MMA or Savings or Cash Management

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KK0727
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MMA or Savings or Cash Management

Post by KK0727 » Wed Nov 06, 2019 12:34 pm

Hi!

So I'll get right into it : we have about $30-$40k to put / park into one of the aforementioned account-types. I'm curious to learn others' viewpoints on these modalities.

TIA! :)

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ruralavalon
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Re: MMA or Savings or Cash Management

Post by ruralavalon » Wed Nov 06, 2019 3:50 pm

Welcome to the forum :) .

KK0727 wrote:
Wed Nov 06, 2019 12:34 pm
Hi!

So I'll get right into it : we have about $30-$40k to put / park into one of the aforementioned account-types. I'm curious to learn others' viewpoints on these modalities.

TIA! :)
You say "park", is this just for a short time period? What is the intended intended eventual use a of this money? Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

I would not use a bank Money Market Account (MMA). Usually they do not give a good return compared to high yield online savings accounts (see www.bankrate.com) or a good money market fund like Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 1.84%.
Last edited by ruralavalon on Wed Nov 06, 2019 3:52 pm, edited 3 times in total.
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MotoTrojan
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Re: MMA or Savings or Cash Management

Post by MotoTrojan » Wed Nov 06, 2019 3:50 pm

What is the goal with this money? Do you need to be able to access it easily? Do you know when you'll want to access it?

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KK0727
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Re: MMA or Savings or Cash Management

Post by KK0727 » Wed Nov 06, 2019 4:18 pm

KK0727 wrote:
Wed Nov 06, 2019 12:34 pm
Hi!

So I'll get right into it : we have about $30-$40k to put / park into one of the aforementioned account-types. I'm curious to learn others' viewpoints on these modalities.

Don't need the money any time soon (but within the next 3-5 yrs.)

It's just "play" money....

TIA! :)

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Kevin M
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Re: MMA or Savings or Cash Management

Post by Kevin M » Wed Nov 06, 2019 4:27 pm

For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
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Topic Author
KK0727
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Re: MMA or Savings or Cash Management

Post by KK0727 » Wed Nov 06, 2019 4:32 pm

Kevin M wrote:
Wed Nov 06, 2019 4:27 pm
For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
How enlightening! Thank you!

Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.

I'm leaning towards the Vanguard MM; I wanted "no-risk" though....

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Kevin M
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Re: MMA or Savings or Cash Management

Post by Kevin M » Wed Nov 06, 2019 4:42 pm

KK0727 wrote:
Wed Nov 06, 2019 4:32 pm
Kevin M wrote:
Wed Nov 06, 2019 4:27 pm
For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
How enlightening! Thank you!

Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.

I'm leaning towards the Vanguard MM; I wanted "no-risk" though....
The Vanguard Treasury MM fund is about as close to no risk as you'll get, but minimum initial investment is $50K. Federal MM fund is a close second, as it holds more than 80% in Treasury Bills and other US Government obligations. I'd sleep well at night with cash in Prime MM, especially in the current environment. If the financial scenario deteriorated significantly, I might back off on Prime MM, since there are liquidity gates, etc.

You might be able to find a regular savings account at 2.3% - 2.4%--check out DepositAccounts.

Kevin
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RAchip
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Re: MMA or Savings or Cash Management

Post by RAchip » Wed Nov 06, 2019 6:32 pm

”If the financial scenario deteriorated significantly, I might back off on Prime MM, since there are liquidity gates, etc.“

Vanguard has disclosed that it has and will operate VMMXX with sufficient liquidity at all times so that the gates and fees will not be triggered. In any case, the gates and fees are good things. They essentially guarantee that you will get your money back in a financial crisis (with, at worst, a modest delay). Moreover, VMMXX is not open to institutions (only individuals) which avoids the problem of a run on the fund by huge institutional depositors.

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Kevin M
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Re: MMA or Savings or Cash Management

Post by Kevin M » Wed Nov 06, 2019 6:54 pm

RAchip wrote:
Wed Nov 06, 2019 6:32 pm
”If the financial scenario deteriorated significantly, I might back off on Prime MM, since there are liquidity gates, etc.“

Vanguard has disclosed that it has and will operate VMMXX with sufficient liquidity at all times so that the gates and fees will not be triggered.
Great, and this is one more reason not to lose sleep over holding cash in VMMXX, as long as things don't get too dicey.
RAchip wrote:
Wed Nov 06, 2019 6:32 pm
In any case, the gates and fees are good things. They essentially guarantee that you will get your money back in a financial crisis (with, at worst, a modest delay).
OK, but I'd rather not take any risk of "a modest delay" unless there's a good reason to. And the liquidity fees actually could result in you not getting all of your money back if you want your money, they've imposed a liquidity fee, and have not implemented a redemption gate. From the prospectus for Prime MM:
There are two types of liquidity fees: discretionary liquidity fees and default liquidity fees.

