Savings accounts paying interest again

[BehindBlueI's]

I mentioned this in a different thread, but thought I would give it it's own topic. Some banks are still paying the .01% APR (looking at you USAA) or other pittances, but there's some decent rates out there again. I just got this from Bask Bank:

The annual percentage yield you are earning on your Bask Interest Savings Account has been increased from 4.15% to 4.25% APY

Bask is part of a Texas based company and is a very very no frills online only bank. You get nothing but a bank account. No ATM access, no debit card, no online bill pay, etc. You get a bucket to put money in from another savings account at a different bank. This means Bask can't be your only bank, but it's a good place to park an emergency fund or the like. Transferring money *in* takes 4-5 days, transferring it *out* has been in 48 hours or less in my experience. There's a limit to how much you can transfer in a day, $30k I think, as an anti-fraud measure but you can transfer out as much as you like.

You can also open an account that pays in airline miles instead of cash, currently 2 American Airlines miles per dollar per year. Note you will get a tax documents for the equivalent cash value, though.

There's a few better offers on CDs right now, and I-bonds are still paying more, but this is a very good option for money you want liquid at very short notice IMO.

 

[wtburnette]

I'm curious how the economy can be getting worse and worse, but suddenly you can earn better interest on checking and savings accounts. It's a bit mind boggling to me. I completely understood it under Trump when the economy was going gangbusters, but now that we seem to be teetering on a cliff?

And yes, I've seen this as the credit union associated with my employer and Credit Karma savings recently announced better rates.

 

[Nugget]

I'm curious how the economy can be getting worse and worse, but suddenly you can earn better interest on checking and savings accounts. It's a bit mind boggling to me. I completely understood it under Trump when the economy was going gangbusters, but now that we seem to be teetering on a cliff?

In case that isn't a rhetorical question...

The higher interest rates being paid by banks is a signal that they are also likely charging their borrowers higher interest. The banks are making a nice spread on their loans, and need people to give them more deposits that they can in turn loan to borrowers. Banks love these times, because they typically widen the spread they make.

When businesses and individuals pay higher interest rates on loans, they have less money for luxury items, R&D, capital expenditures, rent, benefits, etc. Higher rates may not be an indicator that the economy has gotten worse, but could be an indication that it will.

 

[shibumiseeker]

Ahh, when I first became financially aware CDs were paying 8-9%. Of course mortgage rates were 10.9. Student loans were 2-3. I knew people maxed out student loans, put the excess in savings and paid off when they graduated.

This is why most of my money has always gone to real property of some sort.

 

[cg21]

Maybe a thread jack maybe not …. I apologize in advance. I figure this thread will attract the financially savvy amongst us.
If looking into a product for a young child as a long term investment strategy where would you park the money? (10 years min) very open minded… gold silver real estate weather balloons cars guns

 

[shibumiseeker]

In case that isn't a rhetorical question... The higher interest rates being paid by banks is a signal that they are also likely charging their borrowers higher interest. The banks are making a nice spread on their loans, and need people to give them more deposits that they can in turn loan to borrowers. Banks love these times, because they typical widen the spread they make.

When businesses and individuals pay higher interest rates on loans, they have less money for luxury items, R&D, capital expenditures, rent, benefits, etc. Higher rates may not be an indicator that the economy has gotten worse, but could be an indication that it will.

This.

Another reason I prefer real property is that it’s harder for the rich to profit from me.

 

[SAILORGOLF46]

Several Central Indiana banks and credit unions are offering short term CD's in the 4% range.

 

[Nugget]

Maybe a thread jack maybe not …. I apologize in advance. I figure this thread will attract the financially savvy amongst us.
If looking into a product for a young child as a long term investment strategy where would you park the money? (10 years min) very open minded… gold silver real estate weather balloons cars guns

If it's meant to pay for college, look into 529 accounts. I don't have kids, so I'm not familiar with 529s, but I believe it has tax advantages. Once the money is in a 529, what you invest it in would really depend on your risk tolerance. A broad market, low fee S&P index fund would probably be a good choice if you're looking at 10+ years. The lower risk, low reward option would be a 5 year cd from a place like Ally currently paying 4.25% or a 10 year treasury from the US government on Treasury Direct. All that being said, I am hearing good things about weather balloons lately...

Disclaimer: This is a gun forum, I'm not a licensed investment advisor, don't take advice from strangers on the internet, do your own research, YMMV, etc.

 

[BehindBlueI's]

I'm curious how the economy can be getting worse and worse, but suddenly you can earn better interest on checking and savings accounts.

Supply & Demand.

Remember your money doesn't sit in a bucket, the bank uses it to make money on your money. Read this first: https://www.investopedia.com/ask/answers/072815/why-do-commercial-banks-borrow-federal-reserve.asp and now this: https://www.investopedia.com/terms/f/federalfundsrate.asp

Since the Great Recession circa 2008, the federal reserve has been lending money to banks at basically 0%. Now it's back over 4%, territory it hasn't seen in 18 years. The Federal Funds Rate is 4.58% as of Friday.

