High yield savings accounts

[Anonymous]

Hello All - couple of questions.

right now i have my rainy day fund (north of 50K) sitting in a Chase checking account not drawing any interest.

I received a solicitation from CapOne (i'm a QuickSilver card holder) for their 360 Money Market account that returns a 2.0% APY and if i apply in the next 30 days - there is a $500 cash sign on bonus.

i had not heard of these savings accounts prior, and had no idea they could pay 2 percent.

my research indicates that these banks have been quickly moving the APY they offer upwards over the last year or so.

so - my questions:

1) If i sign on for this account at 2% return - is that fixed for the life of the account or is it tied somehow to some variable market indicator?

2) bankrate.com shows what other banks are offering in terms of APY return, but they don't mention bonus/sign on offers.  Anyone aware of a place that shows current returns + bonus offers (versus logging into all the banks websites).   I'm also an AmEx credit card holder and called about their savings product paying 2.1 % but they're not offering any sign on bonus even to existing customers.

[Anonymous]

Well, since you're already used to your money being in a checking account...perhaps you'd like a high yield checking account?
Orion offers 4% on up to $30k. Just have to deposit 500/month to it (which I would assume you already hit/do with your current checking account) and make 8 "signature based transactions" each month. Pretty sure that swiping your card covers that. Just do 8 little purchases each month.
You could park the 30k there. Do 8x $1 purchases every month. And just deposit 500/month. And then at the start of next month, transfer $492 out to a different account for savings. And then repeat each month.

www.doctorofcredit.com/tn-ms-ar-orion-federal-credit-union-premium-checking-4-apy-on-balances-up-to-...


If you're fine with doing more minor transactions, check out the Redneck checking. 3% on 10k. But have to do 10x monthly transactions. But it looks like others are saying you could simply make 10x $1 purchases from yourself via Google Pay?

https://ficoforums.myfico.com/t5/Personal-Finance/Redneck-Bank/td-p/5667311


Edit: you should snag that $500 bonus. Just park a little bit of money to meet requirements. Collect bonus. Move money to better yields. Just be sure you read the terms/you park the money for whatever duration the require (probably 6-12 months).

[frugal47374]

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@Anonymous wrote:
 

my research indicates that these banks have been quickly moving the APY they offer upwards over the last year or so.

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While that was true, interest rates are heading down now.  But still better than the 0% you are currently getting.

If you moved $25k or more to CIT Bank you would (currently) get 2.30% without any hoop-jumping of needing a number of transactions.

But also no reason to also go for the sign-on bonus at CapOne.

[Anonymous]

so one of my basic questions was whether the APY fluctuates with the market...sounds like you're saying they do and that there's no 'locking in' the 2% they're offering now - yes?

also - are you suggesting i move enough to CapOne to get the $500 bonus, and then move the rest to CIT as example to get a higher yield?

[Anonymous]

The rate is not fixed, it will fluctuate with the market. Unfortunately most rates are going down right now. If you just want to park it and forget it, I would do a high yield savings vs the checking accounts where you have to have so many transactions a month (but that's just me). I would definitely move to Cap1 and get the bonus. After that you can decide if another savings account is a better option for you. (PS, I have 5 different high yield accounts)

[frugal47374]

One way to lock in the current rates is with a CD.

While that might sound like the wrong thing to do for a rainy day fund, there are "no penalty" CDs that let you out with no penalty after a short time.

Ally and Marcus (and, undoubtably others) have them, paying around 2.20% for around a year.

Ally, specifically, is 2.20% for 11 months if you invest $25k or more.  After 6 days you can withdraw your money (it has to be all) with no penalty. 

Marcus has a variety of time frames and a much lower requirement of $500.  I've used Ally once when they had a bonus for new money, but Marcus looks to be a better choice now.

[iced]

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@Anonymous wrote:

Hello All - couple of questions.

right now i have my rainy day fund (north of 50K) sitting in a Chase checking account not drawing any interest.

I received a solicitation from CapOne (i'm a QuickSilver card holder) for their 360 Money Market account that returns a 2.0% APY and if i apply in the next 30 days - there is a $500 cash sign on bonus.

i had not heard of these savings accounts prior, and had no idea they could pay 2 percent.

my research indicates that these banks have been quickly moving the APY they offer upwards over the last year or so.

so - my questions:

1) If i sign on for this account at 2% return - is that fixed for the life of the account or is it tied somehow to some variable market indicator?

