Capital One 360: 11-Month CD at 5.00% APY

Posted on February 2, 2023 // 3 Comments

Capital One 360 has a new special 11-month CD at 5.00% APY. Note that unlike many other 11-month CDs, this one does have an early withdrawal penalty of 3 months of interest, and it looks like they will eat into principal if you withdraw in the first 3 months. There are also no partial withdrawals:

Can I withdraw my money before the CD term is over?

You can always decide to withdraw your money early. However, like with any CD account, there is a penalty for withdrawal prior to the end of your CD term. For 12 month CD accounts (or less), the penalty for withdrawing early is 3 months of interest. For CD accounts longer than 12 months, the penalty for withdrawing early is 6 months of interest. You also cannot make a partial withdrawal during your CD term.

Can I lose money in a CD account?

CD accounts like a 360 CD grow at a fixed rate over a set period of time called a term. This “set it and forget it” approach, and the fact that your money is FDIC-insured up to allowable limits, make CD accounts among the lowest-risk investments and they will not lose value. The only risk of losing money is if you make an early withdrawal from your 360 CD, where you would face a penalty of 3 to 6 months of interest depending on the term of your account.

I don’t know what the future holds for interest rates, up or down, but right now it is a top rate for a CD where you are locked in for about a year. For comparison:

Thanks to the readers that sent this one in. Rates quoted as of 2/2/23.

Filed Under: Banking, Deals & Offers //

$6,000 IRA Contribution Goal 2022 Final Results: $6,259+ in Total Bonuses

Posted on February 1, 2023 // 19 Comments

2022 Year-End Update. Each year, I have a side goal of earning the equivalent of the maximum annual IRA contribution limit ($6,000 for 2022) using the profits from various finance promotions alone. In 2021, I reached $5,592 in bonuses and $2,500+ in extra interest. If you had put $6,000 into your IRA every year for the recent 10 year period (2013-2022) and invested in a simple Target Date retirement fund, you would have turned small, weekly deals into a $87,000+ nest egg.

That’s worth repeating: An extra 87 grand has been the real-world result of regularly investing $500 a month for 10 years! A couple could double these numbers.

Ground rules: Real-world results for one real person only. Following with Better Finance Info tradition, this will track my personal, real-world results. It would be quite easy to list a bunch of random promotions that add up to $6,000, but these will be promotions that I personally sign up for and complete the requirements (even though I’ve already opened so many bank accounts, credit cards, and brokerage accounts over the years). I will track my individual results only, although my partner does also participate on a more selective basis. Nearly all of them have been documented in real-time in the Deals and Offers category, Top 10 credit cards list, and brokerage bonus list.

Note: I am also excluding the $900 bonus from Chase Ink Business Cash card, since it is meant for small businesses.

2022 bonuses and promotions list. The 💵 symbol means I have received and/or cashed out the bonus successfully. The ⌛ symbol means the promo is still in progress.

Bonuses that required significant assets to max out (but not necessarily participate)

2022 final results. The total tally for bonuses not requiring significant assets was $6,259 total for 2022, which was 104% of the $6,000 annual IRA contribution limit for 2022. This excludes the three bonuses (Public, SoFi, and Ally) that paid out bigger bonuses for larger asset transfers or cash deposits. I acknowledge not everyone has enough assets to max those out, but they were certainly an efficient use of time if you did. If you add in the $3,500 that I received from those bonuses, the total would be $9,759.

Additional background stuff. This is a personal challenge/game that I like to play. I enjoy trying out new apps and services. I look for the best payoff/effort ratio for my situation; your choices won’t look like my choices. In addition, some things I will skip simply because I’ve already done them. For those new to this hobby, I would first grab the low-hanging fruit like the Chase Sapphire Preferred or the Chase Sapphire Reserve and build up a nice stash of flexible Ultimate Rewards points. After that, I would recommend looking at the Citi Premier (ThankYou points), Capital Venture X (Capital One Miles), and American Express Gold (AmEX Membership Rewards points) to jumpstart your points stashes.

These numbers included fixed bonuses for short-term asset transfers, but ignore higher interest rates overall from buying US Treasury bonds or savings bonds. They also ignore ongoing credit card purchase rewards like 2% to 2.6% cash back on all credit purchases (or airline miles or hotel points) and 5% cash back on specific categories or 1% or better cash back on rent.

This is an enjoyable and profitable hobby for me, but I don’t like to waste my time either. I look for a solid return based on the time commitment required. I tend to avoid speculative bets, bonuses that are hard to convert to real value, and anything that requires driving to stores where things may or may not be in stock. The deals that I post usually last at least a few days, but it’s a bit like value investing where you have to be ready to get off your butt and take decisive action when an opportunity shows up, because they won’t last forever.

