High interest savings account

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cals400ex
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High interest savings account

Post by cals400ex »

Hello, I currently keep extra cash in a Vanguard money market fund. The rates are low now, so I'm thinking that I should move to a high interest savings account. I'm looking for these options:

1. Have good customer service.
2. Be able to transfer money from my personal checking account to this high interest savings account remotely.
3. Be able to transfer larger sums of money whenever I want. Meaning, I don't want to be limited on the amount that I can transfer in or out of the savings account each month. Some savings accounts have a limit. I will need the ability to transfer out over $100K in a single transaction to my local checking account.
4. Have a decent interest rate.

I have been thinking about Ally due to their customer service. Sometimes I see higher rates elsewhere, but that usually comes with additional headaches or poor customer service. I am unsure if I can transfer larger sums of money to and from the savings account each month at Ally?

I have also thought about a penalty free CD. My major issue with these are that I can not add to it each month, and that I am unsure how quickly I can get the funds out of the CD to my bank account. I generally don't need the money in a matter of a day or two. But I do sometimes need it transferred to my bank account within a week.

Any suggestions?
BruinBones
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Re: High interest savings account

Post by BruinBones »

Quite a few of the on-line high yield savings accounts (like Ally, or Synchrony-which I have) offer what you are describing, but currently Goldman Sachs seems to have a lot quality features while still maintaining a higher APY.
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bluquark
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Re: High interest savings account

Post by bluquark »

Have you considered a short/intermediate bond fund/ETF at a brokerage? You lose the guarantee of absolutely no loss of principal but it's not clear this is for an emergency fund where that matters, and you get all of the other things you want.

In particular for "4. Have a decent interest rate." you may lose that at any time with no compensation with a savings account, just like what just happened to you with the Vanguard money market. With a CD, you can't lose the interest rate over the term, but you can't add/remove money as flexibly as you desire. With a bond fund, you can still lose it but you'll have a nice rise in NAV to come with it so it's not considered a bad thing.
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nalor511
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Re: High interest savings account

Post by nalor511 »

Alliant dropped to .9% today ☹
Topic Author
cals400ex
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Re: High interest savings account

Post by cals400ex »

bluquark wrote: Thu Jun 04, 2020 5:52 pm Have you considered a short/intermediate bond fund/ETF at a brokerage? You lose the guarantee of absolutely no loss of principal but it's not clear this is for an emergency fund where that matters, and you get all of the other things you want.

In particular for "4. Have a decent interest rate." you may lose that at any time with no compensation with a savings account, just like what just happened to you with the Vanguard money market. With a CD, you can't lose the interest rate over the term, but you can't add/remove money as flexibly as you desire. With a bond fund, you can still lose it but you'll have a nice rise in NAV to come with it so it's not considered a bad thing.

I will use the funds in this account to purchase rental properties. I can handle slight swings that are up and down. So, a bond fund might be ok for me. It would be in a taxable account so I'm not sure which choices might be best for me.
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cals400ex
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Re: High interest savings account

Post by cals400ex »

What are your thoughts on Vanguard Short-Term Federal Fund Admiral Shares (VSGDX) or Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX)?
I am unsure if there are any restrictions on the amount that I sell at one time or the time-frame I need to wait to pull money out of these? For example, if I purchase $100k of either of these, can I sell them at any time and have the money transferred to my personal checking account?
natchez
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Re: High interest savings account

Post by natchez »

I moved a chunk out of my Vanguard money market account into my Marcus (online Goldman-Sachs) account, which is paying 1.30%.
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Kevin M
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Re: High interest savings account

Post by Kevin M »

cals400ex wrote: Thu Jun 04, 2020 5:25 pm I have been thinking about Ally due to their customer service. Sometimes I see higher rates elsewhere, but that usually comes with additional headaches or poor customer service. I am unsure if I can transfer larger sums of money to and from the savings account each month at Ally?
Ally is a good all-purpose online bank, with generally high limits for everything (ACH transfer amount, number of external accounts). I have transferred out large amounts, and never hit a limit. I see $150K per day mentioned with a web search, but I also see a statement that it varies based on account history. You can call them and ask.

