Bank of America Free Museum Tickets 2019 Dates (+ New Holiday Dates)

Posted on December 18, 2019 // 6 Comments

(Update: BofA has added an additional six days of free museum admission in 2019, from 12/26-12/31. In case you need something extra and no-cost to do during the winter break! I just went back to the Thinkery in Austin, TX again recently and it was awesome again but those admissions quickly added up for an entire family.)

bofa_musBank of America is running their Museums on Us program again for 2019, which offers cardholders free admissions to 200+ museums, science centers, and botanical gardens nationwide on the first full weekend of every month (Saturday and Sunday). Each person just needs to show their valid Bank of America or Merrill Lynch credit or debit card and photo ID for free admission.

Each cardholder gets one free general admission for themselves only, so be sure everyone with their own cards brings them. If you have a BofA credit card, you may consider adding family members (of any age) as a free authorized user. Another option is to open a Kids Savings Account with no monthly fee and also comes with a debit card. You may need to open this in a physical branch.

2019 Calendar Dates (Check specific museum for hours)

  • January 5th & 6th
  • February 2nd & 3rd
  • March 2nd & 3rd
  • April 6th & 7th
  • May 4th & 5th
  • June 1st & 2nd
  • July 6th & 7th
  • August 3rd & 4th
  • September 7th & 8th
  • October 5th & 6th
  • November 2nd & 3rd
  • December 7th & 8th

Here is the full list of participating locations [pdf]. One of the available museums is the Thinkery in Austin, Texas. We found it to be a fun and interactive children’s science center. The admission was $12 per person including kids (23 months and under free), which means this could have saved our family of five $60 for that one day. I’ve seen other museums on their list with $20 admission prices.

While I wouldn’t open a new bank or credit card account for this feature, it is a nice perk if you already have such accounts. You can also sign-up for a free text reminder before each free weekend. I signed up and haven’t gotten any spam texts from BofA, just the reminders.

Filed Under: Banking, Credit Cards //

Keep or Close Old Bank Accounts? How To Manage Multiple Bank Accounts

Posted on December 12, 2019 // 12 Comments

In 2019, I opened new accounts at the following banks and credit unions in order to earn higher interest on my cash reserves. Some of the offers are now expired, but the idea is to show you that I do accumulate new accounts every year:

For the most part, I keep these new accounts. I also profited from these promotions via accounts I opened prior to 2019:

I’ve gotten a few questions about what I do with all of these accounts. Do I keep them forever? Close them immediately? Here’s my thought process.

Opening new accounts. In general, I will consider opening a new bank account or credit union account if the following conditions are met: Is the net benefit is roughly $100 or higher? Are the monthly fees avoidable? Is my money not already tied up elsewhere? Does it incur a hard credit check upon opening? Most banks do not perform a hard credit check for new accounts. Many credit unions do, however, as their business model is strongly dependent on lending between members. This used to matter more when you could open 20 credit cards in a year and thus you’d want to avoid having too many inquiries on your report, but nowadays the credit card issuers have limits based specifically on your credit card history and less about your number of inquiries.

However, a lot of it also depends on soft factors. Does it seem like it will be a hassle to collect the bonus? Does this bank/CU offer a history of competitive rates and offers? Does it have a reputation for good customer service?

For inactive bank accounts that you don’t care about. For a bank that is no longer offering me something useful and doesn’t look like it will in the future, I will set it to paperless statements, remove all external bank account links, and withdraw all my money. Usually, if there is no activity and $0.00 inside for over a year, the bank will quietly close the account for me. If not, there is minimal ongoing mental load and I’ll usually just let it sit idle indefinitely. If the account charges a monthly fee or somehow causes me hassle, I will go ahead and close it manually.

For inactive bank accounts that you want to keep open. For a bank where I don’t keep my cash there anymore, but I still want to keep it open in case the interest rate improves, a future promotion pops up, or to maintain a perk like free notary service, I will keep at least $10 in the account and also make a $1 in/out transaction once every 12 months. This keeps the account active so that they won’t close it without at least some sort of warning.

