Vanguard Cash Plus Account Pilot

[ScroogeMcDuck]

I received an email from Vanguard inviting me to enroll in a pilot of the Vanguard Cash Plus Account which has a 2.25% APY. I'm thinking of moving my cash out of VMFXX (currently yielding 2.14%) to get FDIC coverage and a little more yield. Has anyone else tried the Cash Plus Account?

[Parkinglotracer]

https://www.reddit.com/r/Bogleheads/com ... s_account/


Maybe you received the same info listed on Reddit

[HomeStretch]

Thanks for posting as I hadn’t heard about this new account. The /bogleheads Reddit thread includes the full email text. Cash will be invested via a bank sweep program to earn a competitive interest rate (currently 2.5%) and be covered by FDIC.

Sounds like this is a mini cash management account through partner banks as there will be a routing #/account # to pay bills and accept direct deposits. But no paper checks will be issued and it doesn’t mention whether the account will have a debit card or ATM access.

If I had not already opened a Fidelity CMA (after Vanguard Advantage accounts were eliminated) I would definitely try it. But without the full CMA features I don’t know if it is compelling to open this new account. Treasuries and Vanguard MMFs in my brokerage account earn a yield that may be “good enough” not to add the complexity of another account. Although it could be a good way to “insulate” my Taxable account by using this new cash account to segregate all money movement in/out of Vanguard to reduce possible fraud.

[ScroogeMcDuck]

Thanks, I hadn't seen that Reddit thread.

The FAQ says the account won't have an ATM card. I'm also weighing whether it's worth the trouble of another account... I do hate adding more rows to my accounts spreadsheet...

[iamblessed]

To bad they did not go all the way with bill pay and checks. They would have hit a homerun.

[Broken Man 1999]

To bad they did not go all the way with bill pay and checks. They would have hit a homerun.

That would look a lot like a CMA account if they did that.

Official word from Vanguard the reason they pulled the plug on their CMA account was because the service was used by so few.

I considered opening up a CMA account but those type accounts can't provide all the services a real bank can provide. What the CMA account did do was to put another entity into the mix (PNC bank was Vanguard's partner at the time) and I still needed my credit union for certain services. So I stuck with my credit union for banking and Vanguard for investments. They play nice together and give me zero problems to deal with.

Broken Man 1999

[Munir]

Any con arguments for owning such an account? How is it different than Cash Reserve Federal MM ? Can it replace MM funds? Marcus HYS is at 1.7% only while this is 2.25%.

[Broken Man 1999]

Any con arguments for owning such an account? How is it different than Cash Reserve Federal MM ? Can it replace MM funds? Marcus HYS is at 1.7% only while this is 2.25%.

The account replaces your settlement account I believe.

So far as why someone would want the service, the account gives you FDIC protection, unlike a regular settlement or money market account.

Me, monkeys would fly before I needed the FDIC protection as I have so little cash to protect. Given the holdings of the current settlement account, personally I feel my $$$ are very safe, even though they are lacking in FDIC protection.

Broken Man 1999

[iamblessed]

If you got this email let us know?

[billaster]

Well, this is confusing. You are talking about a pilot Vanguard Cash Plus account with an APY of 2.25% and there is also talk about a pilot Vanguard Cash Deposit account with an APY of 1.75%. Are these two different pilot programs going on at the same time? Do they apply to different qualifying clients?

[anon_investor]

Well, this is confusing. You are talking about a pilot Vanguard Cash Plus account with an APY of 2.25% and there is also talk about a pilot Vanguard Cash Deposit account with an APY of 1.75%. Are these two different pilot programs going on at the same time? Do they apply to different qualifying clients?

2.25%? Much more appealing than 1.75%.

[beyou]

To bad they did not go all the way with bill pay and checks. They would have hit a homerun.

That would look a lot like a CMA account if they did that.

Official word from Vanguard the reason they pulled the plug on their CMA account was because the service was used by so few.

I considered opening up a CMA account but those type accounts can't provide all the services a real bank can provide. What the CMA account did do was to put another entity into the mix (PNC bank was Vanguard's partner at the time) and I still needed my credit union for certain services. So I stuck with my credit union for banking and Vanguard for investments. They play nice together and give me zero problems to deal with.