Filed Under: Banking, Credit Cards, Deals & Offers, Goals //

Primis Bank: Premium Checking and Saving 4.35% APY (5.03% APY for Grandfathered Customers)

Posted on January 31, 2023 // 28 Comments

Update 2/17/23: Primis announced that new customers will only get 4.35% APY. Existing customers who got in while it was 5.03% APY will be grandfathered in for the time being (duration unknown).

You were one of the first – and you deserve the best.

Thanks for being one of the first customers to take advantage of our Primis Premium Checking. You’re earning the top-notch annual percentage yield (APY) of 5.03% and we’re glad you’re here.

Soon, you may see on our website that our APY is changing to 4.35%. This will not apply to you. As an early adopter of our digital platform, you will continue to earn 5.03% APY. While our rates are always subject to change, we want to currently hold your rate at the highest level possible.

Original post:

Primis Bank is relatively unknown, but is sure to gather some new deposits with their 5.03% APY Premium checking and 5.03% APY Primis savings accounts (rate as of 1/31/23).

Premium Checking details:

  • 5.03% APY as of 1/30/23.
  • No minimum balance requirement.
  • Open with just $1.
  • Must open online.
  • Free cashier’s checks and starter pack of checks.
  • Free ATM rebates.

Primis Savings details:

  • 5.03% APY as of 1/30/23.
  • No minimum balance requirement.
  • Open with just $1.

This is notable as it breaks the 5% barrier as a non-“rewards” checking account and there are no minimum debit card usage requirements. Found via DepositAcccounts. I don’t see any maximum deposit limit on the APY either, but keep in mind that there is no rate guarantee on these checking and savings so the rate can change at any time in the future.

Added: Reader Adam says to make sure to download the “Primis Digital Mobile App” and not the other one which applies to their physical branch accounts (their two systems are currently separate). You may have issues syncing your existing bank (or Personal Capital) with Primis because they try to log into the physical branch account interface and not their online-only accounts.

Filed Under: Banking, Deals & Offers //

CreditUnion1 High Yield Savings Plus $1,000 Deposit Bonus

Posted on January 24, 2023 // Leave a Comment

CreditUnion1 is offering a $1,000 bonus on its High Yield Savings Plus account. This promo requires a $100,000 minimum deposit held for 12 months, so it has a limited audience, but it does provide an opportunity to understand why some of these flat deposit bonuses aren’t as great as they might seem. Thanks to the readers that sent it in. Let’s start with the fine print:

2 This is a limited time offer available only from 1.17.23 to 3.15.23 and cannot be combined with any other offers. The $1,000 bonus (Bonus) will be deposited into your CU1 High Yield Savings Plus (HYS+) account at the end of the business day on the day you open the HYS+ account by making a minimum $100,000 deposit balance of new money from a competitor financial institution to earn dividends. The $1,000 bonus will start earning interest immediately but not be eligible for withdrawal until the account has a balance of $100,000 or greater for twelve (12) consecutive calendar months from the date of opening of the HYS+ account. Bonus is considered interest and will be reported on 1099-INT. Offer may be cancelled at any time without notice. Account Closure: If the HYS+ account is closed by the member or Credit Union1 or balance drops below $100,000 within 12 months after opening, Credit Union1 will deduct the Bonus from the HYS+ account at closing.

You must deposit a minimum of $100,000 in new money and keep it there for at least 12 months. If you go below $100,000 at any time during those 12 months, you lose the entire $1,000 bonus. Therefore, this is in effect a 12-month certificate with a early withdrawal penalty.

Separately, the base interest rate of 3.75% APY currently is not guaranteed or fixed, as it is a savings account. The rate can change at any time at their sole discretion. What if the Fed lowers rates or CU1 goes through some financial struggles and they decide to make it non-competitive a few months from now? They could drop it to 0% or 1%, but you’ll still be stuck there for 12 months if you want the $1,000 bonus. Note also that the High Yield Savings Plus account is a special account that has a minimum balance of $100,000. It’s different from their “High Yield Savings” account, so they could drop one rate and not affect the others. Not saying they will, but they could.

If the savings account rate does stay at 3.75% APY and you do get the $1,000 bonus on $100,000 held for 12 months, that is the equivalent of a 1-year CD paying 4.75% APY. That is a good rate, but many other banks and credit unions have similar term CDs at similar APYs that are guaranteed. Technically, if rates rise, you could even get more, but you could also easily get less. Personally, if I’m going to be locked in, I want a guaranteed payoff in return. I would rather have a straight-up 12-month CD paying 4.75% APY.

