best account for interest on cash?

F

fusiforme

What is the best account for earning the highest interest rate on cash one does not want to put at risk in the market?

I heard someone say if you get the right account you can earn as high as 7% on cash - but not sure what sort of account this is.

I have also heard banks in Ecuador pay very high interest - but now sure if it is possible to open an account with one of those if in the US?
 
fusiforme said:
What is the best account for earning the highest interest rate on cash one does not want to put at risk in the market?

I heard someone say if you get the right account you can earn as high as 7% on cash - but not sure what sort of account this is.

I have also heard banks in Ecuador pay very high interest - but now sure if it is possible to open an account with one of those if in the US?
More...

If in the U.S. I'd go with Fidelity if your top priority is interest on spare cash.
They keep all spare cash in a fund currently earning 4.3%. They also offer 1-month CDs yielding 4.7-4.95% and longer-term CDs with a bit higher yields (5-6%).
Brokers like TDA/Schwab allow you to purchase funds at no cost but that needs to be done manually so not quite as convenient & it takes 24 hours to withdraw from the fund to use it for purchases. Those funds also yield +4%.

Personally, I'd avoid sending $$ out of the country chasing the 7% yield. Higher yield is often higher risk. What insurance would you have if something goes wrong with the broker?
 
BKR88 said:
If in the U.S. I'd go with Fidelity if your top priority is interest on spare cash.
They keep all spare cash in a fund currently earning 4.3%. They also offer 1-month CDs yielding 4.7-4.95% and longer-term CDs with a bit higher yields (5-6%).
Brokers like TDA/Schwab allow you to purchase funds at no cost but that needs to be done manually so not quite as convenient & it takes 24 hours to withdraw from the fund to use it for purchases. Those funds also yield +4%.

Personally, I'd avoid sending $$ out of the country chasing the 7% yield. Higher yield is often higher risk. What insurance would you have if something goes wrong with the broker?
More...

Good point about the foreign account.

I'd need to open a fidelity account - I have a Vanguard account but notice their money market fund VMFXXX seems, at the moment, to be earning 2.27% a year - half of fidelity!

Browsing the web I just discovered a bank called ufbdirect. Says they pay 5.02% on entire cash balance, so even higher than Fidelty. Not familiar with this company though. A division of Axos bank. Any thoughts?
 
fusiforme said:
Good point about the foreign account.

I'd need to open a fidelity account - I have a Vanguard account but notice their money market fund VMFXXX seems, at the moment, to be earning 2.27% a year - half of fidelity!

Browsing the web I just discovered a bank called ufbdirect. Says they pay 5.02% on entire cash balance, so even higher than Fidelty. Not familiar with this company though. A division of Axos bank. Any thoughts?
More...

UFB Direct is one of the banks on a website I use to pick online banks. I have 10-15 banks but not UFB Direct. I usually read some of the reviews on this site before opening an account. As long as they're FDIC insured & not really bad reviews then I don't do much other research.
https://www.depositaccounts.com/savings/

Here's the short-term CDs at Fidelity.

Fidelity.CDs.png
 
Good recommendation if the cash does not need to function as collateral, else tbills at IB.

BKR88 said:
If in the U.S. I'd go with Fidelity if your top priority is interest on spare cash.
They keep all spare cash in a fund currently earning 4.3%. They also offer 1-month CDs yielding 4.7-4.95% and longer-term CDs with a bit higher yields (5-6%).
Brokers like TDA/Schwab allow you to purchase funds at no cost but that needs to be done manually so not quite as convenient & it takes 24 hours to withdraw from the fund to use it for purchases. Those funds also yield +4%.

Personally, I'd avoid sending $$ out of the country chasing the 7% yield. Higher yield is often higher risk. What insurance would you have if something goes wrong with the broker?
More...
 
Dont know much about the Ecuador market,but if they are pegged to the dollar today,that does not mean they will stay pegged tomorrow..

As of today,I doubt there is much exchange/convertibility risk,but for 200 Bps Ill take a pass...




fusiforme said:
What is the best account for earning the highest interest rate on cash one does not want to put at risk in the market?

I heard someone say if you get the right account you can earn as high as 7% on cash - but not sure what sort of account this is.

I have also heard banks in Ecuador pay very high interest - but now sure if it is possible to open an account with one of those if in the US?
More...
 
BKR88 said:
UFB Direct is one of the banks on a website I use to pick online banks. I have 10-15 banks but not UFB Direct. I usually read some of the reviews on this site before opening an account. As long as they're FDIC insured & not really bad reviews then I don't do much other research.
https://www.depositaccounts.com/savings/

Here's the short-term CDs at Fidelity.

View attachment 310208
More...

CDs will likely have early termination penalties. If you don't want to hold for the entire term, perhaps better to consider money market type instruments. Some of the banks have accounts with MM interest rates of 4.5-5% and no penalties for withdrawal.

Some banks have/had(?) "no penalty CDs"... where you earn the stated rate, but not lower. If rates go up, you get some increase. If you withdraw before the original term, no penalty. Apparently that was too good of a deal for the depositor as it appears those types are less available now.

I had an experience with Marcus (Goldman Sachs bank)... where I had one of those "no penalty CDs". When the term was up, they asked if I wanted to roll to a new CD? I said, "sure". I presumed it would be the same as the no-penalty one I'd had before. Well, wasn't. When Marcus dragged its feet on raising rates along with the market, I moved the money to a higher yield venue. But much to my surprise, I paid an "early termination fee" of $550. My bad for presuming the new CD was the same as the old... "shoulda read the fine print", as they say.

When I did our taxes this year wifey asked, "why do we have 18 bank accounts"? Yeah, well... the answer to that was to clear all the money out of banks (except for checking for day-to-day bill paying) and moved to savings deposit money market funds at our Fidelity brokerage. Interest rate is about the same + our money is "at the ready" to deploy into equities after the great crashola and pick up bargains.

FWIW.... the interest rate on our Fidelity "core" account is ~4.3%. For amounts >$1MM, it's ~4.6%.
 
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