Broken Man 1999

Fidelity is no different than Vanguard Advantage, they use UMB bank to provide such services. Etrade and Schwab actually opened their own full service online banks, a step better than Vanguard had and Fidelity has, but not a full service bank. I used Etrade brokerage as an online bank for years, with checks, billpay and atm/debit cards. But even then, the problem is the rare need at a branch. I can have a fully virtual broker IMO (Vanguard suits me fine for investing) but I want a brick and mortar bank, for the rare immediate cash or bank check needs, signature guarantee, etc. Etrade was a secondary “bank” at best. This is all a broker can be to me. Vanguard has the right idea, don’t waste resource trying to open a real bank, too competitive, don’t provide via a 3rd party, let customers pick their own 3rd party. This new product is more compatible with Vanguard core business, investment management. Spreading your cash among various fdic accounts isn’t much different than buying the holdings of a money market fund. Select “issuer” and shop rates. The logistics of the “trades” are very different, but the decision process is similar to running a money market fund. And without online billpay or checks, less customer service phone calls (and more calls is the last thing Vanguard needs).

Doubt I would use this unless it was a sweep option alternative for my existing account. Definitely would not want another account, nothing wrong with the cash management products already offered, FDIC insurance doesn’t mean much too me, no better than Tsy bills.

[tarheel91]

Thanks for the post. I'm signing up for this account.

Regarding banking, I'm mostly concerned about EWS tracking/reporting my day-to-day activities. Not that I'm doing anything illegal, its just unsettling to see how these big bangs track your everyday spending and your account balances.

May be there is something egalitarian about bitcoin and blockchain technology. I should read more about it.

[criticalmass]

Fidelity is no different than Vanguard Advantage, they use UMB bank to provide such services. Etrade and Schwab actually opened their own full service online banks, a step better than Vanguard had and Fidelity has, but not a full service bank.

E*Trade actually purchased Telebanc Financial (Telebank) in the height of the .com boom two decades ago, which was a smart move for them. TIAA bought Everbank a few years ago to boost their own fledgling national bank. Would Vanguard buy a small bank to allow them to offer banking products with a national charter? Probably not, but they did shift from the outsourced Pershing brokerage to their new in-house brokerage to clear trades inside Vanguard almost 15 years ago.

[Bama12]

I really see no need in this unless they offer a debit card.

[5outof10]

I didn't see anything in the post, do we know if statements will be posted in Vanguard profile? And if transfers between my bank account and this account will be handled through Vanguard profile?

If so, this might be a good option to simplify a high yield savings account. Could get rid of online HYSA and reduce another "relationship". Maybe?

[grok87]

Treasuries and Vanguard MMFs in my brokerage account earn a yield that may be “good enough” not to add the complexity of another account. Although it could be a good way to “insulate” my Taxable account by using this new cash account to segregate all money movement in/out of Vanguard to reduce possible fraud.

both good points

[edge]

Is it possible to easily (online) switch between mmf and this new fdic insured bank account as the sweep account?

[Charles Joseph]

I received an email from Vanguard inviting me to enroll in a pilot of the Vanguard Cash Plus Account which has a 2.25% APY. I'm thinking of moving my cash out of VMFXX (currently yielding 2.14%) to get FDIC coverage and a little more yield. Has anyone else tried the Cash Plus Account?

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

[Vulcan]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

[billaster]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

That's how Fidelity pays for their zero fee mutual funds and 24-hour service reps -- skimming interest from their cash accounts.

[Cheez-It Guy]

Facts.

[jeffyscott]

Well, this is confusing. You are talking about a pilot Vanguard Cash Plus account with an APY of 2.25% and there is also talk about a pilot Vanguard Cash Deposit account with an APY of 1.75%. Are these two different pilot programs going on at the same time? Do they apply to different qualifying clients?

2.25%? Much more appealing than 1.75%.

Maybe these are the same thing with two different names and the rate has increase?

The 1.75% was the rate as of Aug 2: https://investor.vanguard.com/investmen ... sh-deposit

[CletusCaddy]

Just tried signing up for this but pilot already closed

[anon_investor]

Well, this is confusing. You are talking about a pilot Vanguard Cash Plus account with an APY of 2.25% and there is also talk about a pilot Vanguard Cash Deposit account with an APY of 1.75%. Are these two different pilot programs going on at the same time? Do they apply to different qualifying clients?

2.25%? Much more appealing than 1.75%.

Maybe these are the same thing with two different names and the rate has increase?

