Bank of America Customized Cash Rewards Card Review: 6% Cash Back in One Category for First Year (Up to 8.25% with Preferred Rewards)

Posted on May 26, 2025 // 36 Comments

New limited-time offer. The Bank of America Customized Cash Rewards Credit Card is the “3-2-1” cash back rewards credit card in the Bank of America line-up. If you are a Preferred Rewards client, you can increase the cash back earned by 25% to 75%. Right, they are also offering a special offer during the first year. Here are the highlights:

  • New customers: $200 cash rewards bonus after $1,000 in purchases in the first 90 days.
  • Earn 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on your choice category up to the first $2,500 in combined grocery/wholesale club/choice category purchases each quarter. During the first year, you’ll get an extra 3% cash back on the choice category.
  • Cardholders will be able to choose their 3% cash back category from one of these 6 options: gas and EV charging stations; online shopping, including cable, internet, phone plans and streaming; dining; travel; drug stores and pharmacies; or home improvement and furnishings.. You can change your category once each calendar month in-app or online. Do nothing and it will stay the same.
  • Bank of America Preferred Rewards® members earn 25%-75% more cash back on every purchase. However, Preferred Rewards bonuses are not applied to the 3% first-year bonus. Details below.
  • 0% Introductory APR offer. See link for details.
  • No annual fee.

During the current limited-time offer, the cash back rewards on your special choice category are boosted by an additional 3% for the first year. The 75% Preferred Rewards bonus for Platinum members does not apply to the extra 3%, so the net cash back during the first year for Platinum members would be 3% * 1.75 + 3% = 8.25% cash back on your Choice Category during the first year, subject to the $2,500 cap per quarter which includes grocery/wholesale club purchases. You would also get 3.5% cash back on your grocery/wholesale club purchases during the first year, again subject to the $2,500 cap per quarter which includes any purchases in your Choice Category.

Theoretically, if you only used your card for the Choice Category and spent exactly $2,500 in that Choice Category per quarter, in one year you would rack up $825 in rewards from $10,000 in purchases. This would be separate from the one-time $200 new customer cash bonus.

Personally, I think the “Online Shopping” category is the most flexible. Per this page: “Online Shopping category includes purchases made online via a website or a digital application (an app). Here are the provided examples of eligible merchants: Amazon, Walmart, Comcast, Etsy, Netflix, Nordstrom, Ticketmaster.

Preferred Rewards bonus basics. The Preferred Rewards program is designed to rewards clients with multiple account and higher assets located at Bank of America banking, Merrill Edge online brokerage, and Merrill Lynch investment accounts. Here is a partial table taken from their comparison chart (click to enlarge):

bofa_pref1

Let’s consider the options. Bank of America’s interest rates on cash accounts tend to be lower than highest-available outside banks (read: nearly zero), so moving cash over to qualify may result in earning less interest on your cash deposits. Merrill Lynch advisory accounts also usually come with management fees. The sweet spot is therefore the Merrill Edge self-directed brokerage, where you can move over your existing brokerage assets like stocks, mutual funds, and ETFs held elsewhere (Vanguard, Fidelity, Schwab, etc).

In the past, moving over to Merrill Edge at the Platinum and Platinum Plus levels also led to 30 to 100 free online stock trades every month. Fast forward to now, and nearly all major online brokers offer commission-free trades anyway.

Personally, I moved over $100k of brokerage assets from Vanguard to Merrill Edge to qualify for Platinum Honors. You should ask Merrill Edge if they will cover any ACAT transfer fees involved. I realize not everyone will have this level of assets to move around, but if you do then it is worth considering. Keep in mind that it will take a while for your “3-month average combined balance” to reach the $100k level and officially qualify for Platinum Honors. You might become Gold first, then Platinum, and so on. After that, the 25%-75% rewards bonus on credit card rewards kick in. Once you reach a certain tier, BofA guarantees that you will stay there for a year no matter what, even if your balance fluctuates. (In certain cases, when you open a new Merrill Edge account and new BofA Checking with a asset transfer bonus offer, you may be eligible to “fast track” to a higher tier.)

Cash Back Rewards after Preferred Rewards bonus (standard):

Recall that the basic structure is “1/2/3”; you get 1% cash back on every purchase, 2% at grocery stores and wholesale clubs and 3% on choice category for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter (1/2/3). Here’s how the bonuses work out:

  • Platinum Honors: 1.75% cash back on every purchase, 3.5% at grocery stores and wholesale clubs, and 5.25% on choice category for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
  • Platinum: 1.5% cash back on every purchase, 3% at grocery stores and wholesale clubs, and 4.5% on choice category for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
  • Gold: 1.25% cash back on every purchase, 2.5% at grocery stores and wholesale clubs, and 3.75% on choice category for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.

Not all Bank of America consumer credit cards qualify for Preferred Rewards. Other cards of interest that do qualify are:

Bottom line. The Bank of America Cash Rewards Credit Card is an “okay” cash back rewards card with a 1/2/3 structure, but turns into an “excellent” rewards card if you are willing to do deal with the added complexity of tracking purchase categories and can take full advantage of their Preferred Rewards program. If you transfer $100,000 of existing brokerage assets over to Merrill Edge, you can qualify for the highest Platinum Honors tier. This won’t be a good option for everyone, but something to be aware of if you can swing it.