As you say, not the highest rate on savings, but pretty competitive, and all the other services they offer make it a good choice for a "hub" bank.

You might even consider moving your checking to Ally, and then you won't need to bother with transferring to an external checking account.
cals400ex wrote: Thu Jun 04, 2020 5:25 pmI have also thought about a penalty free CD. My major issue with these are that I can not add to it each month, and that I am unsure how quickly I can get the funds out of the CD to my bank account. I generally don't need the money in a matter of a day or two. But I do sometimes need it transferred to my bank account within a week.
After 7 days, you can do a penalty-free withdrawal of the entire amount at any time, and have it instantly transferred to your Ally checking or savings account, and then the ACH transfer elsewhere works the same (maybe you can even transfer directly from the CD to external bank--don't remember). So a NP CD adds no time to external transfers.

The main benefit of a NP CD when rates are falling is to lock in the current rate for up to 11 months, yet maintain the flexibility to access your cash for free before then if you want. Some folks are still enjoying 2% or more on NP CDs opened before the rates started falling. No, it is not an add-on CD--wouldn't that be nice.

Consider opening multiple NP CDs, so if you need cash you might only need to break one of them, while continuing to earn the higher rate on the rest of them.

The Ally NP CD rate now is 1.2%, which is lower than the savings rate of 1.25%. However, I'm almost certain that the savings rate will continue to decline (it hit a low of 0.84% during the 7 years after the last financial crisis when the federal funds rate was near 0%), so I bet you'd earn more over the next 11 months on an NP CD than in an Ally savings account.

Kevin
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sycamore
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Re: High interest savings account

Post by sycamore »

cals400ex wrote: Fri Jun 05, 2020 10:05 am What are your thoughts on Vanguard Short-Term Federal Fund Admiral Shares (VSGDX) or Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX)?
I am unsure if there are any restrictions on the amount that I sell at one time or the time-frame I need to wait to pull money out of these? For example, if I purchase $100k of either of these, can I sell them at any time and have the money transferred to my personal checking account?
I don't know much about VSGDX. Take note that VUSFX declares dividends monthly, so you need to be holding it on the date of record to "earn" the dividend for the whole month. The NAV of VUSFX dropped about 1.3% during the March sell-off. It gained almost all of that back.

You can sell them at any time. Vanguard does have a general policy that prevents you from buying back into a fund 30 days after you've sold shares from that fund. See here: https://personal.vanguard.com/us/faces/ ... ontent.jsp

If you haven't yet set up a link from your Vanguard account to your bank account, best to do that first as it takes about 7 days.
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cals400ex
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Re: High interest savings account

Post by cals400ex »

Those were all good points mentioned.

The short term / ultra short term funds through Vanguard always catch my eye. I didn't look up the current rates, but it is convenient to have money in those for times that I want to quickly rebalance or TLH after a downturn. This was the main reason why I previously used the Vanguard money market fund. The rates on those are quite low right now, so that may not make the most sense. But, as mentioned, it's nice being able to make a quick transfer or buy another stock/fund without having to wait for it to transfer from a savings account to Vanguard.
index2max
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Re: High interest savings account

Post by index2max »

Savings accounts are nice because they don’t require any effort, but I would recommend taking an extra 10 minutes per month to utilize a high interest rewards checking account at a credit union instead.

I have money stored in two different high interest checking accounts at two different credit unions that each pay 3% annual interest up to a balance of $15,000. (One of them was paying me 3 1/2% per year until the Fed went back to zero-interest rates...) In return I have to bring in some outside money per month through direct deposit or ACH transfers. In addition I need to get a minimum number of debit card transactions done.

Transactions are easy to do online with a debit card by just reloading a gift card balance on Amazon in increments of $0.50 or more. Other credit unions may require you to spend a minimum number of dollars per transaction. Those credit unions set the minimum transaction amounts to high such that your interest on deposits per month will not exceed what you spend. So look at it as an opportunity cost because you’re not utilizing a credit card with better rewards.

Take a look at the website:

Depositaccounts.com

In the drop-down menu for checking accounts, select the “rewards checking account option”

You can filter by your geographic area, banks only or credit unions only or both along with max deposit amounts the institution will pay interest on.

