Chase Sapphire Banking: $1,000 Bonus For New/Existing Customers ($75,000 Assets)

Posted on September 26, 2019 // 6 Comments

New bonus. Chase has a new $1,000 cash bonus offer if you upgrade to or open a new Sapphire Banking account. To qualify, you must transfer a total of $75,000 or more in new money or securities into eligible Chase checking, savings and/or investment accounts. You must open by 11/19/2019, complete the $75k transfer within 45 days of opening, and maintain that balance for at least 90 days from the date of funding. Chase will deposit the bonus into your new account within 10 business days after meeting the requirements.

Banks are trying to develop relationships with the “might be rich in the future” crowd instead of only courting the “really rich”. Okay, the official term is “mass affluent”. Sapphire Banking is a new brand extension of their popular Chase Sapphire line of credit cards, although you don’t need to have one to open this account.

Sapphire Banking details. This is a “premium” checking account for those that can keep $75,000 in deposits or investments in qualifying Chase accounts. If you have less than $75k in assets, then a $25 monthly fee applies. Sapphire Banking perks include:

  • No ATM fees, including rebates on fees charged by non-Chase ATMs.
  • No fees for foreign exchange (ATM/debit), outgoing wire transfers, or stop payments.
  • No fees on the first four overdrafts within 12 months.
  • Free online stock and ETF trades with You Invest by JP Morgan.
  • Access to Sapphire lounges at concerts, sports and special events, early ticket sales and premium seats.
  • $0 monthly service fee on a linked Chase Total Business Checking account.

Moving over ETFs, mutual funds, and stocks. Since investments count towards the $75,000 requirement, if you have that much in ETFs, mutual funds, or stocks at another broker, you could perform an in-kind ACAT transfer over to their discount brokerage firm You Invest. All of your tax basis information should also move over seamlessly these days. Your old broker may charge you an outgoing ACAT fee about about $75, although you might ask You Invest if they will reimburse you for this fee. This would let you avoid parking $75,000 at Chase earning nearly zero interest (okay, it’s 0.01% APY). Losing out on 2% interest on $75k works out to a rate of $125 interest per month ($1,500 per year).

Alternatively, you could move over some cash and then invest in something similar to cash. I’m not sure if You Invest will let you buy individual US Treasury bills or brokered CDs. If not, you might also consider ultra-short bond ETFs like MINT or Treasury Bill ETFs like BIL.

Bonus math. Let’s say they want you to keep your $75k there for 90 days and to be safe you keep it there for another 10 business days until you see the bonus. Let’s make that 120 total days to be conservative. Earning $1,000 over 120 days on a $75,000 balance is ~4% annualized. This is on top of any other return from your investments (T-Bill interest, etc).

This is about the highest bonus that I have seen on this account, which is good because you can only get it once per 12 month period. This includes the You Invest bonus, which would only give you $200 right now if you transferred in under $100,000. The bonus will be reported on a 1099-INT:

You can only participate in one Chase Private Client CheckingSM, Chase SapphireSM Checking or You InvestSM new money bonus in a 12 month period. Coupon is good for one time use and only one bonus per account. Bonus is considered interest and will be reported on IRS Form 1099-INT (or Form 1042-S, if applicable).

Bottom line. Chase Bank has a premium checking account tier called Sapphire Banking, targeted at the “mass affluent”. There is a new account bonus of $1,000 for both new and existing Chase bank customers if you move over $75,000 in cash and/or investment assets.

Filed Under: Banking, Credit Cards, Deals & Offers //

Reminder: Nobody Can Predict Future Interest Rates (Especially the Experts)

Posted on September 12, 2019 // 11 Comments

The financial prediction industry is simply mind-boggling to me. There is zero long-term memory or accountability. You can make all the predictions you want about the stock market, gold prices, and interest rates, and nobody remembers your bad calls. You get a contrarian call right, and all of a sudden you’re on all the TV interviews and news articles.

Allow me to remind you of what the Wall Street Journal’s panel of economists predicted in January 2019 as to what interest rates would look like the rest of the year (WSJ source). I have updated the chart with the current rates (click to enlarge). This was less than 10 months ago!

Apologies for the sloppy graphics, but you can see that 10-year rates dropped down to 2% in July, down even further to 1.5% at the beginning of September, with a slight bounce up to around 1.75% today. Not a single prediction was even close to reality.

