M1 Finance offers a cash management account and a lending feature that competes favorably with banking services offered by other robo-advisor and online brokerage platforms.
M1 Borrow
M1 Borrow is a lending service that uses your existing account balance as collateral for loans. The service is available to users with account balances of $5,000 or more, and lets eligible users borrow up to 35% of their total account balance. Borrowers may set their own repayment timeline, and the funds may be used to purchase more stocks and ETFs, or for any other purpose.
A differentiating feature of M1 Borrow is lower interest rates than similar margin loans from nearly all competing online broker platforms. Users with M1 Basic accounts get an annual interest rate of 3.5%, while M1 Plus members pay 2% annual interest—this beats margin loans from the low-rate online brokerage leader, Interactive Brokers.
While M1 Borrow is a low-cost way to invest on margin and pay for other short-term expenses, like a wedding or vacation, without needing to sell your investments at an inopportune time. Just note that M1’s retirement and custodial accounts aren’t eligible for loans.
M1 Spend
M1 Finance’s cash management account works like a regular checking account from a bank or other fintech platform. M1 Spend provides all users with a debit card and one ATM fee reimbursement per month, while M1 Plus users get 1% cashback rewards on all debit card purchases, the ability to send physical checks via M1’s app, and three additional monthly ATM fee reimbursements.
Balances held in M1 Spend earn 1% APY if you are an M1 Plus user. M1 Basic users earn zero APY on deposits.
Be aware that M1 Finance is not a bank. All M1 Spend account balances are held by Lincoln Savings Bank, which provides Federal Deposit Insurance Corp. (FDIC) insurance on deposits up to the standard limit of $250,000.
