up both an incoming connection to your outside account on the T-Mobile Money site ($3,000 limit in or out per day) and also a incoming/outgoing connection to T-Mobile Money from your bank or brokerage account (probably a higher limit, set by your bank or brokerage, not T-Mobile Money.)
How long does it take for deposited money to show up in your available balance?
External transfers in take 2 to 4 business days to be available. Incoming wire transfers are available on the same day they arrive. T-Mobile Money says payroll-related direct deposits can be available up to 2 days early.
Can I open a savings account instead of a checking account?
No.
Can I open an joint account?
T-Mobile says: “Joint accounts are currently unavailable. Only one account may be opened per person.” There is also no apparent way to name a beneficiary for the account. This could be a major drawback from some investors.
Does T-Mobile Money provide free checks?
No. The online account sends you to Vistaprint so you can order your own checks, at a cost ranging from 10 cents to 16 cents per check. However, T-Mobile Money does provide three free checks when it sends you your initial ATM debit card.
Does T-Mobile Money rebate ATM fees?
T-Mobile says: “If you use an out-of-network ATM, we won’t charge you, but the ATM owner probably will, and we aren’t able to rebate those fees.”
Can you get T-Mobile Money support at a T-Mobile store?
No.
How does T-Money make sense as a business?
T-Mobile says: “We expect to see revenues from merchant transaction fees when a customer pays with their T-Mobile Money MasterCard debit card. Over time, we expect to see additional operational benefits in our core business in increased customer retention and reductions in payment expenses.”
Conclusion
Despite my disappointment with the bait-and-switch … er … “change in terms” for the 4% perk, I think earning 1% in an FDIC-insured account is attractive in our current market conditions. That’s probably nearly 100 times what your bank or brokerage cash account is paying, and about double the yield of the best-in-nation online savings accounts.
There are times I feel like a T-Mobile beta-tester (the TVision streaming service was an unfortunate example), but in this case, at least so far, T-Mobile Money seems to be a solid product.
If the terms change, or interest rates elsewhere improve greatly, my deposits are always available to invest elsewhere.
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I’ve had the t-mobile money account since the beginning. It was like you said, a simple deposit, then it became 10 debit card transactions. Now, they’re simply disallowing me to make any type of transfer out. I’ve had a couple of my other accounts connected to t-mobile since I first opened the account, and now they said that I am “permanently blocked” from making any type of transfer. After I figure out how to get my money out, this account is getting closed!! Nobody holds my money hostage.
Let me know how you resolve this and how they explain what the problem was.
Did you try pulling it into the other account (e.g., brokerage account, different bank, etc.) to which you linked it using that other account’s website to pull the funds, rather than pushing it out of T-Mobile using the T-Mobile website? Alternatively, did you try ordering checks and writing a check to another account?
That was how I finally got it out. I had to “pull” from my one of my other accounts. Thank goodness I had those set up from before. If that didn’t work, I was planning to use the debit card to fill up my amazon account balance.
If you are a T-Mobile customer and want to get the 4% back on this account, I recommend reloading your Amazon gift card balance. You have to reload at least 50 cents as a time, but you can do 10 gift card reloads in one sitting, and you’ll get 4% for the whole month. It’s worked for me for months.
Natalie, thanks for sharing this extremely clever workaround to get the 4% interest. Assuming it works, it is $10 a month for a few minutes of work. I’ll test it out, just for fun.
It might be $7.50 (3% on $3000). We are getting 1% on the first 3000 regardless of debit card usage. Then subtract the $5 spent on Amazon and it might not be worth it.
Yes, all of this is true, except if you are adding $5 to your Amazon account, then you will just spend it on the next thing you buy. So it is not an expense at all.
Also annoying is the fact that their card is not accepted by all merchants, so the requirement of ten transactions per month makes it seem even more like bait & switch.
“Depositing a large amount of cash? Forget it. You’ll need a money order, check or direct transfer to make a deposit.”
I’m stumped-so they’ll let you use the app to deposit 3k and smaller but, above 3k what do I do? I have a personal check I’ll have in a day or so for around 15k and wanted to use T Mobile Bank. How would I go about depositing that?
There is a way around the $3,000 limit, and it works: You need to set up a cash transfer from your bank or brokerage (Fidelity, Vanguard, etc) to T-Mobile Money. Then the transfer limit of that outside account will be the limit. For Fidelity, for example, you can transfer up to $100,000 a day. Once you set that up, you can do it anytime you want. So, for that $15K, you could deposit the check in a bank or brokerage that can connect to T-Mobile Money, and transfer the entire amount in one day.
Hi David, thanks for this article; 1% on FDIC insured deposits is an incredible deal in today’s low interest rate environment. One question – I’m trying to get around the $3000 daily transfer limit. You mention that “you can also set up T-Mobile Money to receive an incoming deposit from your bank or brokerage”. How exactly do you set this up?
My recommendation is to 1) Inside T-Mobile Money, set up your brokerage or bank account for incoming or outgoing transactions (those are limited to $3,000 a day), and then 2) at your brokerage or bank account, set up T-Mobile money as a connected account for incoming and outgoing transactions. Those will be limited by the bank or brokerage account’s daily limit, which is likely to be higher.
Or put more simply, just set up an external account at your bank or brokerage to link it to the T-mobile acct. You can do it online. This is very easy to do. Ask your bank or brokerage how to do it if necessary. Initiate all electronic transfers using your bank or brokerage account.
Thank you Patrick and David. I tried to do a transfer of $100k from my Chase account to TMobileMoney account and unfortunately it didn’t work. The funds were returned to my Chase account. I don’t think I could use Tmobilemoney for all of my cash given the difficulty of transferring funds into and out of the account, but I’ve got $3000 in the account paying 4% that I could easily withdraw using an ATM card so it pays more interest and is easier to access than my other online savings accounts. I’ll probably let that $3000 sit there as a first tier emergency fund.
Just to clarify, I attempted to transfer the account from Chase and set up Tmobile as the external account (as suggested in this thread). It worked on a small test transfer of $100 but not $100k.
William, according to this site: https://www.mybanktracker.com/news/ach-transfer-limits … Chase has an external transfer limit of $10,000 per transaction or $25,000 per day.
Last time I phoned them, they did not allow POD (payable on death) on these accounts. So make sure you stay alive, otherwise your money will end up in probate, which has lots of legal and court fees.
I agree this is annoying. I messaged them about creating a joint account, and the answer was “not possible at this time.” I mean, why not?
Same problems with Marcus Bank. I use Ally Bank, which only pays .5% on savings accounts, but it functions like a real bank with all normal banking options. The telephone reps are helpful and they usually answer the phone pretty fast.
Marcus has bennies
Can I send money from my t mobile money account to a non t mobile money account , like hutington bank
Yes, as long as your bank or brokerage accepts transfers, you can do this. My T-Mobile Money account is connected to a brokerage and it works well.
The retirees care about not causing probate and estate issues, though anyone this can cause an issue for!