In the end, this is not a bad offer if the term length and deposit size fits your needs, I would personally put my money elsewhere given current options due to the way the promo is structured. Hopefully it is useful as an example of the different variables that go into comparing these offers. I have been a happy CU1 customer so far and look forward to see what other special offers they come up with.

Filed Under: Banking, Deals & Offers //

Public App Treasury Account Review: 6-Month T-Bill Interest With The Ease of a Savings Account?

Posted on January 12, 2023 // Leave a Comment

Investing app Public just announced a Treasury Account which basically lets you buy and hold 6-month US Treasury Bills in a more convenient wrapper (press release). You can invest as little as $100 and they will buy the T-Bills for you (and sell them for you if you choose to withdraw).

This is done via a partnership with Jiko. From their site:

Investments in T-bills are made in $100 increments. […] T-bills are held in custody at The Bank of New York Mellon. Proceeds are automatically reinvested (i.e., T-bills are “rolled”) at maturity. When funds are needed, T-bills are liquidated on-demand.

Right now, T-Bills yield more than most online savings accounts, and their interest is also exempt from state and local income taxes. As of 1/12/23, the rate on a 6-month T-Bill is 4.80%. This number changes every minute when the market is open like a stock, unlike the usually slower pace of weekly to monthly changes for savings accounts.

Fees. I was initially somewhat excited about this account, but what was not mentioned at all in the press release, and also put at the bottom of their fine print is the fact that they charge a fee of 0.05% per month (0.60% annualized) for this service:

In exchange for the management, trading, and custody of Treasury services, Jiko charges a flat management fee of 5 basis points per month based on the average daily balance of your Treasury account. This amount will be deducted from your Treasury account on a monthly basis. Public receives a portion of that management fee as a referral fee.

I like the idea of making T-bill purchases and sales more simple and hassle-free, but 0.60% annually is a pretty significant haircut that brings the net rate much closer to the top online savings accounts. They should really include the net interest on their rate comparison charts. I know there will also be a bid/ask spread paid if you bought the T-Bills yourself on the secondary market, but you can also buy T-Bills as new issues and hold to maturity. You could also buy shorter 4-week T-Bills.

In the end, the fees basically make this comparable to a relatively-expensive short-term Treasury mutual fund or ETF. The iShares 0-3 month T-Bill ETF (ticker SGOV) only has a 0.05% expense ratio, and you can buy that ETF from any brokerage account.

The Treasury Accounts are not live yet, but some of you may already have joined Public last year for their account transfer bonus (tiers have gotten worse since initial offering).

New customer to Public? Their referral program offers “free stock” worth between $3 and $300 if you open with a referral code and deposit $20+ (referrer also gets whatever you get). My referral code is betterfinanceinfo which you can enter on the second page of the transfer promo link above. Thanks if you use it! Alternatively, the shopping portal Swagbucks is offering $16 worth of Swagbucks points right now.

Filed Under: Banking, Deals & Offers //

Paper Savings Bonds: Pay w/ Credit Card by 1/17, Use Tax Refund To Increase Purchase Limit by $5,000

Posted on January 11, 2023 // 2 Comments

As inflation spiked, so did interest in purchasing inflation-linked Series I Savings bonds. Some folks have been going to extra lengths to increase their ability to purchase them, buying savings bonds for kids, trusts, LLCs, corporations, and so on. One of the more direct ways to increase your annual purchase limits is to use IRS Form 8888 when filing your taxes this year, which allows you to use your tax refund to purchase up to $5,000 in paper Savings Bonds each year. This is on top of the $10,000 annual limit on electronic savings bonds per person at TreasuryDirect.

Of course, that means you need to have a refund when you file your taxes. You’ll need to estimate your tax liability, and if needed, you can make an overpayment on your federal tax withholding to ensure you have the refund size you want. The deadline for 2022 4th Quarter estimated tax payments is Tuesday, January 17th, 2023.

You can make a direct payment via credit or debit card via various official processors. The processing fee starts at just 1.85%, which means that as long as you have 2% cash back rewards card or better, you can actually come out slightly ahead. Even better, paying $4,000 in taxes would satisfy most of the spending hurdles on big credit card bonuses worth well over $500. Two birds, one stone.

You can also make a direct payment via your bank account at EFTPS.gov or IRS DirectPay.

Right now is the best window, as it minimizes the time between paying the taxes and receiving your paper savings bonds. Filing your taxes earlier will also shorten that window. If you wish, you can later convert those paper savings bonds to electronic form at TreasuryDirect.

Filed Under: Banking, Credit Cards, Deals & Offers, Savings Bonds //

Best Interest Rates on Cash – January 2023

Posted on January 10, 2023 // 3 Comments

Here’s my monthly roundup of the best interest rates on cash as of January 2023, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 1/9/2023.

