Paper Savings Bonds: Pay w/ Credit Card by 1/17, Use Tax Refund To Increase Purchase Limit by $5,000

Posted on January 11, 2023 // 2 Comments

As inflation spiked, so did interest in purchasing inflation-linked Series I Savings bonds. Some folks have been going to extra lengths to increase their ability to purchase them, buying savings bonds for kids, trusts, LLCs, corporations, and so on. One of the more direct ways to increase your annual purchase limits is to use IRS Form 8888 when filing your taxes this year, which allows you to use your tax refund to purchase up to $5,000 in paper Savings Bonds each year. This is on top of the $10,000 annual limit on electronic savings bonds per person at TreasuryDirect.

Of course, that means you need to have a refund when you file your taxes. You’ll need to estimate your tax liability, and if needed, you can make an overpayment on your federal tax withholding to ensure you have the refund size you want. The deadline for 2022 4th Quarter estimated tax payments is Tuesday, January 17th, 2023.

You can make a direct payment via credit or debit card via various official processors. The processing fee starts at just 1.85%, which means that as long as you have 2% cash back rewards card or better, you can actually come out slightly ahead. Even better, paying $4,000 in taxes would satisfy most of the spending hurdles on big credit card bonuses worth well over $500. Two birds, one stone.

You can also make a direct payment via your bank account at EFTPS.gov or IRS DirectPay.

Right now is the best window, as it minimizes the time between paying the taxes and receiving your paper savings bonds. Filing your taxes earlier will also shorten that window. If you wish, you can later convert those paper savings bonds to electronic form at TreasuryDirect.

Filed Under: Banking, Credit Cards, Deals & Offers, Savings Bonds //

Best Interest Rates on Cash – January 2023

Posted on January 10, 2023 // 3 Comments

Here’s my monthly roundup of the best interest rates on cash as of January 2023, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 1/9/2023.

TL;DR: 5% on up to $25,000 from fintech. Short-term rates up a little. 4.35% APY available on liquid savings. 4.60% to 5% APY available on short-term CDs Compare against Treasury bills and bonds at every maturity (12-month near 4.70%). 6.89% Savings I Bonds can be bought with 2023 annual limits now.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5% on up to $25,000. Juno now pays 5% on all cash deposits up to $25,000 and 3% on cash deposits from $25,001 up to $250,000. No direct deposits required. If you set up direct deposit and qualify for their Metal tier, you may be able to upgrade to 5.5% interest. Please see my Juno review for details.
  • 4.00% APY on $6,000. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). Must maintain a direct deposit of $200+ every 35 days. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 4.00% APY on up to $250,000, but requires direct deposit and credit card spend. Now again accepting new applicants. The top tier requires you to maintain positive cashflow in the checking account each month, $500 in total monthly direct deposits, and $500 in credit card purchases each month. Existing customers will get up to 4% APY through April 2023, with requirements waived through March 2023. Please see my HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The leapfrogging to be the temporary “top” rate continues. MySavingsDirect at 4.35% APY. All America/Redneck Bank is at 4.25% APY for balances up to $75,000 ($500 to open, no min balance).
  • SoFi Bank is now up to 3.75% APY + up to $275 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has their own bank charter now so no longer a fintech by my definition. See details at $25 + $250 SoFi Money new account and deposit bonus.
  • There are several other established high-yield savings accounts at 3.30%+ APY that aren’t the absolute top rate, but historically do keep it relatively competitive for those that don’t want to keep switching banks.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 4.10% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 3.50% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 3.50% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • INSBANK has a 12-month certificate at 4.85% APY. $2,500 minimum. Early withdrawal penalty is 90 days of interest.
  • NASA FCU has a special 9-month certificate at 4.60% APY. $10,000 min, new money required. Anyone can join this credit union via partner organization membership.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 4.22%. Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 4.36% SEC yield ($3,000 min) and 4.46% SEC Yield ($50,000 min). The average duration is ~1 year, so there is some term interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 4.57% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 4.51% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 1/9/23, a new 4-week T-Bill had the equivalent of 4.24% annualized interest and a 52-week T-Bill had the equivalent of 4.70% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 3.94% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 3.87% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2022 and April 2023 will earn a 6.89% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • Pelican State Credi Union pays 5.11% APY on up to $10,000 if you make 15 debit card purchases, opt into receive only online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
  • All America/Redneck Bank pays 4.50% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
  • The Bank of Denver pays 4.00% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 4.00% APY on balances between $500 and up to $25,000 (3.00% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Navy Federal Credit Union has a special 15-month CD at 5% APY. Open now with just $50, but you can still add on more deposits later. You must have a military relationship to join NavyFed.
  • Lafayette Federal Credit Union has a 5-year certificate at 4.63% APY ($500 min), 4-year at 4.58% APY, 3-year at 4.52% APY, 2-year at 4.47% APY, and 1-year at 4.42% APY. They also have jumbo certificates with $100,000 minimums at even higher rates. These are competitive rates to build a CD ladder, but know that the early withdrawal penalty for the 5-year is very high at 600 days of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I don’t see any 5-year non-callable CDs. Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at (none available, non-callable) vs. 3.60% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate, currently 2.10%. As of 1/9/23, the 20-year Treasury Bond rate was 3.83%.

All rates were checked as of 1/9/2023.

Filed Under: Banking, Deals & Offers, Investing //

SkyOne FCU Savings / Checking $400 Bonus w/ Direct Deposit

Posted on December 11, 2022 // 5 Comments

SkyOne Federal Credit Union has a $100 savings + $300 checking account promotion with qualifying direct deposits. New members only. There is also a separate $300 credit card bonus. Based in Hawthorne, California, membership is open nationwide through membership in a partner organization… and they’ll pay for your membership when you join:

We’re intensely dedicated to serving our members and their communities — and no, that’s not just a line. We’re serious about that passion. That’s why we partner with organizations and non-profits that reflect the values that our members care about.