Liquidity fees are designed to transfer the costs of liquidating securities from shareholders who remain in the Fund to those who leave the Fund during periods when liquidity is limited.

Discretionary liquidity fee. The Fund may impose a liquidity fee of up to 2% on all redemptions in the event that the Fund’s weekly liquid assets fall below 30% of its total assets if the Board determines that it is in the best interest of the Fund. Subject to practical limitations necessary to implement the fee, the discretionary liquidity fee may be implemented the same day that the Board determines to impose a fee. Once the Fund has restored its weekly liquid assets to 30% of total assets, any liquidity fee must be suspended.

Default liquidity fee. The Fund is required to impose a liquidity fee of 1% on all redemptions in the event that the Fund’s weekly liquid assets fall below 10% of its total assets unless the Fund’s Board determines that (1) the fee is not in the best interest of the Fund or (2) a lesser/higher fee (up to 2%) is in the best interest of the Fund. A default liquidity fee is required to be implemented the business day after the Board determines to impose a fee.

In addition to, or in lieu of, the liquidity fee, the Fund is permitted to temporarily implement a redemption gate (i.e., suspend redemptions) if the Fund’s weekly liquid assets fall below 30% of its total assets. The gate could remain in effect for no longer than 10 days in any 90-day period. Once the Fund has restored its weekly liquid assets to 30% of total assets, the gate must be lifted.

Once the Fund imposes a redemption gate, then unprocessed orders to redeem or exchange will be canceled and the Fund will not accept redemption or exchange orders until the gate is no longer in effect. If you still wish to redeem or exchange once the gate is lifted, you will need to submit a new redemption or exchange request to the Fund or your financial intermediary.
I'll happily sacrifice a few basis points of yield to avoid any risk of liquidity fees or redemption gates for my most liquid assets if we start getting into anything similar to the GFC. I'll just sleep better at night. But we're nowhere close to that now.

Kevin
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BlueCable
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Re: MMA or Savings or Cash Management

Post by BlueCable » Wed Nov 06, 2019 7:01 pm

KK0727 wrote:
Wed Nov 06, 2019 4:32 pm


Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.
Could you explain this? I tried to imagine a reason you'd be apprehensive about credit unions, but I could not imagine a single reason.

Clarice
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Re: MMA or Savings or Cash Management

Post by Clarice » Wed Nov 06, 2019 7:22 pm

Those account types are all the same really. The nuances are nominal.

Topic Author
KK0727
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Re: MMA or Savings or Cash Management

Post by KK0727 » Thu Nov 07, 2019 3:14 pm

BlueCable wrote:
Wed Nov 06, 2019 7:01 pm
KK0727 wrote:
Wed Nov 06, 2019 4:32 pm


Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.
Could you explain this? I tried to imagine a reason you'd be apprehensive about credit unions, but I could not imagine a single reason.
I'm used to brick-and-mortar institutions like banks; understand how they work and how they profit. Credit Unions, not so much (but that might be for lack of research.) Online banking, I understand better.

Workable Goblin
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Re: MMA or Savings or Cash Management

Post by Workable Goblin » Thu Nov 07, 2019 3:54 pm

KK0727 wrote:
Thu Nov 07, 2019 3:14 pm
I'm used to brick-and-mortar institutions like banks; understand how they work and how they profit. Credit Unions, not so much (but that might be for lack of research.) Online banking, I understand better.
Credit unions function exactly like banks, I mean exactly. You still deposit money with them, you can still get loans from them, you still write checks; everything you do with a bank is exactly the same with a credit union, and the way it works overall is the same. The only real difference is that nominally credit unions are nonprofits owned by their depositors (instead of for-profits owned by shareholders), so theoretically they should offer somewhat better terms than regular banks. This seems to be more true for loans than it is for deposit or current accounts, though, with some notable exceptions.

