topic Re: High Yield Savings Account in Personal Finance

High Yield Savings Account

rgninja — Fri, 29 Dec 2023 00:46:34 GMT

I am looking for some suggestions for a HYSA for 50k. I don't want to lock my money away in a CD just in case I need to use some of it, but letting it sit in my Langley savings account, earning 0.05%, is crazy. I opened a high-yield savings account with them but realized they had a gotcha of any balance over 10k didn't earn the high APY. I've looked at sites that recommended banks, but some of the banks I had never heard of, and there wasn't much info about them out there. I've been thinking since I already have a Discover savings account, of moving the money there for the 4.35% APY but I wanted to ask for any suggestions first.

Re: High Yield Savings Account

CreditCobra — Fri, 29 Dec 2023 01:02:16 GMT

I've got some cash parked at UFB Direct. As of this writing, it's at 5.25% APY.

https://www.ufbdirect.com/

Generally, I've been satisfied with UFB, I've moved money in via ACH, but they offer free inbound wires. I did have a situaiton where the APY was dropped, but I contacted customer support and they corrected it.

Re: High Yield Savings Account

GZG — Fri, 29 Dec 2023 01:10:30 GMT

@rgninja wrote:
I am looking for some suggestions for a HYSA for 50k. I don't want to lock my money away in a CD just in case I need to use some of it, but letting it sit in my Langley savings account, earning 0.05%, is crazy. I opened a high-yield savings account with them but realized they had a gotcha of any balance over 10k didn't earn the high APY. I've looked at sites that recommended banks, but some of the banks I had never heard of, and there wasn't much info about them out there. I've been thinking since I already have a Discover savings account, of moving the money there for the 4.35% APY but I wanted to ask for any suggestions first.

https://www.doctorofcredit.com/high-interest-savings-to-get/

you can definitely do better than 4.35, but there's nothing wrong with a nice big bank with good UI, a good app and known good US customer service, but as you get higher than 4.35, you start seeing smaller, less familar names where you're going to have to do the research to check if they are somewhere you're comfortable leaving your money

it's all FDIC insured though, so there's no real risk, but the cost of dealing with a bank that doesn't give good service/experience isn't worth < 1% APY, IMO

Re: High Yield Savings Account

Anonymalous — Fri, 29 Dec 2023 10:39:34 GMT

Two alternatives are treasuries or a federal money market fund.

Treasuries will typically earn a little more than the best HYSA, are at least as secure as FDIC/NCUA insured deposit accounts (they're backed by the full faith and credit of the U.S. government), and if held to maturity the rate is guaranteed. They can be bought from the source via Treasury Direct, or through many brokerages. The downside is if you have to liquidate them suddenly and interest rates have risen, they might not be worth as much on the secondary market. The solution to this is to stick to fairly short term bills (say 4 weeks), and then buy them at different durations or at staggered times, so a portion mature at at regular intervals, say every week or month (this is called "laddering"). This is more effort than just dumping them in a savings account, however.

If you want to keep it simpler, the other option is to buy treasuries, but to let the brokerage handle all the work. This is done through a money market fund (or ETF), which a type of mutual fund purchased through a brokerage, and is not related to money market accounts at retail banks. The short term federal government money market funds hold treasuries and other closely related debt (these days much of it is often cash held at the Federal Reserve, since their interest rates are so high), and pass through the interest to you, minus the expense ratio (find one under 0.2%). One feature that can be both a downside and an upside is there will be a lag in the rate, because they're holding bonds of various maturities, so they'll only reflect current rates once they all mature and are replaced. Municipal funds are slightly higher risk (local governments have defaulted on their bonds), and have a lower rate of return, but they're tax exempt at the state and even local level, which can make them attractive for those in high tax brackets in high tax states like CA or NY.

Re: High Yield Savings Account

rgninja — Sun, 31 Dec 2023 02:01:10 GMT

Thank you for the list. I see Popular Bank, the US version of Banco Popular, on there, which may be an option at 5.35%. Also, I see Tab Bank on there at 5.27%. I had a checking account with them ages ago when they were in Flying J locations—a great bank for truckers or for anyone who travels a lot, which I was doing at the time.

