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By Anthony Termini, Benzinga
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The Associated Press recently reported that Minneapolis-based retailer Target (NYSE: TGT) "will no longer accept personal checks from shoppers.”
While the written check, whose use dates back to the early eleventh century, may be going the way of the Dodo bird, the transaction accounts from which checks are drawn remain an important part of the American banking system.
One Company’s Quest To Innovate The Humble Checking Account
Checking accounts in America have not changed since 1974. That’s when a handful of small banks in New England began paying interest on checking account balances.
While that was a significant innovation at the time, today, an interest-bearing checking account pays depositors almost nothing. According to the Federal Deposit Insurance Corporation (FDIC), the average rate earned on money in a checking account is about 0.08% as of July 15, 2024.
“Everyone thinks the checking account is a commodity,” says Bill Harris, founder of Evergreen Money. “What we have done is take the basic checking account that comes with a debit card and everything you expect and need, and sweep the balance into U.S. Treasury bills.”
The result is that Evergreen Money is currently able to pay more than 5% on checking account balances because they are swept to U.S. Treasury Bills. Harris says that putting the cash you use for everyday expenses into Treasuries is “a strategy that the ultra-wealthy use.”
Evergreen Money makes this strategy available for any reasonably affluent family through a product they call a Liquid Treasuries account. Liquid Treasuries accounts are available on deposits of $10,000 or more.
What is interesting to note about the $10,000 minimum is that it isn’t far from what the U.S. Federal Reserve says the average checking account balance is in America. In its October 2023 Survey of Consumer Finances, the Fed estimated that the average checking account balance is right around $8,000.
Evergreen Money created the Liquid Treasuries account because the company’s founder saw that many people were missing out on a significant opportunity for both checking and savings account balances.
What Warren Buffett Does With His Idle Cash
The Liquid Treasuries account uses the same approach that Warren Buffet does. According to reports, Buffett owns more than $158 billion in US Treasuries alone.
By combining a checking account with an investment account established to hold only U.S. Treasury bills, the Liquid Treasuries Account simplifies both your transactional checking account needs and a small part of your investment portfolio. Balances in the account are swept into U.S. Treasury bills and begin earning a high yield and state and local tax exemption thanks to the T-bills.
Depositors also have instant access to their funds. Liquid Treasuries balances are available to transfer, withdraw by debit card, ATM, ACH, or Wires the same way they are at a local or nationally-recognized large commercial bank.
It is also noteworthy that the tax effective yield on a Liquid Treasuries account is typically higher than the coupon rate of the pool of Treasury bills generating income. This is because the interest paid by Treasury bills is exempt from both state and federal income tax. This makes a Liquid Treasuries account more tax-efficient than a typical bank checking account in states with high state and local income taxes, such as NYC or California.
An additional benefit to consumers is the lower cost of maintaining a Liquid Treasuries account. The fee to maintain an account at Evergreen Money is just 0.03% of the account’s average daily balance.
Evergreen Money Is A Technology-Driven Financial Services Provider
Evergreen is innovating traditional banking, investment advisory and wealth management services by using digital technology to reengineer traditional banking and investment products. Evergreen plans to offer enhanced financial advisory capabilities in the near future for clients to manage their investments in a tax-efficient manner.
The checking account is provided by Evergreen’s banking partner, Coastal Community Bank, Member FDIC. The Evergreen Visa Debit Card is issued by Coastal Community Bank, Member FDIC, pursuant to licensing by Visa U.S.A. Inc. Investment advisory services are provided by Evergreen Money Advisors, an SEC-registered investment advisor. The brokerage account holding U.S. Treasuries is offered by Jiko Securities, INC., Member FINRA and SIPC. INVESTMENTS IN TREASURY BILLS AND OTHER INVESTMENTS ARE NOT DEPOSITS, NOT INSURED BY THE FDIC, NOT BANK GUARANTEED, AND MAY LOSE VALUE INCLUDING LOSS OF PRINCIPAL.
The firm was founded by Bill Harris, who ran TurboTax and led both PayPal (NASDAQ: PYPL) and Intuit (NASDAQ: INTU) as CEO. A serial entrepreneur, Harris also founded Personal Capital, an investment firm he grew to over $23 billion in assets under management.
For more information about how Evergreen Money is transforming financial services, visit their website at www.evergreenmoney.com.
Featured photo by Money Knack on Unsplash.
Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.
This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.
Client Disclaimer: Benzinga is not a client of Evergreen Money Advisors and is being compensated for sharing their opinion and experience with Evergreen Money Advisor. Any compensation creates a conflict of interest and Benzingaâs comments may not be representative of any other person's experience with the firm. This endorsement may not be representative of the experience of other customers, is no guarantee of future performance or success and has been paid for.
Evergreen Money Corporation is a financial technology company, not a bank. Banking services provided by Coastal Community Bank, Member FDIC. Deposits are insured up to $250,000 per depositor. The Evergreen Visa Debit Card is issued by Coastal Community Bank, Member FDIC, pursuant to licensing by Visa U.S.A. Inc.
Investment advisory services are provided by Evergreen Money Advisors, an SEC-registered investment advisor.
Evergreen Money, Evergreen Money Advisors, and Coastal Community Bank do not provide tax, legal, or accounting advice. Information stated is not intended to provide nor should it be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in transactions.
INVESTMENTS IN TREASURY BILLS AND OTHER INVESTMENTS ARE NOT DEPOSITS, NOT INSURED BY THE FDIC, NOT BANK GUARANTEED, AND MAY LOSE VALUE INCLUDING LOSS OF PRINCIPAL.
Treasury services provided by Jiko Securities, Inc., a registered broker-dealer, member FINRA and SIPC. Securities in your account protected up to $500,000. For details, please see www.sipc.org.The Jiko bank account is offered by Jiko Bank, a division of Mid-Central National Bank. Past performance is not indicative of future results. Jiko Group, Inc. and its affiliates do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. See FINRA BrokerCheck, Jiko U.S. Treasuries Risk Disclosures, and Jiko Securities Inc. Form CRS.
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