Choose any one of the organizations we’re partnered with when opening an account with us and we’ll pay your membership dues for that organization.*

They even mention a simple $25 bonus with promo code JOIN, but I think you can only use one promo code. Hat tip to reader Mary and DoC. Offer expires 12/31/22.

$100 Savings Bonus highlights:

  • Must use promo code GIFT
  • Must maintain a $1,000 balance for 3 months.
  • Max APY is 0.05% APY.

$300 Checking Bonus highlights:

  • Must use promo code GIFT
  • Must establish direct deposit within 30 days of account opening, and receive a total of $1,000+ in qualifying direct deposits per statement cycle for six consecutive cycles into your new checking account during the qualification period.
  • Max APY is 0.05% APY.
  • Minimum balance of $2,500 or have monthly aggregate deposits of $1,000 or more to avoid $5 monthly fee.

Full fine print:

1 Get $100: Open an account online from December 9, 2022, to December 31, 2022, use promo code GIFT and deposit the minimum opening balance amount of $5 into a Primary Savings Account, and maintain a $1000 balance for 3 months. This offer is intended for new members only. You are not eligible for this offer if you are a current owner of a SkyOne savings account or if you have closed an account within the last 12 months. Savings Rate is 0.05% APY. APY=Annual Percentage Yield. Rates are effective as of the last dividend declaration date. The rate is variable and may change after the account is opened. A $500 balance is required to earn dividends. Dividends are posted and compounded monthly. Fees may reduce earnings. Please refer to the Fee Schedule and All in One Disclosure for complete details. All account terms and conditions apply.

2 Get $300: Open a new SkyOne Advantage checking account online from December 9, 2022, to December 31, 2022, using promo code GIFT. within 30 days of account opening establish direct deposit and receive a total of $1,000 or more in qualifying direct deposits per statement cycle for six consecutive cycles into your new checking account during the qualification period. A qualifying direct deposit is a direct deposit of your salary, pension, Social Security, or other regular monthly income, electronically deposited through the Automated Clearing House (ACH) network to this checking account. Transfers from one account to another, mobile deposits, or deposits made at a banking location or ATM do not qualify. Advantage Checking earns dividends of .05% APY if the balance requirement is met. APY=Annual Percentage Yield. Rates are effective as of the last dividend and declaration date. The rate is variable and may change after the account is opened. A $2,500 balance is required to earn dividends. Dividends are posted and compounded monthly. Fees may reduce earnings. Please refer to the Fee Schedule and All in One Disclosure for complete details. All account terms and conditions apply. This offer is intended for new checking accounts only. Offer is not available to existing SkyOne checking account holders or those whose accounts have been closed within the last 12 months.

Thinking about this one. I like to open accounts at credit unions that show a commitment to providing competitive products in multiple areas. In addition to the checking and savings promo, SkyOne is also offering a 22-month CD at 5% APY as well as a 15-month CD at 4.50% APY with some flexible withdrawal and add-on features. Too bad their 5-year certificate rates are not nearly as competitive.

Filed Under: Banking, Deals & Offers //

Best Interest Rates on Cash – December 2022 Update

Posted on December 4, 2022 // 12 Comments

Here’s my monthly roundup of the best interest rates on cash as of December 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 12/4/2022.

TL;DR: 5% on up to $10,000 from fintech. 5% APY on up to $100k via a 7-month promo CD. 4% APY available on liquid savings. 1-year CD at 4.71% APY. 5-year CD at 4.75% APY. Compare against Treasury bills and bonds at every maturity (12-month near 4.69%). 6.89% Savings I Bonds still available if you haven’t maxed out 2022 limits.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5% on up to $10,000. Juno now pays 5% on all cash deposits up to $10,000 and 3% on cash deposits from $10,001 up to $250,000. $50 direct deposit bonus. Please see my Juno review for details.
  • 4.00% APY on $6,000 with no direct deposit requirement. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). No direct deposit required. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 4.00% APY on up to $250,000, but requires direct deposit and credit card spend. Currently a waitlist for new applicants. The top tier requires you to maintain positive cashflow in the checking account each month, $500 in total monthly direct deposits, and $500 in credit card purchases each month. Existing customers will get up to 4% APY through April 2023, with requirements waived through March 2023. Please see my updated HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • The leapfrogging to be the temporary “top” rate continues. All America/Redneck Bank is at 4% APY for balances up to $75,000 ($500 to open, no min balance). Republic Bank of Chicago has a Digital Money Market account at 4.00% APY ($2,500 minimum to open and avoid monthly fee, new money only).
  • SoFi Bank is now up to 3.25% APY + up to $275 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has their own bank charter now so no longer a fintech by my definition. See details at $25 + $250 SoFi Money new account and deposit bonus.
  • There are several other established high-yield savings accounts that aren’t a top rate, but historically do keep it relatively competitive for those that don’t want to keep switching banks.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 3.65% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 3.30% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 3.05% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • My eBanc has a 12-month certificate at 4.71% APY. $5,000 minimum. Early withdrawal penalty is 90 days of interest.
  • Andrews FCU has a special 7-month certificate at 5.00% APY (offer ends 12/14). $1,000 min, $100k max. Anyone can join this credit union with a ACC membership, and ACC membership is free with promo code “Andrews”. My previous application experience.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 3.70%. Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 4.32% SEC yield ($3,000 min) and 4.42% SEC Yield ($50,000 min). The average duration is ~1 year, so there is some term interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 4.21% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 4.31% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 12/2/2022, a new 4-week T-Bill had the equivalent of 3.81% annualized interest and a 52-week T-Bill had the equivalent of 4.69% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 3.52% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 3.47% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2022 and April 2023 will earn a 6.89% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • All America/Redneck Bank pays 4.25% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
  • The Bank of Denver pays 4.00% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 3.75% APY on balances between $500 and up to $25,000 (3.00% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Bread Financial has a 5-year certificate at 4.75% APY ($1,500 min), 4-year at 4.65% APY, 3-year at 4.50% APY, 2-year at 4.50% APY, and 1-year at 4.50% APY. The early withdrawal penalty for the 5-year is 365 days of interest.
  • Department Of Commerce Federal Credit Union has a 5-year certificate at 4.70% APY ($500 min), 4-year at 4.59% APY, 3-year at 4.57% APY, 2-year at 4.61% APY, and 1-year at 4.40% APY. The early withdrawal penalty for the 5-year is 180 days of interest. Anyone can join this credit union through a $5 membership in the American Consumer Council (ACC). Enter ACC membership number on the online application.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year CD at 4.85% (non-callable). Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 5.25% (non-callable) vs. 3.56% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate currently 2.10%. As of 12/2/2022, the 20-year Treasury Bond rate was 3.79%.