TL;DR: 5% on up to $25,000 from fintech. Short-term rates up a little. 4.35% APY available on liquid savings. 4.60% to 5% APY available on short-term CDs Compare against Treasury bills and bonds at every maturity (12-month near 4.70%). 6.89% Savings I Bonds can be bought with 2023 annual limits now.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5% on up to $25,000. Juno now pays 5% on all cash deposits up to $25,000 and 3% on cash deposits from $25,001 up to $250,000. No direct deposits required. If you set up direct deposit and qualify for their Metal tier, you may be able to upgrade to 5.5% interest. Please see my Juno review for details.
  • 4.00% APY on $6,000. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). Must maintain a direct deposit of $200+ every 35 days. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 4.00% APY on up to $250,000, but requires direct deposit and credit card spend. Now again accepting new applicants. The top tier requires you to maintain positive cashflow in the checking account each month, $500 in total monthly direct deposits, and $500 in credit card purchases each month. Existing customers will get up to 4% APY through April 2023, with requirements waived through March 2023. Please see my HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The leapfrogging to be the temporary “top” rate continues. MySavingsDirect at 4.35% APY. All America/Redneck Bank is at 4.25% APY for balances up to $75,000 ($500 to open, no min balance).
  • SoFi Bank is now up to 3.75% APY + up to $275 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has their own bank charter now so no longer a fintech by my definition. See details at $25 + $250 SoFi Money new account and deposit bonus.
  • There are several other established high-yield savings accounts at 3.30%+ APY that aren’t the absolute top rate, but historically do keep it relatively competitive for those that don’t want to keep switching banks.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 4.10% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 3.50% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 3.50% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • INSBANK has a 12-month certificate at 4.85% APY. $2,500 minimum. Early withdrawal penalty is 90 days of interest.
  • NASA FCU has a special 9-month certificate at 4.60% APY. $10,000 min, new money required. Anyone can join this credit union via partner organization membership.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 4.22%. Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 4.36% SEC yield ($3,000 min) and 4.46% SEC Yield ($50,000 min). The average duration is ~1 year, so there is some term interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 4.57% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 4.51% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 1/9/23, a new 4-week T-Bill had the equivalent of 4.24% annualized interest and a 52-week T-Bill had the equivalent of 4.70% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 3.94% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 3.87% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2022 and April 2023 will earn a 6.89% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • Pelican State Credi Union pays 5.11% APY on up to $10,000 if you make 15 debit card purchases, opt into receive only online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
  • All America/Redneck Bank pays 4.50% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
  • The Bank of Denver pays 4.00% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 4.00% APY on balances between $500 and up to $25,000 (3.00% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Navy Federal Credit Union has a special 15-month CD at 5% APY. Open now with just $50, but you can still add on more deposits later. You must have a military relationship to join NavyFed.
  • Lafayette Federal Credit Union has a 5-year certificate at 4.63% APY ($500 min), 4-year at 4.58% APY, 3-year at 4.52% APY, 2-year at 4.47% APY, and 1-year at 4.42% APY. They also have jumbo certificates with $100,000 minimums at even higher rates. These are competitive rates to build a CD ladder, but know that the early withdrawal penalty for the 5-year is very high at 600 days of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I don’t see any 5-year non-callable CDs. Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at (none available, non-callable) vs. 3.60% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate, currently 2.10%. As of 1/9/23, the 20-year Treasury Bond rate was 3.83%.

All rates were checked as of 1/9/2023.

Filed Under: Banking, Deals & Offers, Investing //

SkyOne FCU Savings / Checking $400 Bonus w/ Direct Deposit

Posted on December 11, 2022 // 5 Comments

SkyOne Federal Credit Union has a $100 savings + $300 checking account promotion with qualifying direct deposits. New members only. There is also a separate $300 credit card bonus. Based in Hawthorne, California, membership is open nationwide through membership in a partner organization… and they’ll pay for your membership when you join:

We’re intensely dedicated to serving our members and their communities — and no, that’s not just a line. We’re serious about that passion. That’s why we partner with organizations and non-profits that reflect the values that our members care about.

Choose any one of the organizations we’re partnered with when opening an account with us and we’ll pay your membership dues for that organization.*

They even mention a simple $25 bonus with promo code JOIN, but I think you can only use one promo code. Hat tip to reader Mary and DoC. Offer expires 12/31/22.

$100 Savings Bonus highlights:

  • Must use promo code GIFT
  • Must maintain a $1,000 balance for 3 months.
  • Max APY is 0.05% APY.

$300 Checking Bonus highlights:

  • Must use promo code GIFT
  • Must establish direct deposit within 30 days of account opening, and receive a total of $1,000+ in qualifying direct deposits per statement cycle for six consecutive cycles into your new checking account during the qualification period.
  • Max APY is 0.05% APY.
  • Minimum balance of $2,500 or have monthly aggregate deposits of $1,000 or more to avoid $5 monthly fee.

