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

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

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.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – August 2019

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Here’s my monthly roundup of the best interest rates on cash for August 2019, roughly sorted from shortest to longest maturities. The target for the Fed Funds Rate was just cut by 0.25% as of 8/1/19, so look out for small rate drops this month (probably right after I publish this post). 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 8/4/19.

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.

  • Popular Direct is at 2.55% APY with $5,000 minimum. I don’t like this bank because they always create a “new” account instead of giving old customers the higher rate automatically, but it’s the top rate. Betterment Everyday Savings just dropped to 2.44% APY with a no minimum balance requirement ($10 min to open). There are several other established high-yield savings accounts at 2% APY and up, although some have had small drops recently too.

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 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.30% APY with a $25,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Quontic Bank has a 12-month CD at 2.70% APY and $1,000 minimum with an early withdrawal penalty of 12 months (!) of interest. Andrews Federal Credit Union has a 8-month special at 2.86% APY and $1,000 minimum – anyone can join via partner organization for a small fee.

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 2.24% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.21%. 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 2.40% SEC yield ($3,000 min) and 2.50% 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 2.52% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.53% 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 8/1/19, a 4-week T-Bill had the equivalent of 2.11% annualized interest and a 52-week T-Bill had the equivalent of 1.89% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.27% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.04% 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, 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. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. 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 1.60% 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. Some CDs offer an “add-on” features that gives you the option of adding funds if rates drop. 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.

  • You could build a CD ladder at First National Bank of America at 2.90% APY for 5-year, 2.80% APY for 4-year, 2.75% APY for 3-year, 2.70% APY for 2-year, and 2.60% 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 Hiway Federal Credit Union offering 3.20% APY ($25,000 min) or 3.00% 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 5-year CD at 3.50% APY ($1,000), but you must have a military affiliation to join (includes being a relative of a veteran). NavyFed also has an 18-month CD at 3.00% APY.
  • GTE Financial Credit Union has a promotional add-on CD that allows unlimited additional funds after CD opening. You can open a 5-year CD with $500 minimum at 3.04% APY.
  • 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 fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.10% APY and a 5-year non-callable CD at 2.25% 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, I am seeing no inventory on 7-year and 10-year CDs. 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 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 deflation, but only if you can hold on for 20 years. As of 8/1/19, the 20-year Treasury Bond rate was 2.21%.

All rates were checked as of 8/4/19.



My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Betterment Everyday Savings and Checking Review: 2.44% APY (Tied to Fed Funds Rate)

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Updated. Betterment, best known for their automated portfolio management software, has added a high-yield savings product called Betterment Everyday Savings. An additional checking product is “coming soon”. This product has several unique features that makes it unlike many other savings accounts. Here are the highlights, followed by both the important pros and cons of this account.

Betterment Everyday Savings (Available Now)

  • Promotional rate of 2.44% APY (EFFR + 0.25%) if you sign up for the Everyday Checking waitlist (free)
  • Base rate of Effective Federal Funds Rate (EFFR)
  • FDIC insurance up to $1,000,000
  • No minimum balance. Minimum opening deposit is $10.
  • No monthly fees

If you are an existing Betterment client with Smart Saver, that is going away. You can move over immediately or wait to be transitioned over to this product.

Betterment Everyday Checking (Coming “Later This Year”)

  • No interest paid
  • No minimum balance
  • No monthly or maintenance fees.
  • No overdraft fees.
  • ATM fees reimbursed worldwide
  • FDIC insurance covering up to $250,000†

$1,000,000 FDIC insurance through partner banks. They can offer up to $1,000,000 in FDIC coverage because they use multiple partner banks, currently including:

  • Barclays Bank Delaware
  • Citibank, N.A.
  • Georgia Banking Company
  • Seaside National Bank & Trust
  • Valley National Bank
  • BankUnited, National Association
  • ConnectOne Bank
  • East West Bank
  • Third Coast Bank SSB

You can manually opt-out of one of these banks, for example if you already have cash with them, as to not exceed the $250,000 FDIC insurance limits at any single bank.