During the current limited-time offer, the Choice Category purchases are boosted by an additional 3% for the first year. The 75% Preferred Rewards bonus for Platinum members does not apply to the extra 3%, so the net cash back during the first year for Platinum members would be 3% * 1.75 + 3% = 8.25% cash back on your Choice Category during the first year, subject to the $2,500 purchase cap per quarter which includes any grocery/wholesale club purchases.

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

MYGA Fixed Annuity Warning: Choosing The Highest Rate Can Be Stressful

Posted on May 20, 2025 // 7 Comments

I’ve written a little about about Multi-year guaranteed annuity (MYGA) fixed deferred annuities in the past, and I actually bought one as one of my “$10,000 Experiments” way back in 2015. I bought the MYGA with the highest available interest rate at the time from a company called Sentinel Security Life. Owning a MYGA is very quiet, I only get a mailed statement once a year and the only action required is to roll it over every 5 years. In 2020, Sentinel still offered the highest rate, so I rolled it over to them again. More quiet…

Fast forward to early 2025, and after my recent post about private equity entering the world of MYGAs, I decided to check in on ole’ Sentinel Security Life. Turns out they have been going through some major drama recently!

  • In December 2024, the Utah Insurance Department issued an emergency order prohibiting Sentinel Security Life, along with its affiliates Haymarket Insurance and Jazz Reinsurance, from issuing new policies after December 31, 2024.
  • In mid-March 2025, a Utah judge paused this emergency order, and allowed them to start issuing policies again, pending the result of a trial to start in May 2025.
  • In March 2025, Utah Insurance Commissioner Jonathan Pike petitioned for Sentinel to be placed into “rehabilitation”, stated that it had a “years-long history of self-dealing, conflicts of interest, and obfuscation.” For example, allegedly, Sentinel Insurance would make substantial risky loans to entities also owned by the same controlling party (Kenneth King and Advantage Capital Partners, known as A-Cap). They also have additional insurance companies in South Carolina that are having similar issues with regulators.

“Drama” and your insurance/annuity provider are not a good combo. I knew that going for the highest interest would involve buying from a riskier insurance company, but went for it anyway because that was the entire point of the experiment. The reason to go for a MYGA instead of an FDIC-insured bank CD is to earn a significantly higher net rate due to the combination of the rate gap and the tax deferral benefits during accumulation. Along with that is the assumption that insurance department will require the insurance companies have proper reserves, and that your state guaranty association will cover you in the unlikely case that your insurance company does fail.

While in the accumulation stage, I feel that I can be more aggressive in using a higher-interest-paying, lower-credit-rating company since my exposure will be limited to the next 5 years. But eventually if I choose to convert the final amount to an annuitized income stream, I would be more conservative since my exposure would be potentially for decades. If I was relying on Sentinel to provide my monthly paycheck in retirement, that would be very stressful.

As it stands, my current 5-year MYGA contract ends in less than 5 months (September 2025), and I will be looking to transfer to another 5-year MYGA from a different insurance provider. Honestly, I’ll still probably be comparison shopping amongst the highest rates. I worry that if I tried to buy only from some old, stodgy traditional insurance company, these days it could be bought out by some private equity firm and transformed within a year anyway.

In the end, like many insurance and annuity products, MYGAs are very complex with a lot of variables and grey areas. As a finance geek, this actually intrigues me, but on the flip side this means they are not very consumer-friendly. I personally don’t view their benefits to justify the added complexity to my overall portfolio, so I have not bought any additional MYGAs since my first and only purchase.

If you do decide to pursue MYGAs, I encourage you to research State Guaranty Associations and be careful to stay under your applicable state limits. Since their beginnings in the 1970s, no state guaranty association has failed to pay a covered claim. However, nobody knows what would happen if there was a large crisis. They are not backed by any Federal guarantee like FDIC or NCUA insurance.

Filed Under: Annuities, Banking, Insurance //

US Bank Self-Directed Brokerage: Enabling Automatic Dividend Reinvestment

Posted on May 16, 2025 // 2 Comments

For those that are newer members of the US Bank checking/savings/credit card/brokerage ecosystem, most likely for the up to 4% cash back rewards from their Smartly credit card (current terms for new applicants are poor, but the grandfathered terms are still excellent), you may choose to park some assets in their self-directed brokerage arm in order to meet the (grandfathered) qualification requirements. I personally did, and it has been working out fine.

Notably, as with many brokerage firms, US Bank pays rather pathetic rates on idle cash (0.23% APY as of 5/15/25). The cash sweep that we forget about is a reliable profit source for them. I tend to forget, everyone tends to forget.

Thus, when I need to move assets to a new brokerage, my two preferred options are my holdings of Berkshire Hathaway (BRKB) because they don’t pay out any dividends at all and iShares 0-3 Month Treasury Bond ETF (SGOV) because it pays a competitive yield from T-Bills (that’s also exempt from state/local taxes). The final touch is to set up automatic dividend reinvestment on the shares to avoid losing interest on idle cash sweep. This way, each month the interest paid out is automatically reinvested into more shares of SGOV at the current market price.

Earning a ~5% return from SGOV over the last year was much better (20X better!) than earning ~0.25%.

For US Bank brokerage, there is no online option available to set this up. You must call them on the phone and request it manually. The phone number for US Bank Wealth Management Brokerage Services is 800-888-4700. There were no sales-related hassles and it only took about 5 minutes. Worth the effort. Now I don’t have to worry about making manually trades or manually transferring out the idle cash every month.