Finally, I track all my bank accounts using Mint and Personal Capital. I also use a password manager to keep complex, distinct passwords at each financial institution. Enable two-factor authentication where available.

By monitoring all of my open accounts using such services, I help guarantee that I will stay well within the 60-day window provided by Regulation E to notify the bank of any unauthorized activity. If you lose your debit card (“access device”) and report it lost or stolen no more than two days after becoming aware of the theft, your liability is limited to $50. If you experience an unauthorized ACH transfer, you must report it within 60 days of the statement. Here’s an example from ConsumerFinance.gov:

For example, a consumer’s account is electronically debited for $200 without the consumer’s authorization and by means other than the consumer’s access device. If the consumer notifies the institution within 60 days of the transmittal of the periodic statement that shows the unauthorized transfer, the consumer has no liability. However, if in addition to the $200, the consumer’s account is debited for a $400 unauthorized transfer on the 61st day and the consumer fails to notify the institution of the first unauthorized transfer until the 62nd day, the consumer may be liable for the full $400.

Filed Under: Banking, Deals & Offers //

Best Interest Rates on Cash – December 2019

Posted on December 9, 2019 // 3 Comments

Here’s my monthly roundup of the best interest rates on cash for December 2019, roughly sorted from shortest to longest maturities. I track these rates because I keep a full 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. 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 12/9/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from 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 (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. My eBanc has a 11-month No Penalty CD at 2.00% APY with a $100,000 minimum deposit. Marcus Bank has a 7-month No Penalty CD at 1.90% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 1.90% APY with a $25,000 minimum deposit. CIT Bank has a 11-month No Penalty CD at 1.85% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Quontic Bank has a 12-month CD at 2.25% APY ($1,000 minimum).

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 1.72% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.60%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.06% SEC yield ($3,000 min) and 2.16% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.05% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.15% 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. 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 12/6/19, a 4-week T-Bill had the equivalent of 1.52% annualized interest and a 52-week T-Bill had the equivalent of 1.57% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.83% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.44% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2019 and April 2020 will earn a 2.22% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-April 2020, 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.

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 capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. 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.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, but the Orion offer is worth consideration.

  • Consumers Credit Union Free Rewards Checking (my review) has up to 5.09% APY on balances up to $10,000 if you meet make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Orion FCU Premium Checking (my review) has 3.00% APY on balances up to $15,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. Find a locally-restricted rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements, the rate won’t be nearly as high, but take a look at MemoryBank at 0.90% APY.

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.

  • You could build a CD ladder at Lafayette Federal Credit Union (LFCU) at 3.03% APY for 5-years, 2.78% APY for 4-year, 2.52% APY for 3-year, 2.27% APY for 2-year, and 2.02% APY for 1-year. As with many credit union deals, this likely won’t last long. Anyone can join this credit union via partner organization ($10 one-time fee).
  • Andrews FCU still had their special 7-year certificate at 3.05% APY. Anyone can join this credit union via partner organization.
  • 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. The rates are not competitive right now. Watch out for higher rates from callable CDs listed by Fidelity.

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. I don’t see anything noteworthy. Watch out for higher rates from callable CDs from Fidelity.
  • 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 a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 12/9/19, the 20-year Treasury Bond rate was 2.13%.

All rates were checked as of 12/9/19.

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

Andrews FCU 3-Month/84-Month Certificates at 3% APY

Posted on November 25, 2019 // 6 Comments

afcu_logo

Andrews FCU has a few special certificate rates going on right now. These aren’t my idea of doorbusters, but interest rates are low again and these do manage to break the 3% APY barrier (barely).