Interest rate is directly linked to the Effective Fed Funds Rate. The rate on Everyday Savings is variable, and will move with the effective federal funds rate (EFFR). As long as you are on the Everyday Checking waitlist, you will get the EFFR + 0.25%. As of 8/4/19, that works out to an APY of 2.44%. Your rate may move around quite frequently. Before the Fed Rate cut, it was 2.69% APY.

I view this as a good thing overall, as it’s guaranteed to be quite competitive against most non-promotional rates. It also provides more transparency and lowers the chance of a bait-and-switch to some really sad rate. However, the 0.25% boost above the EFFR is currently a waiver of their 0.25% management fee good through 2019. Being on the waitlist is free and comes with no obligation to open the account, so that’s not a big deal. However, it’s not clear if or how they will extend the waiver after that. You might need an active and open Everyday Checking account, set up direct deposit, or jump through a similar hoop.

Everyday Savings isn’t your normal bank savings account. There are some quirky things about EveryDay Savings that you should know about.

  • No joint accounts.
  • No routing number or account number, so no direct deposit or linking via other banks.
  • You can only initiate ACH transfers through Betterment, and you can only link one external bank account.
  • It’s not a “real” savings account, so there is no limit of 6 withdrawals per month.

Everyday Checking plans to offer things like direct deposit (and thus real routing and account numbers).

Bottom line. Betterment, a “robo-advisor” best known for their automated investing service, has added a high-yield savings product called Betterment Everyday Savings. There are some limitations with external bank transfers, but I do like that it has a transparent structure that links the interest rate to the Fed Funds Rate. If you sign-up on their EveryDay Checking waitlist, you can get up to 2.44% APY which is a competitive rate on liquid savings.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Marcus Bank Promotion: 1% Additional Cash Bonus up to $500 (~6% APY 3-month CD)

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Online bank Marcus (formerly Goldman Sachs Bank) has a new Cash Bonus Offer which includes 1% cash bonus (up to $500) on new deposits on top of their existing interest rate (currently 2.15% APY). Valid for both new and existing customers. Given the holding period, this roughly equates to the same total interest paid as a 3-month bank CD at 6% APY.

Here’s how it works:

  • Enroll first at the offer link and designate a specific savings account to be tracked for this promotion.
  • Deposit your new funds ($1,000 minimum) within 10 days of enrollment. Multiple transfers within that 10 days is fine, but funds must be new to Marcus Bank.
  • Maintain your balance at enrollment plus the new funds for 90 days.
  • Receive your 1% cash bonus (up to $500) on your new funds within 14 days after the 90-day period ends.

To be clear, the bonus applies to new funds added after enrollment, not your total balance. Since the 10-day clock starts when you enroll, you may consider waiting until the last day of 7/29/19 if you need some time to gather your new funds together. However, they can also revoke the offer at any time, so I wouldn’t wait any longer than necessary.

This offer is available to new and existing Marcus customers who are not currently enrolled in another Marcus bonus offer. Each customer is limited to one 1% cash back offer, which can only be applied to a single account. For eligibility purposes, each joint owner will be treated as a separate customer. For example, if you apply the bonus offer to a joint account, the remaining joint owner(s) may apply this offer to another account they own if they have not done so already.

Rough math. Given that you can an additional 1% bonus after about 3 months, the bonus itself 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 new money deposits between $1,000 and $50,000. Alternatively, if you are lazy, you could leave it in there for a year and still earn a bit over 3% APY over that year (assuming the base interest rate stays above 2%). That’s still good compared to a 12-month CD. Either way, the max benefit is $50,000 of new money held there for 90 days to earn a $500 bonus.

This combination makes it a great 3-month rate at that balance size when compared to my most recent update of best interest rates.

Should I move money out of Marcus and back in to qualify? No, it won’t make any difference. Funds deposited in your account prior to enrollment are not eligible for the cash bonus.

I am an existing customer (just recently for their expired $100 promo), and did not see a hard credit check at opening. Since I already have an account, I’ll probably be taking advantage of this one as well.

