Merrill Lynch Preferred Deposit

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DTalos
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Joined: Wed Apr 10, 2013 7:59 pm

Merrill Lynch Preferred Deposit

Post by DTalos » Thu Aug 23, 2018 5:41 pm

I received an letter in mail about a bank deposit program from Merrill Lynch called Preferred Deposit that offers an interest rate of 1.56% vs the current .33% that I am currently earning in their Cash Management Account. The only "catch" that's prominently stated is that you would need to call your financial advisor to make deposits and withdrawals. The money is FDIC ensured and placed into a deposit account with Bank of America, N.A. What are the hidden or undisclosed "catches" to these higher interest rate accounts. Why would they offer such a higher interest rate with such few stated restrictions? Is Bank of America investing the deposits in riskier securities?

Longtermgrowth
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Re: Merrill Lynch Preferred Deposit

Post by Longtermgrowth » Thu Aug 23, 2018 6:09 pm

Merrill Edge account? Merrill Edge has two auto sweep options with a 7 day SEC yield close to that: BIF Money Fund and BIF Treasury Fund.
https://www.blackrock.com/cash/en-us/products/282856/

I use the BIF Money Fund to avoid phone calls, along with an online savings account that pays more than their Preferred Deposit rate.

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whodidntante
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Re: Merrill Lynch Preferred Deposit

Post by whodidntante » Thu Aug 23, 2018 6:19 pm

Merrill Lynch is not the same as Merrill Edge.

OP, a lot of us don't use full service brokers like Merrill Lynch due to the high costs involved. You might get better responses on another forum.

DTalos
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Joined: Wed Apr 10, 2013 7:59 pm

Re: Merrill Lynch Preferred Deposit

Post by DTalos » Fri Aug 24, 2018 1:58 am

Longtermgrowth wrote:
Thu Aug 23, 2018 6:09 pm
Merrill Edge account? Merrill Edge has two auto sweep options with a 7 day SEC yield close to that: BIF Money Fund and BIF Treasury Fund.
https://www.blackrock.com/cash/en-us/products/282856/

I use the BIF Money Fund to avoid phone calls, along with an online savings account that pays more than their Preferred Deposit rate.


I have a Merrill Lynch account, not Merrill Edge.

Longtermgrowth
Posts: 557
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Re: Merrill Lynch Preferred Deposit

Post by Longtermgrowth » Fri Aug 24, 2018 5:15 am

DTalos wrote:
Fri Aug 24, 2018 1:58 am
I have a Merrill Lynch account, not Merrill Edge.
Sorry about that. The options you listed are also available through Merrill Edge.

I just did a lot of searching trying to find automatic sweep money market funds for Merrill Lynch accounts, and found this article partially behind a paywall indicating there may not be any very soon, at least for new accounts: https://www.google.com/amp/s/www.wsj.co ... 1534880179

As far as the question about risk of Preferred Deposit, with so many FDIC insured online savings accounts paying close to and some over 2% currently, it sounds fairly average to me.

DTalos
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Joined: Wed Apr 10, 2013 7:59 pm

Re: Merrill Lynch Preferred Deposit

Post by DTalos » Sun Aug 26, 2018 1:44 am

I don't understand why the Cash Management Account pays .33% interest, yet the Preferred Deposit Account pays 1.56% interest and the latter is FDIC insured.

mega317
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Re: Merrill Lynch Preferred Deposit

Post by mega317 » Sun Aug 26, 2018 7:47 am

One catch I can think of is the advisor has you on the phone to try to talk you into doing something more lucrative for him or her with the money. You are aware that you can get higher rates with FDIC, right?

DTalos
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Re: Merrill Lynch Preferred Deposit

Post by DTalos » Thu Sep 06, 2018 2:37 pm

I just looked at my statement and read that the cash management account is FDIC insured, but not SIPC insured. So, if both accounts are FDIC insured, what's the catch, other than having to contact the advisor for deposits and withdrawals?

megabad
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Re: Merrill Lynch Preferred Deposit

Post by megabad » Thu Sep 06, 2018 4:53 pm

DTalos wrote:
Thu Sep 06, 2018 2:37 pm
I just looked at my statement and read that the cash management account is FDIC insured, but not SIPC insured. So, if both accounts are FDIC insured, what's the catch, other than having to contact the advisor for deposits and withdrawals?
I have no experience with ML specifically but it appears you have outlined the extra step needed. If this is truly a bank account, you may not be able to freely move money between the two without ACH (slow). SIPC not relevant for bank accounts since no brokerage is involved. Since neither of these accounts serve a purpose to me other than a short term sweep account, the interest rate is not relevant in my mind. Actually, I would probably want a lower interest rate in my sweep account to avoid gains.

kevdude
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Re: Merrill Lynch Preferred Deposit

Post by kevdude » Thu Sep 13, 2018 8:55 pm

Interesting that the rate thru ML is 1.56%. We use Merrill Edge and the rate for their Preferred Deposit is 1.82%. It is FDIC insured up to $250k, but we do need to talk to a rep in order to move money in and out of it. The initial minimum is $100k, but it can drop below that. I'm not sure if there is a minimum number of days it has to be at/above the $100k before it can drop below.

FlamingoTime
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Re: Merrill Lynch Preferred Deposit

Post by FlamingoTime » Tue Oct 09, 2018 11:41 am

I'm in the process of opening a Merrill Edge account, mainly to maintain my Bank of America Platinum Honors perks. I was told by the Rep that there is no minimum time that the cash has to stay in the Preferred Deposit account after the minimum initial deposit of at least $100,000. The Preferred Deposit account is currently paying 1.97% interest. I was going to purchase some short term brokered CD's, but I'm now thinking perhaps I will keep it liquid until December to see what rates do.

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