  • 3-Month Share Certificate at 3.01% APY ($1,000 min). This is their “Black Friday special”. Offer valid November 25, 2019 through December 6, 2019.
  • 84-Month Share Certificate at 3.05% APY ($1,000 min). The Special 84-Month Certificate has a penalty equal to 360 days of dividends.

Note that all 3-Month Certificates are automatically set to renew at the 12-Month share certificate rate and term upon maturity. You must manually tell them if you want to simply withdraw.

Please see my Andrews Federal Credit Union Application and Account Opening Review for more details on the opening process. Note that applying for this credit union will result in a hard credit inquiry. They checked my TransUnion report back in 2016.

Filed Under: Banking, Deals & Offers //

Best Interest Rates on Cash – November 2019

Posted on November 5, 2019 // 7 Comments

Here’s my monthly roundup of the best interest rates on cash for November 2019, roughly sorted from shortest to longest maturities. There was another Fed rate cut last week. I track these rates because I keep a full 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 11/5/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I include 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 (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. My eBanc has a 11-month No Penalty CD at 2.15% APY with a $10,000 minimum deposit. Marcus Bank has a 7-month No Penalty CD at 2.00% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 1.90% APY with a $25,000 minimum deposit. CIT Bank has a 11-month No Penalty CD at 1.85% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Total Direct Bank has a 12-month CD at 2.36% APY ($25,000 minimum) with an early withdrawal penalty of 3 months of interest.

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 1.85% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.76%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.09% SEC yield ($3,000 min) and 2.19% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.19% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.30% 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. 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 11/5/19, a 4-week T-Bill had the equivalent of 1.56% annualized interest and a 52-week T-Bill had the equivalent of 1.62% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.83% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.66% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between November 2019 and April 2020 will earn a 2.22% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-April 2020, 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.

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 capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. 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.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, but the Orion offer is worth consideration.

  • Consumers Credit Union Free Rewards Checking (my review) has up to 5.09% APY on balances up to $10,000 if you meet make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Orion FCU Premium Checking (my review)has 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. Find a locally-restricted rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements, the rate won’t nearly as high, but take a look at MemoryBank at 0.90% APY.

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.

  • You could build a CD ladder at Pennsylvania State Employees Credit Union (PSECU) at 3.00% APY for 5-year, 2.75% APY for 4-year, 3.25% APY for 3-year, 3.00% APY for 2-year, and 1.95% APY for 1-year. Early withdrawal penalty: Up to 2-year CD is 90 days of interest. 3 to 5 year CD is 180 days of interest. Some of these are limited-time specials. Anyone can join this credit union via partner organization ($10 one-time fee).
  • You could also build a CD ladder at current rates of First National Bank of America at 2.55% APY for 5-year, 2.50% APY for 4-year, 2.40% APY for 3-year, 2.37% APY for 2-year, and 2.35% APY for 1-year.
  • 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. The rates are not competitive right now. Watch out for higher rates from callable CDs listed by Fidelity.

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. As of this writing, I am seeing no inventory on 7-year and 10-year CDs. Watch out for higher rates from callable CDs from Fidelity.
  • 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 a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 10/2/19, the 20-year Treasury Bond rate was 1.90%.

All rates were checked as of 11/5/19.

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

Savings I Bonds November 2019 Interest Rate: 2.02% Inflation + 0.20% Fixed Rate

Posted on November 4, 2019 // Leave a Comment

sb_poster

Updated November 2019. The fixed rate will be 0.20% for I bonds issued from November 1, 2019 through April 30th, 2020. This is a drop from the previous fixed rate of 0.50%. The variable inflation-indexed rate for this 6-month period will be 2.02% (as was predicted). The total rate on any specific bond is the sum of the fixed and variable rates, changing every 6 months. If you buy a new bond in between November 2019 and April 2020, you’ll get 2.22% for the first 6 months. This isn’t that bad given the recent rate cuts. See you again in mid-April for the next early prediction for May 2020.

Original post 10/14/19:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. You could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2019 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to predict what an October 2019 savings bond purchase will yield over the next 12 months, instead of just 6 months.

