Author Topic: Best way to hold liquid cash?  (Read 2926 times)

Pixelshot

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Best way to hold liquid cash?
« on: September 04, 2019, 11:57:47 AM »
Hi all, I have some cash in a low-yield savings account that I would like to keep on hand as liquid cash for some upcoming transactions in the next few months. Some searching online revealed a list of high yield savings accounts. When I tried to apply for one (Vio Bank  - NOT RECOMMENDED), my application was rejected. When I called the bank they said that they couldn't tell me why it was rejected. Creepy. (note, there is no reason I'm aware of why they wouldn't let me open an account) Another online search verified that lots of folks had this same problem. SO, that leaves me back at the drawing board.

Does anyone have a recommended bank or  for a liquid (or semi-liquid) savings account?? The accounts I've seen, like Citibank and American Express, pay around 2% APR. (Vio claims 2.5%). Should I be using a Vanguard investment account instead?  Thx

MaybeBabyMustache

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Re: Best way to hold liquid cash?
« Reply #1 on: September 04, 2019, 12:07:18 PM »
No experience with the others, but I personally have used Barlcays (online only) & they are paying 2.1%, I believe.

Watchmaker

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Re: Best way to hold liquid cash?
« Reply #2 on: September 04, 2019, 12:27:13 PM »
Best way to hold liquid cash?
A bucket.

Bad joke aside, I'd stick with banks I know. Barclay's was already mentioned. Ally's no penalty CDs might be worth looking at. But in your shoes I'd just keep it in a Vanguard Money Market account.

Pixelshot

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Re: Best way to hold liquid cash?
« Reply #3 on: September 04, 2019, 01:00:20 PM »
Thanks! I guess this opens up a new question, which is: what would I do with the money if it were in a Vanguard Money Market account? Let's assume that it might not stay there for long, or would need to be somewhat liquid (say to cover a large unexpected medical bill or car purchase). does it act like a bank account if the money is not "invested?" Or, would it be best to just use it to buy an indexed fund (total stock market) like where all of my retirement money sits?

RWD

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Re: Best way to hold liquid cash?
« Reply #4 on: September 04, 2019, 01:13:51 PM »
I have been very happy with Ally but I know you can find a few tenths of a percent more at some other reputable options.

Watchmaker

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Re: Best way to hold liquid cash?
« Reply #5 on: September 04, 2019, 01:20:14 PM »
Thanks! I guess this opens up a new question, which is: what would I do with the money if it were in a Vanguard Money Market account? Let's assume that it might not stay there for long, or would need to be somewhat liquid (say to cover a large unexpected medical bill or car purchase). does it act like a bank account if the money is not "invested?" Or, would it be best to just use it to buy an indexed fund (total stock market) like where all of my retirement money sits?

For funds that may/will be needed soon I wouldn't invest them in an index fund as there's risk of the value dropping right when you need it. The Vanguard Prime Money Market fund (VMMXX) pays a variable interest rate, currently somewhere just north of 2% I believe.

VMMXX isn't FDIC insured though, so if that's a concern to you I'd stick with a bank savings account or short CDs.

Rosy

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Re: Best way to hold liquid cash?
« Reply #6 on: September 05, 2019, 07:38:12 AM »
If you have $50K - you're in luck. Take advantage of Capital One's current promo for their 2% APR MM and get $500 bonus cash - x-date for offer 9-22-19.
They are a solid online bank (took over ING a few years back and it is easy to transfer money in and out).
You do need to have $10K min bal to get that 2% interest.

Here is the complete review on the doctorofcredit blog (they are a reliable source) with the fine print and a direct link to the sign-up.
https://www.doctorofcredit.com/capital-one-money-market-500-bonus-2-apy-requires-deposit-of-50000/
Look under Bank Accounts - click Best Bank Account Bonuses for September and scroll down to Section 2 - Savings Account Bonuses.

It is amazing to me to find out about all this free money floating around:) - $100 for leaving $2K in Hancock Whitney Bank for 90 days? Yes, please.
That's like getting 5% interest for a 12 mo - $2K CD.
I've learned a lot on this blog mostly just from reading the lively comments under each review.

My other suggestion to you would be to check your local Credit Unions, you'd be surprised at some of the goodies you find if you start poking around for special offers and even things like a Holiday Savings Account that pays 2.5% interest up to $4K and you only pay $5 in penalty for pulling out your money early.
If you have or had a military connection you'll find there are still some awesome offers and benefits available like 3% and 3.5% CDs for their credit union members.

One local credit union offered 3.5% on a min $1million 5yr CD deposit and had such an overwhelming response they pulled the offer (very) early. Banks and CU can pull their offers any time but if you're in, you're good. That happened only 8 months ago, the banner was up two days:).
I guess there are a lot of rich retirees in Florida who aren't that keen on the market.

Ecky

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Re: Best way to hold liquid cash?
« Reply #7 on: September 05, 2019, 10:15:12 AM »
I keep liquid cash in a checking account with my local credit union, which offers 3% interest.

Pixelshot

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Re: Best way to hold liquid cash?
« Reply #8 on: September 05, 2019, 11:08:58 AM »
wow. that's pretty sweet.

habanero

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Re: Best way to hold liquid cash?
« Reply #9 on: September 05, 2019, 11:28:48 AM »
Cash in a FDIC insured savings account is the only real arbitrage opportunity easily available to the little man. You generally get slightly higher yield than what uncle Sam is paying on treasury bills and you take the same credit risk.

35andFI

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Re: Best way to hold liquid cash?
« Reply #10 on: September 05, 2019, 11:45:17 AM »
I'm surprised that no one has recommended Wealthfront's Cash Account.

Currently it offers 2.32% APY with FDIC insurance, no hoops to jump through, no minimum balance, and unlimited withdrawals.

Pixelshot

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Re: Best way to hold liquid cash?
« Reply #11 on: September 05, 2019, 01:51:47 PM »
I'm surprised that no one has recommended Wealthfront's Cash Account.

Currently it offers 2.32% APY with FDIC insurance, no hoops to jump through, no minimum balance, and unlimited withdrawals.

Funny that you say that. After comparing numerous options (particularly helpful was by Rosy's DoctorOfCredit link), I went back to re-read the MMM article on Betterment. Through that, I found Wealthfront's savings account, (2.32% APY), which is just a bit more enticing than Betterment (2.13% APY), and gives the convenient option of using this account for after-tax investing (if I decide to pay the fees). Betterment does too, but with slightly higher fees. So, I'm giving Wealthfront a try.

Thanks to all!
« Last Edit: September 05, 2019, 02:12:37 PM by Pixelshot »

Padonak

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Re: Best way to hold liquid cash?
« Reply #12 on: September 05, 2019, 01:56:04 PM »
Ptf

35andFI

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Re: Best way to hold liquid cash?
« Reply #13 on: September 05, 2019, 03:47:45 PM »
Glad we could help!

Iím a fan of wealthfront myself and have been using it for a few months now.
Got my friends and family on board too.

CanuckExpat

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Pixelshot

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Re: Best way to hold liquid cash?
« Reply #15 on: September 06, 2019, 08:37:07 AM »
very enticing options. thanks!

Bucksandreds

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Re: Best way to hold liquid cash?
« Reply #16 on: September 06, 2019, 12:07:57 PM »
Id use Tupperware or a gallon freezer bag. Putting liquid cash in a colander or cheese cloth and most/all of it would go down the drain.