Where to "stash" down payment until needed?

[begood]

We have too much cash earning next to nothing in the bank. We're hanging on to it because it will eventually become a down payment on a house (could be a year, could be six years, could be even more) and we don't want to risk it declining in value by investing in stocks or being less accessible when needed.

I know we could put it in an online bank that makes a little better interest, but I've tried setting up accounts at both Barclay's and American Express and not been successful, then had trouble reaching customer service during their regular hours to sort it all out. Those experiences did not inspire confidence in online banks!

I also have a really dumb, basic question: How would I move the money from my bank to another bank? I mean the logistics, the steps to transfer. Bank of America has $1,000 transfer limit per day and charges $3 for the privilege of moving it. Then there's a "SafePass" system to transfer more but it involves texts and things I haven't had the courage to explore yet. How can I ensure my oh-so-important nest egg gets where it needs to go without a lot of hassle or expense?

[Credaholic]

I'm curious what other's thoughts on this are as well. We've kept a considerable amount of cash liquid over the past few years that was ear marked for home purchase or remodels, and it pains me a little to see that money accumulating nothing but dust. I suppose you could do laddered CDs, but those don't earn much more than a regular high interest savings account anyway.

FWIW I use Alliant Credit Union. Initially we got about 1.2% interest in their savings account, no minimum limits, no fees. That's gone down over the years and is now .7%, so not much lower than an American Express or Barclays online account. It's also an excellent credit union, and I ended up switching all my personal banking over to them. Their rates are better than anything you'd get at a traditional bank, and even though they have no locations where I live, I'm able to handle all my banking needs at one of my local credit union ATMs fee free, using their iPhone app, or by placing a call to customer service where I always get a live person immediately. I sound like a commercial now - not affiliated in any way, I swear :) Just have really loved them.

You do have to be a member of one of their qualifying organizations, but it's a long list which includes the PTA. I may or may not have actually belonged to the PTA when I joined, but I figured hey, I'll be a member one day!

[Thegoblinchief]

Smartypig is the highest APR that I'm aware of in the U.S. at 1% last I checked.

What I would do is find a no-fee checking account with another bank or credit union. Close your BoA account, move all the money there. I have no problem transferring thousands of dollars back and forth each month from my checking to my Capital One 360 account.

[huadpe]

As to online banks - I've had good experience with Ally.

The logistics of the transfer are simple.  It will be done through the Automatic Clearing House (ACH) system, which is the check processing system.  When you sign up for the new account, it will give you the option to fund it by a transfer from your old bank.  You put your current bank's info in there (account and routing numbers) and Ally or whoever you decide to go with will initiate an electronic check to Bank of America in the amount you tell them, same as if you'd written a paper check to yourself.  It will take a few days to clear - same as if you'd written a paper check to yourself.  You won't use BofA's software at all, and they're not likely to charge you a fee - unless they currently charge you a fee per check you write.  There is no size cap or anything on checks.

Now, if you want to go to investments, you need to tell us 6 months or 6 years, or at least give some idea of the probabilities.  If it's 6 months, wait it out in a bank account.  6 years you're looking at something like this fund from Vanguard:

https://personal.vanguard.com/us/funds/snapshot?FundId=0724&FundIntExt=INT

[chicagomeg]

You could always request a cashier's check from BOA & mail it to the online bank for deposit to get around BOA's limits.

[sol]

We stored all of our recent down payment in our taxable investment account at vanguard.  Mostly invested in vtsax.  We pulled it out and put it in our checking account on the day they signed our offer, which worked out well for us.  We could have lost a bundle had the market tanked, though.

[marty998]

Bank of America has $1,000 transfer limit per day and charges $3 for the privilege of moving it. Then there's a "SafePass" system to transfer more but it involves texts and things I haven't had the courage to explore yet. How can I ensure my oh-so-important nest egg gets where it needs to go without a lot of hassle or expense?

Safepass sounds like a security system designed to prevent fraudulent transactions. For me, if I make an internet payment to a new account I get sent a txt with a pin code to input online. THis way it's proof that I am making the payment and not some Nigerian fraudster.

But can't you just walk into a branch and ask them to increase your limit? Or increase your limit through your online banking platform?

You could always request a cashier's check from BOA & mail it to the online bank for deposit to get around BOA's limits.

Are we in the 19th century? My little aussie bank has an app you can do it through your phone. How far behind the times are your banks?

[thepokercab]

I use an online savings account from American Express, which is where we are currently stashing our down payment savings.   Interest rate is 0.8%.   

[Grateful Stache]

We do the local Wells Fargo.

Shitty interest rate, but I'm not trying to make money (or lose money). We have easy access in case we want to add a couple hundred at a time. Works well for us.

Cheers.

[begood]

OP here! Thank you all for your replies!

I think I need to work up the gumption to try a little harder on getting this online savings account thing to work. Both Barclays and AmEx took all my info (like, ALL my info - including SSN) and then I got error messages after submission. Both times! And it was outside their customer service hours, of course, because that's when I have time to sit down and do this kind of stuff.

I have a followup question: Do any of you use Fidelity's Cash Management? What has your experience been?

I did a little reading yesterday, since Fidelity Spartan Index Funds are one place we are considering for these funds (even I get a little whiplash at the thought of going from no-interest savings account to the wild wild west of index funds) and they seem to offer a savings-account-like structure that is FDIC-insured. The closest Fidelity storefront is about 20 miles away - doable in a pinch, for sure.

I guess I am old - I seem to want a place to go, people to see. It's really hard for me to imagine clicking a few buttons and watching my hard-earned (well, in this case, inherited) nest egg float off into the ether.

In terms of timing, it completely depends on my spouse's job, since we currently live in employer-provided housing. A change could come as soon as six months, or we could be here for two more years, or four, or six, or even more. At this point, I am thinking closer to two to four years than the six month or six+ year scenario. But without knowing, it makes me want to clasp that money close to my chest!

Going by MMM's approach, we probably have "enough" already. But my spouse lives to work, and it's hard for him to imagine ER. So instead, I've been talking about FU money and FI in general.