New inflation rate prediction. March 2019 CPI-U was 254.202. September 2019 CPI-U was 256.759, for a semi-annual increase of 1.01%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 2.02%. You add the fixed and variable rates to get the total interest rate. If you have an older savings bond, your fixed rate may be very different than one from recent years.

Tips on purchase and redemption. You can’t redeem until 12 months have gone by, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A known “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in October 2019. If you buy before the end of October, the fixed rate portion of I-Bonds will be 0.50%. You will be guaranteed a total interest rate of 1.90% for the next 6 months (0.50 + 1.40). For the 6 months after that, the total rate will be 0.50 + 2.02 = 2.52%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on October 31st, 2019 and sell on October 1, 2020, you’ll earn a ~1.72% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you held for three months longer, you’d be looking at a ~1.89% annualized return for a 14-month holding period (assuming my math is correct). Compare with the best interest rates as of October 2019.

Buying in November 2019. If you buy in November 2019, you will get 2.02% plus a newly-set fixed rate for the first 6 months. The new fixed rate is unknown, but is loosely linked to the real yield of short-term TIPS. In the past 6 months, the 5-year TIPS yield has dropped to about 0.20% and has been close to zero. My best guess is that it will be 0.10%. Every six months, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (set at purchase) + variable rate (minimum floor of 0%).

Buy now or wait? In the short-term, these I bond rates will probably not beat a top CD. If you intend to be a long-term holder, a factor to consider is that the October fixed rate is 0.5% and that it will likely drop at least a little in November in my opinion. You may want to lock in that higher fixed rate now.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and now consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. Buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number.

For more background, see the rest of my posts on savings bonds.

[Image: 1946 Savings Bond poster from US Treasury – source]

Filed Under: Banking, Investing, Savings Bonds //

Best Interest Rates on Cash – October 2019

Posted on October 2, 2019 // 2 Comments

Here’s my monthly roundup of the best interest rates on cash for October 2019, roughly sorted from shortest to longest maturities. Rates are lower across the board due to the recent Fed rate cut. I track these rates because I keep a full 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 10/2/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you 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 (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. Marcus Bank has a 7-month No Penalty CD at 2.10% APY with a $500 minimum deposit. CIT Bank has a 11-month No Penalty CD at 2.05% APY with a $1,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Total Direct Bank has a 12-month CD at 2.50% APY ($25,000 minimum) with an early withdrawal penalty of 3 months of interest. Navy Federal Credit Union has a special 9-month CD at 2.25% APY ($1,000 minimum), but you must have a military affiliation to join (includes being a relative of a veteran). Customers Bank has 2.25% APY ($25,000 minimum) on their liquid Ascent Money Market with a rate guarantee until 6/30/2020 (almost 10 months from today).

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.00% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.94%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.16% SEC yield ($3,000 min) and 2.26% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.32% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.36% 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. 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 10/1/19, a 4-week T-Bill had the equivalent of 1.79% annualized interest and a 52-week T-Bill had the equivalent of 1.74% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.99% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.85% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, 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.

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 capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. 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.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, but the Orion offer is worth consideration.

  • Orion FCU Premium Checking has 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. Consumers Credit Union Free Rewards Checking has up to 5.09% APY on balances up to $10,000 if you meet make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Find a locally-restricted rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.15% APY.

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.

  • You could build a CD ladder at First National Bank of America at 2.70% APY for 5-year, 2.60% APY for 4-year, 2.55% APY for 3-year, 2.50% APY for 2-year, and 2.45% APY for 1-year.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3% APY, with Hiway Federal Credit Union offering 3.00% APY ($25,000 min) or 2.80% APY ($500 min) on a 5-year CD with an early withdrawal penalty of 12 months of interest. Anyone can join this credit union via partner organization Minnesota Recreation and Park Foundation ($10 fee).
  • Navy Federal Credit Union has a special 18-month cert at 2.60% APY ($1,000 minimum) and a 5-year cert at 3.00% APY, but you must have a military affiliation to join (includes being a relative of a veteran).
  • 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. The rates are not competitive right now. Watch out for higher rates from callable CDs listed by Fidelity.

