Internet bank experience?

[pavulon]

My local banks' savings account APYs stink. Available rates advertised for "online" banks are way, way more attractive but...internet. Anyone use online banks for this reason? Experiences? Recommendations?

Thanks in advance.

[Chocaholic]

Yes, I use Marcus (Goldman Sachs). The app is outstanding and interest rates very attractive (3.7% currently) on a basic savings acct. I screwed up and also did a 1yr CD last summer…stuck at 1.9%, but still about 10x BofA.

[The Synergizer]

Ally works really well for me.

[zakthor]

There's this great web site for financial type advice:

https://www.bogleheads.org/forum/index.php

My story:
1 We hated our bank so decided to change.
2 My wife liked the idea of internet banking because it would be 'so convenient', I'm a skeptic so I ignored her but she and the young kids setup accounts online.
3 I drove around and visited the local banks to get a feel for them. A bunch were really bad, literally fronts to a phone to call corporate. The chase bank that is 10 minutes away is a lovely 60s building with a giant redwood out front, a george tsutakawa fountain, and parking. The folks inside are helpful. We talked and I setup a brokerage account and moved enough stock there to get some sort of premium account so I did it. If I ever have a problem I go to them and sit while they call corporate to get that thing to happen.
4 From what I can tell the online banking has been a bewildering experience for my wife and kids - they're constantly on hold and messing with stuff.
5 kids old enough, have jobs, in college, they needed better banking. I opened accounts for them and their accounts are free because they're linked to me. They love it, have opened starter credit cards, etc.
6 when interest rates started rising few months ago I moved 90% of my cash to the brokerage account and bought VUSXX, the vanguard treasury money market account. Pays market rate (currently 4.58% pa), is liquid enough for me, takes 1-2 days to turn it back into cash in checking account.
7 There are internet loss leaders trying to attract your business but I'm not going to switch to an office-less unknown for 0.5%.

I really like being able to sit drinking coffee and watching the fountain while the banker tries to convince corporate to make some sort of inane change. Better them than me being on the phone at home. Weird stuff only happens every few years but when it does I'm happy to have an actual person to see.

Every year or so they politely inquire if I'm interested in their investment managers and I politely decline.

[Dantilla]

I like walking into my local bank where they know me by name.
There have been a couple instances where it has been a big advantage to look at their eyeballs face-to-face so there is no chance of being put on eternal hold, or transferred back and forth between unhelpful minions on the phone.

Big, national banks have all been difficult, where it's impossible to communicate directly with decision makers. Small, local banks have always been quick to serve.

[KFC911]

I use a credit union, but only keep a small amount in those accts... one is linked to one of my Fidelity Brokerage accts. Don't keep a lot in the money market accts there (currently over 4%), as I invest in even higher yields, but all of the CDs from 3 months to 5 yrs are above 5%.

Moving the $$$ between linked accts is easy, and the brokerage CDs (offered from many banks) have more flexibility (liquidity) and the same FDIC protections as a brick & mortar bank.

Works for me....

[Crowbob]

From where I sit, it’s waaaaay more than a .5% difference.

Though not an on-line bank, my CU is offering 13 Mo CD with apy 5.12%.

[zakthor]

Originally Posted by Crowbob

From where I sit, it’s waaaaay more than a .5% difference.

Though not an on-line bank, my CU is offering 13 Mo CD with apy 5.12%.

I'm currently getting 4.58% in vusxx and its just liquid, not locked like a cd and I'm happy the rate floats with the market.

5.12% - 4.58% = 0.54%.

[Crowbob]

OK. There is no brick and mortar bank anywhere near me with any kind of account with that kind of rate.

Might be soon though, since the Fed upped it today another 25bps.

[zakthor]

Originally Posted by Crowbob

OK. There is no brick and mortar bank anywhere near me with any kind of account with that kind of rate.

Might be soon though, since the Fed upped it today another 25bps.

I thought I was pretty clear above. Sorry it was verbose.

My checking accounts interest is so low it might as well be 0.

I moved the money from checking to a linked brokerage account, then bought vusxx fund which is almost all treasuries and returns current treasury rate which is 4.58.

If something comes up I sell what I need of vusxx and transfer it back to checking, start to finish that takes 1-2 days.

EDIT: Not to say I'm happy with this. 4.58 is still less than inflation so my purchasing power is still disappearing fast. Wish I could rewind to 3 years ago...

[Por_sha911]

Discover bank or Amex - reasonable rates and FDIC.

Beware: DON'T use Amex for CDs. The early withdrawal penalties are way out of line from anyone else.

[Mike80911]

I just moved my money to Wealthfront got a special rate of 4.55 right noe I think it is 4.3 but if you bring a new depositor over they increase that rate. I keep a small amount in a local bank with minimum balance to use the cash machine and transfer back and forth as needed. But most internet banks today have cash machine access with no fees.

[wildthing]

Marcus... still backed by a large bank, though not the highest rate out there.

[LWJ]

Hey All!
This is super useful. I am about to jump in, here is what I see:

1. Marcus has a 4.15 no penalty CD
2. Ally has a 4.25 no penalty CD
3. PNC has a savings account showing 4.30% - more research but it sounds too good to be true!

[Crowbob]

Originally Posted by LWJ

Hey All!
This is super useful. I am about to jump in, here is what I see:

1. Marcus has a 4.15 no penalty CD
2. Ally has a 4.25 no penalty CD
3. PNC has a savings account showing 4.30% - more research but it sounds too good to be true!

13, 17-week T-Bills are approaching 5.5% (currently 5.232% at last auction). Oops. They went down .02%:

https://www.treasurydirect.gov/auctions/announcements-data-results/

[Arizona_928]

Originally Posted by Crowbob

13, 17-week T-Bills are approaching 5.5% (currently 5.232% at last auction). Oops. They went down .02%:

https://www.treasurydirect.gov/auctions/announcements-data-results/

I don't think it'll hold out much longer.

[KFC911]

Originally Posted by Arizona_928

I don't think it'll hold out much longer.

Yep.... brokerage money market funds are yielding 4.5%, with CDs, bonds, etc. even higher, but FrED is just about finished. I've opted to lock into these opportunities for the "long run", while maintaining flexibility if needed. But those "short term rates" are really hard to beat...

[KFC911]

Seems as if all the CD rates (via Fidelity) whether 3 months to 5 yrs are right around 5% right now... but the landscape has changed too. Several Fed rate increases ago (6 months back), many LARGE banks were offering 5 year/5% CDs with call protection .... and millions would be offered up and purchased within an hour .... poof... gone! That call protection disappeared around Thanksgiving, and the CD rates are lower now even after several more Fed increases.... just an interesting observation.... I wasn't in the market for them.

[Chocaholic]

Marcus has a 10 month CD at APY 5.05%. Just moved a few bucks that way.

[sc_rufctr]

Maybe it's because I'm generally *conservative but...

I find the idea of trusting an online bank with my money is troubling. Feels a bit Crypto.

(*I don't mean politically)