All rates were checked as of 12/4/2022.

Filed Under: Banking, Deals & Offers, Investing //

Reader Question: Higher Interest Rates on Cash Without Internet Access or Cell Phone?

Posted on November 20, 2022 // 2 Comments

Here’s a reader question that I found interesting regarding “low-tech” retirees:

Hi – my 82 year-old father-in-law does not own a cell phone or a computer. He has very little “visibility” on the internet because he was a self-employed craftsman for the last 40 years. But he has money to invest, and it is sitting in a near-zero savings account. For the reasons listed above, he cannot qualify for any of the high-yield savings accounts that are out there. Their methods of identifying customers require a cell phone and some kind of documentable internet presence. Maybe he is an extreme example, but I am guessing there are others in similar situations. Any thoughts on how such a person can obtain a higher yield? Thanks.

I am empathetic to this problem as I am frequently helping older relatives navigate modern life without internet access. I’m also a fan of low-tech as a backup form of resilience and emergency preparedness. What would happen if the power went down for an extended period? What would happen if you passed away suddenly and nobody could figure out your passwords?

This question specifically addresses low interest rates on cash. It is not an accident that NONE of the three biggest banks by branch size (Bank of America, Chase, and Wells Fargo) offer a decent interest rate on their basic checking and savings accounts. (Even Citibank only offers their high-yield Accelerate savings account in states where they have no physical branches.) If they made it easy to sign up for a “high-yield savings account”, they would lose many millions in profit as all the offline folks would happily switch over their deposits earning 0.01% APY. My 94yo great-aunt will dilute her dish soap until it comes back on sale at the local grocery store. You can bet she would walk right into her local branch to sign up for a savings account paying 3% APY instead of 0.02% APY!

My first thought is that I would open an account with Fidelity Investments, as they have solid history as a traditional broker with a fully-staffed customer service phone line. Fidelity would still run just fine if there was only snail-mail envelopes and rotary phones. This Fidelity Core Positions page is a handy bookmark to see the current interest rates (screenshot below taken 11/18/2022) on the various options for your core position (default for uninvested cash). As you can see, the rates are quite competitive with online banks. Money market funds are not FDIC-insured, but they are very close (and even closer after recent regulations). I personally don’t lose a bit of sleep on my Fidelity money market funds and I also snail mail them large checks every year for my Solo 401k plan.

In addition, Fidelity has a decent branch network (“Investor Centers”) at major metro areas nationwide. Finally, Fidelity offers a solid inventory for brokered CDs and access to Treasury bills and bonds if you were willing to lock up your money for a higher rate.

Why don’t I include Vanguard? While Vanguard money market funds are excellent and usually pay even higher interest rates than Fidelity money market funds, I have heard far too many customer complaints about hour-long hold times for phone customer service. Vanguard also does not have a physical branch network. I try my best to only use Vanguard for simple index fund transactions and nothing complicated. Meanwhile, TD Ameritrade and Schwab do have some money market options and physical branches, but you must make every transaction manually while the default is a sad cash sweep program paying less than 0.50% APY. This is why I’d pick Fidelity over the others. (No, Fidelity did not pay me to say any of this. Unfortunately…)

Another option would be a local credit union that is looking for loan growth (which requires deposit growth) and thus is offering high interest rates. You would want to find one that has a physical branch in your area, and the best resource for this is DepositAccounts.com which allows you to search by zip code. Make sure to uncheck the “Web Only” box and check the “Local Branches” box.

This will hopefully let you find a physical branch nearby that will offer a decent rate. Oftentimes, the good rates only show up in certificates of deposit (which allow them to match maturities) but you could simply ladder even 1-year CDs over time to maintain a solid rate with decent liquidity. Many of the military-affiliated credit unions have a larger branch network and a history of competitive products, and some of them can be joined without military status. Good luck and thanks for helping others!

Filed Under: Banking, Family //

Stockholm Banco vs. FTX: Creating Money From Nothing in 1661 vs. 2022

Posted on November 17, 2022 // 2 Comments

As with the rest of the finance world, I’ve been following the collapse of FTX and Sam Bankman-Fried (SBF). There are many explainers (Matt Levine is my fav, but paywall?), while new details keep emerging. Crypto the newborn currency is growing up and finding out the hard way why traditional finance has all the rules it has. Central bank? FDIC insurance? Independently-audited financials? A board of directors? Not being allowed to buy personal houses with company money and having other expenses approved with emojis? 💸 From the most recent bankruptcy filing and written by the new FTX CEO of less than a week:

Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.