Full fine print:

1 Get $100: Open an account online from December 9, 2022, to December 31, 2022, use promo code GIFT and deposit the minimum opening balance amount of $5 into a Primary Savings Account, and maintain a $1000 balance for 3 months. This offer is intended for new members only. You are not eligible for this offer if you are a current owner of a SkyOne savings account or if you have closed an account within the last 12 months. Savings Rate is 0.05% APY. APY=Annual Percentage Yield. Rates are effective as of the last dividend declaration date. The rate is variable and may change after the account is opened. A $500 balance is required to earn dividends. Dividends are posted and compounded monthly. Fees may reduce earnings. Please refer to the Fee Schedule and All in One Disclosure for complete details. All account terms and conditions apply.

2 Get $300: Open a new SkyOne Advantage checking account online from December 9, 2022, to December 31, 2022, using promo code GIFT. within 30 days of account opening establish direct deposit and receive a total of $1,000 or more in qualifying direct deposits per statement cycle for six consecutive cycles into your new checking account during the qualification period. A qualifying direct deposit is a direct deposit of your salary, pension, Social Security, or other regular monthly income, electronically deposited through the Automated Clearing House (ACH) network to this checking account. Transfers from one account to another, mobile deposits, or deposits made at a banking location or ATM do not qualify. Advantage Checking earns dividends of .05% APY if the balance requirement is met. APY=Annual Percentage Yield. Rates are effective as of the last dividend and declaration date. The rate is variable and may change after the account is opened. A $2,500 balance is required to earn dividends. Dividends are posted and compounded monthly. Fees may reduce earnings. Please refer to the Fee Schedule and All in One Disclosure for complete details. All account terms and conditions apply. This offer is intended for new checking accounts only. Offer is not available to existing SkyOne checking account holders or those whose accounts have been closed within the last 12 months.

Thinking about this one. I like to open accounts at credit unions that show a commitment to providing competitive products in multiple areas. In addition to the checking and savings promo, SkyOne is also offering a 22-month CD at 5% APY as well as a 15-month CD at 4.50% APY with some flexible withdrawal and add-on features. Too bad their 5-year certificate rates are not nearly as competitive.

Filed Under: Banking, Deals & Offers //

Best Interest Rates on Cash – December 2022 Update

Posted on December 4, 2022 // 12 Comments

Here’s my monthly roundup of the best interest rates on cash as of December 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 12/4/2022.

TL;DR: 5% on up to $10,000 from fintech. 5% APY on up to $100k via a 7-month promo CD. 4% APY available on liquid savings. 1-year CD at 4.71% APY. 5-year CD at 4.75% APY. Compare against Treasury bills and bonds at every maturity (12-month near 4.69%). 6.89% Savings I Bonds still available if you haven’t maxed out 2022 limits.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5% on up to $10,000. Juno now pays 5% on all cash deposits up to $10,000 and 3% on cash deposits from $10,001 up to $250,000. $50 direct deposit bonus. Please see my Juno review for details.
  • 4.00% APY on $6,000 with no direct deposit requirement. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). No direct deposit required. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 4.00% APY on up to $250,000, but requires direct deposit and credit card spend. Currently a waitlist for new applicants. The top tier requires you to maintain positive cashflow in the checking account each month, $500 in total monthly direct deposits, and $500 in credit card purchases each month. Existing customers will get up to 4% APY through April 2023, with requirements waived through March 2023. Please see my updated HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The leapfrogging to be the temporary “top” rate continues. All America/Redneck Bank is at 4% APY for balances up to $75,000 ($500 to open, no min balance). Republic Bank of Chicago has a Digital Money Market account at 4.00% APY ($2,500 minimum to open and avoid monthly fee, new money only).
  • SoFi Bank is now up to 3.25% APY + up to $275 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has their own bank charter now so no longer a fintech by my definition. See details at $25 + $250 SoFi Money new account and deposit bonus.
  • There are several other established high-yield savings accounts that aren’t a top rate, but historically do keep it relatively competitive for those that don’t want to keep switching banks.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 3.65% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 3.30% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 3.05% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • My eBanc has a 12-month certificate at 4.71% APY. $5,000 minimum. Early withdrawal penalty is 90 days of interest.
  • Andrews FCU has a special 7-month certificate at 5.00% APY (offer ends 12/14). $1,000 min, $100k max. Anyone can join this credit union with a ACC membership, and ACC membership is free with promo code “Andrews”. My previous application experience.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 3.70%. Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 4.32% SEC yield ($3,000 min) and 4.42% SEC Yield ($50,000 min). The average duration is ~1 year, so there is some term interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 4.21% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 4.31% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 12/2/2022, a new 4-week T-Bill had the equivalent of 3.81% annualized interest and a 52-week T-Bill had the equivalent of 4.69% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 3.52% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 3.47% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2022 and April 2023 will earn a 6.89% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • All America/Redneck Bank pays 4.25% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
  • The Bank of Denver pays 4.00% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 3.75% APY on balances between $500 and up to $25,000 (3.00% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Bread Financial has a 5-year certificate at 4.75% APY ($1,500 min), 4-year at 4.65% APY, 3-year at 4.50% APY, 2-year at 4.50% APY, and 1-year at 4.50% APY. The early withdrawal penalty for the 5-year is 365 days of interest.
  • Department Of Commerce Federal Credit Union has a 5-year certificate at 4.70% APY ($500 min), 4-year at 4.59% APY, 3-year at 4.57% APY, 2-year at 4.61% APY, and 1-year at 4.40% APY. The early withdrawal penalty for the 5-year is 180 days of interest. Anyone can join this credit union through a $5 membership in the American Consumer Council (ACC). Enter ACC membership number on the online application.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year CD at 4.85% (non-callable). Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 5.25% (non-callable) vs. 3.56% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate currently 2.10%. As of 12/2/2022, the 20-year Treasury Bond rate was 3.79%.