Otherwise, there are some differences in what banks and credit unions call things (but they're only differences in terminology) and credit unions usually have more restrictive criteria for membership than banks (but many will allow you to join for a nominal charitable donation), but nothing structurally important.

jvini
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Re: MMA or Savings or Cash Management

Post by jvini » Thu Nov 07, 2019 4:03 pm

KK0727 wrote:
Wed Nov 06, 2019 4:32 pm
Kevin M wrote:
Wed Nov 06, 2019 4:27 pm
For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
How enlightening! Thank you!

Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.

I'm leaning towards the Vanguard MM; I wanted "no-risk" though....
I just signed up for this and am in the process of funding a 3 year CD. Fairly easy although don't expect the most modern electronic experience. That said they are pretty patient and it's a great rate. I just put about half of my bond allocation in there, the other half is in BND.

surfstar
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Re: MMA or Savings or Cash Management

Post by surfstar » Thu Nov 07, 2019 4:15 pm

2.25% up to 50k
https://allamerica.bank/personal/bankin ... t-checking

You know its better b/c its a MMMA - Mega Money Market Account ;)

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Kevin M
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Re: MMA or Savings or Cash Management

Post by Kevin M » Thu Nov 07, 2019 4:39 pm

jvini wrote:
Thu Nov 07, 2019 4:03 pm
KK0727 wrote:
Wed Nov 06, 2019 4:32 pm
Kevin M wrote:
Wed Nov 06, 2019 4:27 pm
For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
How enlightening! Thank you!

Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.

I'm leaning towards the Vanguard MM; I wanted "no-risk" though....
I just signed up for this and am in the process of funding a 3 year CD. Fairly easy although don't expect the most modern electronic experience. That said they are pretty patient and it's a great rate. I just put about half of my bond allocation in there, the other half is in BND.
I actually fine find their web interface quite usable and nice, both the application and the online account.

Kevin
Last edited by Kevin M on Thu Nov 07, 2019 6:31 pm, edited 1 time in total.
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jvini
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Re: MMA or Savings or Cash Management

Post by jvini » Thu Nov 07, 2019 4:45 pm

Kevin M wrote:
Thu Nov 07, 2019 4:39 pm
jvini wrote:
Thu Nov 07, 2019 4:03 pm
KK0727 wrote:
Wed Nov 06, 2019 4:32 pm
Kevin M wrote:
Wed Nov 06, 2019 4:27 pm
For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
How enlightening! Thank you!

Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.

I'm leaning towards the Vanguard MM; I wanted "no-risk" though....
I just signed up for this and am in the process of funding a 3 year CD. Fairly easy although don't expect the most modern electronic experience. That said they are pretty patient and it's a great rate. I just put about half of my bond allocation in there, the other half is in BND.
I actually fine their web interface quite usable and nice, both the application and the online account.

Kevin
Parts of their site don't have e signature capabilities yet. The process is easy but a bit clunky. Definitely not bad but not a great UI. Good enough though.

Topic Author
KK0727
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Re: MMA or Savings or Cash Management

Post by KK0727 » Thu Nov 07, 2019 6:32 pm

Can anyone specify for me the differences btwn a cash management account and a money market account (not fund)?

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Kevin M
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Re: MMA or Savings or Cash Management

Post by Kevin M » Thu Nov 07, 2019 6:41 pm

jvini wrote:
Thu Nov 07, 2019 4:45 pm
Kevin M wrote:
Thu Nov 07, 2019 4:39 pm
jvini wrote:
Thu Nov 07, 2019 4:03 pm
KK0727 wrote:
Wed Nov 06, 2019 4:32 pm
Kevin M wrote:
Wed Nov 06, 2019 4:27 pm
For a 3-year timeframe, a good choice would be PSECU 3-year CD at 3.25%. You'll be hard pressed to find anything better. They also have a 2-year at 3.00%, which also is hard to beat. Biggest downside is that you have to join the credit union if you're not already a member. No big deal for me, but some don't like the hassle.

For more liquidity, Vanguard money market funds are good to consider. If you pay state income tax, Federal MM could have a higher after-tax yield (ATY) for you, and if you can scrape up $50K, Treasury MM could be even better.

If you don't mind jumping through a few monthly hoops, you can earn higher than market yields on some reward checking accounts (RCAs). I'm earning 3.33% APY on up to $25K at Heritage Bank.

Check out DepositAccounts for the best deals on savings, RCAs, and CDs.

Kevin
How enlightening! Thank you!

Credit Unions are a foreign land to me and, despite me knowing better, I'm still apprehensive to put my money into them.

