How We Measure
simple.com
simple.com
Simple states very clearly on their faq[0] page that they make money off of interest and interchange fees, not punitive and arguably immoral fees like those imposed by the large mainstreet banks. Head over to this reddit thread[1] from this morning that discusses what it's like to work for these banks: "[the customer who was mistakenly charged the fee] struggles from week to week with finances, and needs every dollar more than the rich customers who treat us like shit yet the managers kiss their asses. It wasn't the customers fault at all yet they have to suffer".
All of the large banks are ruthless predators on the weakest of our societies, gouging their customers with an ever evolving scheme of fees and debt incentives to ensnare, entrap and exsanguinate those who can least afford it.
They are involved in price fixing scandals of the highest order, are beyond the reach of the law no matter the transgression, and seem to hold the sum total of our shared societies in contempt. Apparently there is very little that can be done at this point, the horse as long since bolted, but at the bare minimum I'll be god damned if I give them a dime I don't have to. Simple enables me to bank as usual without continuing to participate in that abusive relationship, and for that, I like them.
[0] https://www.simple.com/faq/ [1] http://www.reddit.com/r/AskReddit/comments/26qpcq/redditors_...
I really like the way simple presents themselves. I don't think I'll join them any time soon though.
The incentive to use a 3rd party credit card is way too strong. I get things like cash back (depending on the card, up to 6% for e.g. groceries, 3% on gas, ...) and it helps building my credit score which the debit transactions on simple won't help with at all.
I do like Fee-Free ATMs, but on both of my current checking accounts (e.g. Charles Schwab) I don't have to try to find a special one that, judging from the map, usually means a 10 minute walk. I can just go to any ATM since there are quite a few banks that will reimburse costs for ANY of them.
Photo Check Deposit is pretty standard these days as well, both my local bank as well as Charles Schwab had apps that allow me to do that.
Most of the integration that simple provides (the "budgeting" part) , I probably also get with Mint. Only that Mint actually takes ALL of my accounts (Brokerage, Credit cards, ...) into account.
Besides that, the last time I checked they only accepted “Type 1 Social Security Numbers”. Sadly, as a resident alien, I only have a type 2 number (“for work”). This seemed a bit strange since pretty much every other financial institution didn't care about the specific type of SSN so far. I didn't even know there were different ones. They mention on twitter that they've "processed a few exceptions", it would probably still be very inconvenient.
I meet founders quite often who think they can get their customers to use their product because it is a better deal for the customer. Unfortunately, many of these ideas are not viable because of the way many people focus on short-term gains rather than all-in, lifetime cost. It's too bad that many (most?) people would rather have some immediate gratification from a company that intends to screw them at the first opportunity than a long-term better proposition from a company that is trying to help them.
A great example with Simple is when people say they're sticking with their higher-interest account at a traditional bank. While finding the highest interest rate may appeal to their competitive instinct, the extra 0.5% or so on an average balance of even a couple thousand dollars does not even begin to make up for the surprise fees the bank charges when that person makes a mistake. The usual rebuttal is "Well, I don't make mistakes." The revenue split between fees and net interest margins at the retail banks shows that this is just not true, on average. The argument, then, must be that YOU don't make mistakes because you're better than everyone else. That's just an unattractive attitude.
Someone should build some wearable tech that whenever you make an irrational decision, it beeps angrily at you.
</rant>
These "rewards" are rewards for the consumer if you: 1) Never carry a balance 2) Pay the same price as cash and the merchant eats the fees [as most merchants do!]
Its perfectly rational if you make fewer mistakes on average. So far, in the 10 years of using credit cards, I've recovered about 2% of every dollar I've ever spent and never carried a balance. This amounts to half a paycheck.
Its perfectly rational to assume that my rate of 'error' will remain roughly the same as it has been historically and that I want to continue to use credit cards and force merchants to effectively give me a larger discount that they would otherwise.
What's worse, because the vast majority of merchants charge you the same price whether you're paying cash or credit, people who pay cash are, in effect, charged these hidden fees as well.
If people stopped using rewards cards, and the merchants didn't have to deal with the associated fees, the cost of the merchandise would arguably drop by the same percentage as what you're getting back in rewards.
However, I'm not going to fall on my sword and give up 2% in the hope that that will happen.
You even admit in your post it would cost me money to stop at present :/
Perhaps we need a pledging system with a Kickstarter vibe -- I pledge to stop using rewards cards if X% of the market also makes the same pledge.
This is a long haul strategy, and likely a costly battle to fight. Is it worth it?
Their merchant account agreements actually require cash/card prices to be the same. (Credit card purchase minimums are generally not allowed either - of course that doesn't stop many merchants from trying.)
