While I have never in my life desired to be an accountant I do have a strange fascination with filing taxes. I organize for it pretty much all year long and I file as soon as I possibly can (except for the rare occasions where we have owed the government – in which case, I wait as long as I can – and don’t get me started on getting a return equaling giving an interest free loan to the government, I know that is the case, but there are other reasons that we try to make sure we get a return). Then once I have finished our returns I look to see if the boys or mom need/want/will allow me to help them. I’m not looking for any others because I fear it will turn the process from enjoyable to burdensome, so don’t view this post as an open invitation for me to do your taxes. 🙂 I should probably add here that I am not a tax professional and nothing in this post should be construed as actual professional advice – if you want tax advice you should go to a professional rather than me.
Anyhow, this wonderful time of the year has begun and tax forms are beginning to head our way. One of these coming forms is what I am now going to write about because the 1099-INT points to a subject that I would like to discuss. Since we were married twenty-nine years ago Pam and I have tried (sometimes more successfully than others) to maintain a savings account that contains an emergency fund. The purpose of this account is to quickly be available for when we face financial emergencies, not so much to actually increase in value. It is good that the purpose was about preparation rather than a substantial increase in valuation because, as you probably know, the annual percentage yields on most savings accounts have been so low that you really didn’t make any real money on them. For us this has meant that since the IRS changed the rule concerning the amount of interest at which the bank has to send you a 1099-INT (if you earn less than $10 interest in a year they don’t have to send you one) we have not receive a 1099-INT from our main bank (though you are still supposed to report your earned interest on your tax forms). In fact, I already know we won’t receive one this year either because we earned a grand total of $4.03 in interest this year on the largest of our emergency accounts. The the annual percentage yield on our banks savings accounts is a whopping 0.03%.
We also are members of a credit union that pays significantly more at 0.25% APY, which is significantly more than our bank but still not enough for them to need to send to us a 1099-INT.
Then along came the online banks and FinTech companies. This past year we started savings accounts with three online banks/FinTechs. These companies pay much higher rates of interest since they don’t have branches. Here’s what we are receiving rate-wise.
- online bank #1 – 2.02%
- online bank #2 – 1.75%
- FinTech company – 1.80%
The reason I am writing about all this is because of the disruption that these online banks and FinTechs are making in the financial services industry. You see in the first month of being a part of online bank #1 Pam and I earned more interest, on less money, than we had in the previous four years total at our traditional bank. This wasn’t a huge amount (about $20), but still it was 48 times more than my traditional bank had paid me each month. I am pretty sure by the end of 2020 we will have earn more interest in our online bank #1 account than we have cumulatively in our traditional banks’ savings accounts for all of 29 years of our marital life.
Every now and then you need some disruption. We’ve seen it in other industries – 10 years ago who would have thought that you would have jumped into a stranger’s car instead of hailing a taxi (Uber and Lyft), or that I would randomly stay at a stranger’s house instead of a hotel or motel (AirBnB and VRBO) – and it is happening now in the financial services industry. This is why you are beginning to see the big banks do some of this too. For example, Capital One now offers 1.70% APY on their 360 savings accounts, and Goldman Sachs and American Express are doing the same thing. Smaller banks and credit unions have done this for awhile but you know when the big banks change is coming – they don’t do something unless they have to do so to stay competitive.
It is a reminder to me that just because I have always done something a certain way doesn’t mean that is the best way for it to be done any longer, or ever. This isn’t just true for savings account, transportation, lodging, and the other industries that have been disrupted in the past 10 years, and it isn’t always something big happening. Sometimes the disruption is a move to something smaller. Read about the phenomenon over the past few years of local, independent bookstores reviving – here’s a quick search of related articles. These independent bookstores offer something that people want and isn’t being offered by the big book stores and Amazon don’t/won’t/can’t offer. It is also why some small coffee roasters are producing coffee that is widely recognized as amazing (I’m looking at you Ruby).
I wouldn’t be surprised if small churches aren’t this disruption in modern Christian faith in the near future. For the longest time in American Christianity (specifically, but not exclusively, Evangelical Christianity) the mega-church model has been the goal for so many churches. I’ve heard the saying “if you aren’t growing, you’re dying” or “healthy things grow” in various church conferences and events more times than I can remember. I’ve discussed before some of my struggles with such a mindset (HERE), but it can basically be summed in the mindset that healthy things mature, rather than necessarily grow. There are a lot things about big churches that can offer a great deal to help people mature as disciples of Jesus Christ, but there is also much that smaller churches can offer that larger churches don’t/won’t/can’t. Being a small church may be an advantage that Christianity in America needs right now. So many of the voices that I admire in Christian writing and thinking right now, voices that I believe are speaking prophetically, producing maturity, and calling disciples to deep faith, are involved in small communities of faith. This could just be me connecting to people from smaller churches, BUT it might be something about smaller churches that is more conductive to producing this type of mature faith. Just because the big church has been the model of success in the church for the past 60 years doesn’t mean that it should be the model now, and that model may be being disrupted during our present age.
As I have written before small churches are wonderful things.