All rates were checked as of 12/4/2022.

Filed Under: Banking, Deals & Offers, Investing //

Reader Question: Higher Interest Rates on Cash Without Internet Access or Cell Phone?

Posted on November 20, 2022 // 2 Comments

Here’s a reader question that I found interesting regarding “low-tech” retirees:

Hi – my 82 year-old father-in-law does not own a cell phone or a computer. He has very little “visibility” on the internet because he was a self-employed craftsman for the last 40 years. But he has money to invest, and it is sitting in a near-zero savings account. For the reasons listed above, he cannot qualify for any of the high-yield savings accounts that are out there. Their methods of identifying customers require a cell phone and some kind of documentable internet presence. Maybe he is an extreme example, but I am guessing there are others in similar situations. Any thoughts on how such a person can obtain a higher yield? Thanks.

I am empathetic to this problem as I am frequently helping older relatives navigate modern life without internet access. I’m also a fan of low-tech as a backup form of resilience and emergency preparedness. What would happen if the power went down for an extended period? What would happen if you passed away suddenly and nobody could figure out your passwords?

This question specifically addresses low interest rates on cash. It is not an accident that NONE of the three biggest banks by branch size (Bank of America, Chase, and Wells Fargo) offer a decent interest rate on their basic checking and savings accounts. (Even Citibank only offers their high-yield Accelerate savings account in states where they have no physical branches.) If they made it easy to sign up for a “high-yield savings account”, they would lose many millions in profit as all the offline folks would happily switch over their deposits earning 0.01% APY. My 94yo great-aunt will dilute her dish soap until it comes back on sale at the local grocery store. You can bet she would walk right into her local branch to sign up for a savings account paying 3% APY instead of 0.02% APY!

My first thought is that I would open an account with Fidelity Investments, as they have solid history as a traditional broker with a fully-staffed customer service phone line. Fidelity would still run just fine if there was only snail-mail envelopes and rotary phones. This Fidelity Core Positions page is a handy bookmark to see the current interest rates (screenshot below taken 11/18/2022) on the various options for your core position (default for uninvested cash). As you can see, the rates are quite competitive with online banks. Money market funds are not FDIC-insured, but they are very close (and even closer after recent regulations). I personally don’t lose a bit of sleep on my Fidelity money market funds and I also snail mail them large checks every year for my Solo 401k plan.

In addition, Fidelity has a decent branch network (“Investor Centers”) at major metro areas nationwide. Finally, Fidelity offers a solid inventory for brokered CDs and access to Treasury bills and bonds if you were willing to lock up your money for a higher rate.

Why don’t I include Vanguard? While Vanguard money market funds are excellent and usually pay even higher interest rates than Fidelity money market funds, I have heard far too many customer complaints about hour-long hold times for phone customer service. Vanguard also does not have a physical branch network. I try my best to only use Vanguard for simple index fund transactions and nothing complicated. Meanwhile, TD Ameritrade and Schwab do have some money market options and physical branches, but you must make every transaction manually while the default is a sad cash sweep program paying less than 0.50% APY. This is why I’d pick Fidelity over the others. (No, Fidelity did not pay me to say any of this. Unfortunately…)

Another option would be a local credit union that is looking for loan growth (which requires deposit growth) and thus is offering high interest rates. You would want to find one that has a physical branch in your area, and the best resource for this is DepositAccounts.com which allows you to search by zip code. Make sure to uncheck the “Web Only” box and check the “Local Branches” box.