Bottom line. Marcus Bank has a new promotion to attract new money to their Online Savings Account – a 1% cash bonus (up to $500) on new deposits on top of their existing interest rates. This works out to a 3-month holding period paying roughly 6% annualized interest. You must enroll by 7/29 and transfer over new funds within 10 days of enrollment.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Simple (BBVA USA Bank) $250 Bonus for $10,000 Goals Deposit

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

(Update: Offer extended to an open date by 8/31/19, funded date by 9/16/19, and maintain date until 12/31/19. Thanks Robert for the tip.)

Simple was one of many fintech startups that tried to add fancy tech and smartphone app sprinkles to your vanilla checking account. They were acquired by the big European-based bank BBVA in 2014, but never really took off. It looks like they are making another push by adding high-yield “Protected Goals” accounts that earn 2.02% APY (as of 7/10/19) and offering additional $250 bonus if you deposit $10,000 and meet certain requirements and deadline dates:

  • Open a new Protected Goals Account by 7/31/19 4:59 PM PT.
  • Deposit(s) totaling $10,000 or more must post to the new Protected Goals Account by 8/15/19 4:59 PM PT.
  • Maintain a balance of at least $10,000 in the new Protected Goals Account through 10/31/19 4:59 PM PT.
  • Qualifying customers will receive the bonus credit to their Protected Goals Account by 11/15/19 4:59 PM PT. Accounts must be open and in good standing at the time of bonus credit.

You can earn $250 bonus for each new Individual or Shared Protected Goals Account, for a total of $500. This means a couple could both open accounts and technically earn $750 total ($250 each for two individuals, plus $250 for one shared). Protected Goals Accounts opened prior to 7/1/2019 do not qualify. FDIC-insured and all that. Thanks to commenter CM for the tip.

It looks like you’ll have to open their base checking account as well if you don’t have one already. Move money into the base checking, and then into a new Protected Goal account. Basically a 2.5% bonus on $10,000 if you keep it there for 90 days, which makes it roughly 10% APY annualized. The bonus is on top of the standard interest rate, currently 2.02% APY (as of 7/10/19). This combination makes it a great 3-month rate at that balance size when compared to my most recent update of best interest rates.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Navy Federal CD Special: 5-Year Share Certificate at 3.50% APY

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

navyfed0

New offers. Navy Federal Credit Union is the nation’s largest credit union, but is primary limited to those with a military relationship. However, their membership now includes veterans and family members of veterans. Here are their current banking specials:

  • 5-Year Certificate at 3.50% APY. $1,000 minimum. No maximum. No add-ons. Available as a Share Certificate, IRA or ESA.
  • Special EasyStart Certificate at 3.50% APY. Open with as little as $50. Make additional deposits anytime (up to $3,000). 12-month term. Certificate owner(s) age 18 and older must have Direct Deposit of Net Pay or payroll allotment and a Navy Federal checking account within 90 days of the certificate issue date.

That 5-year certificate rate would be a top rate in my Best Interest Rates on Cash – July 2019 post. Note that there is an early withdrawal penalty of 1 full year of interest (or all of the interest earned if less than 1 year old). There is no firm expiration date, and the rate can change at any time.

Navy Federal Credit Union has solid bank and loan products, including checking accounts with ATM rebates, competitive mortgage rates, and limited-time 0% balance transfer promotions. Readers have commented on their excellent customer service and the fact that they often keep and service the mortgages and other loans they originate. I would consider joining if you are eligible.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – July 2019

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Here’s my monthly roundup of the best interest rates on cash for July 2019, roughly sorted from shortest to longest maturities. Rates are dropping a bit, but it still pays to shop around. 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 7/2/19.

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.

  • Wealthfront Cash is at 2.57% APY with no minimum balance. Note that while this account is FDIC-insured, there is no routing number since your money is split amongst four banks and thus you must initiate all transfers through Wealthfront. Northpointe Bank is at 2.55% APY with $25,000 minimum (but guaranteed for 3 months). CIT Bank Savings Builder dropped to 2.30% APY with a $100 monthly deposit (no minimum balance requirement). There are several other established high-yield savings accounts at 2% APY and up, although some have had small drops recently too.

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 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.30% APY with a $25,000 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • MapleMark Bankt has a 12-month CD at 2.86% APY and $25,000 minimum with an early withdrawal penalty of 6 months of interest. Andrews Federal Credit Union has a 8-month special at 2.86% APY and $1,000 minimum – anyone can join via partner organization for a small fee.