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. As of this writing, I am seeing no inventory on 7-year and 10-year CDs. Watch out for higher rates from callable CDs from Fidelity.
  • 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 a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 10/2/19, the 20-year Treasury Bond rate was 1.90%.

All rates were checked as of 10/2/19.

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

Chase Sapphire Banking: $1,000 Bonus For New/Existing Customers ($75,000 Assets)

Posted on September 26, 2019 // 6 Comments

New bonus. Chase has a new $1,000 cash bonus offer if you upgrade to or open a new Sapphire Banking account. To qualify, you must transfer a total of $75,000 or more in new money or securities into eligible Chase checking, savings and/or investment accounts. You must open by 11/19/2019, complete the $75k transfer within 45 days of opening, and maintain that balance for at least 90 days from the date of funding. Chase will deposit the bonus into your new account within 10 business days after meeting the requirements.

Banks are trying to develop relationships with the “might be rich in the future” crowd instead of only courting the “really rich”. Okay, the official term is “mass affluent”. Sapphire Banking is a new brand extension of their popular Chase Sapphire line of credit cards, although you don’t need to have one to open this account.

Sapphire Banking details. This is a “premium” checking account for those that can keep $75,000 in deposits or investments in qualifying Chase accounts. If you have less than $75k in assets, then a $25 monthly fee applies. Sapphire Banking perks include:

  • No ATM fees, including rebates on fees charged by non-Chase ATMs.
  • No fees for foreign exchange (ATM/debit), outgoing wire transfers, or stop payments.
  • No fees on the first four overdrafts within 12 months.
  • Free online stock and ETF trades with You Invest by JP Morgan.
  • Access to Sapphire lounges at concerts, sports and special events, early ticket sales and premium seats.
  • $0 monthly service fee on a linked Chase Total Business Checking account.

Moving over ETFs, mutual funds, and stocks. Since investments count towards the $75,000 requirement, if you have that much in ETFs, mutual funds, or stocks at another broker, you could perform an in-kind ACAT transfer over to their discount brokerage firm You Invest. All of your tax basis information should also move over seamlessly these days. Your old broker may charge you an outgoing ACAT fee about about $75, although you might ask You Invest if they will reimburse you for this fee. This would let you avoid parking $75,000 at Chase earning nearly zero interest (okay, it’s 0.01% APY). Losing out on 2% interest on $75k works out to a rate of $125 interest per month ($1,500 per year).

Alternatively, you could move over some cash and then invest in something similar to cash. I’m not sure if You Invest will let you buy individual US Treasury bills or brokered CDs. If not, you might also consider ultra-short bond ETFs like MINT or Treasury Bill ETFs like BIL.

Bonus math. Let’s say they want you to keep your $75k there for 90 days and to be safe you keep it there for another 10 business days until you see the bonus. Let’s make that 120 total days to be conservative. Earning $1,000 over 120 days on a $75,000 balance is ~4% annualized. This is on top of any other return from your investments (T-Bill interest, etc).

This is about the highest bonus that I have seen on this account, which is good because you can only get it once per 12 month period. This includes the You Invest bonus, which would only give you $200 right now if you transferred in under $100,000. The bonus will be reported on a 1099-INT:

You can only participate in one Chase Private Client CheckingSM, Chase SapphireSM Checking or You InvestSM new money bonus in a 12 month period. Coupon is good for one time use and only one bonus per account. Bonus is considered interest and will be reported on IRS Form 1099-INT (or Form 1042-S, if applicable).