2) bankrate.com shows what other banks are offering in terms of APY return, but they don't mention bonus/sign on offers.  Anyone aware of a place that shows current returns + bonus offers (versus logging into all the banks websites).   I'm also an AmEx credit card holder and called about their savings product paying 2.1 % but they're not offering any sign on bonus even to existing customers.

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With $50k for rainy day, I'd suggest diversifying that a bit more than just savings/MM/CD. There's very, very few rainy days that need that much coverage, so you're leaving money on the table - a lot more than the piddly little $500 sign-up bonus here and there.

I'd figure out how much you really need in a rainy-day (assuming this is separate from emergency), put that in one of the 2-2.2% savings accounts out there, and fold the rest into something longer-term like stocks. That way, you still have your well of no-penalty guaranteed cash to draw from while putting the rest into something you can weather short-term risk on and will yield much higher returns.

As an example, I've got one stock I'm about $30,000 into. It doesn't experience a ton of growth on the share price, but it's yielding about $2,500 a year in dividends, and has consistently paid a high dividend for years that increases annually at a rate higher than inflation. By comparison, that same $30,000 in a 2.2% savings (which is now heading back down, unfortunately) would yield $660. I'd have to move that money 4 times to get the bonus 4x before I match what I get leaving it parked in stocks and forgetting it. Reinvesting the dividends into the same stock will yield double the shares in about 7 years, parlaying that dividend into more than $5,000 annually given the annual increases in dividend payout. The icing on the cake is that $2500 is taxed at 15% while the ~$1000 I get each year in interest is taxed at full income (28%ish).

[KLEXH25]

If you’re strictly looking at bank accounts:

https://www.google.com/amp/s/www.doctorofcredit.com/best-bank-account-bonuses/amp/

Otherwise, @iced makes a very good point and you can get some higher returns if you’re willing to expand your horizons and invest. Either way though, you need to move that money out of that checking account. My measly $7k is making more money than yours.

[Anonymous]

If you do go the CD route, maybe do a ladder so you have funds available every 12 months, and the longer terms will earn higher interest. Eventually all will be long term with one maturing every year. But with that much money, stocks sound like a good idea at least for part of it.

[Green456]

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@iced wrote:

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@Anonymous wrote:

Hello All - couple of questions.

right now i have my rainy day fund (north of 50K) sitting in a Chase checking account not drawing any interest.

I received a solicitation from CapOne (i'm a QuickSilver card holder) for their 360 Money Market account that returns a 2.0% APY and if i apply in the next 30 days - there is a $500 cash sign on bonus.

i had not heard of these savings accounts prior, and had no idea they could pay 2 percent.

my research indicates that these banks have been quickly moving the APY they offer upwards over the last year or so.

so - my questions:

1) If i sign on for this account at 2% return - is that fixed for the life of the account or is it tied somehow to some variable market indicator?

2) bankrate.com shows what other banks are offering in terms of APY return, but they don't mention bonus/sign on offers.  Anyone aware of a place that shows current returns + bonus offers (versus logging into all the banks websites).   I'm also an AmEx credit card holder and called about their savings product paying 2.1 % but they're not offering any sign on bonus even to existing customers.

---

With $50k for rainy day, I'd suggest diversifying that a bit more than just savings/MM/CD. There's very, very few rainy days that need that much coverage, so you're leaving money on the table - a lot more than the piddly little $500 sign-up bonus here and there.

I'd figure out how much you really need in a rainy-day (assuming this is separate from emergency), put that in one of the 2-2.2% savings accounts out there, and fold the rest into something longer-term like stocks. That way, you still have your well of no-penalty guaranteed cash to draw from while putting the rest into something you can weather short-term risk on and will yield much higher returns.

As an example, I've got one stock I'm about $30,000 into. It doesn't experience a ton of growth on the share price, but it's yielding about $2,500 a year in dividends, and has consistently paid a high dividend for years that increases annually at a rate higher than inflation. By comparison, that same $30,000 in a 2.2% savings (which is now heading back down, unfortunately) would yield $660. I'd have to move that money 4 times to get the bonus 4x before I match what I get leaving it parked in stocks and forgetting it. Reinvesting the dividends into the same stock will yield double the shares in about 7 years, parlaying that dividend into more than $5,000 annually given the annual increases in dividend payout. The icing on the cake is that $2500 is taxed at 15% while the ~$1000 I get each year in interest is taxed at full income (28%ish).

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There are places where two bedrooms cane be easily $3,000 a month. And I'm not talking about Manhattan, Los Angeles, San Francisco where rents can be easily in $5,000 a month range. $50,000 may not even last 6 months.