When I was stocking up on 4% APY 5-year CDs last year, I was reading comments like “Why lock in such a low rate? You’re going to see much higher rates soon!”. Now, all of the comments are “You better lock in that 3% CD before rates drop further!”

Predicting interest rates even only as far as the next 12 months, is incredibly hard. You can’t do it reliably. Nobody can do it reliably. You might get it right, but that is called luck and not skill.

Individual investors don’t have an advantage in predicting future rates, but they do have their own set of special advantages. As an individual investor, you can purchase certificates from any FDIC-insured bank or NCUA-insured credit union if the interest rate is better than the comparable US Treasury. Over the last couple of years, I was able to buy multiple 5-year CDs at 4% APY when the 5-year Treasury was well below 3%. You have to act decisively, but any individual can do it. Pension funds and other institutional investors can’t.

I have a ladder of 5-year CDs. Each year, I buy a 5-year CD when a compelling interest rate arises. I don’t care about the rate direction, as long as I get about 1% above US Treasuries. After 5 years of doing this, you will have a ladder of CDs such that each year one CD is maturing and you can simply reinvest the funds each year. If I managed to put one year of expenses into each rung of this ladder, I now have 5 years of expenses in the bank, fully-insured and ready to go in case of financial emergency. An extra 1% on each $100,000 is $1,000 a year. That’s real money.

If this sounds like too much trouble to open accounts at multiple banks, you can always still with a Total US Bond fund (like AGG or BND). You’re essentially buying an ladder of bonds. BND has an average effective maturity of 8 years and average duration of 6 years. You might also buy it automatically inside a Vanguard Target Retirement Fund. Just keep buying it and ignore any talk about “The Fed”. Keep the chart above in your mind.

Filed Under: Banking, Behavioral Economics, Investing, Retirement //

Best Interest Rates on Cash – September 2019

Posted on September 3, 2019 // 12 Comments

Here’s my monthly roundup of the best interest rates on cash for September 2019, roughly sorted from shortest to longest maturities. I track these rates because I keep a full 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 9/3/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Marcus Bank has a 7-month No Penalty CD at 2.25% APY and a 11-month No Penalty CD at 2.20% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.20% APY with a $25,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Total Direct Bank has a 12-month CD at 2.60% APY ($25,000 minimum) with an early withdrawal penalty of 3 months of interest. Navy Federal Credit Union has a special 9-month CD at 2.50% APY ($1,000 minimum), but you must have a military affiliation to join (includes being a relative of a veteran).

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.12% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.08%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.21% SEC yield ($3,000 min) and 2.31% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.40% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.41% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 9/3/19, a 4-week T-Bill had the equivalent of 2.07% annualized interest and a 52-week T-Bill had the equivalent of 1.74% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.99% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.92% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, but the Orion offer is worth consideration.

  • The newest one is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. One has been around for while is the Consumers CU Free Rewards Checking at up to 5.09% APY on balances up to $10,000 if you meet make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Find a locally-restricted rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.40% APY.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • You could build a CD ladder at First National Bank of America at 2.85% APY for 5-year, 2.75% APY for 4-year, 2.65% APY for 3-year, 2.60% APY for 2-year, and 2.50% APY for 1-year.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.00% APY, with Commonwealth One Federal Credit Union offering a 5-year CD at 3.11% APY ($1,000 minimum) with an early withdrawal penalty of 180 days of interest. Higher rates with $50k an $100k deposits. Anyone can join this credit union via partner organization.
  • Navy Federal Credit Union has a special 18-month cert at 3.00% APY ($1,000 minimum) and a 5-year cert at 3.25% APY, but you must have a military affiliation to join (includes being a relative of a veteran).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. The rates are not interesting right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 1.80% APY. Watch out for higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. As of this writing, I am seeing no inventory on 7-year and 10-year CDs. Watch out for higher rates from callable CDs from Fidelity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. However, you could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 9/3/19, the 20-year Treasury Bond rate was 1.77%.

All rates were checked as of 9/3/19.