Bottom line. Chase Bank has a premium checking account tier called Sapphire Banking, targeted at the “mass affluent”. There is a new account bonus of $1,000 for both new and existing Chase bank customers if you move over $75,000 in cash and/or investment assets.

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

Reminder: Nobody Can Predict Future Interest Rates (Especially the Experts)

Posted on September 12, 2019 // 11 Comments

The financial prediction industry is simply mind-boggling to me. There is zero long-term memory or accountability. You can make all the predictions you want about the stock market, gold prices, and interest rates, and nobody remembers your bad calls. You get a contrarian call right, and all of a sudden you’re on all the TV interviews and news articles.

Allow me to remind you of what the Wall Street Journal’s panel of economists predicted in January 2019 as to what interest rates would look like the rest of the year (WSJ source). I have updated the chart with the current rates (click to enlarge). This was less than 10 months ago!

Apologies for the sloppy graphics, but you can see that 10-year rates dropped down to 2% in July, down even further to 1.5% at the beginning of September, with a slight bounce up to around 1.75% today. Not a single prediction was even close to reality.

When I was stocking up on 4% APY 5-year CDs last year, I was reading comments like “Why lock in such a low rate? You’re going to see much higher rates soon!”. Now, all of the comments are “You better lock in that 3% CD before rates drop further!”

Predicting interest rates even only as far as the next 12 months, is incredibly hard. You can’t do it reliably. Nobody can do it reliably. You might get it right, but that is called luck and not skill.

Individual investors don’t have an advantage in predicting future rates, but they do have their own set of special advantages. As an individual investor, you can purchase certificates from any FDIC-insured bank or NCUA-insured credit union if the interest rate is better than the comparable US Treasury. Over the last couple of years, I was able to buy multiple 5-year CDs at 4% APY when the 5-year Treasury was well below 3%. You have to act decisively, but any individual can do it. Pension funds and other institutional investors can’t.

I have a ladder of 5-year CDs. Each year, I buy a 5-year CD when a compelling interest rate arises. I don’t care about the rate direction, as long as I get about 1% above US Treasuries. After 5 years of doing this, you will have a ladder of CDs such that each year one CD is maturing and you can simply reinvest the funds each year. If I managed to put one year of expenses into each rung of this ladder, I now have 5 years of expenses in the bank, fully-insured and ready to go in case of financial emergency. An extra 1% on each $100,000 is $1,000 a year. That’s real money.

If this sounds like too much trouble to open accounts at multiple banks, you can always still with a Total US Bond fund (like AGG or BND). You’re essentially buying an ladder of bonds. BND has an average effective maturity of 8 years and average duration of 6 years. You might also buy it automatically inside a Vanguard Target Retirement Fund. Just keep buying it and ignore any talk about “The Fed”. Keep the chart above in your mind.

Filed Under: Banking, Behavioral Economics, Investing, Retirement //

Best Interest Rates on Cash – September 2019

Posted on September 3, 2019 // 12 Comments

Here’s my monthly roundup of the best interest rates on cash for September 2019, roughly sorted from shortest to longest maturities. I track these rates because I keep a full 12 months of expenses as a cash cushion and also invest in longer-term CDs (often at lesser-known credit unions) when they yield more than bonds. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much extra interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 9/3/19.

High-yield savings accounts
While the huge megabanks like to get away with 0.01% APY, it’s easy to open a new “piggy-back” savings account and simply move some funds over from your existing checking account. The interest rates on savings accounts can drop at any time, so I prioritize banks with a history of competitive rates. Some banks will bait you 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 (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. Marcus Bank has a 7-month No Penalty CD at 2.25% APY and a 11-month No Penalty CD at 2.20% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.20% APY with a $25,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Total Direct Bank has a 12-month CD at 2.60% APY ($25,000 minimum) with an early withdrawal penalty of 3 months of interest. Navy Federal Credit Union has a special 9-month CD at 2.50% APY ($1,000 minimum), but you must have a military affiliation to join (includes being a relative of a veteran).

Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, beware that many brokers pay out very little interest on their default cash sweep funds (and keep the difference for themselves). The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.

  • Vanguard Prime Money Market Fund currently pays an 2.12% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.08%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 2.21% SEC yield ($3,000 min) and 2.31% SEC Yield ($50,000 min). The average duration is ~1 year, so there is more interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.40% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.41% 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. 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 9/3/19, a 4-week T-Bill had the equivalent of 2.07% annualized interest and a 52-week T-Bill had the equivalent of 1.74% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 1.99% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 1.92% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

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. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.

  • “I Bonds” bought between May 2019 and October 2019 will earn a 1.90% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
  • In mid-October 2019, 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.

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 capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. 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.

  • The only notable card left in this category is Mango Money at 6% APY on up to $2,500, but there are many hoops to jump through. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. I don’t use any of these anymore, but the Orion offer is worth consideration.

  • The newest one is Orion FCU Premium Checking at 4.00% APY on balances up to $30,000 if you meet make $500+ in direct deposits and 8 debit card “signature” purchases each month. One has been around for while is the Consumers CU Free Rewards Checking at up to 5.09% APY on balances up to $10,000 if you meet make $500+ in ACH deposits, 12 debit card “signature” purchases, and spend $1,000 on their credit card each month. Find a locally-restricted rewards checking account at DepositAccounts.
  • If you’re looking for a high-interest checking account without debit card transaction requirements then the rate won’t be as high, but take a look at MemoryBank at 1.40% APY.

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.

  • You could build a CD ladder at First National Bank of America at 2.85% APY for 5-year, 2.75% APY for 4-year, 2.65% APY for 3-year, 2.60% APY for 2-year, and 2.50% APY for 1-year.
  • 5-year CD rates have been dropping at many banks and credit unions, following the overall interest rate curve. A good rate is now about 3.00% APY, with Commonwealth One Federal Credit Union offering a 5-year CD at 3.11% APY ($1,000 minimum) with an early withdrawal penalty of 180 days of interest. Higher rates with $50k an $100k deposits. Anyone can join this credit union via partner organization.
  • Navy Federal Credit Union has a special 18-month cert at 3.00% APY ($1,000 minimum) and a 5-year cert at 3.25% APY, but you must have a military affiliation to join (includes being a relative of a veteran).
  • 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. The rates are not interesting right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 1.80% APY. Watch out for higher rates from callable CDs listed by Fidelity.

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. As of this writing, I am seeing no inventory on 7-year and 10-year CDs. Watch out for higher rates from callable CDs from Fidelity.
  • 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 a sad 0.10% rate). I view this as a huge early withdrawal penalty. However, you could also view it as a hedge against prolonged deflation, but only if you can hold on for 20 years. As of 9/3/19, the 20-year Treasury Bond rate was 1.77%.

All rates were checked as of 9/3/19.

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

Capital One 360 Money Market – $500 Cash Bonus on $50,000 Deposit

Posted on August 12, 2019 // 6 Comments

Capital One is running a $500 cash bonus promotion for new 360 Money Market accountholders. Note that if you have or had an open savings product (excludes CDs) with Capital One on or after January 1, 2016, you’re ineligible for the bonus. Here are the details:

  • Open a new 360 Money Market account by 8/31/19 using promo code CASH500.
  • Deposit $50,000 or more into the account with new money from an external bank within 10 days and maintain it for the next 90 days.
  • Capital One will deposit the bonus into your account within 60 days following the 90-day period. If your account is in default, closed, or suspended, or otherwise not in good standing, you will not receive the bonus.
  • You’ll also earn their current interest rate of 2.00% APY on $10,000+ balances. No monthly fees or minimum balance requirements.

(Tip via reader Bill: The 90-day “maintain balance” period is AFTER the end of the 10-day “initial funding period”. So if you are counting from the opening day, that is a total of *100* days. You may wish to chat with Capital One to confirm the exact date.)

