First Internet Bank Savings(requires 1M+ balance) was 4.93% now 5.20%
Mission Valley Bank Savings(via SaveBetter) was 4.86% now 5.01%
Vio Bank MM was 4.77% now 4.85%
The Atlantic FCU MM(via SaveBetter) was 4.75% now 5.01%
FVC Bank MM(via SaveBetter) was 4.75% now 5.00%
Cloud Bank 24/7 Savings(via SaveBetter) was 4.48% now 5.00%
Tab Bank Savings was 4.40% now 4.76%
Wealthfront was 4.30% now 4.55%
Virtual Bank MM was 4.15% now 4.80%
Prime Alliance Bank Savings was 4.05% now 4.50%
E Trade Savings was 3.75% now 3.85%
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Holy cow, who’s holding $1M in a savings account? At “First Internet Bank” no less?
Someone with money who sees these current rates as better and safer than holding the portion of their portfolio normally designated for bonds?
My question is how long would this rain last? Even if you could come up with the $1M… 
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rain. rate ???
The problem, especially now, is that it doesn’t say anything about additional FDIC coverage. The most you get is $500K by making it a joint account. And even though no depositor has lost any money yet, you’d have to be either stupid or insane to deposit the full $1M at this bank. You could just open multiple fully insured accounts at other banks or just buy short-term treasuries. The risk of losing $500K is not worth the less than 1% extra that this account pays over those other options.
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This, exactly. Is it high risk? Probably not. But it isn’t particularly low risk either, and the whole point of keeping money liquid versus something like a t-bill or a CD is to have immediate access to it, when you need it. Otherwise, those other products are competitive rate-wise (see Alliant’s 18mo CD, for instance) without the $1M restriction.
And I’d also add - anyone with $1M in liquid funds floating around almost certainly has options that are better, when considering the entire package. Stuff like waived wire fees (which matter at this kind of account balance, when ACH limits are an issue), unlimited ATM reimbursement, waived international transaction fees, access to an actual human in charge of your account, and other services catered to that kind of balance.
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Your FDIC coverage is only limited to however many names you have to list as beneficiary. A married couple with a couple kids and a couple living (grand)parents can easily clear $2M in covered deposits in one account. The only limit is that with more than a certain number of beneficiaries (8?), the distribution must be equal shares for all of them - you cant give 20 beneficiaries .01% each with the 21st beneficiary receiving the remaining 99.8%, and have it produce $5.25M FDIC coverage.
Yes, if the accountholder(s) should happen to croak, it’d create a bit of a mess with money being distributed outside your otherwise comprehensive estate plan. Maybe it’s unique to me, but I trust my parents to forward any money they might get as a beneficiary to who I actually want it going to. You can even designate a trust as beneficiary so that the cash isnt distributed directly to minor children beneficiaries.
So no, that size of a balance isnt any more of an issue or any higher risk than it’s an issue for balances under $250k - the risk requires the FDIC failing, in which case we’re all screwed regardless.
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There may be usage cases that create an exception, but generally speaking, for a 7-figure balance, the value of those “other services” is dwarfed by the gain from a fraction of a percent higher interest rate. Even for a difference of only .1%, are you going to forego $1,000 in annual interest (on a $1M balance) to score free $35 wire transfers?
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Depends on your income. If you’re in the upper bracket… uncle sam’s gonna take 37% of whatever you gain, plus 3.8% for net investment income tax. Plus any state and local tax owed.
If you’re regularly moving money around above the ACH limit, and you need to pull cash out internationally, these perks can be very valuable and aren’t subject to any tax.
We are in the 35% bracket and I can tell you that it’s made me significantly lazier in terms of moving cash around. That’s what higher tax rates tend to do - they take away incentive to earn more money. Sure, it’s not nothing, but it’s less than that lump of cash you see hitting your account each month.
I dont disagree. I agree that rate chasing becomes less of a priority, but that holds equally true for the motivation to save that $35 wire transfer fee. If you are going to put any, even minimal, effort into it, it’s almost always going to be more effective to focus on the rate.
For some reason I thought that an account with a POD designation is still considered an individual or joint for the purposes of FDIC coverage, but I just learned that it’s covered as an Informal Revocable Trust and it can have many named beneficiaries. Live and learn.
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It might be worth noting that adding a beneficiary does not add $250k coverage to your own (the accountholder’s) $250k coverage, the beneficiary coverage replaces your own. Your individual account with one POD beneficiary would still only have $250k coverage; you’d need to add 2 beneficiaries to have $500k coverage, etc.
But for a joint account, a POD beneficiary is considered to be a beneficiary to both account owners, and thus each beneficiary adds $500k coverage ($250k coverage being a beneficiary for each owner). Again, that replaces the account holder’s coverage - so a joint account with 2 POD beneficiaries would have $1M coverage.
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Right, but it puts that account in a different ownership category, so if I have one regular individual account (without POD) and a second account with POD, then each of those is covered for $250K, or $500K total.
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Yes, I’m referring solely to ONE account. Multiple accounts add more variables.
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US treasuries are paying over 5.5% for 1 month, and about 5.25% out to 6 months.
I think this may be related to debt ceiling uncertainty.
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the next 4 week tbill auction will be announced on May 9 and will take place on May 11. You can place your order with brokers such as Fidelity, Schwab, E*TRADE etc
The auction announcement
https://treasurydirect.gov/auctions/upcoming/
I have never done it, but I think Fidelity will roll these over every month without losing a week waiting for the next auction.
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TreasuryDirect also allows you to roll over from auction to auction, they send the proceeds to your linked account
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This is not a thing.
Money market rates, from elsewhere
Current ~ 7 day SEC yield
VMRXX ~ 4.91%
VMFXX ~ 4.89%
SWVXX ~ 4.79%
SNOXX ~ 4.69%
The difference between a money market fund backed by treasuries and your bank investing in treasuries is that your money market can’t blow up and lose your money if they run into banking troubles.
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