Aspiration Banking Review (2020) — Are Recent Changes for the Better?
There was once a time when I thought perhaps I had too many bank accounts. Yet, since then, I’ve only found more attractive accounts to open. One of the additions I made to my roster back in 2018 was Aspiration.
Not long after I opened an account, several things started to change with my account — first for better and then, later… not so much. Most recently, in March of 2020, Aspiration made another round of adjustments that I think further degraded their banking product. At the same time, the company does maintain a unique mission and approach.
With that preview out of the way, let’s take a closer look at what Aspiration still has to offer customers and what makes/made them stand out in the increasingly crowded field of online banking services.
Editor’s note: this article was updated in March 2020 with the latest APY information and other changes.
What is Aspiration?
Aspiration is an online banking services company with some high, well, aspirations. With taglines such as “Do Well. Do Good.” and “Save Money, Save the Planet,” the company puts as much of an emphasis on charity and ecological impact as it does on personal finance health. In fact humanitarian and Oscar-winning actor Leonardo DiCaprio is among Aspiration’s investors.
There are many areas where Aspiration’s Earth-saving endeavors shine through, such as their Redwood Fund and Redwood IRA products that promote sustainable investing. Additionally the bank donates to various causes and makes it easy for its customers to do the same. However, for the rest of this review, we’ll be looking specifically at Aspiration’s banking features and how they compare to other offerings.
A brief, oversimplified history of Aspiration and its many changes
First, early last year, Aspiration announced it was changing a few things about their accounts. For one, instead of a single account they dubbed “Aspiration Summit,” the bank created Aspiration Spend and Aspiration Save accounts. The biggest positive to this change was that the bank doubled its APY from 1% to 2%. However, to earn this interest, funds would first need to be placed into the Save account. Additionally customers would need to deposit at least $1 a month into any of their Aspiration accounts (or have a balance of at least $10,000 or higher for a minimum of one day per month) in order to earn to that 2% APY. Failing to do so will, sadly, result in a 0% interest rate for the month.
Unfortunately, this structure changed again in August 2019. Following a quarter-point Federal Reserve’s rate cut, Aspiration announced that it would still offer 2% APY… but only to customers who deposited at least $1,000 a month — a far higher threshold than the previous $1. Alternatively, if you have a balance of over $10,000 for at least one day during a given month, you’ll earn 1.5% APY. Again, failing to meet either of these requirements will result in 0% APY for the month.
Subsequent changes and restrictions arrived in September 2019 and now in March 2020 that further complicate the Aspiration product and make it more difficult to earn interest. For clarity, Aspiration now offers up to 1.5% APY, although most customers will likely only earn 0.5% or 0%.
We’ll talk more about my feelings on these changes a bit later.
What Aspiration Currently Offers
Since Aspiration’s accounts have changed frequently, here’s a quick rundown of what basic banking features are currently offered as of March 2020:
- 0.5% APY on savings (if you deposit at least $2,000 a month or hold a balance over $10,000 or sign-up for Planet Protector service)
- 1.5% APY on savings on balances up to $10,000 (if you deposit at least $2,000 a month and sign-up for Planet Protector service — funds over $10,000 earn 0.5% APY)
- Worldwide ATM fee reimbursements (up to 5 per month)
- Cash back on debit card purchases (0.5% on purchases select brands, 3-5% on purchases from select Conscience Coalition members, and 0.05% back on all other purchases)
- No mandatory fees
- Plant Your Change charity round-up option
- FDIC insurance up to $2 million per depositor
What’s Good About Aspiration
Before we go any further, rest assured that deposits to Aspiration are FDIC insured just like any other bank. That said, Aspiration is actually not a bank themselves and instead partners with banks to offer this insurance. In fact they actually sweep funds to several different banks, allowing for insurance on up to $2 million per depositor instead of the regular $250,000.
“Pay What is Fair”
Aspiration doesn’t charge many of the fees that traditional banks do. There’s no minimum balance fee, overdraft fees, maintenance fees, etc. Instead the bank asks its customers to sustain them by paying a monthly fee of their choosing — even if that amount is $0. Overall this is a good system that has the potential to save you money versus many brick-and-mortar banks.
Cashback on debit card purchases
Incidentally this is a feature of Aspiration I have yet to use but is definitely worth discussing. Along with the other recent changes to Aspiration accounts, debit card purchases now yield cardholders cashback. However, this particular feature has also continued to evolve.
The bank has developed its Aspiration Impact Measurement (AIM) that evaluates “how a business treats People (employees, customers and community) and the Planet (environment).” When the cashback debit feature was first announced, if you used your debit card to make a purchase at an establishment with a high AIM score, you’d earn 1% cashback. Meanwhile if the business has a lower AIM score or has yet to be evaluated by Aspiration, you’d earn 0.5% cashback on your purchase. Even back then it was a bit unclear what constitutes a high or a low score but, in any case, that system has changed.