Filed Under: Banking, Deals & Offers, Investing //

Capital One 360 Money Market – $500 Cash Bonus on $50,000 Deposit

Posted on August 12, 2019 // 6 Comments

Capital One is running a $500 cash bonus promotion for new 360 Money Market accountholders. Note that if you have or had an open savings product (excludes CDs) with Capital One on or after January 1, 2016, you’re ineligible for the bonus. Here are the details:

  • Open a new 360 Money Market account by 8/31/19 using promo code CASH500.
  • Deposit $50,000 or more into the account with new money from an external bank within 10 days and maintain it for the next 90 days.
  • Capital One will deposit the bonus into your account within 60 days following the 90-day period. If your account is in default, closed, or suspended, or otherwise not in good standing, you will not receive the bonus.
  • You’ll also earn their current interest rate of 2.00% APY on $10,000+ balances. No monthly fees or minimum balance requirements.

(Tip via reader Bill: The 90-day “maintain balance” period is AFTER the end of the 10-day “initial funding period”. So if you are counting from the opening day, that is a total of *100* days. You may wish to chat with Capital One to confirm the exact date.)

In terms of APY, you are getting 1% of your $50,000 deposit with a minimum holding period of 90 days. (If you deposit your money near the 10th day, then the minimum time you would have to keep your money there is still technically 90 days, but you’ll probably go over by a few days.) This works out to the equivalent of a 4% annualized yield. 2% + 4% = 6%, so you’re looking at the equivalent of a 3-month CD at 6% APY for a new money deposit of exactly $50,000. In terms of cash, your $50,000 would earn about $250 interest + $500 bonus = $750 total over 90 days.

As there is ongoing no minimum balance requirement, you can move out your money after you’ve safely cleared this 90-day holding period. Just make sure to keep your account open, perhaps with at least $10 in there to make sure they don’t close it on you. If you were lazy and left it in there for a year, that $50,000 would earn about $1,000 interest + $500 bonus = $1,500 total, or roughly 3% APY.

Bottom line. Capital One 360 Bank has a new promotion to attract new deposits – a $500 cash bonus (1%) on a $50,000 deposit for 90 to 100 days, on top of their usual interest rate (currently 2% APY). The primary drawback is that you must deposit a minimum of $50,000. If you have or had an open savings product (excludes CDs) with Capital One on or after January 1, 2016, you’re ineligible for the bonus.

Filed Under: Banking, Deals & Offers //

Safe Deposit Boxes: A Perfect Place to Store Copies Of Important Documents

Posted on August 6, 2019 // 8 Comments

The NY Times recently published an article stating Safe Deposit Boxes Aren’t Safe. I was a little disappointed in the article because it was a bit sensational, but I suppose the takeaway is important for folks that made other assumptions. A more accurate headline would be “Safe Deposit Box Contents Aren’t Insured”.

No federal laws require banks to compensate customers for lost property from a safe deposit box. Usually, you have agreed in the rental contract that that maximum liability is on the order of $1,000. Unfortunately, there have been rare cases where folks have lost the contents of your safe deposit box. Natural disasters like fire, flood, or even a movie-style bank robbery have occurred. The NYT article told the story of a man who stored $10 million of rare watches in a safe deposit box and lost them when the bank mistakenly emptied it because it thought the owner stopped paying the rental fees.

If you think about it, why would a bank agree to charge you maybe $100 a year in rental fees, but be responsible for $10 million of property? What if it was $100 million? That doesn’t sound like a good business model. How do they know what you put in there? You could put in a silver Casio and say it was a Patek Philippe. This is the domain of insurance and personal articles policies. Your homeowner’s policy may offer limited coverage on safe deposit box contents, but you can bet they won’t cover $10 million without asking a lot more questions.

Despite this lack of insurance, having access to a small box inside a bank’s vault for $30 a year can still be a great deal. Why not just store copies of valuable documents and photos? The odds of losing the contents are still quite low. Although they have little monetary value on the open market, these items are still quite valuable to me:

  • Copies of identity documents (birth certificates, marriage licenses, Social Security cards, passports)
  • Copies of real estate deeds and auto titles
  • Copies of paper savings bonds
  • Copies of mortgage and other loan documents
  • Copies of insurance policies
  • Copies of your home inventory (paper and digital)
  • Additional digital scans of above?
  • Copies of personal photos on flash drive

The idea is that the important contents of my house are consumed in a fire, I can still rebuild my life. Sometimes things get lost, and most recovery procedures work much more smoothly with a copy of the original. I like having physical documents because flash drives can fail as well.

