Author Topic: 1.15% APR is "High Yield"?  (Read 2168 times)

Zamboni

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1.15% APR is "High Yield"?
« on: June 25, 2017, 12:18:00 PM »
For years, my friend has had a conspiracy theory that "banks are trying to make everyone forget that they ever paid interest on accounts."

Sadly, though, I think he may be right. I prefer to keep most of my assets invested, but I do keep a few thousand in my credit union so it is handy for things like repairs, travel, etc. Also, my income fluctuates somewhat, so (after autoinvestments) I typically pop extra pay into a holding account knowing that I will likely use it in a month or three.

Years ago I held it in my 0.75% savings account. The guy at the bank one day said "you can get 1% by switching to this type of account." Great, not much higher but better than a poke in the eye! So I opened the MM account and switched. Now I see that at some point they instituted at $2 a month fee on that account . . . this essentially wipes out any interest because I don't keep much in there in the first place. Argh! So I'm moving the money back to the 0.75% savings that has no fees and closing the other one next week.

All of that is to say that I am amazed that the highest interest savings account I could find online is 1.15%. This is now termed "high yield." Wow, just wow.

L.A.S.

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Re: 1.15% APR is "High Yield"?
« Reply #1 on: June 25, 2017, 02:40:57 PM »
The interest rate that banks will pay to account holders on demand deposits and short term time deposits are a function of prevailing short term interest rates.

In order to encourage economic activity, as opposed to saving, in the wake of the financial crises, the Fed has had a low/zero interest rate policy since 2008/09 for short term interest rates.  This has lowered the interest rate that banks must pay in order to borrow money short term. 

Accordingly, there has been no economic reason for them to pay high interest rates on savings accounts since they can get the money cheaper elsewhere.  So they pay low interest rates.

It hasn't been all bad though.  Inflation has been low for the past several years so although the nominal value of savings accounts has not risen much, the real value has not been chewed away by inflation either.

And the Fed has started its tightening cycle.  So interest rates on savings accounts might start going up soon.

Zamboni

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Re: 1.15% APR is "High Yield"?
« Reply #2 on: June 25, 2017, 04:07:48 PM »
Yes, that's a good point about the inflation. It's just amazing that the term "high yield" is put on these accounts.

Hargrove

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Re: 1.15% APR is "High Yield"?
« Reply #3 on: June 25, 2017, 07:49:24 PM »
Yes, that's a good point about the inflation. It's just amazing that the term "high yield" is put on these accounts.

The yield's level is just determined by the context of interest rates, which were nearly 0 for a very long time. It's much higher than the almost-nothing almost everyone else is paying. Discover has 2.35% CDs that may be very slightly higher through AAA. That's the best FDIC-insured investment right now, I think.

GS Bank offers 1.2% in their regular high-yield savings.

DavidAnnArbor

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Re: 1.15% APR is "High Yield"?
« Reply #4 on: June 25, 2017, 07:55:13 PM »
Consider I-Bonds from treasurydirect.gov

Car Jack

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Re: 1.15% APR is "High Yield"?
« Reply #5 on: June 26, 2017, 06:02:58 AM »
All America Bank's internet brand, Redneck Bank gives 1.25% on up to $35k.  There's another bank that gives 1.25% on $10k+ with no high limit that I'm aware of.

bob22

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High Interest Savings and Checking
« Reply #6 on: July 17, 2017, 03:42:43 AM »
Redneck Bank Mega Money Market Account is up to 1.5% APY up to $35,000. It's the best FDIC insured account that I can find that doesn't have monthly usage requirements and isn't an introductory rate only. One of the things I REALLY liked with Redneck is when I called their customer service line, I got a human being on the phone immediately--no automated attendant, no press "1" for this, press "2" for that. And the person knew the business, and was helpful immediately--no accent that made it difficult to understand, no trying to find the answer to my question on a list, no putting me on hold, no transfer to a level 2 help desk, etc.

I use Barclays Bank Dream Account (1.15% APY) for my kids. It's got some nice features such as additional interest rate bonuses if you don't withdraw for 6 months. It's also kid friendly and can be set up with an adult account to access childrens' accounts.

For checking, the best that I've seen is Lake Michigan Credit Union (LMCU) which offers 3% APY up to $14,999. But I believe there are some usage restrictions.
« Last Edit: July 17, 2017, 03:58:39 AM by bob22 »

the_fella

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Re: 1.15% APR is "High Yield"?
« Reply #7 on: July 17, 2017, 05:20:05 PM »
I use prepaid cards like Netspend and Insight Prepaid Card. They have associated savings accounts that pay 5%. Both pay quarterly. Netspend only pays 5% on balances up to $1,000. I just withdraw the interest as it is deposited, because any amount over $1,000 earns significantly less than 1%. Insight pays 5% on balances up to $5,000, and will also pay that on any interest accrued beyond $5,000, but not on any amount you deposit beyond $5,000. Insight allows you to have up to two cards at once, so you can get this on up to $10,000.


If you do use these, make sure you do NOT use the debit cards. They're 100% a scam and come with ridiculous fees.

katsiki

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Re: 1.15% APR is "High Yield"?
« Reply #8 on: July 17, 2017, 05:30:15 PM »
This seems like a good time to pass along this 1.30% account I just stumbled across.  I do not bank with them so please research this if interested.  Seems like there are no obvious gotchas.

https://www.salliemae.com/save-for-college/savings-products/money-market-account/

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Hargrove

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Re: High Interest Savings and Checking
« Reply #9 on: July 17, 2017, 05:32:15 PM »
For checking, the best that I've seen is Lake Michigan Credit Union (LMCU) which offers 3% APY up to $14,999. But I believe there are some usage restrictions.