Now, all purchases on your Aspiration debit will only yield you 0.05% cashback while patronizing “businesses with the highest AIM scores” will earn you 0.5%. This time, however, they provide a list of stores eligible for this higher cashback rate (accurate as of March 8, 2020):
- Adobe Systems
- Boost Mobile
- Cricket Wireless
- Page Plus Cellular
The good news is that, on top of that, Aspiration is also offering up to 5% cashback when you use your debit card to make purchases from members of the Conscience Coalition. Here’s a look at those participants (accurate as of March 8th, 2020):
- 5% cashback:
- Warby Parker
- United By Blue
- Parachute Home
- 4% cashback:
- Known Supply
- 3% cashback:
- Arcadia Power
- Feed Projects
- This Bar Saves Lives
- Wag Walking
- Blue Apron
- Girlfriend Collective
Even as someone who doesn’t plan on really using this feature, the initial change was pretty disappointing. While I was thankful to have a bit more clarity on what qualifies for which tier — and there are least a few places on the list where I shop with some regularity — cutting the cashback rates so dramatically (now down to 0.05% for most) makes this feature even less viable. However the addition of the Conscience Coalition bonuses is admittedly pretty cool even if the list is fairly short.
Ultimately if simple, straight-forward cashback checking is what you’re after, Discover offers 1% back on up to $3,000 in debit card purchases per month. Plus, if you trust yourself with a credit card, there are plenty of options that will pay you far more than the 0.05% back you’ll get on most Aspiration debit card purchases.
Plant Your Change
While we’re on the topic of debit cards, one newer feature of Aspiration is called Plant Your Change. When you opt into this, your Aspiration debit card purchases will be rounded up to the nearest dollar, with the spare change going towards planting trees. Aspiration says that they guarantee one tree will be planted for each purchase rounded up.
I know I said I’d only be looking at Aspiration’s actual banking features in this review. This one is borderline; however, since it is unique and involves your money, I figured it was worth highlighting.
High-ish APYs (if you meet the requirements)
As mentioned earlier, Aspiration previously offered up 1% APY on savings but has made earning that amount much harder than it was back when I initially signed up. The good news is that technically you can now get up to 1.5% APY instead… but, as you’ll see in the “Downsides of Aspiration” section, it’ll cost you. Instead, even if you meet all of the other requirements that Aspiration installed last year, you’ll only get 0.5% — about one-half to one-third of what other online banking services are currently boasting. Additionally, with this cut in APY, Aspiration quietly increased the required monthly deposit requirement from $1,000 to $2,000 (the $10,000 balance option is still there as well or you can subscribe to their Planet Protection program to get this rate).
Perhaps Aspiration’s main APY will rise again if the Fed were to reverse its emergency rate cut, but there’s no guarantee and I certainly wouldn’t count on it.
ATM fee reimbursement — even international
Last but not least, Aspiration boasts that it allows its customers to use any ATM in the world for free. No, this isn’t the result of some massive partnerships that span the globe. Instead it just means that the company will reimburse any fees you may incur for using an ATM domestically or abroad — up to five reimbursements per month.
On a trip to Hong Kong last year, I got to try out Aspiration’s ATM fee refund first hand. I have to say I was a bit worried as I approached the Bank of China ATM at the Hong Kong Airport, Aspiration card in hand. Truth be told, I was depending on the card to work as I required cash to take a cab to my hotel. Thankfully, after entering my card, typing my pin, and opting into any fees I might incur (and that Aspiration would hopefully cover), I was able to walk away with $200HKD in hand.
Fairly soon after this transaction, I could see it pending on my account — except it was converted to the sum of $25.53. That’s actually what Google says the conversion should be, so it didn’t seem as though any fee had been applied. Nevertheless, a few days later, a $4.00 credit for “Int’l ATM Fee Rebate” appeared in my account. At first I thought this $4 credit was just a note reversing a separate fee I hadn’t seen but, running the math, it would seem that it actually added $4 to my account. I used ATMs twice more while in Hong Kong, netting similar results.
Looking into this further, I found that Aspiration’s help center notes “International ATM fees are reimbursed at a flat rate of $4.00 per transaction.” They add that, if you’re charged more than $4, you can submit a photo of your receipt to receive full reimbursement. However, in my case, evidence would suggest I was never actually charged an ATM fee and, instead, earned $4 just for taking out money. Now, I have to say that this was not my intention nor do I condone taking advantage of the apparent loophole… but there it is. In any case, my overseas ATM experience — one of the main reasons I was attracted to Aspiration — was quite a success. That said, I should note that the five reimbursements per month limit is another recent change (the perk was previously unlimited) that came in August 2019.