As a fitting follow-up to the idea of timeless financial wisdom, Doomberg (also paywall) brings us historical perspective from Stockholm Banco, which in 1661 was the first European bank to print banknotes. I found this detailed history of Stockholm Banco [pdf] on the website of Sveriges Riksbank. A single person was granted great and unsupervised power to effectively create unlimited currency. What could go wrong?

In 1656, Johan Palmstruch was finally granted the country’s first bank charter by the King of Sweden after multiple rejections. (His proposal only succeeded after he promised half the profits to the Crown.) At the time, people had to use cumbersome copper and silver currency (see above) that fluctuated in value based on industrial demand for those metals. The slab of copper above was “10 dalers” and the size of two sheets of letter paper and weighed 43 pounds!

It was the inconvenience of copper plate money that the exchange bank would remedy. Institutions and the general public could deposit their plate money in the bank in exchange for a receipt, which could then be used in transactions with other parties. This was a great relief for commerce. In the bank charter, Karl X Gustav emphasised ‘the good convenience our subjects thereby obtain, that in this way they are rid of much subtraction and addition, hauling and dragging and other trouble that the copper coin entails in its handling’. The weighty plates boded well for the success of the exchange bank.

A simple piece of paper could now represent any amount of dalers (100 daler note below):

The charter allowed the creation of an exchange bank. People could deposit their slabs of copper and silver at the bank, and instead receive a paper note promising that it could be redeemed back again at any time. Convenient! The charter also allowed the creation of a loan bank. The bank lent out money, and charged interest. The exchange bank and the loan bank were supposed to be separate. But look at all those pretty deposits just sitting there!

The charters treated the exchange bank and the loan bank as separate entities but this was not observed in practice. Although the exchange bank was no more than a depository for its clients’ money, which could be withdrawn without notice, the Bank started to lend its holdings. This state of affairs continued until 1664.

Soon the deposits were all lent out. But people still wanted loans! There was money to be made! If only there was a way to keep the whole things spinning…

Palmstruch found a solution. According to Erik Appelgren, a bank commissioner, ‘Not long afterwards, credit notes became a supplement invented by Herr Director for the shortage of money’. The bank would issue notes declaring that the holder had a claim on Stockholms Banco for a specified sum of money; the Bank would redeem the notes in exchange for cash. […]

This was a novelty in European banking. Earlier attempts to introduce notes had invariably tied them to deposits. Such certificates of deposit could be transferred as a token of value to business associates, who in turn could pass them on in the same way. In contrast, Palmstruch’s notes were not backed by particular deposits; instead, they relied on public confidence that the Bank would redeem them on demand. The system relied on the Bank’s credibility.

Success! Print as much money as you want! Expansion! Even the Crown and other high-ranking officials borrowed money.

Thanks to the credit notes, lending by the Bank ceased to be dependent on deposits. Loans could be provided for as much as the Bank was prepared to issue notes. After a tentative start, the flood gates were opened during 1663. The Crown borrowed 500,000 d km, Chancellor De la Gardie took a total of 255,000 d km for himself, the tar company borrowed 200,000 d km. More and more loans were unsecured. The business flourished; branches were opened in Abo, Falun and Goteborg; in Skane (ceded to Sweden by Denmark in 1658) the three upper Estates requested a separate branch in either Malmo or Landskrona.

What if… something spooked the customers… and people actually wanted all their deposits back?

However, reality soon caught up. On 12 September 1663, Joachim Schuttehielm, a bank secretary, reported to Palmstruch, who was away in Vasteras, that so much money had been withdrawn that the Bank had less than 4,000 d km in ready cash. To make matters worse, a depositor had announced that he wished to withdraw 10,000 d km. Schuttehielm asked Palmstruch to send money as soon as he could but the Director had nothing to send.

The bank collapsed after only six years. During the cleanup, audits revealed tons of missing money. Palmstruch was sentenced first to execution (later reduced to jail), and died only a year after his eventual release.

The Court of Appeal was not impressed. On 22 July 1668 Palmstruch was dismissed as director and sentenced to the loss of his privileges. He was banished for life and ordered to compensate within six months for ‘all the deficiency and shortage in the Bank that can demonstrably be proven’. If he failed to pay what he owed, he would be executed.

Let’s compare to the current FTX situation. Started out with a simple idea and got out of control very fast. FTX is less than 4 years old. Everyone was easily distracted by getting rich, all greased by the political donations and naming rights that spread the money around and the “effective altruism” that the media loved. The power to create unlimited currency for a while – FTX claimed billions of SRM and FTT tokens as assets – essentially things that FTX made out of thin air and knew it. Eventually, the desperate loaning out (aka stealing) of $10 billion in customer deposits to help themselves out of a jam. The panicked discovery. The coming criminal proceedings.

Individual investors are again reminded why FDIC and NCUA insurance exists – counterparty risk is real. It doesn’t matter what you own if you let the wrong place hold it for you.

Filed Under: Banking, Debt, Investing //

Best Interest Rates on Cash – November 2022 Update

Posted on November 6, 2022 // 5 Comments

Here’s my monthly roundup of the best interest rates on cash as of November 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 11/6/2022.