Filed Under: Banking, Investing //

Best Interest Rates Survey: Savings Accounts, Treasuries, CDs, Money Markets, ETFs – May 2025

Posted on May 14, 2025 // 2 Comments

Here’s my monthly survey of the best interest rates on cash as of May 2025, roughly sorted from shortest to longest maturities. Banks love taking advantage of our idle cash, and you can often earning more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 5/14/2025.

TL;DR: Savings account interest rates are stable overall. Short-term T-Bill rates at around 4.3%. Top 5-year CD rates are ~4.25% APY, while 5-year Treasury rate is ~4.15%.

High-yield savings accounts*
Since the huge megabanks still pay essentially no interest, everyone should at least have a separate, no-fee online savings account to piggy-back onto your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates and solid user experience. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The top saving rate at the moment: Axos One Savings at 4.66% APY (no min). Roger.bank is right behind at 4.65% APY (no min), but does require an additional companion checking account. OnPath FCU has a new account paying 5.00% APY but requires $25,000 min and has some ACH withdrawal hoops. CIT Platinum Savings is now at 4.10% APY with $5,000+ balance, but also has a $225/$300 deposit bonus you can stack on top. There are many banks in between.
  • SoFi Bank is at 3.80% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount (even $1) each month for the higher APY. SoFi has historically competitive rates and full banking features. See details at $25 + $300 SoFi Money new account and deposit bonus.
  • Here is a limited survey of high-yield savings accounts. They aren’t the top rates, but a group that have historically kept it relatively competitive such that I like to track their history.

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 (plan to buy a house soon, 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 has a 7-month No Penalty CD at 4.00% APY ($500 minimum deposit) and 13-month at 3.90% APY. Farmer’s Insurance FCU has 9-month No Penalty CD at 4.25% APY ($1,000 minimum deposit). Kinecta FCU has 9-month Liquid CD at 4.25% APY ($10,000 minimum) that allows for daily penalty-free withdrawals of up to 50% of the start of day balance. Consider opening multiple CDs in smaller increments for more flexibility.
  • Security State Bank has a 12-month certificate special at 4.65% APY ($25,000 min). Early withdrawal penalty is 180 days of interest.

Money market mutual funds
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Note: Money market mutual funds are highly-regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms.

  • Vanguard Federal Money Market Fund (VMFXX) is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 4.20% (changes daily, but also works out to a compound yield of 4.28%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Treasury Money Market Fund (VUSXX) is an alternative money market fund which you must manually purchase, but the interest will be mostly (100% for 2024 tax year) exempt from state and local income taxes because it comes from qualifying US government obligations. Current SEC yield of 4.23% (compound yield of 4.31%).

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 and are fully backed by the US government. 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, which can make a significant difference in your effective yield.

  • 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 5/14/25, a new 4-week T-Bill had the equivalent of 4.32% annualized interest and a 52-week T-Bill had the equivalent of 4.14% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 4.17% SEC yield (0.09% expense ratio) and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 4.13% SEC yield (0.136% expense ratio) and effective duration of 0.15 years. The new Vanguard 0-3 Month Treasury Bill ETF (VBIL) has a 4.20% SEC yield (0.07% expense ratio) and effective duration of 0.10 years.

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. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov.

  • “I Bonds” bought between May 2025 and October 2025 will earn a 3.98% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-October 2025, 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 post another update at that time.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • OnPath Federal Credit Union (my review) pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
  • Genisys Credit Union pays 6.75% APY on up to $7,500 if you make 10 debit card purchases of $5+ each per statement cycle, and opt into online statements. Anyone can join this credit union via $5 membership fee to join partner organization.
  • La Capitol Federal Credit Union pays 5.75% APY on up to $10,000 if you make 15 debit card purchases of at least $5 each per statement cycle. Anyone can join this credit union via partner organization, Louisiana Association for Personal Financial Achievement ($20).
  • First Southern Bank pays 5.50% APY on up to $25,000 if you make at least 15 debit card purchases, 1 ACH credit or payment transaction, and enroll in online statements.
  • Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 12 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
  • Andrews Federal Credit Union pays 5.50% APY (down from 6%) on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit or ACH transaction per statement cycle. Anyone can join this credit union via partner organization.
  • Find a locally-restricted rewards checking account at DepositAccounts.

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.

  • Mountain America Credit Union (MACU) has a 5-year certificate at 4.25% APY ($500 minimum), 4-year at 4.20% APY, 3-year at 4.15% APY, 2-year at 4.00% APY, and 1-year at 4.20% APY. Early withdrawal penalty for the 4-year and 5-year is 365 days of interest. Anyone can join this credit union via partner organization American Consumer Council for a one-time $5 fee (or try promo code “consumer”).
  • Lafayette Federal Credit Union (LFCU) has a 5/4/3/2/1-year certificates at 4.28% APY ($500 min). Slightly higher rates with jumbo $100,000+ balances. Note that the early withdrawal penalty for the 5-year is a relatively large 600 days of interest. Anyone nationwide can join LFCU by joining the Home Ownership Financial Literacy Council (HOFLC) for a one-time $10 fee.
  • 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. Right now, I see a 5-year non-callable brokered CD at 4.20% APY (callable: no, call protection: yes). Be warned that both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can (and will!) call back your CD if rates drop significantly later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk (tbh, I don’t use them at all), 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. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 4.05% (non-callable) vs. 4.53% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 5/14/25.

* I no longer recommend fintech companies due to the possibility of loss due to poor recordkeeping and lack of government regulation. (Ex. Evergreen Wealth at 5% APY is a fintech.)