Some people might argue to keep the original in the safe deposit box and the copies at home. That is certainly debatable. You might even keep some originals in one and the rest in the other. However, I would first make sure you have copies of all important documents in two different, secure locations.

Bottom line. The stuff in your safe deposit box isn’t insured against loss by your bank. If something has a high market value, make sure you insure it independently. Safe deposit box can still be useful for keeping copies of important documents.

Filed Under: Banking, Insurance //

Best Interest Rates on Cash – August 2019

Posted on August 4, 2019 // 16 Comments

Here’s my monthly roundup of the best interest rates on cash for August 2019, roughly sorted from shortest to longest maturities. The target for the Fed Funds Rate was just cut by 0.25% as of 8/1/19, so look out for small rate drops this month (probably right after I publish this post). Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 8/4/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

  • Popular Direct is at 2.55% APY with $5,000 minimum. I don’t like this bank because they always create a “new” account instead of giving old customers the higher rate automatically, but it’s the top rate. Betterment Everyday Savings just dropped to 2.44% APY with a no minimum balance requirement ($10 min to open). There are several other established high-yield savings accounts at 2% APY and up, although some have had small drops recently too.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Marcus Bank has a 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.30% APY with a $25,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Quontic Bank has a 12-month CD at 2.70% APY and $1,000 minimum with an early withdrawal penalty of 12 months (!) of interest. Andrews Federal Credit Union has a 8-month special at 2.86% APY and $1,000 minimum – anyone can join via partner organization for a small fee.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.24% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.21%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.40% SEC yield ($3,000 min) and 2.50% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.52% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.53% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 8/1/19, a 4-week T-Bill had the equivalent of 2.11% annualized interest and a 52-week T-Bill had the equivalent of 1.89% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.27% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.04% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, either.

  • The best one right now is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. The APY goes down to 0.05% APY and they charge you a $5 monthly fee if you miss out on the requirements. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. Find a locally-restricted rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.60% APY.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Some CDs offer an “add-on” features that gives you the option of adding funds if rates drop. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going.

  • You could build a CD ladder at First National Bank of America at 2.90% APY for 5-year, 2.80% APY for 4-year, 2.75% APY for 3-year, 2.70% APY for 2-year, and 2.60% APY for 1-year.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.00% APY, with Hiway Federal Credit Union offering 3.20% APY ($25,000 min) or 3.00% APY ($500 min) on a 5-year CD with an early withdrawal penalty of 12 months of interest. Anyone can join this credit union via partner organization Minnesota Recreation and Park Foundation ($10 fee).
  • Navy Federal Credit Union has a special 5-year CD at 3.50% APY ($1,000), but you must have a military affiliation to join (includes being a relative of a veteran). NavyFed also has an 18-month CD at 3.00% APY.
  • GTE Financial Credit Union has a promotional add-on CD that allows unlimited additional funds after CD opening. You can open a 5-year CD with $500 minimum at 3.04% APY.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.10% APY and a 5-year non-callable CD at 2.25% APY. Watch out for higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, I am seeing no inventory on 7-year and 10-year CDs. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. However, you could also view it as a hedge against deflation, but only if you can hold on for 20 years. As of 8/1/19, the 20-year Treasury Bond rate was 2.21%.

All rates were checked as of 8/4/19.



Filed Under: Banking, Deals & Offers, Investing //

Betterment Everyday Cash Reserve Review: 0.40% APY (Tied to Fed Funds Rate)

Posted on August 1, 2019 // 2 Comments

Betterment, best known for their automated portfolio management software, has added a high-yield savings product called Betterment Everyday Cash Reserve. An additional checking product is “coming soon”. This product has several unique features that makes it unlike many other savings accounts. Here are the highlights, followed by both the important pros and cons of this account.

Betterment Everyday Cash Reserve (Available Now)

  • Promotional rate of 0.40% APY as of 2/1/2021 (EFFR + 0.25%) if you sign up for the Everyday Checking waitlist (free)
  • Base rate of Effective Federal Funds Rate (EFFR)
  • FDIC insurance up to $1,000,000
  • No minimum balance. Minimum opening deposit is $10.
  • No monthly fees

If you are an existing Betterment client with Smart Saver, that is going away. You can move over immediately or wait to be transitioned over to this product.