Happy hunting!
Last edited by index2max on Fri Jun 05, 2020 1:18 pm, edited 1 time in total.
livesoft
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Re: High interest savings account

Post by livesoft »

I got a chuckle about the term "High interest" used in the thread title. Those days are over.
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Cranberry44
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Re: High interest savings account

Post by Cranberry44 »

livesoft wrote: Fri Jun 05, 2020 1:18 pm I got a chuckle about the term "High interest" used in the thread title. Those days are over.
Serious question: do you think they are over, permanently, or just temporarily?
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Cranberry44
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Re: High interest savings account

Post by Cranberry44 »

I noticed that Marcus lowered their no-penalty CD rates a day or two ago by about 10 basis points each (on their 7, 11, and 13 month NPCDs).
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Re: High interest savings account

Post by livesoft »

Cranberry44 wrote: Fri Jun 05, 2020 1:23 pmSerious question: do you think they are over, permanently, or just temporarily?
Permanently is a long time, so I have to write: No, not permanently, but perhaps in my lifetime.

OTOH, I am not risk averse and so I am very happy to put money into equity or bond funds temporarily (like a day or week) in order to try to outgain the interest paid in a full year by a savings account, but only in a few days.
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GibsonL6s
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Re: High interest savings account

Post by GibsonL6s »

cals400ex wrote: Thu Jun 04, 2020 5:25 pm Hello, I currently keep extra cash in a Vanguard money market fund. The rates are low now, so I'm thinking that I should move to a high interest savings account. I'm looking for these options:

1. Have good customer service.
2. Be able to transfer money from my personal checking account to this high interest savings account remotely.
3. Be able to transfer larger sums of money whenever I want. Meaning, I don't want to be limited on the amount that I can transfer in or out of the savings account each month. Some savings accounts have a limit. I will need the ability to transfer out over $100K in a single transaction to my local checking account.
4. Have a decent interest rate.

I have been thinking about Ally due to their customer service. Sometimes I see higher rates elsewhere, but that usually comes with additional headaches or poor customer service. I am unsure if I can transfer larger sums of money to and from the savings account each month at Ally?

I have also thought about a penalty free CD. My major issue with these are that I can not add to it each month, and that I am unsure how quickly I can get the funds out of the CD to my bank account. I generally don't need the money in a matter of a day or two. But I do sometimes need it transferred to my bank account within a week.

Any suggestions?
I have used CIT and American Express. One thing to consider is if these accounts can be in the name of a trust or a trust can be a beneficiary if this is important to you. It was for me to avoid probate issues. For CIT you can name a trust as a Beneficiary. Am Ex you open in your name and can then easily put it into a trust. I know Marcus only allows individuals to open the account and only individuals can be beneficiaries. They do not allow contingent beneficiaries, which would have solved my problem, so I didn't go with them.
dugtoni
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Re: High interest savings account

Post by dugtoni »

I know Capital One has an offer right now where you can get up to $500 for opening a high yield savings account and funding with 50k ($100 for each $10k up to $500). The apy is 1.15%. I have mma with CIT right now that is earning 1.3% but I might switch to Capital One to take advantage of this offer.
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Kevin M
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Re: High interest savings account

Post by Kevin M »

cals400ex wrote: Fri Jun 05, 2020 11:59 am Those were all good points mentioned.

The short term / ultra short term funds through Vanguard always catch my eye. I didn't look up the current rates, but it is convenient to have money in those for times that I want to quickly rebalance or TLH after a downturn. This was the main reason why I previously used the Vanguard money market fund. The rates on those are quite low right now, so that may not make the most sense. But, as mentioned, it's nice being able to make a quick transfer or buy another stock/fund without having to wait for it to transfer from a savings account to Vanguard.
You can do a same-day purchase of a Vanguard fund from an externally-linked bank account--no need to "wait for it to transfer". Of course you need to wait 7-10 days after first linking the account until you can use if for a purchase. So you don't need to use a money market or bond fund just for this purpose.