In terms of APY, you are getting 1% of your $50,000 deposit with a minimum holding period of 90 days. (If you deposit your money near the 10th day, then the minimum time you would have to keep your money there is still technically 90 days, but you’ll probably go over by a few days.) This works out to the equivalent of a 4% annualized yield. 2% + 4% = 6%, so you’re looking at the equivalent of a 3-month CD at 6% APY for a new money deposit of exactly $50,000. In terms of cash, your $50,000 would earn about $250 interest + $500 bonus = $750 total over 90 days.

As there is ongoing no minimum balance requirement, you can move out your money after you’ve safely cleared this 90-day holding period. Just make sure to keep your account open, perhaps with at least $10 in there to make sure they don’t close it on you. If you were lazy and left it in there for a year, that $50,000 would earn about $1,000 interest + $500 bonus = $1,500 total, or roughly 3% APY.

Bottom line. Capital One 360 Bank has a new promotion to attract new deposits – a $500 cash bonus (1%) on a $50,000 deposit for 90 to 100 days, on top of their usual interest rate (currently 2% APY). The primary drawback is that you must deposit a minimum of $50,000. If you have or had an open savings product (excludes CDs) with Capital One on or after January 1, 2016, you’re ineligible for the bonus.

Filed Under: Banking, Deals & Offers //

Safe Deposit Boxes: A Perfect Place to Store Copies Of Important Documents

Posted on August 6, 2019 // 8 Comments

The NY Times recently published an article stating Safe Deposit Boxes Aren’t Safe. I was a little disappointed in the article because it was a bit sensational, but I suppose the takeaway is important for folks that made other assumptions. A more accurate headline would be “Safe Deposit Box Contents Aren’t Insured”.

No federal laws require banks to compensate customers for lost property from a safe deposit box. Usually, you have agreed in the rental contract that that maximum liability is on the order of $1,000. Unfortunately, there have been rare cases where folks have lost the contents of your safe deposit box. Natural disasters like fire, flood, or even a movie-style bank robbery have occurred. The NYT article told the story of a man who stored $10 million of rare watches in a safe deposit box and lost them when the bank mistakenly emptied it because it thought the owner stopped paying the rental fees.

If you think about it, why would a bank agree to charge you maybe $100 a year in rental fees, but be responsible for $10 million of property? What if it was $100 million? That doesn’t sound like a good business model. How do they know what you put in there? You could put in a silver Casio and say it was a Patek Philippe. This is the domain of insurance and personal articles policies. Your homeowner’s policy may offer limited coverage on safe deposit box contents, but you can bet they won’t cover $10 million without asking a lot more questions.

Despite this lack of insurance, having access to a small box inside a bank’s vault for $30 a year can still be a great deal. Why not just store copies of valuable documents and photos? The odds of losing the contents are still quite low. Although they have little monetary value on the open market, these items are still quite valuable to me:

  • Copies of identity documents (birth certificates, marriage licenses, Social Security cards, passports)
  • Copies of real estate deeds and auto titles
  • Copies of paper savings bonds
  • Copies of mortgage and other loan documents
  • Copies of insurance policies
  • Copies of your home inventory (paper and digital)
  • Additional digital scans of above?
  • Copies of personal photos on flash drive

The idea is that the important contents of my house are consumed in a fire, I can still rebuild my life. Sometimes things get lost, and most recovery procedures work much more smoothly with a copy of the original. I like having physical documents because flash drives can fail as well.

Some people might argue to keep the original in the safe deposit box and the copies at home. That is certainly debatable. You might even keep some originals in one and the rest in the other. However, I would first make sure you have copies of all important documents in two different, secure locations.

Bottom line. The stuff in your safe deposit box isn’t insured against loss by your bank. If something has a high market value, make sure you insure it independently. Safe deposit box can still be useful for keeping copies of important documents.

Filed Under: Banking, Insurance //
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