TL;DR: 5% on up to $10,000 from Juno. 4% APY on up to $6,000 for liquid savings at Current with no direct deposit requirement. Merchants Bank of Indiana Money Market at 3.82% APY. 1-year CD at 4.30% APY. 5-year CD at 4.42% APY. Compare against Treasury bills and bonds at every maturity (12-month near 4.75%). 6.89% Savings I Bonds still available if you haven’t maxed out 2022 limits.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5% on up to $10,000. Juno now pays 5% on all cash deposits up to $10,000 and 3% on cash deposits from $10,001 up to $250,000. $50 direct deposit bonus. Please see my Juno review for details.
  • 4.00% APY on $6,000 with no direct deposit requirement. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). No direct deposit required. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 4.00% APY on up to $250,000, but requires direct deposit and credit card spend. Currently a waitlist for new applicants. The top tier requires you to maintain positive cashflow in the checking account each month, $500 in total monthly direct deposits, and $500 in credit card purchases each month. Existing customers will get 4% APY through April 2023, with requirements waived through March 2023. Please see my updated HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 3.30% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 3.10% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 2.55% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • Banesco USA has a 12-month certificate at 4.30% APY. $1,500 minimum. Early withdrawal penalty is 90 days of interest.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 3.24%. Compare with your own broker’s money market rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 4.14% SEC yield ($3,000 min) and 4.24% SEC Yield ($50,000 min). The average duration is ~1 year, so there is some term interest rate risk.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 3.81% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 4.09% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 11/4/2022, a new 4-week T-Bill had the equivalent of 3.66% annualized interest and a 52-week T-Bill had the equivalent of 4.77% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 2.82% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.78% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2022 and April 2023 will earn a 6.89% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • The Bank of Denver pays 4.00% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 3.75% APY on balances between $500 and up to $25,000 (3.00% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Liberty Federal Credit Union pays 3.45% APY on up to $20,000. You’ll need at least 15 debit transactions and other requirements every month.
  • Lake Michigan Credit Union pays 3.00% APY on up to $15,000. You’ll need at least 10 debit transactions and other requirements every month.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Lafayette Federal Credit Union has a a 5-year certificate at 4.42% APY ($500 min), 4-year at 4.32% APY, 3-year at 4.22% APY, 2-year at 4.11% APY, and 1-year at 3.80% APY. Early withdrawal penalty can be quite severe though, with the 5-year CD penalty being 600 days of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • First Internet Bank has a 5-year certificate at 4.39% APY ($1,000 min), 4-year at 4.33% APY, 3-year at 4.28% APY, 2-year at 4.23% APY, and 1-year at 4.18% APY. The early withdrawal penalty for the 5-year is 360 days of interest.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Inventory is limited and right now, but I see a 3-year CD at 4.85% (non-callable). Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 5.15% (non-callable) vs. 4.17% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently 0.10%). This feature is not currently interesting because as of 11/6/2022, the 20-year Treasury Bond rate was 4.49%.

All rates were checked as of 11/6/2022.

Filed Under: Banking, Deals & Offers, Investing //

Ally Bank New Deposit Promo: Up to $500 Cash Bonus (Expired, But New CD Opportunity)

Posted on November 4, 2022 // 38 Comments

Update November 2022: Ally has raised the rates on their CDs and savings accounts, but notably the 11-month No Penalty CD is now at 3.10% APY, which isn’t amazing, but if you are already committed to this deposit bonus, it is a way to raise your effective interest rate while both still qualifying for the deposit bonus and maintaining liquidity. Note the terms state “Your new money must remain in an eligible Ally Bank account: Online Savings, Money Market or a CD.”

Original post (offer is now expired):

Ally Bank has a new “Get Paid” cash deposit bonus (link for existing customers) that is offering a 1% cash bonus (up to $500) on new deposits on top of their existing interest rate. Valid for both new and existing customers. Given the holding period, this roughly equates to the same total interest paid as a 3-month bank CD at 6.25%+ APY. Thanks to reader Paul for the heads up. Here’s how it works:

  • Open an account and/or enroll by 10/21/2022. You must enroll or you won’t get the bonus. New customers use the promo code GETPAID. Existing customers must enroll with the same e-mail as linked to their Ally bank account.
  • Fund your account by 10/31/2022. This means your account has to be approved, opened and funded by this date. Move at least $1,000 from another financial institution to a new or existing eligible Ally Bank account. Remember, transfers can take up to 3 business days.
  • Keep money in your account through 1/15/2023. Your new money must remain in your eligible Ally Bank account through 1/15/2023. Keep in mind, any withdrawals made during this time may reduce your bonus.
  • Get your cash bonus on or by 2/15/2023. Get a 1% bonus on the money you moved, up to $500.

Ally had a similar bonus in 2018 and 2020. Note the following extra details:

  • Cash bonus applies to new money added to an eligible Ally Bank account, not your total balance.
  • Your new money must remain in an eligible Ally Bank account: Online Savings, Money Market or a CD.
  • Minimum cash bonus is $10 ($1,000 deposit), maximum is $500 ($50,000 deposit).

Here’s an example:

1. Take your 10/11 end of day balance total across all eligible accounts. Ex. $5,000.
2. Take your 10/31 end of day balance total across all eligible accounts. Ex. $15,000.
3. Your max possible bonus is 1% of $10,000 = $100. If your total balance across all eligible balance ever goes below 15,000, then your bonus goes down as well. Let’s say your total balances from 10/31 onward through 1/15 varies from $12,000 to $18,000. Your bonus will only be 1% of $7,000 = $70.

Rough math. The current rate on the Ally Online Savings account is 2.25% APY (variable, likely to rise again soon, but who knows what the future holds) as of 10/12/22. Given that you can an additional 1% bonus in roughly 3 months, the bonus itself works out to the equivalent of a 4% annualized yield. 2.25% + 4% = 6.25% total annualized yield over 3 months (no guarantee, this is just an example estimate). You could also open a CD to lock in an even higher rate.

Should I move money out of Ally and back in to qualify? No, it won’t make any difference as Ally has already thought of that. Basically, your comparison point is your balance as of the end of day on 10/11/22. From the full terms and conditions:

We base your Cash Bonus calculation on the New Money you deposit into an eligible Online Savings account, Money Market account, or CD at Ally Bank between 10/12/2022 and 10/31/2022 (and then keep in your account through 1/15/2023). This means money you move out of Ally Bank and then back in won’t qualify for the bonus, and any withdrawals you make from an Online Savings account, Money Market account, or CD between 10/12/2022 and 1/15/2023 may reduce your bonus amount. Transfers of funds between existing Ally Bank accounts won’t qualify for the bonus. Remember, check deposits and transfers from other financial institutions can take a few or more days to complete, so make sure to start any transactions well enough before the 10/31/2022 deadline for those transactions to clear by or before 10/31/2022.