The 1.75% was the rate as of Aug 2: https://investor.vanguard.com/investmen ... sh-deposit

1.75% is not appealing right now, I wonder if the rate has gone up since then.

[Charles Joseph]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

At Fidelity you can use a money market fund in their cash management account and it works exactly like cash. You can draw off the MMF with a check or ATM. ATM fees are rebated from any machine anywhere. Yes, the ERs for Fidelity's MMFs are higher.

I use Fidelity Government Cash Reserves (FDRXX) which has an ER of 0.33% and a current yield of 1.86%. Not worried about FDRXX breaking the buck so FDIC insurance doesn't matter to me. If FDRXX breaks the buck we have lots of other problems.

Just by comparison, with Vanguard's cash product vs Fidelity's CMA using FDRXX, we're talking $39 per $10,000, $390 per $100,000. Not life changing and meaningless in at least my financial world.

[Charles Joseph]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

That's how Fidelity pays for their zero fee mutual funds and 24-hour service reps -- skimming interest from their cash accounts.

You can take the $39 per $10,000 of interest at Vanguard, and wait on hold with their horrific customer service. I'll let Fidelity take a little extra and enjoy their incredible customer service and fantastic products.

Vanguard is old and used up. I still have three accounts there though. Thankfully I don't need customer service or a cash account from them.

[Charles Joseph]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

And quick back-of-the-envelope, I get just under half the lost interest back in rebated ATM fees.

[Cheez-It Guy]

You can take the $39 per $10,000 of interest at Vanguard, and wait on hold with their horrific customer service. I'll let Fidelity take a little extra and enjoy their incredible customer service and fantastic products.

Deal!

[Unnecessary comment removed by admin LadyGeek. Discussions are about issues, not people]

[Broken Man 1999]

To bad they did not go all the way with bill pay and checks. They would have hit a homerun.

That would look a lot like a CMA account if they did that.

Official word from Vanguard the reason they pulled the plug on their CMA account was because the service was used by so few.

I considered opening up a CMA account but those type accounts can't provide all the services a real bank can provide. What the CMA account did do was to put another entity into the mix (PNC bank was Vanguard's partner at the time) and I still needed my credit union for certain services. So I stuck with my credit union for banking and Vanguard for investments. They play nice together and give me zero problems to deal with.

Broken Man 1999

Fidelity is no different than Vanguard Advantage, they use UMB bank to provide such services. Etrade and Schwab actually opened their own full service online banks, a step better than Vanguard had and Fidelity has, but not a full service bank. I used Etrade brokerage as an online bank for years, with checks, billpay and atm/debit cards. But even then, the problem is the rare need at a branch. I can have a fully virtual broker IMO (Vanguard suits me fine for investing) but I want a brick and mortar bank, for the rare immediate cash or bank check needs, signature guarantee, etc. Etrade was a secondary “bank” at best. This is all a broker can be to me. Vanguard has the right idea, don’t waste resource trying to open a real bank, too competitive, don’t provide via a 3rd party, let customers pick their own 3rd party. This new product is more compatible with Vanguard core business, investment management. Spreading your cash among various fdic accounts isn’t much different than buying the holdings of a money market fund. Select “issuer” and shop rates. The logistics of the “trades” are very different, but the decision process is similar to running a money market fund. And without online billpay or checks, less customer service phone calls (and more calls is the last thing Vanguard needs).

Doubt I would use this unless it was a sweep option alternative for my existing account. Definitely would not want another account, nothing wrong with the cash management products already offered, FDIC insurance doesn’t mean much too me, no better than Tsy bills.

I put CMAs in the same class of usefulness for me as I do toaster ovens. Toaster ovens do an OK job on many tasks, but nothing great on any one task. Right next to our toaster oven sits ...a toaster!

Broken Man 1999

[Charles Joseph]

You can take the $39 per $10,000 of interest at Vanguard, and wait on hold with their horrific customer service. I'll let Fidelity take a little extra and enjoy their incredible customer service and fantastic products.

Deal!

[Unnecessary comment removed by admin LadyGeek. Discussions are about issues, not people]

If I told you the angle it wouldn't be an angle anymore.

Someone else started the Fidelity discussion.

[anon_investor]

You can take the $39 per $10,000 of interest at Vanguard, and wait on hold with their horrific customer service. I'll let Fidelity take a little extra and enjoy their incredible customer service and fantastic products.

Deal!

