Best Interest Rates on Cash – March 2019

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Here’s my monthly roundup of the best interest rates on cash for March 2019, roughly sorted from shortest to longest maturities. 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 3/4/19.

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.

  • Redneck Bank offers 2.50% APY on balances up to $50,000. CIT Bank Savings Builder is now up to 2.45% APY with a $100 monthly deposit (with no balance limit). There are several other established high-yield savings accounts at 2% APY and up.
  • Got a lot of friends or followers? You can 4.30% APY on up to $50,000 for 30 days via the Empower app, plus another 30 days for each friend that you refer to the. First month is free + 11 referrals = 4.30% APY for a year.

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.

  • Purepoint Financial has a 13-month No Penalty CD at 2.60% APY with a $500 minimum deposit. Marcus Bank 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit, Ally Bank 11-month No Penalty CD at 2.30% APY with a $25k+ minimum, and CIT Bank 11-month No Penalty CD at 2.05% APY with a $1,000 minimum. 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. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Hyperion Bank has a 13-month CD at 3.20% APY ($500 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 money 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 2.46% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.34%. 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 2.71% SEC Yield ($3,000 min) and 2.81% 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 2.87% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.93% 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 3/4/19, a 4-week T-Bill had the equivalent of 2.44% annualized interest and a 52-week T-Bill had the equivalent of 2.54% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.30% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.21% 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 2018 and April 2019 will earn a 2.82% 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 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 or 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, either.

  • The best one right now 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. The APY goes down to 0.05% APY and they charge you a $5 monthly fee if you miss out on the requirements. Find a local 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 1.60% 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.

  • Hyperion Bank has a 19-month CD at 3.50% APY ($500 minimum) with an early withdrawal penalty of 6 months of interest.
  • Mountain America Credit Union has the following certificate rate: 2-year at 3.25% APY 3-year at 3.35% APY, 4-year at 3.25% APY, 5-year at 3.51% APY ($500 minimum deposit). MACU can be joined via a partner organization for a one-time $5 fee, usually right on the online application. Note: The 2-year and 3-year certificates have an early withdrawal penalty of 180 days of interest, and the 4-year and 5-year certificates have an early withdrawal penalty of a full year (!) of interest.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.60% APY and a 5-year non-callable CD at 3.00% 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 fixed early withdrawal penalties. As of this writing, Vanguard is showing a 10-year non-callable CD at 3.25% APY. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a 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 long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. As of 3/4/19, the 20-year Treasury Bond rate was 2.93%.

All rates were checked as of 3/4/19.



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Comments

  1. Are bank rates going to remain generally flat now since the Fed has changed their tune?

  2. Michael says:

    Ten years after the financial crises we are still living under the tyranny of emergency monetary policy. Five rate hikes have taken us from nothing to almost nothing and now CD rates have collapsed again. Who are the beneficiaries of this Financial Terrorism and who are the losers? Just look in the mirror for that answer.

    • I felt this way for awhile.. but have recently changed my tune. Sure, 2.5% feels like nothing using history as a baseline, but compared to other countries 2.5% is significant. The UK, Germany, and Japan 10 year rates are 1.4, .0.4, and 0.1 percent respectively.

  3. Be careful about Mountain America Credit Union. They do a bait and switch. You can’t complete the process online and will get a totally different CD rate and penalty when your CDs start.

    • What was their bait and switch? I recently opened an account with them, and did not encounter that. Opening an account was slower than any other financial institution I’ve dealt with, but I’m pretty sure their rates have only gone up in the past 4 months. It took almost 3 weeks for me to get my account opened, but I probably could have sped it up if I kept contacting them every day. (They required that all of my online application be verified by phone, which was a bit weird.)

  4. For the Hyperion Bank Special 13 month 3.2% promo rate, you need to have your app submitted by 3/6 6PM EST and funded by 3/13 6PM EST. They told me they would not be flexible on these deadlines.

  5. WireLend says:

    Make your money work for you. Always great advice and thanks for the research on where to get the best interest rates.

  6. Jonathan, in the past it seems like you’ve normally included a blurb about how you use Ally as your default/hub/main account, because of its history of consistently solid rates and non-weaseliness.

    Is this no longer the case, or is it just something you’re not bothering to mention anymore? I ask, obviously, out of curiosity as to whether you’ve found something you like more for your primary hub/FDIC-insured liquid savings vehicle.

    • Ally is still my primary hub. I haven’t found any other bank that is so reliable in terms of in/out transfers. (They may exist, but I haven’t found one.) I like that Ally tells me upfront exactly what day the cash will leave, and what day it will arrive. Since I’ve built a history with them, they also let me have 1-day transfers almost all the time.

      I just took it out since this post is about best rates of the month, and I figured I’d just mention Ally when it did have a top rate. Plus, it saved some space as this list is getting rather long.

      • James N says:

        Yeah they really are great in that regard. Makes sense why you’d take it out — thanks for reassuring me (:

  7. How do you feel about offers to open up a checking account to get a bonus? I think you posted about it once before.

    HSBC sent me a mailing advertising a $375 bonus for opening a new account and maintaining $10,000 for 90 days, with the wrinkle that you move that same $10,000 in a 12-month CD for 2.5%. So you make $625 for a year, or the equivalent of 6.25%.

  8. The I bonds are a great deal, and with this being tax time, if you get a tax return, you can get that in I bonds even if you max out the annual purchase of $10,000: https://www.treasurydirect.gov/news/pressroom/pressroom_purlim0112.htm . With the tax return, you can take out an additional $5,000.

    I am a fan of I bonds for most of our emergency fund, and well, if you are too, then I hope this helps you out.

  9. Has anyone looked at Varo? Rewards banking app type setup. 2.12% that goes up to 2.80% if you have a $1,000/month direct deposit and 5 monthly debit card uses. Wondering if the direct deposit could be from another bank?

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