Photo by insung yoon on Unsplash

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

Private Equity Creating Attractive Rates For MYGAs / Life Insurance?

Posted on May 5, 2025 // 5 Comments

One of the lessons from the 2025 Berkshire Hathaway Annual Meeting was that you never know where your next investment idea will come from, so you should “turn every page”. For example, I like to read the entire transcript of the Q&A session (thanks to Steady Compounding) instead of just reading the WSJ or CNBC articles. Take this question and answer came up from Ajit Jain, their head of insurance:

Becky Quick: This question is from Peter Shen in New Jersey. It’s for Mr. Buffett and Mr. Jain. In recent years, large private equity firms like Blackstone, Apollo, and KKR have aggressively expanded into insurance, raising permanent capital, managing float, and aiming to replicate the model that Berkshire pioneered decades ago. Given that these firms are now directly competing for insurance assets, often using higher leverage and more aggressive investment strategies, how do you view their impact on Berkshire’s insurance operations and underwriting discipline? Do you believe that the private equity model poses risks to policyholders in the broad financial system, and has this competition made it more challenging for Berkshire to find and price insurance opportunities safely and profitably today?

Ajit Jain: Part of the question is very easy. There’s no question the private equity firms have come into the space, and we are no longer competitive in the space. We used to do a fair amount in this space, but in the last 3-4 years, I don’t think we’ve done a single deal.

You should separate this whole segment into two parts: the property casualty end of the business and the life end of the business. The private equity firms you mentioned are all very active in the life end of the business, not the property casualty end.

You are right in identifying the risks these private equity firms are taking on both in terms of leverage and credit risk. While the economy is doing great and credit spreads are low, these firms have taken the assets from very conservative investments to ones where they get a lot more return. As long as the economy is good and credit spreads are low, they will make money – they’ll make a lot of money because of leverage.

However, there is always the danger that at some point the regulators might get cranky and say they’re taking too much risk on behalf of their policyholders, and that could end in tears. We do not like the risk-reward that these situations offer, and therefore we put up the white flag and said we can’t compete in this segment right now.

Basically, Berkshire can’t compete in life insurance right now because private equity firms are flush with money and are expanding into insurance and competing very aggressively on rates. The only real insurance-as-investment product that interests me (I do have term life insurance) are multi-year guaranteed annuity (MYGAs), so I decided to check the current rates.

Sure enough, a new name called Knighthead Life is at the top of the charts at Blueprint Income. Their rates will vary by state and investment amount, but I saw 7-year MYGAs at 6.80% and 5-year MYGAs at 6.55% (simple interest). Knighthead Life even has a relatively solid A- rating for financial strength from AM Best. Usually, the top rate will be offered by an insurer with a lower B++ rating.

Digging further, we find that private equity firm Knighthead Capital Management/Knighthead Insurance Group recently completed a $550 million capital raise, acquired Merit Life Insurance in January 2025, and quickly rebranded it as Knighthead Life.

Another top MYGA provider on the list, Revel One, was founded in 1980 and acquired by private equity firm Axar Capital in 2022.

I’m still trying to keep my investments simple, but these MYGA rates are a pretty significant 2%+ spread above current bank CD rates and Treasuries. They are not directly comparable, but they are comparable. MYGA are much more complicated and there are pitfalls to avoid. Please do your own research before investing.

In addition, perhaps this also makes it a good time to shop for term life insurance rates. I haven’t shopped around in a while. We got ours set up at a reasonable cost before having kids and I’m always happy to know that it is there for my family if they need it.

I wonder if looking back, this will have been an opportunity to take advantage of the consumer-friendly rates resulting from the current rush of money into private equity, or if the risks of “higher leverage and more aggressive investment strategies” will eventually create a crisis event if some of these insurance companies start to fail. (How long will that shiny A- rating last?)

Filed Under: Banking, Insurance //

Savings I Bonds May 2025: 1.10% Fixed Rate, 2.88% Inflation Rate (3.98% Total for First 6 Months)

Posted on May 1, 2025 // 7 Comments

Update: Savings I Bonds bought from May 1, 2025 through October 31, 2025 will have a fixed rate of 1.10% and inflation rate of 2.88%, for a total composite rate of 3.98% for the first 6 months. Compare the total rate with the current short-term Treasury yields (1-year @ ~3.9%), and compare the fixed rate with the short-term TIPS real yields (5-year @ ~1.5%).

Every existing I Bond will earn this inflation rate of ~2.88% eventually for 6 months; you will need to add your own fixed rate that was set based the initial purchase month. See you again in mid-October for the next early prediction for November 2025.

Original post from 4/11/25:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the May 2025 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what an April 2025 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a May 2025 purchase.

New inflation rate prediction. September 2024 CPI-U was 315.301. May 2025 CPI-U was 319.799, for a semi-annual inflation rate of 1.43%. Using the official composite rate formula:

Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

This results in the variable component of interest rate for the next 6 month cycle being ~2.86 to 2.88%, depending on the fixed rate.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month. (You should always sell at the very beginning of the month.)

Buying in April 2025. If you buy before the end of April, the fixed rate portion of I-Bonds will be 1.20%. You will be guaranteed a total interest rate of 1.20 + 1.91 = 3.11% for the next 6 months. For the 6 months after that, the total rate will be 1.20 + 2.88 = 4.08%.