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 2.34% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.30%. 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 2.44% SEC yield ($3,000 min) and 2.54% 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 2.63% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.60% 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 7/2/19, a 4-week T-Bill had the equivalent of 2.22% annualized interest and a 52-week T-Bill had the equivalent of 1.92% annualized interest (!).
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.27% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.19% 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 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. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. 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.

  • You could build a CD ladder at First National Bank of America at 3.15% APY for 5-year, 3.05% APY for 4-year, 2.95% APY for 3-year, 2.85% APY for 2-year, and 2.75% 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 Citizens State Bank offering 3.20% APY ($1,000 minimum) on a 5-year CD with an early withdrawal penalty of 12 months 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 fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.15% APY and a 5-year non-callable CD at 2.30% 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 offering 2.60% APY on a 10-year CD. 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 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 long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years. As of 7/2/19, the 20-year Treasury Bond rate was 2.29%.

All rates were checked as of 7/2/19.



My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Navy Federal Membership Open to Veterans and Family Members

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Navy Federal Credit Union is the nation’s largest credit union and has recently surpassed $100 billion in assets as reported by DepositAccounts. I can understand their growth, as many of their financial products have very competitive rates, including certificates of deposit specials and mortgage rates. If the recent rate drops have you looking to refinance, I would definitely compare their rates against the major rate quote sites like LendingTree, especially if you are looking for a jumbo loan or other non-standard mortgage type.

You can now join Navy Federal without serving in the military. It is true that until 2017, it was hard to become a member of Navy Federal unless you were active military, Department of Defense worker, or a military retiree. Even honorably discharged veterans couldn’t join! However, the current membership rules are more open. Here is their eligibility tool.

If you have ever served in the military, you are now eligible to join. This includes:

  • Active Duty Army, Marine Corps, Navy, Air Force or Coast Guard
  • Army or Air National Guard
  • Delayed Entry Program
  • Officer Candidate / ROTC
  • Reservist
  • Veteran, Retiree or Annuitant

Beyond that, if one of your immediate family members serves or has EVER served in the military, you are also eligible for membership. Immediate family members include:

  • Parents and grandparents
  • Children and grandchildren
  • Siblings and spouses

This applies even if they are not a NavyFed member themselves. You may need some form of identifying document that shows your family member’s military relationship. Call NavyFed at 1-888-842-6328 and they should be happy to assist you.

This change greatly opens their field of membership, which I am sure has contributed to their impressive growth in assets. We have never served, but we do have both past and current family members in the military.

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – June 2019

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Here’s my monthly roundup of the best interest rates on cash for June 2019, roughly sorted from shortest to longest maturities. Things are pretty dull this month – mostly small rate drops on CDs due to the inverted yield curve. 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 6/2/19.

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. Purepoint Financial has a 13-month No Penalty CD at 2.50% APY with a $10,000 minimum deposit. Marcus Bank 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Comenity Direct has a 12-month CD at 2.86% APY ($1,500 minimum) with an early withdrawal penalty of 6 months of interest. If you have a military relationship, Navy Federal Credit Union has a 10-month special at 2.75% APY with add-on option.

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 2.40% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.33%. 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 2.61% SEC yield ($3,000 min) and 2.71% 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 2.71% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.69% 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 6/1/19, a 4-week T-Bill had the equivalent of 2.35% annualized interest and a 52-week T-Bill had the equivalent of 2.22% 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 2.24% 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 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. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. 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.

  • Hanscom Federal Credit Union has a 19-month CD special at 3.00% APY ($1,000 minimum) with an early withdrawal penalty of 6 months of interest. WebBank has a 3-year CD at 3.00% APY ($2,500 minimum) with an early withdrawal penalty of 9 months of interest.
  • 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 3.25% APY, with Connexus Credit Union offering 3.40% APY ($5,000 minimum) on a 5-year CD with an early withdrawal penalty of 12 months of interest. Anyone can join this credit union by joining a partner organization for a $5 fee.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You must now log in to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable fixed early withdrawal penalties. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.50% APY and a 5-year non-callable CD at 2.70% 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 not showing any available 10-year CDs. 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 6/1/19, the 20-year Treasury Bond rate was 2.39%.