This will hopefully let you find a physical branch nearby that will offer a decent rate. Oftentimes, the good rates only show up in certificates of deposit (which allow them to match maturities) but you could simply ladder even 1-year CDs over time to maintain a solid rate with decent liquidity. Many of the military-affiliated credit unions have a larger branch network and a history of competitive products, and some of them can be joined without military status. Good luck and thanks for helping others!

Filed Under: Banking, Family //

Stockholm Banco vs. FTX: Creating Money From Nothing in 1661 vs. 2022

Posted on November 17, 2022 // 2 Comments

As with the rest of the finance world, I’ve been following the collapse of FTX and Sam Bankman-Fried (SBF). There are many explainers (Matt Levine is my fav, but paywall?), while new details keep emerging. Crypto the newborn currency is growing up and finding out the hard way why traditional finance has all the rules it has. Central bank? FDIC insurance? Independently-audited financials? A board of directors? Not being allowed to buy personal houses with company money and having other expenses approved with emojis? 💸 From the most recent bankruptcy filing and written by the new FTX CEO of less than a week:

Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.

As a fitting follow-up to the idea of timeless financial wisdom, Doomberg (also paywall) brings us historical perspective from Stockholm Banco, which in 1661 was the first European bank to print banknotes. I found this detailed history of Stockholm Banco [pdf] on the website of Sveriges Riksbank. A single person was granted great and unsupervised power to effectively create unlimited currency. What could go wrong?

In 1656, Johan Palmstruch was finally granted the country’s first bank charter by the King of Sweden after multiple rejections. (His proposal only succeeded after he promised half the profits to the Crown.) At the time, people had to use cumbersome copper and silver currency (see above) that fluctuated in value based on industrial demand for those metals. The slab of copper above was “10 dalers” and the size of two sheets of letter paper and weighed 43 pounds!

It was the inconvenience of copper plate money that the exchange bank would remedy. Institutions and the general public could deposit their plate money in the bank in exchange for a receipt, which could then be used in transactions with other parties. This was a great relief for commerce. In the bank charter, Karl X Gustav emphasised ‘the good convenience our subjects thereby obtain, that in this way they are rid of much subtraction and addition, hauling and dragging and other trouble that the copper coin entails in its handling’. The weighty plates boded well for the success of the exchange bank.

A simple piece of paper could now represent any amount of dalers (100 daler note below):

The charter allowed the creation of an exchange bank. People could deposit their slabs of copper and silver at the bank, and instead receive a paper note promising that it could be redeemed back again at any time. Convenient! The charter also allowed the creation of a loan bank. The bank lent out money, and charged interest. The exchange bank and the loan bank were supposed to be separate. But look at all those pretty deposits just sitting there!

The charters treated the exchange bank and the loan bank as separate entities but this was not observed in practice. Although the exchange bank was no more than a depository for its clients’ money, which could be withdrawn without notice, the Bank started to lend its holdings. This state of affairs continued until 1664.

Soon the deposits were all lent out. But people still wanted loans! There was money to be made! If only there was a way to keep the whole things spinning…

Palmstruch found a solution. According to Erik Appelgren, a bank commissioner, ‘Not long afterwards, credit notes became a supplement invented by Herr Director for the shortage of money’. The bank would issue notes declaring that the holder had a claim on Stockholms Banco for a specified sum of money; the Bank would redeem the notes in exchange for cash. […]

This was a novelty in European banking. Earlier attempts to introduce notes had invariably tied them to deposits. Such certificates of deposit could be transferred as a token of value to business associates, who in turn could pass them on in the same way. In contrast, Palmstruch’s notes were not backed by particular deposits; instead, they relied on public confidence that the Bank would redeem them on demand. The system relied on the Bank’s credibility.

Success! Print as much money as you want! Expansion! Even the Crown and other high-ranking officials borrowed money.

Thanks to the credit notes, lending by the Bank ceased to be dependent on deposits. Loans could be provided for as much as the Bank was prepared to issue notes. After a tentative start, the flood gates were opened during 1663. The Crown borrowed 500,000 d km, Chancellor De la Gardie took a total of 255,000 d km for himself, the tar company borrowed 200,000 d km. More and more loans were unsecured. The business flourished; branches were opened in Abo, Falun and Goteborg; in Skane (ceded to Sweden by Denmark in 1658) the three upper Estates requested a separate branch in either Malmo or Landskrona.

What if… something spooked the customers… and people actually wanted all their deposits back?