Buying in May 2025. If you buy in May 2025, you will get ~2.88% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS with some reductions. In the previous 10 days, 5-year TIPS real rates have ranged from 1.25% to 1.72%. That’s a nearly 50 basis point swing! If I had to guess, I’d put a new fixed rate somewhere between 1.0 to 1.3%, for a total rate of about 4%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your specific purchase month. Everyone will eventually get this variable rate. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%).

Buy now or wait? Between those two options, I’m actually not sure. In the short-term, the rates are no better than T-bills. If you are a long-term holder, you might grab the 1.2% fixed rate “bird in the hand”. But the inflation rate will be higher in May by nearly a whole 1%, and so I’d personally just wait and see what happens in mid-October to buy my limit.

Also consider that 30-year TIPS rates on 4/10/25 were at 2.68%! If you really intend to hold for 30 years, that might be a better deal. I plan to fill out my TIPS ladder a bit more if the rates stay this high.

Unique features and considerations. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and potential tax benefits if used toward qualified educational expenses.

The main drawback is hassle. You can only buy new savings bonds through TreasuryDirect.gov, which is limited in its customer service resources and features. But as there is no option for paper tax forms nor statements, so your heirs may never know they exist! If they do find it, it may take them several months to close out all the estate paperwork. If your password is compromised, they will not replace any lost or stolen savings bonds. The juice may not be worth the squeeze when you can own individual Treasury bonds or TIPS within any full-service brokerage account.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. As of 2024. you can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. (No more tax refund savings bonds.) Technically, the purchase limits are per Social Security Number or Employer Identification Number. For those looking for another way to expand their purchasing power, that means you can also buy for a child, grandchild, LLC, or a trust.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can now only purchase them online at TreasuryDirect.gov. For more background, see the rest of my posts on savings bonds.

[Image: 1942 US Savings Bond poster – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //

AI Pioneer Divides Assets Across Multiple Banks and Brokerages

Posted on May 1, 2025 // 1 Comment

I’m trying (and failing) to keep up with AI developments, but inside this interview with AI pioneer Geoffrey Hinton (Wikipedia names him the Godfather of AI) was an interesting tidbit that relates to personal finance. Here is an excerpt from a transcript of the interview (emphasis mine):

GEOFFREY HINTON: Among the AI researchers, people are more aware of it. So the people I know who are kind of most depressed about it are serious AI researchers. I have started doing practical things because AI is going to be very good at designing cyber attacks. I don’t think the Canadian banks are safe anymore.

So Canadian banks are about as safe as you can get. They’re very well regulated compared with US banks. But over the next 10 years, I wouldn’t be at all surprised if there was a cyber attack that took down a Canadian bank.

BROOK SILVA-BRAGA: What does take down mean?

GEOFFREY HINTON: Suppose that the bank holds shares that I own. Right. Suppose the cyber attack sells those shares. Now my money’s gone. So I actually now spread my money between three banks. Okay. So that’s the first practical thing I’ve done because I think if a cyber attack takes down one Canadian bank, the others will get a lot more serious.

BROOK SILVA-BRAGA: Okay. Anything else like that? What else?

GEOFFREY HINTON: That’s the main thing. That’s where I noticed I actually did something practical that flowed from my belief that very scary times are coming.

In that context, Hinton is not just talking about separating his assets across multiple banks but also brokerage accounts that own shares of companies.

I believe this idea of keeping your assets separated into different silos is a good one. I plan to also avoid linking information from one brokerage account to another brokerage firm (either to initiate funds transfers, or to use in data-sharing services like “Full View”). Assume that any one major bank or brokerage firm may eventually go down in a complete mess, and it may take a very long time to clean up that mess. Hinton’s choice of three different places seems like a reasonable number.

It’s good to have some actionable advice, as opposed to pondering his concerns about bad actors using “lethal autonomous weapons”. 😨

Filed Under: Banking //

Aven Advisor: Track Your Finances, Get $5 Starbucks Gift Card Every Week (Homeowners w/ 700+ Credit)

Posted on April 22, 2025 // 35 Comments

Update June 2025: This offer now appears to be severely limited very soon to occasional gift cards.

Update April 2025: I’ve continued to receive my $5 in SBUX credit every week with no issues, up to over $50 so far. Honestly, getting $5 worth of caffeine every week feels better than it should, no wonder Starbucks is effectively running its own currency. You do need to remember to log into the app every week (Fridays for me, not sure if same day for everyone). Now you can either sign up for Starbucks or Dunkin credit (thanks to DoC).

You can still get an additional one-time $5 cash bonus if you open through Aven.com/advisor and use my invite code JP25DJVG7K during the app sign-up. You’ll need to link a bank account via Plaid to get the $5 transferred to you.

Some caveats: Don’t accidentally sign-up for their credit card, it is not required to get this $5 weekly credit. They have also added new fine print that the offer is limited to residents of AL, AK, AZ, AR, CA, CO, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, NE, NH, NJ, NM, NC, ND, OH, OK, OR, PA, SD, TN, UT, VA, WI, WY. This was not the case originally.

Original post from 2/3/2025:

Aven Advisor is a new app that promises to help to track your financial situation. Kind of like the old Mint app, you have to give them your personal info and link up bank accounts/credit cards, and then they offer a unique mix of things:

  • Free weekly credit score (VantageScore 4.0 for me, even though some screenshots show FICO).
  • Find your hidden subscriptions by mining your transactions.
  • Track your home value, neighborhood home prices, and show you nearby house listings.
  • Get a free lien report on your property.
  • Track your bank balances, brokerage balances, and credit card debt.
  • Track the value of your car.
  • Shows you nearby Facebook Marketplace listing for cars and other random things.