Betterment Everyday Checking (Coming “Later This Year”)

  • No interest paid
  • No minimum balance
  • No monthly or maintenance fees.
  • No overdraft fees.
  • ATM fees reimbursed worldwide
  • FDIC insurance covering up to $250,000†

$1,000,000 FDIC insurance through partner banks. They can offer up to $1,000,000 in FDIC coverage because they use multiple partner banks, currently including:

  • Barclays Bank Delaware
  • Citibank, N.A.
  • Georgia Banking Company
  • Seaside National Bank & Trust
  • Valley National Bank
  • BankUnited, National Association
  • ConnectOne Bank
  • East West Bank
  • Third Coast Bank SSB

You can manually opt-out of one of these banks, for example if you already have cash with them, as to not exceed the $250,000 FDIC insurance limits at any single bank.

Interest rate is directly linked to the Effective Fed Funds Rate. The rate on Everyday Cash Reserve is variable, and will move with the effective federal funds rate (EFFR). As long as you are on the Everyday Checking waitlist, you will get the EFFR + 0.25%.

I view this as a good thing overall, as it’s guaranteed to be quite competitive against most non-promotional rates. It also provides more transparency and lowers the chance of a bait-and-switch to some really sad rate. However, the 0.25% boost above the EFFR is currently a waiver of their 0.25% management fee good through 2019. Being on the waitlist is free and comes with no obligation to open the account, so that’s not a big deal. However, it’s not clear if or how they will extend the waiver after that. You might need an active and open Everyday Checking account, set up direct deposit, or jump through a similar hoop.

Everyday Cash Reserve isn’t your normal bank savings account. There are some quirky things that you should know about.

  • No joint accounts.
  • No routing number or account number, so no direct deposit or linking via other banks.
  • You can only initiate ACH transfers through Betterment, and you can only link one external bank account.
  • It’s not a “real” savings account, so there is no limit of 6 withdrawals per month.

Everyday Checking plans to offer things like direct deposit (and thus real routing and account numbers).

Bottom line. Betterment, a “robo-advisor” best known for their automated investing service, has added a high-yield savings product called Betterment Everyday Cash Reserve. There are some limitations with external bank transfers, but I do like that it has a transparent structure that links the interest rate to the Fed Funds Rate. If you sign-up on their EveryDay Checking waitlist, you can get a competitive rate on liquid savings.

Filed Under: Banking, Deals & Offers //

Marcus Bank Promotion: 1% Additional Cash Bonus up to $500 (~6% APY 3-month CD)

Posted on July 17, 2019 // 19 Comments

Online bank Marcus (formerly Goldman Sachs Bank) has a new Cash Bonus Offer which includes 1% cash bonus (up to $500) on new deposits on top of their existing interest rate (currently 2.15% APY). Valid for both new and existing customers. Given the holding period, this roughly equates to the same total interest paid as a 3-month bank CD at 6% APY.

Here’s how it works:

  • Enroll first at the offer link and designate a specific savings account to be tracked for this promotion.
  • Deposit your new funds ($1,000 minimum) within 10 days of enrollment. Multiple transfers within that 10 days is fine, but funds must be new to Marcus Bank.
  • Maintain your balance at enrollment plus the new funds for 90 days.
  • Receive your 1% cash bonus (up to $500) on your new funds within 14 days after the 90-day period ends.

To be clear, the bonus applies to new funds added after enrollment, not your total balance. Since the 10-day clock starts when you enroll, you may consider waiting until the last day of 7/29/19 if you need some time to gather your new funds together. However, they can also revoke the offer at any time, so I wouldn’t wait any longer than necessary.

This offer is available to new and existing Marcus customers who are not currently enrolled in another Marcus bonus offer. Each customer is limited to one 1% cash back offer, which can only be applied to a single account. For eligibility purposes, each joint owner will be treated as a separate customer. For example, if you apply the bonus offer to a joint account, the remaining joint owner(s) may apply this offer to another account they own if they have not done so already.

Rough math. Given that you can an additional 1% bonus after about 3 months, the bonus itself works out to the equivalent of a 4% annualized yield. 2% + 4% = 6%, so you’re looking at the equivalent of a 3-month CD at 6% APY for new money deposits between $1,000 and $50,000. Alternatively, if you are lazy, you could leave it in there for a year and still earn a bit over 3% APY over that year (assuming the base interest rate stays above 2%). That’s still good compared to a 12-month CD. Either way, the max benefit is $50,000 of new money held there for 90 days to earn a $500 bonus.