However, reality soon caught up. On 12 September 1663, Joachim Schuttehielm, a bank secretary, reported to Palmstruch, who was away in Vasteras, that so much money had been withdrawn that the Bank had less than 4,000 d km in ready cash. To make matters worse, a depositor had announced that he wished to withdraw 10,000 d km. Schuttehielm asked Palmstruch to send money as soon as he could but the Director had nothing to send.

The bank collapsed after only six years. During the cleanup, audits revealed tons of missing money. Palmstruch was sentenced first to execution (later reduced to jail), and died only a year after his eventual release.

The Court of Appeal was not impressed. On 22 July 1668 Palmstruch was dismissed as director and sentenced to the loss of his privileges. He was banished for life and ordered to compensate within six months for ‘all the deficiency and shortage in the Bank that can demonstrably be proven’. If he failed to pay what he owed, he would be executed.

Let’s compare to the current FTX situation. Started out with a simple idea and got out of control very fast. FTX is less than 4 years old. Everyone was easily distracted by getting rich, all greased by the political donations and naming rights that spread the money around and the “effective altruism” that the media loved. The power to create unlimited currency for a while – FTX claimed billions of SRM and FTT tokens as assets – essentially things that FTX made out of thin air and knew it. Eventually, the desperate loaning out (aka stealing) of $10 billion in customer deposits to help themselves out of a jam. The panicked discovery. The coming criminal proceedings.

Individual investors are again reminded why FDIC and NCUA insurance exists – counterparty risk is real. It doesn’t matter what you own if you let the wrong place hold it for you.

Filed Under: Banking, Debt, Investing //

Best Interest Rates on Cash – November 2022 Update

Posted on November 6, 2022 // 5 Comments

Here’s my monthly roundup of the best interest rates on cash as of November 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 11/6/2022.

TL;DR: 5% on up to $10,000 from Juno. 4% APY on up to $6,000 for liquid savings at Current with no direct deposit requirement. Merchants Bank of Indiana Money Market at 3.82% APY. 1-year CD at 4.30% APY. 5-year CD at 4.42% APY. Compare against Treasury bills and bonds at every maturity (12-month near 4.75%). 6.89% Savings I Bonds still available if you haven’t maxed out 2022 limits.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5% on up to $10,000. Juno now pays 5% on all cash deposits up to $10,000 and 3% on cash deposits from $10,001 up to $250,000. $50 direct deposit bonus. Please see my Juno review for details.
  • 4.00% APY on $6,000 with no direct deposit requirement. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). No direct deposit required. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 4.00% APY on up to $250,000, but requires direct deposit and credit card spend. Currently a waitlist for new applicants. The top tier requires you to maintain positive cashflow in the checking account each month, $500 in total monthly direct deposits, and $500 in credit card purchases each month. Existing customers will get 4% APY through April 2023, with requirements waived through March 2023. Please see my updated HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 3.30% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 3.10% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 2.55% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Banesco USA has a 12-month certificate at 4.30% APY. $1,500 minimum. Early withdrawal penalty is 90 days of interest.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 3.24%. Compare with your own broker’s money market rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 4.14% SEC yield ($3,000 min) and 4.24% SEC Yield ($50,000 min). The average duration is ~1 year, so there is some term interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 3.81% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 4.09% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 11/4/2022, a new 4-week T-Bill had the equivalent of 3.66% annualized interest and a 52-week T-Bill had the equivalent of 4.77% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 2.82% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.78% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2022 and April 2023 will earn a 6.89% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • The Bank of Denver pays 4.00% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 3.75% APY on balances between $500 and up to $25,000 (3.00% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Liberty Federal Credit Union pays 3.45% APY on up to $20,000. You’ll need at least 15 debit transactions and other requirements every month.
  • Lake Michigan Credit Union pays 3.00% APY on up to $15,000. You’ll need at least 10 debit transactions and other requirements every month.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Lafayette Federal Credit Union has a a 5-year certificate at 4.42% APY ($500 min), 4-year at 4.32% APY, 3-year at 4.22% APY, 2-year at 4.11% APY, and 1-year at 3.80% APY. Early withdrawal penalty can be quite severe though, with the 5-year CD penalty being 600 days of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • First Internet Bank has a 5-year certificate at 4.39% APY ($1,000 min), 4-year at 4.33% APY, 3-year at 4.28% APY, 2-year at 4.23% APY, and 1-year at 4.18% APY. The early withdrawal penalty for the 5-year is 360 days of interest.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Inventory is limited and right now, but I see a 3-year CD at 4.85% (non-callable). Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 5.15% (non-callable) vs. 4.17% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently 0.10%). This feature is not currently interesting because as of 11/6/2022, the 20-year Treasury Bond rate was 4.49%.

All rates were checked as of 11/6/2022.

Filed Under: Banking, Deals & Offers, Investing //
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