Aspiration delights in throwing shade at the competition. Last year, it used Twitter to lampoon Bank of America’s paltry savings interest rate. In honor of Earth Day this year, it called on consumers to move their money from big banks like Wells Fargo, BofA and Chase that it says support the fossil fuel industry.
Since opening its online doors in 2015, Aspiration has pitched itself to consumers fed up with the traditional banking industry and to Millennials eager to patronize do-good businesses. For example, it donates 10% of its income and offers an in-app feature that guides Aspiration customers to environmentally and people-friendly businesses. Users can even get a sustainability score on their own spending habits.
To be clear, Aspiration is not itself a chartered, federally insured bank. It’s a brokerage offering a cash management account like Fidelity Investment’s cash management account. And like Fidelity, it uses relationship with banks to make sure the money in your “Spend and Save” account is protected by the Federal Deposit Insurance Corp or FDIC. (Any securities you hold through Aspiration will be protected instead by the Securities Investor Protection Corp.)
So how, beyond the feel-good marketing, does Aspiration stack up as a bank replacement?
Aspiration Spend & Save Account
Aspiration Originally, Aspiration offered a single checking-like account that gained notice by paying a high yield of 1% APY. That trounced the yields you’d see at some well-known brick-and-mortar banks that offered as little as 0.01%.
In 2019, Aspiration announced that it was replacing its checking account with something it calls a “Spend & Save” account. The new account offers a spending account that’s attached to a debit card and a savings account paying 2%. Although technically it’s two accounts, it’s meant to operate for the consumer as one seamless Aspiration account. Plus, there are still little or no mandatory fees and Aspiration brags that it is 100% fossil fuel free.
Features
Bill pay: Yes
Mobile check deposit: Yes
Fraud protection: Yes, and users can get up to $1,000 reimbursed for identity fraud
Debit card: Yes
Rewards: Offers up to 0.5% unlimited cash back on every dollar spent. Aspiration gives 0.25% cash back for all purchases, but you’ll receive a bonus cash back of 0.5% for shopping at businesses with high “Aspiration Impact Management” (AIM) scores.
Annual Percentage Yield: 2%
Other Insurance: Up to $600 in cell phone insurance when you charge your monthly bills to the Aspiration Mastercard.
Security features: Automatic sign out and multi-factor authentication
FDIC Insurance: Yes, up to $2 million—at night. Let me explain. During the day, your funds are held at Coastal Community Bank, where debit cards are also issued from. That’s up to $250,000 FDIC insurance per account type (checking and saving accounts). At night, your funds will be swept into a network of FDIC-member banks that you will be notified of. The network expands your FDIC insurance coverage from $250,000 to $2 million.
Fees
ATM fee: You can use any domestic ATM and be reimbursed. You’ll also be reimbursed for up to $4 for international withdrawal fees. (You can’t make deposits in those ATMs, only take cash out.)
Monthly fee: $0 mandatory fees, but Aspiration asks you to “pay us a monthly fee you think is fair”
Overdraft fee: $0
Debit card: $35, if expedited
Wire transfers: $0.82 for domestic; $2.50 for incoming international and $15.00 for outgoing international
Stop payment fee: $0
Foreign currency transaction fee: Yes, and it will not be reimbursed
Aspiration Investment Accounts
Out of the four investment products Aspiration offers, two are earmarked for sustainable investing, also known as environmental, social and governance (ESG) investing. They are the Redwood Fund and the Redwood IRA.
The two other products, the Flagship Fund and Flagship IRA have a low-volatility theme. These funds target investors who are risk averse. The two funds are made up of other funds with strategies that minimize the ups and downs of the overall market and produce risk-adjusted returns. They all require a $10 minimum as an initial deposit, allowing average Joe investors access to portfolios only available to Aspiration customers. In addition, all securities are insured by the Securities Investor Protection Corporation (SIPC) up to $500,000.
The Redwood Fund and the Redwood IRA invest in companies that actively participate in ethnic diversity, gender diversity, better ethics and address climate change. The account is managed by UBS Asset Management. The Flagship products are under Emerald Asset Management.
The retirement accounts are traditional, tax deferred IRAs.
Since Aspiration partners with an outside business to offer its investment products, underlying fees could exist. Aspiration states it will tell you of any fees “up front.” Besides that, the Redwood and Flagship product lines carry no fees.
Fees
Sales commission (front or back end): $0
Transaction fee: $0 per transaction
Performance fee: $0
Redemption fee: $0
Third-party: Yes, it’s a capped amount
After combing through Aspiration’s products and features, here are its advantages and disadvantages for customers.
Pros
- Competitive high interest rate on savings account
- Socially conscious
- Little to no fees
Cons
- No ability to deposit cash
- Best way to reach customer service is through email
- $35 for an expedited debit card
How Aspiration Stacks Up
Aspiration Aspiration is an alternative way to bank, particularly for customers fed up with traditional banks. It’s transparent about its pay-what-is-fair fee model. It has a high interest rate Spend & Save account and reimburses customers at ATMs. Aspiration has some great feel-good features, but there are some things that make it difficult to fully commit to its platform.
For one, there’s no way to deposit physical cash, which is a problem most online banks have. And it could be a potential problem for people who need to put money in their account quickly to pay a bill or transfer money.
The other hang up I have is that customer service is more responsive to emails than phone calls. If Aspiration is going to give out AIM scores for other businesses and go after other financial institutions, it should offer more customer support options like a chat feature and phone support representatives for the phone number it provides on its website. The company is still young and growing, so there may be more development in that area.
As a cash management service for the non-wealthy and socially conscious, Aspiration is great. It doesn’t cap the number of reimbursements you’ll receive from ATMs and there’s no minimum balance to maintain. Plus, you can use your dollars to align your finances with a worthy cause while still earning interest.