So you're saying that the average person makes mistakes that result in bank fees, and so anyone who doesn't or seldom makes mistakes that result in bank fees must think they're better than everyone else and have an unattractive attitude? And how does an unattractive attitude equal an irrational decision?
2. If you have a couple of thousand dollars in the bank and you're getting an extra 0.5% on your interest, that's $10 per year. That's far less than the time-cost of just reading your bank's fee schedule every time they change it.
The fact is, retail banks make most of their money by charging fees which come as a surprise to the people who pay them. Those people would avoid these fees if they could do so in a reasonable way. Comments that imply that this is not so have to be either misleading, irrational, or just not generally applicable. I went with irrational as the most charitable reason.
"If it was after technology alone, BBVA could have built a platform in a few months for half a million dollars, [banking consultant Serge Milman] says."
I know this was probably hyperbole of the cuff, but it seems rather unlikely that any bank, institutions that are non-tech focused, could develop the same tech as a tech startup like Simple or Mint in a few months for a half million bucks. Pretty classic "ignorant of the true cost and complexity of software" attitude.
It's a great service if you're currently using a checking/debit card through a predatory bank which is trying to profit off you by scamming you. Examples include banks with monthly transfer minimums and banks with hidden fees. Simple is nice because there really are no fees.
Their customer service is also remarkably quick and friendly, which again is a plus if you have an awful predatory bank now.
I basically think of Simple as the bare minimum of what a bank should be - friendly service, easy electronic access, no hidden fees, and an obvious business model. It's sad that so many US consumer banks can't even live up to that relatively low bar.
Sadly, Simple's savings interest rate is near-zero and they don't offer any alternative higher-interest accounts like MMAs. There's also no rewards program, since it's a debit card, so you're actively losing a small amount of money by using their service versus a no-fees credit card with cashback or points rewards.
They also don't offer any other banking services - there's an online "pay contacts" option, but it doesn't seem as integrated or fast as that offered by some banks. Since there are no branches you can't really go get a cashier's/secured check if you need one, and they don't appear to offer the ability to wire money out - you can only ACH in and out of your own verified accounts.
I've since switched to a combination of my local credit union and a no-fees cashback rewards credit card. That way I'm losing less money off of the credit-card merchant skim, and I have a place to go when I need to wire money or get a cashier's check for bigger purchases like cars. Plus my credit union offers loans and mortgages at good rates as well. The only advantage Simple has over my credit union is their better online / mobile app support. Their ATM network is OK but nothing special, and since many credit unions participate in a shared-branching network (like CU Service Network or CO-OP), I can generally find one to get cash if I need it.
I've been very satisfied with their customer service. I've been very satisfied with the fact that there haven't, to date, been "surprise fees." I've never been charged any kind of fee for using the service. I like their goals system, too. Tiny bits of money leave your main account (it's still usable though, in case you spend more than is in your perceived "balance"). You end up saving money without noticing it, which is nice.
Other little moments where you interact with the bank are better: getting a replacement card, for example, is very easy and fast.
Downsides: - The money you save isn't earning any real interest, though that's nothing different from a typical savings account.
- It's impossible to get cash into your account. I generally don't use cash very often, so this isn't a huge problem - but every so often, it's been incredibly annoying. Forget about ATMs, too. I can't use my Simple card at an ATM without paying a big fee. There are some fee-free Simple ATMs through a partner, but I've never found a convenient one.
- If you have an especially large check to deposit, good luck! The mobile scan limit of, say, $3,000 is not unique to Simple - but what is unique is that you have no branch to walk into.
That being said, I've had such horrible experiences with BofA, I'm happy to not have a branch.
Is my mind blown by Simple? Not really. It's fine. I like it. On the other hand, I can't say I've ever been a fuming, angry customer in front of Simple - and I can't say the same for most of my other banking experiences.
One alternative to consider: I've heard Capital One 360 is nice and comparable.
At the time, they also didn't allow for joint accounts. I don't know if that has changed yet.
I ultimately switched over to PNC because they have good branch and ATM coverage in my area and although their mobile app and web interface cannot touch Simple, they were substantially better than my previous bank's offerings.
Someone told me that Charles Schwab checking accounts, although also virtual, reimburse all ATM fees. According to this person, that includes ridiculous fees like $20 at "gentleman's clubs".
Now I have to find a bank that can do all of that, but doesn't have even worse issues.
My finances are strange. As a student supported primarily through research grants/TAships, at the beginning of the semester, I have my entire paycheck for half of a year deposited into my account. This makes my budgeting problematic: my "total account balance" would show far more than what I would like to allocate myself for each month. I don't want to get out the pen-and-paper or Emacs' calc just to see whether I could go out to dinner that night.
