Online high yield savings accounts
 

I was looking for a place to keep some play money cash stored where it can make interest but be accessed if needed. Local banks offered nothing other than CD's . So I looked online and found quite a few that offered decent returns .

Settled on one that offered 5.02 % yield with no fees , no minimum balance , FDIC insured with no fee debit card . Checked all the boxes for me . You guys using anything similar ? Any downsides ? I can't think of any .

Care to share what that is? 5.02% is the best I've heard.

The highest I've seen is 5%...my Credit Union is at 4% for a half year CD

Wow I totally missed that discussion . Thanks 👍

UFB Direct

Excellent. We’ve been using Marcus (Goldman Sachs) without issue, but currently at 3.75 APY. 5.02 looks better! All variable, of course. We’ve also got a few shekels with 1st Franklin Financial at 4.5, but no FDIC with them.

We've got money with Marcus as well. Guess I'll have my CFO look into the UFB Direct option.

I think they all are a moving target . And you find reviews all over the place . In my opinion a low risk crapshoot ,😋 . They are a division of Axos Bank for what that's worth .

None of the brokerage's money market funds, etc. have the FDIC protection. I've mentioned brokerage (Fidelity for me) CDs before which offer higher yields, liquidity, and have FDIC protection. I have my parents in them, but I don't currently. Same limits apply though, but through Fidelity you could purchase up to 250K each of JP Morgan, Wells Fargo, Discover, Goldman Sachs, etc. or hundreds of smaller banks' CDs and have it all protected via the FDIC. The yields will beat any other CD offerings even directly from those banks. Link it to your bank/CU account, and it's easy peasy access to higher returns.

Treasury money market funds are guaranteed by us treasury, the same people that back the FDIC. I think splitting hairs to compare the relative risk.

Your brokerage goes broke you still own your money market fund.

Treasury renegs on its obligations and we're all in it deep.

CD - sure they can be FDIC insured but they aren't liquid. Face value moves with market. CD value will drop as rates continue to climb.

I'm skeptical of the current high yield offers - they're loss leaders to attract customers. At least for the cash I keep the 0.5% difference isn't worth the hassle.

^^^^ I don't keep significant $ in savings or CDs either, and was just offering up alternatives for those seeking "something" over their brick & mortar savings acct. or CD rates. And online CDs offer a substantial return over those, even if sold before they mature..... at a fraction of what cashing in a tradional CD early will cost them.

I use T-Bills for my "savings account." If you use short term TBills online and ladder them, you can constantly have money available within a couple weeks. The money goes directly from my checking account and back in so it "feels" much like a savings account.

I divide my "cash" by 12 and invest in 13-week T-bills. I buy 4 per month for 3 months. On the 4th month, the first set matures and if I need money, I can let one or all 4 mature and the money returns to my bank account (the next month, the next set etc...ad infinitum). If not, I click on "reinvest" and only the return on the previous period goes into my checking account and the rest buys a new T-Bill to replace each.

I just reinvested 4 yesterday at 4.81%...so a $10K T-bill cost $9881.83 yesterday. In 13 weeks, it will pay automatically pay $10K (for a gain of $118.17) into my bank account unless I reinvest. If I do reinvest, only the difference between $10K and the new cost will go into my bank account (@$118.17 unless the return rate changes).

Just as an fyi, 3 and 6 month cd's (fdic insured) that one can snag via schwab/infidelity brokerage accounts are currently yielding slightly more than their t-bill counterparts. Something to consider if you live in a state that either taxes t-bill interest income same as cd interest income, or doesn't tax either....

The online CDs via brokerages have always yielded more than "regular" T-bills fwiw. If one chooses (at least with Fidelity) you could "ladder CDs" from short term to 5 years, with automatic rollovers if you wanted a hands-off approach too. Lots of ways to beat the brick & mortar offerings ..... .cause they $uck :D

What mechanism are you using to purchase the t-bills from your savings account?

I have i-bonds via treasury direct but keep procrastinating moving other money from decent high yield online savings to T-bills.

I don't actually do it from my savings account...I do it from checking (as that is the one I buy IBonds from).
I do it on TreasuryDirect...just like IBonds. It pulls the money off the account you designate the same way and sweeps it back into the same on on maturity.

If you are using the same bank account as you fund your IBonds from, just open the site and click on "BuyDirect", Then, instead of selecting "Series I" under "Savings Bonds", select "Bills - Short-term securities of 1 year or less" under "Marketable Securities".

Then click on "submit" at the bottom.
It will bring you up to a list of products (terms from 4-Week to 52 week) and issue dates. Pick the one you want and then below that, put in the purchase amount (between $100 and $10M).

Double check your "source of funds" below that and then click on "submit". You can do it as many time as you like as long as you have funds (Max is $10M). You can back out any time before you hit submit...so easy to walk through and check it out if you have an account.
You will get an email telling you that your purchase has been scheduled...and one again when the purchase is made (you will also see the money come out of your account). You can track everything you do on the site as well...just like with IBonds.

ive got one with discover, one with amex and one with synchrony.

One advantage of T-Bills right now is the short term (if you want that) inversion. You can get a great return and only tie up your money for as little as a 4 week term. 13 weeks is the sweet spot right now. I bought some 1 year CDs and started to ladder them last year and the best I could find at the time was 3.60% for a year. Since then I have only done TBills and each time I reinvested, the rate went up. The 13 week T-Bill rate has risen from 4.397 to 4.810 in the same period. When those mature, if things have not changed, I will put that in T-Bills as well.

The second advantage is no state and local taxes on the return.

So with treasurydirect upon maturity, the t-bills are automatically deposited back into the account (checking/savings) that they came from?