[Unnecessary comment removed by admin LadyGeek. Discussions are about issues, not people]

If I told you the angle it wouldn't be an angle anymore.

Someone else started the Fidelity discussion.

I'd more concerned about Vanguard ending the pilot. They ended VanguardAdvantage accounts.

[JoMoney]

...
Fidelity is no different than Vanguard Advantage, they use UMB bank to provide such services...

Vanguard Advantage (which did offer Bill Pay, checks, and an ATM/debit card) no longer exists. It also required a higher-tier level account and had an additional fee.
Fidelity's CMA has no fee (at any level), and rebates any ATM fees charged.

For people that don't need an ATM/checks/Bill Pay... this new offering from Vanguard does look intriguing.
I pay everything but my rent by credit card, and I can pay both rent and credit card by direct ACH debit which it seems like this Vanguard offering allows for. I suspect one could also link any of the various P2P payment processors to this Vanguard account as well, but I don't know (and personally would recommend against using any of those services.)

Seems like there's a good variety of options out there depending on peoples needs, and this seems more in Vanguard's wheelhouse of being a low-cost high-yield option. Their previous "Vanguard Advantage" account wasn't really competitive with Fidelity's offering (Fidelity's being free + atm rebates.)

[JoMoney]

Are ATM rebates a big thing? I use ATMs about once every two years and it's simple to find an in-network ATM. How much physical cash are people using to where this even registers?

They are if you use them
Sometimes I use one at a bank that has a drive-through ATM convenient to me and charges a $4 fee for cards from other banks. I've had $80 of such fees rebated to me this year.
People have different needs/preferences. It's good there are different options out there that work better for different situations.
Several years back I was spending a lot of time living/working in Australia, being able to use ATMs there to get local cash at a very good exchange rate + have ATM fees rebated was very beneficial to me.

[Charles Joseph]

Are ATM rebates a big thing? I use ATMs about once every two years and it's simple to find an in-network ATM. How much physical cash are people using to where this even registers?

I use them fairly regularly, but now that you mention it, less and less, you're right. Two of our favorite breakfast joints are cash only and I never carry cash so I have to use the ATMs when we go there. Nice to get the (pricey) ATM fees rebated.

[PersonalFinanceJam]

Are ATM rebates a big thing? I use ATMs about once every two years and it's simple to find an in-network ATM. How much physical cash are people using to where this even registers?

From a convenience standpoint if withdrawing from an ATM, yes it’s nice. The closest in network ATM before I switched to a Fidelity CMA was across town and required getting in the car and fighting traffic to get there. Now I can uses an ATM that is less than a 10 minute walk from my house in the burbs without fees. Additionally my wife’s extended family live in Europe so the fee rebate will be nice when visiting them.

More important to me than the rebates is the fact that a CMA comes with an actual debit card which I mostly keep locked but have linked to Venmo and Apple Pay Cash which I use quite a bit. Secondary, is the checks for the couple a year I need for local contractors who don’t take any form of electronic payment.

No offense to Broken Man above, but we love out toaster oven/air fryer. In addition to making great toast, it also makes fantastic salmon. I can also fit a whole frozen pizza in it. Doesn’t heat up the house either in these crazy hot summer days.

[starboi]

Are ATM rebates a big thing? I use ATMs about once every two years and it's simple to find an in-network ATM. How much physical cash are people using to where this even registers?

In addition to the ATM, the debit card feature is super convenient. It's basically nice to have a 1.86% checking account, which (getting back to the OP's post), the Vanguard cash account doesn't/won't be providing.

They've got a lot more features with half the return on your cash balance. Clear. Others might prioritize things differently.

It's more than half the return. It's like 83%.

[whodidntante]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

At Fidelity you can use a money market fund in their cash management account and it works exactly like cash. You can draw off the MMF with a check or ATM. ATM fees are rebated from any machine anywhere. Yes, the ERs for Fidelity's MMFs are higher.

I use Fidelity Government Cash Reserves (FDRXX) which has an ER of 0.33% and a current yield of 1.86%. Not worried about FDRXX breaking the buck so FDIC insurance doesn't matter to me. If FDRXX breaks the buck we have lots of other problems.

Just by comparison, with Vanguard's cash product vs Fidelity's CMA using FDRXX, we're talking $39 per $10,000, $390 per $100,000. Not life changing and meaningless in at least my financial world.

I find the Fidelity setup more flexible.