Here's how Simple addresses this: A giant "Safe-to-spend" number is shown at the top of every page on the website. This "Safe-to-spend" number is defined as your total account balance minus the amount you've allocated to "spending goals", which are tags/buckets that contain money, similar to an old envelope accounting system.
When I'm paid for half the year, I move all of the balance to a "Stipend" goal and never touch it again. My Safe-to-spend now shows as $0.
Every month, I manually log in and move a monthly amount out of the "Stipend" goal/bucket and into my "Safe-to-spend." I then treat that as my "monthly paycheck", and then allocate that money to goals such as "Rent", "Cell phone bill", "Food", and etc., usually leaving a few hundred dollars in my safe-to-spend as a margin and so I can watch how my finances change on a small scale.
When it's time to pay rent, the transaction hits my Simple account. This makes my "Safe-to-spend" immediately drop to 0 (really negative), indicating that I've spent some money that should have been allocated to goals. When I notice this, I log in and tag the big rent transaction as "Rent", which empties out the "Rent" bucket and pushes the Safe-To-Spend back to positive.
It's a great way of planning my spending in advance, which is one of the philosophies behind using these tools.
Some other things that make me feel like Simple genuinely wants to avoid screwing over customers:
- Excellent same-day customer support (I have something like 20 conversations open at the moment); - No overdraft problems, because Simple will just reject transactions if you do not have the money for them (this even applies if you use your card as a credit card transaction--if you want to be strict, you can also make it reject transactions that would drain your Safe-to-spend but I don't do this); - Planning tools that encourage planning large purchases before you make them. (Example: I allocate 10% of my paycheck to a "Tithe" goal, for personal reasons. After doing this, I realize that was able to help a family member during a time of emergency without having to stress about making next month's rent since I already had this money set aside for this purpose.)
Some problems that make Simple less attractive for serious people:
- Low interest. I earned something like a buck of interest all last year. If you're serious about passive income, Simple might not be a good choice for you. (I'm a student. Maybe some day, but I don't want to be a miser quite yet) - I do not have check-writing privileges. If I want to send money to someone, I have to log into their website and fill out a form. Then, an elf in the "Simple Factory" in Portland or whatever will physically print off a check, hand-seal it into a plain white envelope, and put it in the mail to the address I indicated. - You can only put one name on the account, so if you're married, you and your spouse can't share your finances. (If you're both simple customers, you can send money back and forth though, which isn't so bad)
But frankly, I don't mind these things. Their pitch is "We make banking not painful again," and their tools and customer service far outweigh these drawbacks.
As a spending account, Simple will only be significantly helpful to you if you jump in completely and use everything they offer, making Simple your primary spending account. This is a hard pill to swallow for many people since they're already established as roughly-happy customers of other banks. I definitely would recommend Simple to someone who's just starting out in the "real world" who wants to learn how money works and get familiar with budgeting.
(Sorry if this sounded like an advertisement. Maybe it is, in a way.)
I've been a customers for 6+ months and haven't had any of the issues mentioned above. Granted, I haven't had to deposit a $3,000 check yet, but I use direct deposit and PayPal for almost everything. Their mobile deposit works far better than Wells Fargo. I still have Wells Fargo for my business accounts, and still send half of my direct deposit to Wells Fargo because I want the options of a big bank just in case as well, such as the $3k check problem and lots of locations and ATMs.
The only speedbump I've hit with Simple is for some weird reason my rent payment got rejected even though everything was good in my Simple account - but I explained the situation to Simple's amazing customer service and they refunded all the fees that went along with rejection - not sure how big banks would have handled that.
After you purchase something at any store, it shows up within minutes in the Simple app and you get a notification on your phone which is perfect for making sure there wasn't any funny business when you swipe your card at random locations. The goal tracking is really good too in order to see what money you actually have to spend outside of your goals and they'll "hide" your own money from you at your own set intervals which is good for undisciplined consumers like me. I guess I'm not yet in the right stage in life to really benefit highly from credit card cash backs, which would only be worth it above the yearly fee if you put almost all bills on it. I do have a short term CD savings account with Ally Bank that's separate. Overall Simple is the best bank and app I've ever used.
Enjoy the service, thought I'd add on to the downsides as well:
Some merchant accounts view your Simple account as a Pre-paid card, which may (has for me) caused issues with refunds & deposits. From simple's fantastic (they really are fantastic and responsive) support:
"We share a BIN (the first 4 digits of your card number) with a lot of prepaid cards, and a lot of merchants have policies about anything that looks like a prepaid card. That being said, your Simple card is not a prepaid card -- it's associated with a personal checking account at our partner bank."
So far, it's been worth it for Goals, although I think you have to use them a bit unconventionally for things to really go well.