So why give them your data? Well, if you are a homeowner with a good credit (700+), they will give you $5 in Starbucks credit once every week. You have to manually open the app and tap the link on every Monday (so they know you’re actively using it), but I’ve successfully gotten my credit. Loads right onto my Starbucks app, see screenshot below.

Join at Aven.com/advisor (remember, only homeowners get the Starbucks offer). You can also get an additional one-time $5 cash bonus with my referral code JP25DJVG7K. Thanks if you use it. You’ll have to link a bank account via Plaid to transfer the $5 into your account.

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

Best Interest Rates Survey: Savings Accounts, Treasuries, CDs, ETFs – April 2025

Posted on April 20, 2025 // 2 Comments

Here’s my monthly survey of the best interest rates on cash as of April, roughly sorted from shortest to longest maturities. Banks love taking advantage of our idle cash, and you can often earning more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 4/20/2025.

TL;DR: Short-term savings accounts dropped again slightly overall. Short-term T-Bill rates at around 4.3%. Top 5-year CD rates are ~4.25% APY, while 5-year Treasury rate is ~4%.

High-yield savings accounts*
Since the huge megabanks still pay essentially no interest, everyone should at least have a separate, no-fee online savings account to piggy-back onto your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates and solid user experience. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The top saving rate at the moment: Roger.bank is at 4.65% APY (no min), but does require an additional companion checking account. OnPath FCU has a new account paying 5.00% APY but requires $25,000 min. CIT Platinum Savings is now at 4.10% APY with $5,000+ balance, but also has a $225/$300 deposit bonus you can stack on top. There are many banks in between.
  • SoFi Bank is at 3.80% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount (even $1) each month for the higher APY. SoFi has historically competitive rates and full banking features. See details at $25 + $300 SoFi Money new account and deposit bonus.
  • Here is a limited survey of high-yield savings accounts. They aren’t the top rates, but a group that have historically kept it relatively competitive such that I like to track their history.

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 (plan to buy a house soon, 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 has a 13mo No Penalty CD at 4.00% APY ($500 minimum deposit). Farmer’s Insurance FCU has 9-month No Penalty CD at 4.25% APY ($1,000 minimum deposit). Kinecta FCU has 9-month Liquid CD at 4.25% APY ($10,000 minimum) that allows for daily penalty-free withdrawals of up to 50% of the start of day balance. Consider opening multiple CDs in smaller increments for more flexibility.
  • Security State Bank has a 12-month certificate special at 4.65% APY ($25,000 min). Early withdrawal penalty is 180 days of interest.

Money market mutual funds
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Note: Money market mutual funds are highly-regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms.

  • Vanguard Federal Money Market Fund (VMFXX) is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 4.22% (changes daily, but also works out to a compound yield of 4.30%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Treasury Money Market Fund (VUSXX) is an alternative money market fund which you must manually purchase, but the interest will be mostly (100% for 2024 tax year) exempt from state and local income taxes because it comes from qualifying US government obligations. Current SEC yield of 4.23% (compound yield of 4.31%).

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 and are fully backed by the US government. 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, which can make a significant difference in your effective yield.

  • 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 4/17/25, a new 4-week T-Bill had the equivalent of 4.32% annualized interest and a 52-week T-Bill had the equivalent of 3.99% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 4.18% SEC yield (0.09% expense ratio) and effective duration of 0.09 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 4.13% SEC yield (0.136% expense ratio) and effective duration of 0.15 years. The Vanguard 0-3 Month Treasury Bill ETF (VBIL) hasn’t been around long enough to generate an SEC yield (0.07% expense ratio).

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. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov.

  • “I Bonds” bought between November 2024 and April 2025 will earn a 3.11% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2025, 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. Read all the details about your options here.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • OnPath Federal Credit Union (my review) pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
  • Genisys Credit Union pays 6.75% APY on up to $7,500 if you make 10 debit card purchases of $5+ each per statement cycle, and opt into online statements. Anyone can join this credit union via $5 membership fee to join partner organization.
  • La Capitol Federal Credit Union pays 5.75% APY on up to $10,000 if you make 15 debit card purchases of at least $5 each per statement cycle. Anyone can join this credit union via partner organization, Louisiana Association for Personal Financial Achievement ($20).
  • First Southern Bank pays 5.50% APY on up to $25,000 if you make at least 15 debit card purchases, 1 ACH credit or payment transaction, and enroll in online statements.
  • Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 12 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
  • Andrews Federal Credit Union pays 5.50% APY (down from 6%) on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit or ACH transaction per statement cycle. Anyone can join this credit union via partner organization.
  • Find a locally-restricted rewards checking account at DepositAccounts.

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.

  • KS State Bank has a 5-year certificate at 4.15% APY ($500 minimum), 4-year at 4.15% APY, 3-year at 4.15% APY, 2-year at 4.20% APY, and 1-year at 4.25% APY. $500 minimum. The early withdrawal penalty (EWP) for the 5-year is a huge 540 days of interest.
  • Mountain America Credit Union (MACU) has a 5-year certificate at 4.25% APY ($500 minimum), 4-year at 4.25% APY, 3-year at 4.25% APY, 2-year at 3.95% APY, and 1-year at 4.25% APY. Early withdrawal penalty for the 4-year and 5-year is 365 days of interest. Anyone can join this credit union via partner organization American Consumer Council for a one-time $5 fee (or try promo code “consumer”).
  • Lafayette Federal Credit Union (LFCU) has a 5/4/3/2/1-year certificates at 4.28% APY ($500 min). Slightly higher rates with jumbo $100,000+ balances. Note that the early withdrawal penalty for the 5-year is a relatively large 600 days of interest. Anyone nationwide can join LFCU by joining the Home Ownership Financial Literacy Council (HOFLC) for a one-time $10 fee.
  • 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. Right now, I see a 5-year non-callable brokered CD at 4.00% APY (callable: no, call protection: yes). Be warned that both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later. (Issuers have indeed started calling some of their old 5%+ CDs during 2024.)