We’re all about playing fair, so if we believe you’re trying to game or abuse this offer, you won’t be allowed to participate in this offer or any future offers.

Existing customers. As a longtime Ally accountholder, I’m happy again to see that this offer includes existing customers, even if it has to be new money.

Bottom line. Ally Bank has a new promotion to attract new money (or bring back old money). You get a 1% cash bonus (up to $500) on new deposits on top of their existing interest rates. At the current rates for their savings account, this works out to a 3-month holding period paying roughly 6.25% annualized interest. You must enroll soon by 10/21/22 and your account must be opened and fully funded by 10/31/22 at the very latest.

Looks like I will be scraping up all the idle cash from my various accounts in the hopes of maximizing this bonus.

Filed Under: Banking, Deals & Offers //

Savings I Bonds November 2022 Interest Rate: 6.48% Inflation Rate, 0.40% Fixed Rate

Posted on November 1, 2022 // 14 Comments

November 2022 rates officially announced. May 2022 rate confirmed at 9.62%. 11/1/2022 press release. The variable inflation-indexed rate for I bonds bought from November 2022 through April 2023 will indeed be 6.48% as predicted. Every single I bond will also earn this rate eventually for 6 months, depending on the initial purchase month. The fixed rate for I bonds bought from November 2022 through April 2023 will be 0.40% (up from zero, and right in the midpoint of my guess), for a composite rate of 6.89% for 6 months. Still a good deal, either buying now or in January when the purchase limits reset.

See you again in mid-April for the next early prediction for May 2023.

Original post 10/13/22:

Inflation still 🚀 😬 Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2022 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a October 2022 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a November 2022 purchase.

New inflation rate prediction. March 2022 CPI-U was 287.504. September 2022 CPI-U was 296.808, for a semi-annual increase of 3.24%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 6.48%. You add the fixed and variable rates to get the total interest rate. The fixed rate hasn’t been above 0.50% in over a decade, but if you have an older savings bond, your fixed rate may be up to 3.60%.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in October 2022. If you buy before the end of October, the fixed rate portion of I-Bonds will be 0%. You will be guaranteed a total interest rate of 0.00 + 9.62 = 9.62% for the next 6 months. For the 6 months after that, the total rate will be 0.00 + 6.48 = 6.48% for the subsequent 6 months.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on October 31st, 2022 and sell on October 1st, 2023, you’ll earn a ~7.01% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you theoretically buy on October 31st, 2022 and sell on January 1, 2024, you’ll earn a ~6.90% annualized return for an 14-month holding period. Comparing with the best interest rates as of October 2022, you can see that this is much higher than a current top savings account rate or 12-month CD.

Buying in November 2022. If you buy in November 2022, you will get 6.48% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS. My guess is somewhere between 0.1% and 0.6%, but who knows. If I Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%). So if your fixed rate was 1%, you’ll be earning a 1.00 + 6.48= 7.48% rate for six months.

Buy now or wait? Given that the current I bond rate is already much higher than the equivalent alternatives, I would personally buy in October to lock in the high rate for the longest possible time. I would grab the “bird in the hand”, even though you might get a slightly higher fixed rate in November. I already purchased up to the limits first thing in January 2022, and I’ll probably buy again in January 2023. However, I am also buying TIPS as the real yield right now is higher than that of I bonds.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio. Right now, the inflation protection “insurance” is paying off with high yields and no principal risk.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. You can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number. TheFinanceBuff has a nice post on gifting options if you are a couple and want to frontload your purchases now. TreasuryDirect also allows trust accounts to purchase savings bonds.

Note: Opening a TreasuryDirect account can sometimes be a hassle as they may ask for a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. This doesn’t apply to everyone, but the takeaway is don’t wait until the last minute.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can only purchase them online at TreasuryDirect.gov, with the exception of paper bonds via tax refund. For more background, see the rest of my posts on savings bonds.

[Image: 1950 Savings Bond poster from US Treasury – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //

PNC Bank Checking Account Bonus ($200 or $400)

Posted on October 27, 2022 // 3 Comments

Update: Based on what I see in my zip code, it appears this bonus was extended to January 2, 2023.

PNC Bank is one of the Top 10 largest banks in the US, and they have a nice bonus available as well. Enter your zip code into their checking offer locator page and you should see either a $200 or $400 bonus based on your geographic location. You have to apply by 10/31 (although the offer may be extended) and you have 60 days to meet the direct deposit hurdles:

  • The $400 offer that came up required total qualifying direct deposits of $5,000 or more to the Spend account within the first 60 days after account opening.
  • The alternative offer was $200 bonus for total qualifying direct deposits of $2,000 or more to the Spend account within the first 60 days after account opening.

Here is the fine print attached to my specific offer (may differ slightly for your zip code):

You may earn a $400 reward if you open a new Virtual Wallet with Performance Select, a $200 reward if you open a new Virtual Wallet with Performance Spend, or a $50 reward if you open a new Virtual Wallet. If you change your Virtual Wallet product type after account opening, the product type that you are in at the end of the month in which you opened your account will determine your offer eligibility, terms and corresponding reward amount, if applicable.

To qualify for the reward, the new Virtual Wallet product must be started online via the application links on this page and completed with a mobile device, or in a branch using the appropriate coupon between 07/22/2022 to 10/31/2022, and a qualifying Direct Deposit(s) must be received within the first 60 days. Your Virtual Wallet product must remain open in order for you to receive the reward, which will be credited to the eligible account within 60–90 days after all conditions have been met and will be identified as “CREDITS CHECK REWARD” on your monthly statement.