I'm leaning towards the Vanguard MM; I wanted "no-risk" though....
I just signed up for this and am in the process of funding a 3 year CD. Fairly easy although don't expect the most modern electronic experience. That said they are pretty patient and it's a great rate. I just put about half of my bond allocation in there, the other half is in BND.
I actually fine their web interface quite usable and nice, both the application and the online account.

Kevin
Parts of their site don't have e signature capabilities yet. The process is easy but a bit clunky. Definitely not bad but not a great UI. Good enough though.
Again, my experience is just the opposite, but I'm a member of many credit unions, so perhaps it depends what you're comparing it to.

I actually was pleasantly surprised at being able to e-sign almost everything. The only things I recall having to use paper forms for were assigning beneficiaries (they call this a "tentative trust"--a term I've never heard before) and IRA transfer form, but this is common in my experience, so not at all surprising or disappointing.

I was actually impressed that the PSECU IRA rep suggested I call the current custodian for the IRA transfer, which in my case was Vanguard, to see if they would accept a FAXed transfer form. I did, they do, and I was able to get the form from me to PSECU to Vanguard in one day. I've done many IRA transfers, and have always done everything by mail, and it typically takes 2-3 weeks to get a transfer done. This one took one week.

Back to the UI, one thing I like is that their logon screen works great with LastPass--fully automatic, no extra clicks required. Many sites require tweaking LastPass to work at all, manually clicking to select the password on a separate screen, etc. So right off the bat, I like their website for this reason--maybe this puts me in a good mood, so the rest of it seems good too. :wink:

Are you talking about the application screens or the account management screens? What specifically is the problem?

Kevin
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HeelaMonster
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Re: MMA or Savings or Cash Management

Post by HeelaMonster » Thu Nov 07, 2019 8:12 pm

Workable Goblin wrote:
Thu Nov 07, 2019 3:54 pm
KK0727 wrote:
Thu Nov 07, 2019 3:14 pm
I'm used to brick-and-mortar institutions like banks; understand how they work and how they profit. Credit Unions, not so much (but that might be for lack of research.) Online banking, I understand better.
Credit unions function exactly like banks, I mean exactly. You still deposit money with them, you can still get loans from them, you still write checks; everything you do with a bank is exactly the same with a credit union, and the way it works overall is the same. The only real difference is that nominally credit unions are nonprofits owned by their depositors (instead of for-profits owned by shareholders), so theoretically they should offer somewhat better terms than regular banks. This seems to be more true for loans than it is for deposit or current accounts, though, with some notable exceptions.

Otherwise, there are some differences in what banks and credit unions call things (but they're only differences in terminology) and credit unions usually have more restrictive criteria for membership than banks (but many will allow you to join for a nominal charitable donation), but nothing structurally important.
All of this. While I did just join PSECU, to take advantage of the CD rates referenced above, that was my first "long distance" experience with a credit union. All of our banking for the past 40 years has been done at local CUs, and they were (are) very much brick-and-mortar, with more branches and better accessibility than most banks. As noted, they tend to have better rates. To be honest, I have always viewed CUs as safer than commercial banks, precisely because they are owned by and responsible to their members. Sort of like Vanguard, in that respect.

Julieta7
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Re: MMA or Savings or Cash Management

Post by Julieta7 » Thu Nov 07, 2019 9:42 pm

Very impressed with the application process at PSECU, their web interface and customer service. I applied on Friday and received a "welcome" letter via email on Tuesday. The only glitch was inability to attach jpegs of drivers license and address verification, however a quick phone call to a rep and problem solved, email was sent and I called to assure the application was complete. They verified that I would receive confirmation the next day. Highly recommend this credit union for their ease of application and top notch representatives. There is also a chat line which I used to verify that a $25 balance in the checking share account would assure no overdrafts. I only waited about 5 minutes to reach a representative each time I contacted them.

I thank all the Bogleheads for their kindly assistance on this topic. I read all the comments and took all the advice of those who applied earlier.

BlueCable
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Re: MMA or Savings or Cash Management

Post by BlueCable » Fri Nov 08, 2019 5:47 am

KK0727 wrote:
Thu Nov 07, 2019 3:14 pm

I'm used to brick-and-mortar institutions like banks; understand how they work and how they profit. Credit Unions, not so much (but that might be for lack of research.) Online banking, I understand better.
My credit unions are all brick and mortar.

Vanguard is owned by its fundholders. Similarly, a credit union is owned by its members/depositers. They are not obscure, opaque institutions.

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