In the US, both consumer and business debt has continued to rise. Demand for loans has not slowed across the broad market place of money lending, though it has slowed in certain segments. The return on those loans is increasing, given that mortgages are around 7% again, car loans are higher, etc. Cash reserves must still be maintained by post-Depression era laws (to prevent bank runs, system collapse, etc). Gov't loans and interbank loans rates are now going up, so banks who want to attract more deposits need to sweeten the pot for individual depositors.

 

[BehindBlueI's]

Maybe a thread jack maybe not …. I apologize in advance. I figure this thread will attract the financially savvy amongst us.
If looking into a product for a young child as a long term investment strategy where would you park the money? (10 years min) very open minded… gold silver real estate weather balloons cars guns

I used medium risk growth stock mutual funds, and then as my son got closer to college age started moving them to more cash/bond based investments. If you're in Indiana you can make up for a lot of the risk with tax incentives by using an Indiana approved 529. IIRC, it's a $1k tax rebate for $5k invested, so 20% return right out the gate. Collegechoicedirect.com was the one I used.

 

[Chalky]

Money market funds are another option to consider vs savings accounts or CDs. SWVXX for example, is paying 4.29% last I checked and dividends are paid monthly. Obviously not FDIC insured, but not locked in like a CD. Shares are always $1.00 so buy or sell as you want and they settle pretty quickly, a day or two. Decent and flexible way to park some money imo.

 

[DCR]

As long as you're looking at CDs, might as well compare them to T-Bills. 1mo=4.5%, 3mo=4.6%, 1yr=4.8%.
Current rate for I-bonds is 6.89%

 

[Sigblitz]

I have my accounts split between Ball and Mason.

 

[BehindBlueI's]

I have my accounts split between Ball and Mason.

Watch out for the Crayton boys.

 

[gassprint1]

To get these higher intrest rates ...you guys are leaving out the fact that a certain amount of money has to be deposited which is usually well over 10k.

 

[Nugget]

To get these higher intrest rates ...you guys are leaving out the fact that a certain amount of money has to be deposited which is usually well over 10k.

Ally has zero minimum for its accounts and CDs. Rates aren't quite as high as some others mentioned here, but 3.4% for a savings account and 4.6% for a 13mo CD are at least competitive. And I don't believe there's a minimum to buy notes or bonds thru Treasury Direct, though there are annual limits on certain items (i.e. the I Bonds mentioned by DCR).

 

[DCR]

T-Bills come in $1000 denominations.
You didn't mention your risk tolerance, but without looking I think you stated you wanted suggestions for a long term savings account. And you were looking for someone with investment savvy.

Get the T-Bills and also get a small portion of your investment in SPY (the S&P ETF). Over any 10 year period, SPY outperforms any savings acct. Yes it tanked 60% in 2008 and took 4 years to recover, but you have 10 years and in the following 10 years it more than tripled. You decide what the ratio is -- say 80% T-Bills, 20% SPY -- depending on your risk tolerance. Do whatever allows you to sleep at night. You can buy both through any broker.

 

[BehindBlueI's]

To get these higher intrest rates ...you guys are leaving out the fact that a certain amount of money has to be deposited which is usually well over 10k.

I left out the "fact" because it's wrong. There's no minimum with Bask. The Navy Federal CD has a $50 minimum.

 

[BE Mike]

Last Friday, I tried to call the local branch of the bank I have dealt with for over 20 years. I have a CD there which was only drawing .5%. Unfortunately, these days, with companies trying to cut costs, I cannot call my local branch directly, as in the past. I got the central switchboard who connected me with different branch where they know me. I asked if I could get a better rate on my CD. The lady said that I could not. I could only get .1%. I contacted USAA and they told me how to go about transferring my CD to them. My second call to my bank's central switchboard got me transferred to my local branch. When I told the lady there that I wanted to cash in my CD and put it in my checking account so I could obtain a CD from USAA, the lady at my branch, asked what interest rates that USAA was paying. When I told her, she said that they would hate to lose me as a customer and if I would give her a couple of minutes to check, she thought my bank could match USAA. In about 2 minutes, she called me back and quoted me a better rate and that I would have no penalty to pay for transferring my current CD into a new one at the much better rate. Now, this might not work if one has a CD for a couple of thousand dollars, but for a big chunk of change, it got their attention! It pays to shop around and get your money to work harder for you in these days of record inflation.

 

[BehindBlueI's]

5.00% APY with an 11-month 360 CD​

Get guaranteed returns with no minimum deposit. Lock in by 3/14/2023.

Saw this on my Capital One splash screen today.