I link the CMA account to my brokerage account and use the free overdrafts when expenses hit the account. The reasons are that the funds availability policy is better in the brokerage account, it automatically purchases the settlement MMF with incoming cash, and the account is backed by margin if I have an unexpected expense hit.

I used to do something similar with checking and savings accounts before the six fee-free withdrawals limit was imposed at banks.

[starboi]

It sounds like Fidelity's Cash Management Account crushes anything Vanguard is planning to offer in this space.

It pays half the interest rate.

Can you show me the math on that?

[billaster]

In addition to the ATM, the debit card feature is super convenient. It's basically nice to have a 1.86% checking account, which (getting back to the OP's post), the Vanguard cash account doesn't/won't be providing.

They've got a lot more features with half the return on your cash balance. Clear. Others might prioritize things differently.

It's more than half the return. It's like 83%.

The original posting was about a Vanguard FDIC cash account at supposedly 2.25%. The Fidelity FDIC cash account is only 1.20%, so 53%.

The Fidelity government money market account is 1.86% which is something different. If you want to talk about money markets, then the Vanguard money markets are 2.13% to 2.19%.

[anon_investor]

In addition to the ATM, the debit card feature is super convenient. It's basically nice to have a 1.86% checking account, which (getting back to the OP's post), the Vanguard cash account doesn't/won't be providing.

They've got a lot more features with half the return on your cash balance. Clear. Others might prioritize things differently.

It's more than half the return. It's like 83%.

The original posting was about a Vanguard FDIC cash account at supposedly 2.25%. The Fidelity FDIC cash account is only 1.20%, so 53%.

The Fidelity government money market account is 1.86% which is something different. If you want to talk about money markets, then the Vanguard money markets are 2.13% to 2.19%.

Can anyone confirm the 2.25%? The shared link says 1.75%.

[Cheez-It Guy]

[anon_investor]

I wonder if this ever sales up and how the interest rate will compare long term to VMFXX.

[CletusCaddy]

Are ATM rebates a big thing? I use ATMs about once every two years and it's simple to find an in-network ATM. How much physical cash are people using to where this even registers?

I pay my house cleaner in cash. $125 every two weeks. Saves her the check cashing fee.

Also I eat out at a lot of Chinese restaurants that are cash only below a certain amount.

[starboi]

In addition to the ATM, the debit card feature is super convenient. It's basically nice to have a 1.86% checking account, which (getting back to the OP's post), the Vanguard cash account doesn't/won't be providing.

They've got a lot more features with half the return on your cash balance. Clear. Others might prioritize things differently.

It's more than half the return. It's like 83%.

The original posting was about a Vanguard FDIC cash account at supposedly 2.25%. The Fidelity FDIC cash account is only 1.20%, so 53%.

The Fidelity government money market account is 1.86% which is something different. If you want to talk about money markets, then the Vanguard money markets are 2.13% to 2.19%.

But the Vanguard money market has no CMA functionality.

[5outof10]

But the Vanguard money market has no CMA functionality.

So what? What does mean?

[starboi]

But the Vanguard money market has no CMA functionality.

So what? What does mean?

How can you compare a money market fund with no bill pay or CMA capability to a full fledged CMA account?

[LadyGeek]

I removed an off-topic post. As a reminder, see: General Etiquette

We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

... At all times we must conduct ourselves in a respectful manner to other posters.

[5outof10]

How can you compare a money market fund with no bill pay or CMA capability to a full fledged CMA account?

It is super easy. I compare rates.

It appears we have different goals for what we want out of our MMAs. I want the higher rates. You, apparently, like to pay 50% of the Vanguard MMA rate to Fidelity to use Fidelity's MMA as a checking account.

You MMA is more comprable to a checking account. My daily checking account at a brick and mortar bank pays more in interest than than your MMA. Plus free ATMs. Free Bill pay. No monthly charge. Branch 1 min from my work. Notary. Etc, etc, etc. Hell, they even buy season ending pizza parties for kids sports teams.

So I am not too sure about your emotions on this one.

[billaster]

But the Vanguard money market has no CMA functionality.

You may have your own definition of CMA but it is generally considered to be a FDIC cash account with check writing. So money market funds are not typically considered CMA accounts even though Vanguard money market funds do have check writing.

A Vanguard FDIC cash account with check writing as described above would be considered a CMA. Some CMAs may have extra features such as debit cards and bill paying, but are not required.