Longer-term Instruments
I’d use these with caution due to increased interest rate risk (tbh, I don’t use them at all), 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. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at [n/a] (non-callable) vs. 4.34% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 4/20/25.

* I no longer recommend fintech companies due to the possibility of loss due to poor recordkeeping and lack of government regulation. (Ex. Evergreen Wealth at 5% APY is a fintech.)

Photo by insung yoon on Unsplash

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

Verizon + Openbank Savings: 4.40% APY + Up to $180 in Bill Credits

Posted on April 10, 2025 // 1 Comment

Verizon and Openbank have partnered together such if that you open a high yield savings account with Openbank and maintain a qualifying balance, you’ll get up to $15 a month in Verizon bill credits for the first 12 months (total up to $180). You also get the standard APY, which is currently a competitive 4.40% APY. If you are a Verizon customer, it might be worth a look. Here are the tiers:

The Verizon Bill Credit is based on the monthly average daily balance of your High Yield Savings account and can range between $5, $10 or $15 a month according to the following:

– Get up to $60/year ($5/month) in Verizon Bill Credits if your average account balance is between $1,000 and $9,999.99. Offer valid for up to 12 consecutive months from the date you open the account.

– Get up to $120/year ($10/month) in Verizon Bill Credits if your average account balance is between $10,000 and $29,999.99. Offer valid for up to 12 consecutive months from the date you open the account.

– Get up to $180/year ($15/month) in Verizon Bill Credits if your balance is $30,000 or more. Offer valid for up to 12 consecutive months from the date you open the account.

Here are the details on qualifying Verizon accounts:

You’ll need an existing Verizon mobile account with up to 12 phone lines maximum (depending on your plan), 5G Home Internet or LTE Home Internet to be eligible to apply for the Verizon + Openbank Savings account. Verizon Prepaid, Verizon mobile Business, Verizon Fios and Verizon Fios Business accounts are not eligible for Verizon + Openbank Savings

Bonus calculations. There is a $500 minimum to open an account, and the bonus is based on the “monthly average daily balance”.

  • $1,000 balance earning $60/year in credits = 6.0% boost over a year.
  • $10,000 balance earning $120/year in credits = 1.2% boost over a year.
  • $30,000 balance earning $180/year in credits = 0.60% boost over a year.

As long as the base APY is relatively competitive, you could probably justify keeping up to $30,000 in this account, given that the bill credits are basically after-tax money. 4.40% + 0.60% = 5.00%, which is a top overall rate. This is assuming they don’t 1099 you for the bill credits, which I doubt they will considering they are a discount on a service.

However, if you just want the most bang for your buck, you could just keep $1,000 in there for a $60 total bonus. Or you could think of it as a ~10% APY savings account for a year.

This promotion would be a lot more attractive if the bill credits applied indefinitely, instead of only the first 12 months. As it is, it might be attractive if you already have Verizon wireless service.

Hat tip to Doctor of Credit.

Filed Under: Banking, Deals & Offers //

Fidelity, Schwab Won’t Let You Trade Money Market ETFs (That Aren’t Theirs)

Posted on March 25, 2025 // 2 Comments

In case you aren’t aware that a huge profit source for every broker is your idle cash, Bloomberg reports that Fidelity and Schwab are blocking all new purchase trades of new money market ETFs (gift article) from Blackrock and Texas Capital. Here’s what Fidelity and Schwab say about it:

A Schwab spokesperson said its decision is consistent with the firm’s “long-standing approach” of only making available Schwab affiliate money-market mutual funds, while a Fidelity spokesperson said this is an extension of the company’s policy to “generally restrict” third-party money-market mutual funds.

The inflows to those new ETFs weren’t even that big, making this an interesting development:

Yet, the move stands out because trading platforms like Schwab and Fidelity typically don’t restrict exchange-traded funds, even if those funds are in competition with existing in-house offerings.

Indeed, I hope this doesn’t start a trend of more bans of competitor ETFs. Fidelity and Blackrock have worked very closely together in the past, so this is probably rather awkward.

For now, I still own lots of shares of iShares 0-3 Month Treasury Bond ETF (SGOV) and probably soon Vanguard 0-3 Month Treasury Bill ETF (VBIL). Fidelity and Schwab haven’t banned those, yet. Of course, Vanguard continues to not play funny games with their money market sweep funds. C’mon Vanguard, time for your own money market ETF to create even more tension…

I know that these brokers have to make their money somewhere, but they may have to become more transparent about it soon.

Filed Under: Banking, Investing //

Best Interest Rates Survey: Savings Accounts, Treasuries, CDs, ETFs – March 2025

Posted on March 10, 2025 // 8 Comments

Here’s my monthly survey of the best interest rates on cash as of March, roughly sorted from shortest to longest maturities. Banks love taking advantage of our idle cash, and you can often earning more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 3/9/2024.