All rates were checked as of 6/2/19.



My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – May 2019

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

Here’s my monthly roundup of the best interest rates on cash for May 2019, roughly sorted from shortest to longest maturities. There hasn’t been much movement recently, and the rate curve is still pretty flat with long-term rates only slightly higher than short-term ones. 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 5/1/19.

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. Purepoint Financial has a 13-month No Penalty CD at 2.50% APY with a $10,000 minimum deposit. Marcus Bank 13-month No Penalty CD at 2.35% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • CD Bank has a 12-month CD at 3.00% APY ($10,000 minimum) but with a big early withdrawal penalty of 12 months of interest. If you have a military relationship, Navy Federal Credit Union has a 10-month special at 2.75% APY with add-on option.

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 2.44% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 2.36%. 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 2.64% SEC Yield ($3,000 min) and 2.74% 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 2.74% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.75% 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 5/1/19, a 4-week T-Bill had the equivalent of 2.42% annualized interest and a 52-week T-Bill had the equivalent of 2.39% 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 2.24% 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 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. There is also the TAB Bank 4% APY Checking, which I don’t like due its vague terms. 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.

  • CD Bank has an 18-month CD at 3.10% APY ($10,000 minimum) but with a big early withdrawal penalty of 12 months of interest. Hanscom Federal Credit UnionBank has a 19-month CD special at 3.00% APY ($1,000 minimum) with an early withdrawal penalty of 6 months of interest.
  • 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 3.25% APY, with First National Bank of America offering 3.35% APY on a 5-year CD with an early withdrawal penalty of 1.5 years (!) 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. Nothing special right now. As of this writing, Vanguard is showing a 2-year non-callable CD at 2.45% APY and a 5-year non-callable CD at 2.75% 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 3.00% 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 5/1/19, the 20-year Treasury Bond rate was 2.74%.

All rates were checked as of 5/1/19.



My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Savings I Bonds May 2019 Interest Rate: 1.40% Inflation + 0.50% Fixed Rate

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

sb_poster

Update 5/1/19. The fixed rate will be 0.50% for I bonds issued from May 1, 2019 through October 31st, 2019. This is the same as it was for the last 6 months. The variable inflation-indexed rate for this 6-month period will be 1.40% (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 May 2019 and October 2019, you’ll get 1.90% for the first 6 months. See you again in mid-October for the next early prediction for November 2019.

Original post 4/11/19:

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 May 2019 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a April 2019 savings bond purchase will yield over the next 12 months, instead of just 6 months.

New inflation rate prediction. September 2018 CPI-U was 252.439. March 2019 CPI-U was 254.202, for a semi-annual increase of 1.16%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 1.40%. 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 April 2019. If you buy before the end of April, the fixed rate portion of I-Bonds will be 0.50%. You will be guaranteed a total interest rate of 2.82% for the next 6 months (0.50 + 2.32). For the 6 months after that, the total rate will be 0.50 + 1.40 = 1.90%.

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 April 30th, 2019 and sell on April 1, 2020, you’ll earn a ~2.06% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. Comparing with the best interest rates as of April 2019, you can see that this is lower than a current saving rate or 12-month CD.

Buying in May 2019. If you buy in May 2019, you will get 1.40% 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 from 1% to about 0.5%. My best guess is that it will be 0.20%. 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 definitely not beat a top 12-month CD rate if bought in April, and most likely won’t if bought in May either unless inflation skyrockets. Thus, if you just want to beat the current bank rates, I Bonds are not a good short-term buy right now.

If you intend to be a long-term holder, then another factor to consider is that the April fixed rate is 0.5% and that it will likely drop at least a little in May in my opinion. You may want to lock in that higher fixed rate now.

Honestly, I am not too excited to buy either in April or May, but if I really liked the long-term advantages of savings bonds (see below), I would consider buying now in April rather than May due to my guess of a higher fixed rate. You could also wait, as things might change again during the next update in mid-October. For my own accounts, as I am now semi-retired and thus no longer a big saver looking for any tax-deferred space possible, I will probably just buy TIPS in other accounts instead since the real yield is similar.

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]

My Money Blog has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.