After posting our latest update on Fundrise, we received a number of views and follow-up queries (thank you!) A few readers also reached out for further details on our experience with Qapital.
As part of our monthly passive income and portfolio updates, we’ve been highlighting key changes as well as our progress. However, we haven’t really covered Qapital except as part of our Apps & Tools overview.
Here we’ll provide an overview of our results with Qapital, as well as thoughts on our experience with the platform since our initial savings transfer nearly 18 months ago. This is not meant to be an exhaustive review of the Qapital, but we will highlight aspects of the particular service that we’ve utilized for context. We also include some new features that we’ve only started to explore.
As always, do your own thorough research before deciding to utilize a particular tool or service.
Qapital Overview
Qapital is a free banking / saving app aimed to help automate and make it easier to save. Users have the ability to link a funding account or source (such as your regular checking account) via the Qapital app to one or more savings goals that a user creates. Additional features are available if you wish to expand.
Overall, the app can be broken down into 3 areas of service:
(1) Qapital Spend – this includes an optional debit card and Qapital Spending Account.
(2) Qapital Save – this is what feels to me like their “bread and butter” offering – the various savings buckets you can create which are fed from a funding source.
(3) Qapital Invest – this seems like a newer feature, but includes the opportunity for money to be invested by Qapital.
Visit the Qapital website for further details.
To be clear, we’ve only utilized the Qapital Save functionality linked to our Ally Bank checking account and our credit cards (utilized to trigger the various savings rules – covered below). Also, as the title indicates, we do NOT make interest on our Qapital savings.
How it Works – Rules & Goals
Qapital enables users to create a number of different rules that trigger withdrawals from your funding source to your savings goals.
There are a few primary rules, but you can experiment with the options and settings for further combinations across goals and even mix multiple rules together. Here are the rules we’ve tried:
- Round-Up Rule – enables users to literally round-up to the nearest dollar ($1.00). You have the option to also round-up to $2.00, $3.00, $4.00, or $5.00. We use this rule the most frequently.
- Set and Forget Rule – exactly what it says; you set a frequency and amount and let it do its thing. This is the second most used rule for us.
- Guilty Pleasure Rule – based on your transaction activity, you can pick a vendor, service, or category that you spend on and then trigger a savings amount to Qapital.
- 52 Week Rule – basically a savings escalation mechanism, you save $1 the first week, $2 the second week, etc. up through $52 the last week of the year. Effectively, each week of the year you save the dollar amount corresponding to the number of the week.
Other rules include the Spend Less Rule, Freelancer Rule, and the If This, Then That (IFTTT) rule.
Related: 5 Ways to Balance Account Types To Balance Life’s (Un)known Milestones
I actually just started looking further at IFTTT, in general. But with Qapital, you can create savings with so many available rules across various other services and apps that you might already be using.
Our Savings Experience
I attempted to identify those purchases or obligations throughout the course of the year that usually throw our monthly spending out of whack. Whether in terms of frequency or size, here are some of the things I attempt to save for via Qapital.
- Holiday Gifts – whether end-of-year or sometimes birthdays and anniversaries, we set aside fixed amount each week. We typically find ourselves using the bulk of the funds in late November through early January.
- Renters Insurance – a relatively fixed cost, we currently pay our annual premium in June. I got tired of forgetting to set aside cash for this important item and then stressing about having to pay a larger than usual expense that month.
- Doggie Vet – while we do have pet insurance, even just our dog’s annual vet visit costs a substantial amount (let alone an actual doggie emergency!). Not seeing this expense from month-to-month is another item that had caused a bit of stress.
- Annual Income Tax – we do try to ensure we have an appropriate amount (not too little and not too much) withheld from each paycheck, but we’ve owed much more than we anticipated in the past come tax time. If we don’t owe, then great – we invest the cash we had set aside.
- Moving Expenses – while not always utilized or planned, we found it helpful to set aside some cash to offset the costs of moving – whether hiring a crew, fees for a new apartment, or anything related. This does not include savings for a down payment some day, but it does help when needed.
- Random New Gadget – a new computer, a new phone, a new something – whatever. It’s nice to have something saved, even if not the whole cost.
Just be mindful not to go over board. It took a while to find a mix of rules that are manageable. For a few months, I’d ramp up savings and then find myself unable to pay bills and end up raiding my Qapital savings goals. Sustained progress and moderation is key.