This combination makes it a great 3-month rate at that balance size when compared to my most recent update of best interest rates.

Should I move money out of Marcus and back in to qualify? No, it won’t make any difference. Funds deposited in your account prior to enrollment are not eligible for the cash bonus.

I am an existing customer (just recently for their expired $100 promo), and did not see a hard credit check at opening. Since I already have an account, I’ll probably be taking advantage of this one as well.

Bottom line. Marcus Bank has a new promotion to attract new money to their Online Savings Account – a 1% cash bonus (up to $500) on new deposits on top of their existing interest rates. This works out to a 3-month holding period paying roughly 6% annualized interest. You must enroll by 7/29 and transfer over new funds within 10 days of enrollment.

Filed Under: Banking, Deals & Offers //

Best Interest Rates on Cash – July 2019

Posted on July 2, 2019 // 8 Comments

Here’s my monthly roundup of the best interest rates on cash for July 2019, roughly sorted from shortest to longest maturities. Rates are dropping a bit, but it still pays to shop around. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 7/2/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

  • Wealthfront Cash is at 2.57% APY with no minimum balance. Note that while this account is FDIC-insured, there is no routing number since your money is split amongst four banks and thus you must initiate all transfers through Wealthfront. Northpointe Bank is at 2.55% APY with $25,000 minimum (but guaranteed for 3 months). CIT Bank Savings Builder dropped to 2.30% APY with a $100 monthly deposit (no minimum balance requirement). There are several other established high-yield savings accounts at 2% APY and up, although some have had small drops recently too.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Marcus Bank has a 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.30% APY with a $25,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • MapleMark Bankt has a 12-month CD at 2.86% APY and $25,000 minimum with an early withdrawal penalty of 6 months of interest. Andrews Federal Credit Union has a 8-month special at 2.86% APY and $1,000 minimum – anyone can join via partner organization for a small fee.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.34% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.30%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.44% SEC yield ($3,000 min) and 2.54% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.63% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.60% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 7/2/19, a 4-week T-Bill had the equivalent of 2.22% annualized interest and a 52-week T-Bill had the equivalent of 1.92% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.27% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.19% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend or use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, either.

  • The best one right now is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. The APY goes down to 0.05% APY and they charge you a $5 monthly fee if you miss out on the requirements. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. Find a local rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.60% APY.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going.

  • You could build a CD ladder at First National Bank of America at 3.15% APY for 5-year, 3.05% APY for 4-year, 2.95% APY for 3-year, 2.85% APY for 2-year, and 2.75% APY for 1-year.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.00% APY, with Citizens State Bank offering 3.20% APY ($1,000 minimum) on a 5-year CD with an early withdrawal penalty of 12 months of interest.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.15% APY and a 5-year non-callable CD at 2.30% APY. Watch out for higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is offering 2.60% APY on a 10-year CD. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. As of 7/2/19, the 20-year Treasury Bond rate was 2.29%.

All rates were checked as of 7/2/19.



Filed Under: Banking, Deals & Offers, Investing //

Navy Federal Membership Open to Veterans and Family Members

Posted on June 18, 2019 // 15 Comments

Navy Federal Credit Union is the nation’s largest credit union and has recently surpassed $100 billion in assets as reported by DepositAccounts. I can understand their growth, as many of their financial products have very competitive rates, including certificates of deposit specials and mortgage rates. If the recent rate drops have you looking to refinance, I would definitely compare their rates against the major rate quote sites like LendingTree, especially if you are looking for a jumbo loan or other non-standard mortgage type.

You can now join Navy Federal without serving in the military. It is true that until 2017, it was hard to become a member of Navy Federal unless you were active military, Department of Defense worker, or a military retiree. Even honorably discharged veterans couldn’t join! However, the current membership rules are more open. Here is their eligibility tool.

If you have ever served in the military, you are now eligible to join. This includes:

  • Active Duty Army, Marine Corps, Navy, Air Force or Coast Guard
  • Army or Air National Guard
  • Delayed Entry Program
  • Officer Candidate / ROTC
  • Reservist
  • Veteran, Retiree or Annuitant

Beyond that, if one of your immediate family members serves or has EVER served in the military, you are also eligible for membership. Immediate family members include:

  • Parents and grandparents
  • Children and grandchildren
  • Siblings and spouses

This applies even if they are not a NavyFed member themselves. You may need some form of identifying document that shows your family member’s military relationship. Call NavyFed at 1-888-842-6328 and they should be happy to assist you.