Also note that non-government bond funds dropped in value during the last stock "crash", and as already noted, even ultra-short bond fund dropped a bit. Even Treasury funds dropped for about a week when stocks also were falling, but generally a Treasury fund is more likely to increase in price when stocks drop a lot. But currently you must accept very low yields for this potential rebalancing benefit.

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anon_investor
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Re: High interest savings account

Post by anon_investor »

sycamore wrote: Fri Jun 05, 2020 11:57 am
cals400ex wrote: Fri Jun 05, 2020 10:05 am What are your thoughts on Vanguard Short-Term Federal Fund Admiral Shares (VSGDX) or Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX)?
I am unsure if there are any restrictions on the amount that I sell at one time or the time-frame I need to wait to pull money out of these? For example, if I purchase $100k of either of these, can I sell them at any time and have the money transferred to my personal checking account?
I don't know much about VSGDX. Take note that VUSFX declares dividends monthly, so you need to be holding it on the date of record to "earn" the dividend for the whole month. The NAV of VUSFX dropped about 1.3% during the March sell-off. It gained almost all of that back.

You can sell them at any time. Vanguard does have a general policy that prevents you from buying back into a fund 30 days after you've sold shares from that fund. See here: https://personal.vanguard.com/us/faces/ ... ontent.jsp

If you haven't yet set up a link from your Vanguard account to your bank account, best to do that first as it takes about 7 days.
FYI Vanguard buy back restriction does not apply to "short term" bond funds. So you can sell some shares and buy back right away.
https://personal.vanguard.com/pdf/vbsfreq.pdf
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Kevin M
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Re: High interest savings account

Post by Kevin M »

sycamore wrote: Fri Jun 05, 2020 11:57 am I don't know much about VSGDX. Take note that VUSFX declares dividends monthly, so you need to be holding it on the date of record to "earn" the dividend for the whole month.
The dividend is accrued in the share price until the dividend is declared, so you still essentially "earn" it no matter when you sell. However, if you sell before month-end, the accrued dividend will not be reported as a dividend for tax purposes, so you won't pay ordinary income tax on it.
sycamore wrote: Fri Jun 05, 2020 11:57 am Vanguard does have a general policy that prevents you from buying back into a fund 30 days after you've sold shares from that fund. See here: https://personal.vanguard.com/us/faces/ ... ontent.jsp
I don't believe this policy applies to short-term bond funds at Vanguard.

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sycamore
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Re: High interest savings account

Post by sycamore »

Kevin M wrote: Fri Jun 05, 2020 3:40 pm
sycamore wrote: Fri Jun 05, 2020 11:57 am I don't know much about VSGDX. Take note that VUSFX declares dividends monthly, so you need to be holding it on the date of record to "earn" the dividend for the whole month.
The dividend is accrued in the share price until the dividend is declared, so you still essentially "earn" it no matter when you sell. However, if you sell before month-end, the accrued dividend will not be reported as a dividend for tax purposes, so you won't pay ordinary income tax on it.
sycamore wrote: Fri Jun 05, 2020 11:57 am Vanguard does have a general policy that prevents you from buying back into a fund 30 days after you've sold shares from that fund. See here: https://personal.vanguard.com/us/faces/ ... ontent.jsp
I don't believe this policy applies to short-term bond funds at Vanguard.

Kevin
Thanks Kevin M and anon_investor for clarifying.

Plus I realize the link I provided only works if you're logged in to vanguard. The link from anon_investor works regardless - https://personal.vanguard.com/pdf/vbsfreq.pdf
Rudedog
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Re: High interest savings account

Post by Rudedog »

My wife and I have high yield savings accounts at Capital One, Marcus, Ally and Synchrony. When we have cash to invest, we put it in the one that is paying the most at that time. Right now, Capital One is offering $ 450 if you put additional $ 50,000 in account for three months. Not a bad deal.
GreendaleCC
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Re: High interest savings account

Post by GreendaleCC »

nalor511 wrote: Thu Jun 04, 2020 6:13 pm Alliant dropped to .9% today ☹
This was a huge bummer.
index2max
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Re: High interest savings account

Post by index2max »

Screw the banks. Switch to a credit union. They have no outside shareholders to pay and they owe no corporate taxes.