You have to be very active with the account. 4 online logins, 10 debit card purchases, estatements, and direct deposit every month.

That said, 3% is outrageously good for a bank. Anyone with a giant emergency fund in their regular checking should consider this.


DavidAnnArbor

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Re: 1.15% APR is "High Yield"?
« Reply #10 on: July 17, 2017, 06:15:19 PM »
I use prepaid cards like Netspend and Insight Prepaid Card. They have associated savings accounts that pay 5%. Both pay quarterly. Netspend only pays 5% on balances up to $1,000. I just withdraw the interest as it is deposited, because any amount over $1,000 earns significantly less than 1%. Insight pays 5% on balances up to $5,000, and will also pay that on any interest accrued beyond $5,000, but not on any amount you deposit beyond $5,000. Insight allows you to have up to two cards at once, so you can get this on up to $10,000.


If you do use these, make sure you do NOT use the debit cards. They're 100% a scam and come with ridiculous fees.

I didn't know you could have 2 cards with Insight.

When  you say the interest accrued earns 5% does that mean you just keep the interest in the account and the combined balance, say $5,061 will earn 5% ?

the_fella

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Re: 1.15% APR is "High Yield"?
« Reply #11 on: July 24, 2017, 01:50:43 PM »
I use prepaid cards like Netspend and Insight Prepaid Card. They have associated savings accounts that pay 5%. Both pay quarterly. Netspend only pays 5% on balances up to $1,000. I just withdraw the interest as it is deposited, because any amount over $1,000 earns significantly less than 1%. Insight pays 5% on balances up to $5,000, and will also pay that on any interest accrued beyond $5,000, but not on any amount you deposit beyond $5,000. Insight allows you to have up to two cards at once, so you can get this on up to $10,000.


If you do use these, make sure you do NOT use the debit cards. They're 100% a scam and come with ridiculous fees.


When  you say the interest accrued earns 5% does that mean you just keep the interest in the account and the combined balance, say $5,061 will earn 5% ?


That is correct, yes. But that's a unique feature to Insight. Netspend doesn't do that, and afaik no other card does, either.

DavidAnnArbor

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Re: 1.15% APR is "High Yield"?
« Reply #12 on: July 24, 2017, 02:09:55 PM »
I use prepaid cards like Netspend and Insight Prepaid Card. They have associated savings accounts that pay 5%. Both pay quarterly. Netspend only pays 5% on balances up to $1,000. I just withdraw the interest as it is deposited, because any amount over $1,000 earns significantly less than 1%. Insight pays 5% on balances up to $5,000, and will also pay that on any interest accrued beyond $5,000, but not on any amount you deposit beyond $5,000. Insight allows you to have up to two cards at once, so you can get this on up to $10,000.


If you do use these, make sure you do NOT use the debit cards. They're 100% a scam and come with ridiculous fees.



When  you say the interest accrued earns 5% does that mean you just keep the interest in the account and the combined balance, say $5,061 will earn 5% ?


That is correct, yes. But that's a unique feature to Insight. Netspend doesn't do that, and afaik no other card does, either.

Thanks for that info. I had no idea. I thought I had to get the interest out like with the Netspend type accounts.

OurTown

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Re: 1.15% APR is "High Yield"?
« Reply #13 on: July 24, 2017, 02:21:01 PM »
This seems like a good time to pass along this 1.30% account I just stumbled across.  I do not bank with them so please research this if interested.  Seems like there are no obvious gotchas.

https://www.salliemae.com/save-for-college/savings-products/money-market-account/

I have this account.  No minimums, no fees, no tricks. 

bob22

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Re: 1.15% APR is "High Yield"?
« Reply #14 on: July 25, 2017, 02:09:41 PM »
Another potential option: Northpointe Bank 5% APY
Free checking, ATM refunds (up to $10/month), and of course high APY
Qualifications for APY include:
- 15 or more  debit card purchases that post and settle per the statement period
- enrollment in eStatements and direct deposit or automatic withdrawal of $100 or more per statement period

It's one of the best I've seen that has a higher max balance to get the interest rate and very competitive interest rate.

Scandium

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Re: 1.15% APR is "High Yield"?
« Reply #15 on: July 26, 2017, 11:59:48 AM »
All America Bank's internet brand, Redneck Bank

This is not a real thing is it??

bob22

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Re: 1.15% APR is "High Yield"?
« Reply #16 on: July 26, 2017, 03:34:11 PM »
I know it sounds hokey, but Redneck Bank is absolutely a real bank (Mustang, OK). They are primarily an online bank--the online arm of All American Bank. Others have had similar concerns about it not being a real bank: https://www.depositaccounts.com/banks/reviews/redneck-bank.html. But it's FDIC insured.

I can tell you that I have a little over $20K in there, and I get close to $25 in interest each month on it. It's where I currently keep my emergency fund.

ChpBstrd

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Re: 1.15% APR is "High Yield"?
« Reply #17 on: July 26, 2017, 09:32:01 PM »
Have some patience, my friend.  I remember about 10 years ago before the financial crisis you could get 3-4% on high yield savings accounts online such as Discover Savings or ING direct.  It will come up as the Fed increases short term rates, unless there is another recession.
I was earning an FDIC-insured 5.5% on my emergency fund in 2007. Now that's roughly the yield of a junk bond fund like HYG.

At some point, chasing these 1-2% yields isn't worth the trouble. Just write a cash-secured ITM put option on SPY for $2. Get assigned. Sell an ITM call option for another $2. Get called. Even at today's low option prices, this yields 1.6% in two months. Get the timing right and you'll collect a dividend too.