This change greatly opens their field of membership, which I am sure has contributed to their impressive growth in assets. We have never served, but we do have both past and current family members in the military.

Filed Under: Banking, Real Estate //

Best Interest Rates on Cash – June 2019

Posted on June 2, 2019 // 11 Comments

Here’s my monthly roundup of the best interest rates on cash for June 2019, roughly sorted from shortest to longest maturities. Things are pretty dull this month – mostly small rate drops on CDs due to the inverted yield curve. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 6/2/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Purepoint Financial has a 13-month No Penalty CD at 2.50% APY with a $10,000 minimum deposit. Marcus Bank 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Comenity Direct has a 12-month CD at 2.86% APY ($1,500 minimum) with an early withdrawal penalty of 6 months of interest. If you have a military relationship, Navy Federal Credit Union has a 10-month special at 2.75% APY with add-on option.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.40% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.33%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.61% SEC yield ($3,000 min) and 2.71% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.71% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.69% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 6/1/19, a 4-week T-Bill had the equivalent of 2.35% annualized interest and a 52-week T-Bill had the equivalent of 2.22% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.30% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.24% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend or use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, either.

  • The best one right now is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. The APY goes down to 0.05% APY and they charge you a $5 monthly fee if you miss out on the requirements. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. Find a local rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.60% APY.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going.

  • Hanscom Federal Credit Union has a 19-month CD special at 3.00% APY ($1,000 minimum) with an early withdrawal penalty of 6 months of interest. WebBank has a 3-year CD at 3.00% APY ($2,500 minimum) with an early withdrawal penalty of 9 months of interest.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.25% APY, with Connexus Credit Union offering 3.40% APY ($5,000 minimum) on a 5-year CD with an early withdrawal penalty of 12 months of interest. Anyone can join this credit union by joining a partner organization for a $5 fee.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You must now log in to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.50% APY and a 5-year non-callable CD at 2.70% APY. Watch out for higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard not showing any available 10-year CDs. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. As of 6/1/19, the 20-year Treasury Bond rate was 2.39%.

All rates were checked as of 6/2/19.



Filed Under: Banking, Deals & Offers, Investing //

Best Interest Rates on Cash – May 2019

Posted on May 1, 2019 // 3 Comments

Here’s my monthly roundup of the best interest rates on cash for May 2019, roughly sorted from shortest to longest maturities. There hasn’t been much movement recently, and the rate curve is still pretty flat with long-term rates only slightly higher than short-term ones. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 5/1/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Purepoint Financial has a 13-month No Penalty CD at 2.50% APY with a $10,000 minimum deposit. Marcus Bank 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • CD Bank has a 12-month CD at 3.00% APY ($10,000 minimum) but with a big early withdrawal penalty of 12 months of interest. If you have a military relationship, Navy Federal Credit Union has a 10-month special at 2.75% APY with add-on option.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.44% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.36%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.64% SEC Yield ($3,000 min) and 2.74% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.74% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.75% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 5/1/19, a 4-week T-Bill had the equivalent of 2.42% annualized interest and a 52-week T-Bill had the equivalent of 2.39% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.30% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.24% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend or use any of these anymore.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, either.

  • The best one right now is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. The APY goes down to 0.05% APY and they charge you a $5 monthly fee if you miss out on the requirements. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. Find a local rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.60% APY.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going.

  • CD Bank has an 18-month CD at 3.10% APY ($10,000 minimum) but with a big early withdrawal penalty of 12 months of interest. Hanscom Federal Credit UnionBank has a 19-month CD special at 3.00% APY ($1,000 minimum) with an early withdrawal penalty of 6 months of interest.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.25% APY, with First National Bank of America offering 3.35% APY on a 5-year CD with an early withdrawal penalty of 1.5 years (!) of interest..
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.45% APY and a 5-year non-callable CD at 2.75% APY. Watch out for higher rates from callable CDs listed by Fidelity.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is showing a 10-year non-callable CD at 3.00% APY. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. As of 5/1/19, the 20-year Treasury Bond rate was 2.74%.

All rates were checked as of 5/1/19.



Filed Under: Banking, Deals & Offers, Investing //
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