I've been pretty happy with my high-interest rewards checking accounts at several different credit unions that pay over 2% annually, even after meeting their monthly transaction requirements.

Once you switch to a credit union, you'll never go back to a bank.
MythicalSeth
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Re: High interest savings account

Post by MythicalSeth »

index2max wrote: Thu Jun 25, 2020 8:58 pm Screw the banks. Switch to a credit union. They have no outside shareholders to pay and they owe no corporate taxes.

I've been pretty happy with my high-interest rewards checking accounts at several different credit unions that pay over 2% annually, even after meeting their monthly transaction requirements.

Once you switch to a credit union, you'll never go back to a bank.
So I’m probably the exception but I switched from a credit union to an online bank. Credit union had more fees and mediocre rates that trailed HYSA from Amex and Marcus
substantially. The biggest reason however was that the credit union technology (poor website and no app) was at least a decade behind the times. So not all credit unions are created equal. -MS
atdharris
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Re: High interest savings account

Post by atdharris »

Amex dropped to 1% today. Ally is still 1.1% but I bet it will drop too shortly. I opened a 0.95% 11 month no-penalty CD now. I expect all these HYSA will drop below 1% in the next few months with rates staying near 0 for the next 3 years.
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Re: High interest savings account

Post by anon_investor »

atdharris wrote: Thu Jun 25, 2020 10:42 pm Amex dropped to 1% today. Ally is still 1.1% but I bet it will drop too shortly. I opened a 0.95% 11 month no-penalty CD now. I expect all these HYSA will drop below 1% in the next few months with rates staying near 0 for the next 3 years.
I have an Ally no penalty CD expiring next month (currently 2.05%). Even if the 0.95% no penalty CD rate is still around then (I would get a 0.05% bonus for renewing), I may instead put the money into the Vanguard Short Term Federal Fund (VSGBX), the current 30 day SEC yield is around 1.3% with an average duration of 2 years. To me it would basically be like getting a 2 year CD at 1.3% with a little volatility.
atdharris
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Re: High interest savings account

Post by atdharris »

anon_investor wrote: Thu Jun 25, 2020 10:58 pm
atdharris wrote: Thu Jun 25, 2020 10:42 pm Amex dropped to 1% today. Ally is still 1.1% but I bet it will drop too shortly. I opened a 0.95% 11 month no-penalty CD now. I expect all these HYSA will drop below 1% in the next few months with rates staying near 0 for the next 3 years.
I have an Ally no penalty CD expiring next month (currently 2.05%). Even if the 0.95% no penalty CD rate is still around then (I would get a 0.05% bonus for renewing), I may instead put the money into the Vanguard Short Term Federal Fund (VSGBX), the current 30 day SEC yield is around 1.3% with an average duration of 2 years. To me it would basically be like getting a 2 year CD at 1.3% with a little volatility.
All my money is at Merrill Lynch, so sadly I do not have access to that fund. I could buy into SHV or SHY, but I can't buy fractional shares of those ETFs.
index2max
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Re: High interest savings account

Post by index2max »

MythicalSeth wrote: Thu Jun 25, 2020 9:29 pm
index2max wrote: Thu Jun 25, 2020 8:58 pm Screw the banks. Switch to a credit union. They have no outside shareholders to pay and they owe no corporate taxes.

I've been pretty happy with my high-interest rewards checking accounts at several different credit unions that pay over 2% annually, even after meeting their monthly transaction requirements.

Once you switch to a credit union, you'll never go back to a bank.
So I’m probably the exception but I switched from a credit union to an online bank. Credit union had more fees and mediocre rates that trailed HYSA from Amex and Marcus
substantially. The biggest reason however was that the credit union technology (poor website and no app) was at least a decade behind the times. So not all credit unions are created equal. -MS
True, the smaller credit unions don't always have decent high-interest rewards checking accounts. I've been depositing money at large credit unions with at least $1 billion in assets. I was able to join those credit unions even though I live outside their field of membership zones by making donations to a charity they're associated with. Usually a donation of $5 is enough to join. The large credit unions I am a member of all have smartphone apps in addition to their websites.

Don't feel limited by just the credit unions in your region alone!
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