The Downsides of Aspiration
About that monthly fee
In the “What’s Good About Aspiration” section, I explained the institution’s Pay What is Fair fee policy. While it’s true that you can elect to set this fee to $0, I couldn’t bring myself to do it. Heck, I felt bad enough reducing their initial $5 a month fee recommendation to the $1 I landed on. But here’s the thing: there are other online banks that offer near what Aspiration does that don’t charge any fees and don’t even ask for voluntary payment. I suspect I’m not the only one paying a higher fee to Aspiration than they otherwise would just because of guilt, making this a slight negative to the service. Then again, Aspiration does give 10% of these fees to charity, so now I’m back to feeling bad that I even wrote this!
P.S. — whether you’re feeling more generous or decide it’s time to lower your fee, you can always do so by going into Settings > Fee Settings and adjusting from there.
Complicated APY structure
While the APY potential of Aspiration is a good thing, what you need to do to earn it is now a major negative. To be honest, my plan was never to use Aspiration as one of my main accounts, thus a $2,000 a month (up from $1,000) deposit is just not something I’m going to do. Similarly, I don’t see holding $10,000 with them. Thus, the latest changes have knocked my APY from 2% once upon a time to 0% today — and I suspect the same is true for many others.
Aside from the deposit/balance thresholds required to obtain the 0.5% APY (accurate as of March 8th, 2020), Aspiration recently introduced yet another component to their APY structure. On the bright side, users can now unlock a 1.5% APY on balances up to $10,000. However, to attain this tier, you’ll need to 1) deposit a total of $2,000 a month into your Aspiration accounts and 2) sign up for their Planet Protection program. This feature promises to ensure that you’re driving is carbon neutral but comes at a cost of $5.99 a month or $59 a year. In other words, you’ll need to pay at least $4.91 a month (the annual fee divided by 12) to earn a maximum of $12.50 a month (the monthly interest on a $10,000 balance). As for those who maintain balances far lower than $10,000, there’s a good chance you’ll either break even or spend money each month under this structure — especially if you’re tipping Aspiration via Pay What is Fair each month as well.
I’m not sure if I’m just impatient but it seems that external transfers to Aspiration take a bit longer than normal. Perhaps that’s because they don’t even display as pending in your account (you’ll have to hit the “transfers” tab to see it, assuming you initiated the transfer from Aspiration itself). This has led to a couple of times where I worried that something was wrong.
Of course this fear was only compounded when I got an e-mail from the bank saying one of the transfers I launched had failed. It turns out that was just a glitch that affected a few customers around the time of the big Save and Spend split, but it only made this speed issue more evident.
Less than stellar account statements
Earlier I noted that I wasn’t sure if the $4 ATM fee credits I was receiving were extra money or just leveling me out from a charge I didn’t see. Well part of the reason for the confusion is that Aspiration didn’t display all of the balance data that other banks would. Thankfully, this has since been corrected and a running tally now shows under your transaction both on mobile and on desktop.
At the same time, Aspiration’s account statements still leave something to be desired. To me, they’re oddly confusing and not really what I’m used to from banks. So while I’m thrilled that they finally fixed the balances issue, I hope statements also get a second look in the future.
Final Thoughts on Aspiration
There’s clearly a reason why Aspiration has been getting so much publicity in recent years. In addition to their unique business model and humanitarian/eco-centric efforts, they also offer a number of banking features that can help customers save money. At the same time, based on the numerous recent changes to their accounts, I can no longer whole-heartedly recommend them for your banking needs.
Although the 1% APY and the ability to use any ATM in the world for free was what brought me to Aspiration, the new limits on earning interest coupled with the capping of ATM reimbursements has certainly soured me. On top of that, while I’m glad their app and site now allow you to view running balance totals with transactions, there are still other aspects of their banking experience I find lacking — and for that they still request a monthly fee.
To me, while Aspiration’s heart may be in the right place, the constant changes and increasingly-complicated rules make the offering seem suspect. For example, the idea of being able to offset your driving and remain carbon neutral is nice but a one-size-fits-all monthly or annual fee for such a service strikes me as odd (shouldn’t it be based on your actual fuel purchases?). Back to the banking component, it’s even stranger to then require such a subscription in order to obtain an APY that some competitors offer without any fees or deposit/balance requirements.
For those reasons, I’d say it’s only worth setting your sights on Aspiration if their overall message is enough for you to overlook these downsides. If not, I’d try SoFi Money or Discover Bank instead.
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