Back when interest rates were higher, I was a “rate chaser” that was constantly shifting my cash balances to whatever promotional rate was highest. With the growing popularity of “robo-advisors” that manage your retirement portfolio using automated software, what if there was a robo-advisor for rate chasing? Instead of switching between ETFs or mutual funds, you would switch between banks.
That’s the basic idea behind MaxMyInterest.com (Max). You set a Target Value you’d like to keep in your standard “brick-and-mortar” checking account. Max will then sweep any excess funds into whatever online savings bank has the highest yield. If their rates change, Max can move your money again. If your checking account balance gets low, Max will move money back into your checking account for you. The ole’ hub and spoke graphic:
If your balance exceeds the FDIC insurance limits of $250,000 per account type, Max will move the rest into the bank with the next-highest yield, and so on. This screenshot is a bit dated, but it shows you the general idea for very large balances.
What banks does it work with? They officially support checking accounts from the following big banks. Their application suggests that they may support other checking accounts. (The official list has also expanded a bit since their launch.)
- Bank of America
- First Republic Bank
- Wells Fargo
- Charles Schwab Bank
- US Bank
Max will use one of these five online banks as your spokes (others may be added in the future, but only these work right now):
- Ally Bank
- American Express
- Capital One 360
- GE Capital
You can have them open already, or you can only open a few, or you can use their “common application” to apply for all of them at once.
The cost? 0.02% per quarter, or 0.08% per year.
Recap. I certainly think the idea is a neat one. But considering the cost and restrictions to the specific five online banks, the greatest appeal of MaxMyInterest is probably to people with $250,000+ balances that want the maintain the safety FDIC-insurance without having to juggle multiple accounts on their own. Money market funds in brokerage accounts are still stuck offering relatively low yields. You can get an idea of their target audience from their marketing materials. I didn’t even know Hermes sold ties, let alone that they cost $200 a pop!
For most people that don’t have that much sitting around in cash, simply picking a single online savings account with a good track record of offering high interest rates should be good enough. These days, I primarily use Ally Bank (review). At this writing (2/28/16), GE Capital is the highest out of the 5, at 1.05% while Ally offers 1.00%, so with the 0.08% fee I’m still better off on my own. With more modest balances of about $5,000 to $20,000, you can actually get higher interest rates using rewards checking accounts or prepaid-linked savings accounts, albeit with some hoops each month to jump through.