Related: How We Got To Averaging +$1,000 a Month In Passive Income
Other Considerations
Things I’ve noticed with the Qapital so far:
No Interest on Savings
As mentioned above, and to make it clear again, we do NOT make interest on our funds with Qapital with the basic service we utilize. But that’s not a reason to not try Qapital.
$100 Failsafe Mechanism
If Qapital detects less than $100 in your funding source (our Ally Bank checking account for us), it will freeze transfers to your goals. To be clear, as Qapital notes, it’s not perfect, but it has helped us avoid going into overdraft.
Qapital also notes it won’t cover overdraft fees as a result of the service or the rules a user creates. Related to our point earlier, be mindful of whatever rules or system you put in place.
App Only
There isn’t any desktop functionality that we’ve seen yet. Not a must-have, but a nice-to-have.
Cumulative Savings
Each time you log in, you see your cumulative savings and what you’ve saved since last logging in. It’s addicting (don’t log in too frequently). Also, remember: it’s sometimes better to forget these funds are there.
Timing of Savings
Transfers to or from your bank account (funding source) take a couple of business days, but it seems overall reasonable.
Related: 5 Considerations on How to Deploy New Capital
Automatic Allocations
Based on the rules triggered each time, the platform will automatically allocate your various goals or buckets.
Note: You’ll also see an aggregate debit in your bank account per day of each respective triggered event (e.g., if you save $100 and gets allocated five ways to different goals, you’ll still see one withdrawal in your bank account for all respective savings triggers on the single day).
Fees / Expenses
Qapital really does say their service is 100% free. There are no fees that we’re aware of for the basic savings tool that we utilize; if you opt to use their debit card, you might get charged with ATM fees, but not by Qapital. As noted on their site, Qapital mainly makes their revenue when users utilize the Qapital Debit Card via vendors.
Tax Implications
As we’re only using the Qapital Save functionality and receive zero (0.00) returns on our savings, we haven’t encountered any tax implications. If you do opt to utilize other services (Spend or Invest), you might have items to report on your tax returns depending on your saving and/or investing results.
Wrapping It Up
According to the app, we reached $6,639.66 in total savings in about 18 months since using Qapital. Do we have this amount sitting in Qapital right now? No way. We use this for short-term savings. Money comes and goes frequently depending on the goal or need.
As of today, we have $589.66 sitting with Qapital across our various goals. I’d say a few hundred bucks is the typical average balance for us. Do we need it right now? No. If we do, it’s only a business day or two away. More importantly, it makes saving easier for us and spending less stressful.
Looking Back and — More Importantly — Ahead
I’ve enjoyed utilizing Qapital. The user interface is terrific and the overall savings opportunities have met our personal needs and objectives so far.
With interest rates rising over the last several months (and potentially further), I am tempted to reconsider utilizing our various savings accounts at Ally Bank. Not receiving a return for your hard-earned cash sitting in an account does suck.
But I think the advantages and benefits of using Qapital greatly outweigh the relatively insignificant returns we’d be getting elsewhere (based on our personal use of amounts not being terribly large and generally allocated to short-term goals of less than 6-12 months).
Overall, we’ll try to be mindful to find a balance between our various account types, as well as within our search for convenience, returns, and positive behavior reinforcement.
Readers, do you currently utilize Qapital or any other online savings or bank platforms? What role does convenience vs. return play in your savings goals? Do you have any thoughts or recommendations to share for consideration?
Related:
6-Month Update: Fundrise Passive Income Review
5 Considerations on How to Deploy New Capital
FTW! Is it Possible to Invest for Today AND Tomorrow?
Our favorite free financial tool is Personal Capital. We use it to track our net worth, manage our spending & savings, and to monitor our investments. It’s simple and free to use.
Mike, I guess I have done a lot of this mentally and manually over the years like many people so it just makes sense that those thought processes have been automated into an app. If it helps achieve one’s financial goals then it is a good product. Tom
Hi Tom – good point. We’ve done the mental accounting game for years as well. What I’ve found helpful is the automation and the motivation. It’s much easier to save (for me at least) gradually over time – especially where the $$ is not immediately accessible at your regular bank (though it takes a day or 2 only to access). And agreed – whatever the tool or app, as long as it’s helpful, then good. – Mike