360 Money Market

[HamsterStache]

With so many better options for growing money, I know savings accounts aren't much discussed here, but the way interest rates are going at the moment, some of them actually seem like a worthwhile place to keep larger amounts of liquid cash. I've been happy with my Capital One 360 Money Market which is currently at 1.85% for balances over $10k - the only disadvantage I see with them over a traditional savings account is that withdrawals and deposits can take a few days to process. They have up to $100 referral bonus for opening a new account. Disclaimer, I can earn a referral fee also if you use my link.

https://www.capitalone.com/bank/referred-by-friend/?save=K2JayUttPA$U

Anyone have any thoughts on the 360 MM or know a better savings account I should be aware of?

[Indexer]

Vanguard's Federal Money market is paying over 2%, and their Prime mmkt is paying about 2.15%. That's what I've been using.

[Another Reader]

Lots of savings and money market accounts paying more without the restrictions.  Other banks move money faster.  I dislike their procedures and the interface and got rid of the account.

www.deposit accounts.com for a list of rates. 

Vanguard's MM accounts pay more, without the FDIC guarantee.

I buy treasuries directly at Fidelity.  Vanguard and Schwab offer the same service.  No cost for buying at the auction.  Four week bills settled this morning around 2.14 percent IIRC.

[HamsterStache]

I'm still somewhat of a financial newbie, and part of the reason I like the 360 account is that our regular bank is Capital One also (used to be Chevy Chase till CO bought it) and it is convenient to have all our money under the same roof so to speak. Opening a Vanguard IRA is in the cards for 2019 though as we get a bit of cash flow available (paid off the car) so I'll have to look into their options. Aren't most Money Markets not technically insured though?

[Indexer]

Vanguard's MM accounts pay more, without the FDIC guarantee.

I would argue that's a positive trait, not a negative. FDIC gives you government insurance on your money up to $250,000 if the institution failed.

The Vanguard Federal Money Market is invested in short term government securities, the same treasuries you are a fan of. That means the investments are backed by the government regardless of dollar amount.

Aren't most Money Markets not technically insured though?

Money market savings accounts, like those offered by banks including Capital One 360's, are FDIC insured.

Money Market Mutual funds, like Vanguard's, are not FDIC insured and fall into 2 groups.

Federal Money Markets invest in short term government debt. While they lack FDIC, they are still backed by the government since they are invested in Government debt.

Other money market mutual funds, like Prime and Municipal money market mutual funds, are not FDIC insured and they are not invested in U.S. Federal government debt, so they don't have the same level of protection.

[Another Reader]

I would argue that's a positive trait, not a negative. FDIC gives you government insurance on your money up to $250,000 if the institution failed.

The Vanguard Federal Money Market is invested in short term government securities, the same treasuries you are a fan of. That means the investments are backed by the government regardless of dollar amount.

Suggest you look at the fund's composition.

Distribution by issuer (% of fund)
as of 09/30/2018

Bankers Acceptances   
Certificates of Deposit   
Other   
Repurchase Agreements   14.1 %
U.S. Commercial Paper   
U.S. Govt. Obligations   29.7%
U.S. Treasury Bills           56.2%
Yankee/Foreign                  

43.8 percent of the fund is NOT invested in treasuries but in other federally issued paper and complex repurchase agreements.  Although Vanguard has a smaller percentage of repurchase agreements than others, it does use them to juice the yield.  OTOH, Fidelity does offer a Treasury-only MMF at a lower yield with a high expense ratio.  ETA:  So does Vanguard.  VUSXX, ER 0.09. 

Buying treasuries directly guarantees the money is invested in treasury paper.  It also insures that they are your property, not that of a mutual fund.