Aspiration is an L.A.-based investment firm that also offers checking account services through a partnership with Radius Bank. Radius Bank is based in Boston, MA. It has a four-star rating with Bauer Financial and more than $725 million in assets. Aspiration offers two main products: a checking account and a savings/investment fund. The company is located in Marina Del Rey, California, and was founded in 2013 by Andrei Cherny, who is also its CEO. As of December 2015, the startup has received $20.5 million in funding.
What Are Aspiration’s Checking and Savings Accounts Like?
Aspiration´s Summit Account offers users with a balance of $2,500 or more a 1.00% APY. Users with a balance of less than $2,500 only receive 0.25% APY. These rates are 100 times higher those offered by the vast majority of banks. However, relatively higher rates are not the only or even the main benefit of Aspiration´s Summit Account.
It also offers no minimum monthly balance, no monthly service fees and no minimum monthly deposit, and no ATM fees. That means no ATM fees, regardless of which ATM you use in the United States or overseas.
The minimum deposit to open an account is $10, but you don’t have to maintain a minimum balance. Aspiration is not a bank but funds placed in the Summit Account are insured by the FDIC up to $250,000 because they are deposited in Radius Bank. There is a $33 overdraft fee to consider, which is high considering many banks don’t even charge this fee anymore. There is also an $8 returned checks fee, a $10 incoming wire transfer, and a $20 outgoing wire transfer.
Aspiration’s Flagship fund is an investment fund, not a regular savings account. Your money is invested in the Aspiration Flagship fund, ASPFX. Instead of the 0.01% to 1.00% APY most banks offer, the return on this fund depends on its market performance. These funds are not insured by the FDIC, which means you could lose money. The minimum investment is $500.
Aspiration’s website says you can choose the fee you pay Aspiration for investing in their fund. You could even choose to pay nothing for their service. However, this does not include the 1.72%, or 1.35% depending what prospectus you read, in operating expenses the fund charges. If you decide to “pay” for Aspiration’s services you will be paying over and above the basic operating expenses of the fund. These expense rates high when compared to the 1.02% industry average expense ratio for indexed funds or the 0.18% expense ratio low-cost fund managers like Vanguard charge.
What Are The Advantages And Disadvantages of Aspiration’s Checking And Savings Accounts?
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