Re: High Yield Savings Account

rgninja — Sun, 31 Dec 2023 02:25:43 GMT

Thank you for the suggestion. I am putting some money into 4-week bills. I have a friend who used to work at the Federal Reserve in Minneapolis, and she walked me through the process on the treasury website. Pretty simple.

Re: High Yield Savings Account

ptatohed — Tue, 02 Jan 2024 04:30:38 GMT

I've been pretty happy with Sallie Mae and Popular Direct. Rates always change all the time so I recommend selecting a bank that consistently is on the higher side as opposed to picking a bank that is the highest at this current moment in time.

@Anonymalous has some great advise about T-Bills. I have just now been dabbling in T-Bills and there are nice advantages.

Re: High Yield Savings Account

Anonymous — Wed, 03 Jan 2024 13:00:27 GMT

Another list is at High Yield Savings Accounts – Daily Rates | DepositAccounts

You can also restrict it to your local region (though probably better not to!) Also check the Money Market link at that site

Re: High Yield Savings Account

Citylights18 — Wed, 10 Jan 2024 01:10:20 GMT

I guess the question is do you have money parked at a brokerage account?

If you do and can earn 5% there I'd do that over treasuries. Then a good buying opportunity appears on a stock that you want you're poised to take direct advantage of it.

Re: High Yield Savings Account

Jeffster1 — Wed, 10 Jan 2024 01:23:17 GMT

I have Merrill Preferred Deposit as my primary HYSA. The ease of transferring monies between my Bank of America accounts and Merrill works for me.

My secondary HYSA is my American Express Savings.

I also have a smaller HYSA at BMO.

Re: High Yield Savings Account

Anonymalous — Wed, 10 Jan 2024 19:44:03 GMT

@Citylights18 wrote:
I guess the question is do you have money parked at a brokerage account?

If you do and can earn 5% there I'd do that over treasuries. Then a good buying opportunity appears on a stock that you want you're poised to take direct advantage of it.

With brokerages, watch out for the base position. For instance, Fidelity will put any money I don't have invested in SPAXX, which isn't bad. But Schwab will just let the cash sit there, unless you manually buy into SNVXX or something. Which isn't hard, but it is another step. But yes, having the money already in your investment account, whether in cash or a close equivalent, makes it a lot easier to invest opportunitistically. Though the academic literature is very clear that that investing now is better than tomorrow. So while I do it too, it's a wiser move to just invest in accordance with my assest allocation plan as soon as the money is available.

Re: High Yield Savings Account

oorhett — Wed, 10 Jan 2024 19:41:29 GMT

I use Fidelity Money market (SPAXX) already mentioned it is currently at about 5% I also use UFB 5.25% (Division of AXOS) which was already mentioned. You may want to consider taking advantage of Checking or Saving account Sign Up Bonuses (SUBs) US Bank currently has an $800 bonus, PNC has a $400 Bonus, Sofi and Axos both have $300. I am sure there are others, I heard Chase currently has one up to $1000 but can't find it anywhere maybe invite only.

Re: High Yield Savings Account

Anonymalous — Wed, 10 Jan 2024 19:54:18 GMT

Speaking of bonuses, brokerage bonuses may also be worth a look. The big dollar amounts that get advertised -- like $2000 -- typically require a huge amount of cash to be moved over, so the APR earned is pretty marginal. Which is fine if you were planning on moving a retirement account over anyway, but I don't think it's worth chasing. But Fidelity, Schwab, and occasional fintechs regularly run smaller bonuses ($100 or so) with very low deposit requirements (often $100 or less), which may be really attractive to people just starting to look into investing.

Re: High Yield Savings Account

rgninja — Sat, 24 Feb 2024 01:05:09 GMT

I didn't realize I had additional responses to my question. I work for an investment company, so even though I am not involved in brokerage with the company, I am required to have my investment accounts at my employer, Merrill Lynch or Charles Schwab. I had someone try to open a fraudulent account at Charles Schwab a few years ago, so I would have to go into a branch to open an account with them. I did open an account with Merrill Lynch and purchased a few stocks to hold in the account.