A qualifying Direct Deposit for this offer, is defined as a recurring Direct Deposit of a paycheck, pension, Social Security or other regular monthly income electronically deposited by an employer or an outside agency into the Spend account of a Virtual Wallet with Performance Select, Virtual Wallet with Performance Spend or Virtual Wallet. The total amount of all qualifying Direct Deposits credited to your Spend account must be at least $5,000 for Virtual Wallet with Performance Select, $2,000 for Virtual Wallet with Performance Spend and $500 for Virtual Wallet. Credit card cash advance transfers, wire transfers, person to person transfers, transfers from one account to another or deposits made at a physical PNC location or ATM do not qualify as qualifying Direct Deposits.

New account will not be eligible for offer if you or any signer on the new account has an existing PNC Bank consumer checking account or has closed an account within the past 90 days, or has been paid a PNC promotional premium in the past 24 months. If multiple accounts are opened with the same signers, only one account will be eligible for the premium.

The Virtual Wallet Checking Pro has no monthly fees. The PNC Virtual Wallet with Performance Select and PNC Virtual Wallet with Performance Select have monthly fees that can be waived with either a minimum balance across accounts or a minimum direct deposit size. There is also an early closure fee of $25 if you close the account within 60 days, so you may need to downgrade your account after meeting the bonus requirements. The details may change with your address.

Filed Under: Banking, Deals & Offers //

Multi-Year Guaranteed Annuity (MYGA) to Immediate Annuity Example (Rates Now 5%+)

Posted on October 19, 2022 // 13 Comments

Many people hold a blanket assumption that all annuities are bad investments. Indeed, many annuities offer confusing promises with high hidden expenses, but I believe that certain annuities can be a very useful tool in retirement planning. First, the annuities must be transparent with clear, contractual guarantees such that you can directly comparison shop different products against each other. Two of the most simple types of annuities fit this definition:

  • Single premium immediate annuities (SPIA). These are for lifetime income in retirement. You pay an upfront lump sum (single premium), and you immediately start receiving a guaranteed monthly income check for the rest of your life (or joint life).
  • Multi-year guaranteed annuity (MYGA) fixed deferred annuity. These are for the accumulation stage. You put up your principal and similar to a bank certificate of deposit, you receive a fixed, guaranteed rate of return for a certain number of years. The investment growth is tax-deferred until age 59.5 when you withdraw your funds without the 10% IRS penalty. At that time, you could also roll into an SPIA.

As of this writing, MYGA rates are over 5% at the 5-year term and longer. (Image above is a sample chart of the growth of a $10,000 investment for a 5-year MYGA at 5.10%.) These rates are still higher than prevailing bank certificate rates and Treasury bond rates, while also offering the potential for tax-deferred growth while in the annuity wrapper.

There are additional wrinkles of course like early withdrawal penalties and annual withdrawal allowances, but the most important part is that you you can compare apples to apples at websites like Blueprint Income, Stan the Annuity Man, and ImmediateAnnuities.com.

MYGAs 101: Who are MYGAs a good fit for? They aren’t for everyone. I wondered how a MYGA would fit into something like the Standardized Personal Finance Advice Flowchart.

  • You have adequate emergency funds.
  • You don’t have debt besides primary mortgage.
  • You have maxed out your available Roth IRA, 401k/403b/457, and HSA contributions.
  • As part of your asset allocation, you would like more room for a CD/fixed-income style investment in a tax-deferred vehicle.
  • You are saving for close to a traditional retirement age (i.e. don’t need any liquidity until age 59.5).
  • You have looked at your state-specific guaranty limits and will stay below them for any single insurance issuer. You understand what the state guaranty system does and doesn’t provide.

I have written in more detail about MYGAs here:

Low-Risk MYGA to SPIA $100,000 Example. Let’s say you are a risk-averse 50 yo investor (Texas resident) with $100,000 and want to retire at age 60. Based on actual rates available as of this writing (10/19/2022), you could put the $100,000 into a 10-year MYGA at 5.20% today and in 10 years you will have $166,019 due to the tax-deferred compounding. Both the initial and final values are well within the Texas state guaranty limits of $250,000 per insurer and the insurer Oceanview is rated A-.

I can’t tell you the future, but let’s say you are 60yo and have that $166,019 today. At current rates, with $166,019 you can get an immediate annuity from Nationwide Insurance paying between $955 a month or $11,500 a year (female) and $11,800 a year or $987 a month (male) for the rest of your life. This will stack with your Social Security to create a very stable income base to complement your riskier growth assets, even if you live to 110. Note that you may owe income taxes on the pro-rated amount of your income that is marked as capital gains.

You are giving up the possibility of higher returns via the stock market in exchange for a slow-and-steady option with no stock market volatility. If you were going to invest in bonds anyway for part of your portfolio, this option offers the potential for higher returns in a tax-deferred wrapper (like with a Traditional IRA, you still owe taxes on gains at the end).

Bottom line: MYGAs can be a good tool to keep an eye upon. Each unique tool available has different features for the right situation. For example, a no-penalty CD offers the unique combination of a rate that you can always ratchet upward but will never go down (savings accounts can drop whenever they want), plus you have instant liquidity whenever you want. In contrast, this MYGA offers a significantly higher rate with tax-deferral benefits that can really add up over time, but you have extremely harsh early withdrawal penalties and you must do your due diligence and diversify to minimize any risk involved. You might find them useful for a portion of your portfolio, or you might not ever need either one.

Filed Under: Annuities, Banking, Investing, Retirement //

Best Interest Rates on Cash – October 2022 Update

Posted on October 4, 2022 // 8 Comments

Here’s my monthly roundup of the best interest rates on cash as of October 2022, roughly sorted from shortest to longest maturities. We all need some safe assets for cash reserves or portfolio stability, and there are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you’d earn by moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 10/3/2022.