TL;DR: Short-term savings accounts dropped very slightly overall, with top rates varying widely from 3.7% to 5% APY. Short-term T-Bill rates at around 4.3%. Top 5-year CD rates are ~4.30% APY, while 5-year Treasury rate is ~4.1%.

High-yield savings accounts*
Since the huge megabanks still pay essentially no interest, everyone should at least have a separate, no-fee online savings account to piggy-back onto your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates and solid user experience. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The top saving rate at the moment: Roger.bank is at 5.00% APY (no min), but does require an additional companion checking account. CIT Platinum Savings is now at 4.30% APY with $5,000+ balance, but also has a $225/$300 deposit bonus you can stack on top.
  • SoFi Bank is at 3.80% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount (even $1) each month for the higher APY. SoFi has historically competitive rates and full banking features. See details at $25 + $300 SoFi Money new account and deposit bonus.
  • Here is a limited survey of high-yield savings accounts. They aren’t the top rates, but a group that have historically kept it relatively competitive such that I like to track their history.

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 (plan to buy a house soon, 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 has a 13mo No Penalty CD at 4.15% APY ($500 minimum deposit). Farmer’s Insurance FCU has 9-month No Penalty CD at 4.25% APY ($1,000 minimum deposit). Credit Human has 12-month Liquid CD at 4.26% APY ($5,000 minimum) that allows unlimited deposits and two allowed withdrawals. Consider opening multiple CDs in smaller increments for more flexibility.
  • Security State Bank has a 12-month certificate special at 4.65% APY ($25,000 min). Early withdrawal penalty is 180 days of interest.

Money market mutual funds
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). Note: Money market mutual funds are highly-regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms.

  • Vanguard Federal Money Market Fund (VMFXX) is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 4.24% (changes daily, but also works out to a compound yield of 4.32%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Treasury Money Market Fund (VUSXX) is an alternative money market fund which you must manually purchase, but the interest will be mostly (100% for 2024 tax year) exempt from state and local income taxes because it comes from qualifying US government obligations. Current SEC yield of 4.25% (compound yield of 4.33%).

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 and are fully backed by the US government. 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, which can make a significant difference in your effective yield.

  • 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 3/7/25, a new 4-week T-Bill had the equivalent of 4.31% annualized interest and a 52-week T-Bill had the equivalent of 4.06% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 4.20% SEC yield (0.09% expense ratio) and effective duration of 0.09 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 4.13% SEC yield (0.136% expense ratio) and effective duration of 0.15 years. The Vanguard 0-3 Month Treasury Bill ETF (VBIL) hasn’t been around long enough to generate an SEC yield (0.07% expense ratio).

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. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov.

  • “I Bonds” bought between November 2024 and April 2025 will earn a 3.11% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2025, 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.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • OnPath Federal Credit Union (my review) pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
  • Genisys Credit Union pays 6.75% APY on up to $7,500 if you make 10 debit card purchases of $5+ each per statement cycle, and opt into online statements. Anyone can join this credit union via $5 membership fee to join partner organization.
  • La Capitol Federal Credit Union pays 5.75% APY (down from 6.25%) on up to $10,000 if you make 15 debit card purchases of at least $5 each per statement cycle. Anyone can join this credit union via partner organization, Louisiana Association for Personal Financial Achievement ($20).
  • (new) First Southern Bank pays 5.50% APY on up to $25,000 if you make at least 15 debit card purchases, 1 ACH credit or payment transaction, and enroll in online statements.
  • Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 12 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
  • Andrews Federal Credit Union pays 6.00% APY on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit or ACH transaction per statement cycle. Anyone can join this credit union via partner organization.
  • Find a locally-restricted rewards checking account at DepositAccounts.

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.

  • KS State Bank has a 5-year certificate at 4.30% APY ($500 minimum), 4-year at 4.30% APY, 3-year at 4.30% APY, 2-year at 4.25% APY, and 1-year at 4.30% APY. $500 minimum. The early withdrawal penalty (EWP) for the 5-year is a huge 540 days of interest.
  • Mountain America Credit Union (MACU) has a 5-year certificate at 4.25% APY ($500 minimum), 4-year at 4.25% APY, 3-year at 4.25% APY, 2-year at 3.95% APY, and 1-year at 4.25% APY. Early withdrawal penalty for the 4-year and 5-year is 365 days of interest. Anyone can join this credit union via partner organization American Consumer Council for a one-time $5 fee (or try promo code “consumer”).
  • Lafayette Federal Credit Union (LFCU) has a 5/4/3/2/1-year certificates at 4.28% APY ($500 min). Slightly higher rates with jumbo $100,000+ balances. Note that the early withdrawal penalty for the 5-year is a relatively large 600 days of interest. Anyone nationwide can join LFCU by joining the Home Ownership Financial Literacy Council (HOFLC) for a one-time $10 fee.
  • 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. Right now, I see a 5-year non-callable CD at 4.10% APY (callable: no, call protection: yes). Be warned that both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later. (Issuers have indeed started calling some of their old 5%+ CDs during 2024.)

Longer-term Instruments
I’d use these with caution due to increased interest rate risk (tbh, I don’t use them at all), 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. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at [n/a] (non-callable) vs. 4.32% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 3/9/25.

* I no longer recommend fintech companies due to the possibility of loss due to poor recordkeeping and lack of government regulation. (Ex. Evergreen Wealth at 5% APY is a fintech.)

Photo by insung yoon on Unsplash

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