Need help finding Discount Broker with competitive money market/savings rate

M

marshg

Hi:
I have brokerage accounts with Schwab and Ameritrade. In both cases they have great services, but the rates they pay on liquid $ is laughably miniscule. Does anyone know of a discount broker [and it's okay if they have much less services than Schwab and Ameritrade, but are still able to buy and sell stocks] that pays money market rates above or close to 1% [accts held there would be for 44k and 80k]. Ideally would also have the ability to write checks or transfer to my business account.
thanks,
Marshall
 
Quote from marshg:

Hi:
I have brokerage accounts with Schwab and Ameritrade. In both cases they have great services, but the rates they pay on liquid $ is laughably miniscule. Does anyone know of a discount broker [and it's okay if they have much less services than Schwab and Ameritrade, but are still able to buy and sell stocks] that pays money market rates above or close to 1% [accts held there would be for 44k and 80k]. Ideally would also have the ability to write checks or transfer to my business account.
thanks,
Marshall
More...

Sorry, not going to happen. Fed funds are currently around .20%. They are not going to pay you interest of more than that unless it's a teaser rate. Most accounts pay near zero right now.
 
I have an account with TDAmeritrade and have some cash within the account invested in a money market account at TDBank earning 0.5%. As I recall there's no automatic sweeping between the brokerage account (so if you go negative in cash you'll be paying margin interest) but otherwise it works just like any bank's money market account including up to six withdrawals (i.e. transfers back to the brokerage account) a month.
 
Quote from marshg:

thanks. Why can banks pay 1% on liquid funds?
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In any such account there is probably a catch...

Something in the this spirit. If you make a withdrawal from the account you receive no interest (however much already accrued) for this month for the amount withdrawn (or even for the whole account).

In the above example it an account from which the customer can withdraw as often as they like (i.e. liquid) but if the money is withdrawn no interest is payable.
 
Quote from LeeD:

In any such account there is probably a catch...

Something in the this spirit. If you make a withdrawal from the account you receive no interest (however much already accrued) for this month for the amount withdrawn (or even for the whole account).

In the above example it an account from which the customer can withdraw as often as they like (i.e. liquid) but if the money is withdrawn no interest is payable.
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ING Direct pays 1.00% APR with no catch.

https://home.ingdirect.com/products/products.asp?s=OrangeSavingsAccount
 
Quote from rmorse:

"Chart based on a deposit of $10,000 for one year." It's a very good rate, but for a one year deposit on balance of $10K or more. That's not a money market rate. It's also not attached to a brokerage account.
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There is no $10K requirement. You didn't even bother reading the information on the ING Direct page.

"The Orange Savings Account

High Interest, No Fees, No Minimums - All your money goes to work for you."

I answered LeeD's post, not marshg's post.
 
thanks for help/thoughts. Basically what I'm reading is; what I'm looking for: a good rate and the option to buy a stock now and again doesn't really exist. At least not so that anyone here knows about. Of course, would still love to hear if someone knows of the combo I'm looking for.
 
The fact of the matter is that no financial institution, bank or broker-dealer, is going to pay more than what they, in turn, can reinvest your cash balance in, less some spread. In the case of a broker-dealer, which you must use for effecting securities transactions, that broker-dealer is subject to the SEC's customer protection rule which places significant restrictions upon the investment of customer cash balances. Banks are subject to different regulations.

Essentially, a broker-dealer may only maintain customer cash balances in the form of bank deposits or qualified securities (i.e., U.S. government). The idea is to maintain funds in liquid, low-risk investments which, as previously noted, have a return close to that of the Fed Funds rate. Unfortunately, until such time short-term USD based interest rates increase, you're not likely to earn anything meaningful on your cash balances.

Note that were you to convert and maintain your cash balance in another denomination (i.e., AUD, CAD, EUR, GBP, KRW & SEK), certain brokers do pay interest on those deposits above a given level, although you would be subject to exchange rate risk once you converted back to USD.
 
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