TL;DR: 4% APY on up to $6,000 for liquid savings at Current with no direct deposit requirement. Elements Financial at 3.25% APY liquid savings, rate guaranteed for 1 year. 1-year CD at 3.85% APY. 5-year CD at 4.42% APY. Compare against Treasury bills and bonds at every maturity (12-month near 4%). 9.62% Savings I Bonds still available if you haven’t maxed out limits.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 4% APY on $6,000. Current offers 4% APY on up to $6,000 total ($2,000 each on three savings pods). No direct deposit required. $50 referral bonus for new members with $200+ direct deposit with promo code JENNIFEP185. Please see my Current app review for details.
  • 3% APY on up to $250,000, but requires direct deposit and credit card spend. HM Bradley will now pay up to 3% APY on up to $250,000 if you open both a checking and credit card with them and maintain positive cashflow each month, $500 in total direct deposits each month, and $500 in credit card purchases each month. Existing customers will get 3% APY with requirements waived through end of 2022. Please see my updated HM Bradley review for details.

High-yield savings accounts
Since the huge megabanks pay essentially no interest, I think every should have a separate, no-fee online savings account to accompany your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

  • Rates rising across the board, while the leapfrogging to be the temporary “top” rate continues. Elements Financial at 3.25% APY ($2,500 minimum, new money, rate guaranteed for 1 year).
  • SoFi Bank is now up to 2.50% APY + up to $325 new account bonus with direct deposit. You must maintain a direct deposit of any amount each month for the higher APY. SoFi has their own bank charter now so no longer a fintech by my definition. See details at $25 + $300 SoFi Money new account and deposit bonus.
  • There are several other established high-yield savings accounts at closer to 2.15% APY. Marcus by Goldman Sachs is on that list, and if you open a new account with a Marcus referral link (from reader Paul) you can get an extra 1.00% APY for your first 3 months.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. CIT Bank has a 11-month No Penalty CD at 2.75% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 2.00% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 2.20% APY with a $500 minimum deposit. You may wish to open multiple CDs in smaller increments for more flexibility.
  • State Bank of Texas has a 12-month certificate at 3.85% APY. $25,000 minimum. Early withdrawal penalty is 60 days of interest.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience short-term losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 2.77%. Compare with your own broker’s money market rate.
  • Vanguard Ultra-Short-Term Bond Fund currently pays 3.42% SEC yield ($3,000 min) and 3.52% SEC Yield ($50,000 min). The average duration is ~1 year, so your principal may vary a little bit.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 3.05% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 3.41% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 10/3/2022, a new 4-week T-Bill had the equivalent of 2.79% annualized interest and a 52-week T-Bill had the equivalent of 4.00% annualized interest.
  • The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) has a 2.44% SEC yield and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 2.36% SEC yield. GBIL appears to have a slightly longer average maturity than BIL.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between May 2022 and October 2022 will earn a 9.62% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-October 2022, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
  • See below about EE Bonds as a potential long-term bond alternative.

Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are severely capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). There is a long list of previous offers that have already disappeared with little notice. I don’t personally recommend nor use any of these anymore, as I feel the work required and the fees charged if you mess up exceeds any small potential benefit.

  • Mango Money pays 6% APY on up to $2,500, if you manage to jump through several hoops. Requirements include $1,500+ in “signature” purchases and a minimum balance of $25.00 at the end of the month.
  • NetSpend Prepaid pays 5% APY on up to $1,000 but be warned that there is also a $5.95 monthly maintenance fee if you don’t maintain regular monthly activity.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • (Rate will increase to 4.00% APY with the qualification cycle beginning October 20, 2022.) The Bank of Denver pays 2.50% APY on up to $15,000 if you make 12 debit card purchases of $5+ each, receive only online statements, and make at least 1 ACH credit or debit transaction per statement cycle. If you meet those qualifications, you can also link a Kasasa savings account that pays 1.00% APY on up to $25k. Thanks to reader Bill for the updated info.
  • Presidential Bank pays 3.00% APY on balances between $500 and up to $25,000 (2.50% APY above that) if you maintain a $500+ direct deposit and at least 7 electronic withdrawals per month (ATM, POS, ACH and Billpay counts).
  • Liberty Federal Credit Union pays 3.45% APY on up to $20,000. You’ll need at least 15 debit transactions and other requirements every month.
  • Lake Michigan Credit Union pays 3.00% APY on up to $15,000. You’ll need at least 10 debit transactions and other requirements every month.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Lafayette Federal Credit Union has a a 5-year certificate at 4.42% APY ($500 min), 4-year at 4.32% APY, 3-year at 4.22% APY, 2-year at 4.11% APY, and 1-year at 3.80% APY. Early withdrawal penalty can be quite severe though, with the 5-year CD penalty being 600 days of interest. Anyone can join this credit union via partner organization ($10 one-time fee).
  • Bread Financial has a 5-year certificate at 4.25% APY ($1,500 min), 4-year at 4.15% APY, 3-year at 4.00% APY, 2-year at 3.75% APY, and 1-year at 3.60% APY. The early withdrawal penalty for the 5-year is 365 days of interest.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see no 5-year CDs available (non-callable). Be wary of higher rates from callable CDs, which means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see no 10-year CDs available (non-callable) vs. 3.72% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.
  • How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently 0.10%). Purchase limit is $10,000 each calendar year for each Social Security Number. However, this feature is no longer interesting because as of 10/3/2022, the 20-year Treasury Bond rate was 4.00%.

All rates were checked as of 10/3/2022.

Filed Under: Banking, Deals & Offers, Investing //
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