Which High Yield Saving accounts are the best?

[Candyland33]

I have some saving I want to put into a high saving account that way i can make money on interest and have access to the money when i need it for emergencies.  I already research some potential options such as Marcus Gold ManSachs, Ally and Comenity Direct but I was wondering if anyone has experience with high saving banks. What has been your experience? Which banks offer the best savings?  Which one charge fewer fees?  Thank you

[Rob_bob]

I use ALLY, no fees on my accounts. I have my accounts linked to other banks and transfer funds with no fees. I also use their 11 month no penalty CD's and normal 12 month CD's.  I like their website, easy to use.

[FIREstache]

I use Ally, but mostly for CDs. - it was 2.2% on the savings the last I checked.  I have more stashed in the Vanguard Prime Money Market Fund right now, compound yield 2.44%.  It's been slowly dropping after getting up to 2.51% earlier this year.

[ejmyrow]

I like Alliant. 2% It's also a credit union. :^D

[Candyland33]

Great! Thank you for your feedback.

[Radagast]

Vanguard money market funds are the first stop. Specifically look at the sweep account (the default one where your money goes when it isn't doing anything) because it is perfectly safe and has better yields right now than Alliant/Ally. Also it makes a handy platform for launching into long term investments. For example prime money market. And then ultrashort bond which is just a hair riskier than that. And from there on and on until you are looking at tax managed balanced funds and total work stock index.

Additionally:
https://www.doctorofcredit.com/high-interest-savings-to-get/
I think it just dropped to 2.4%, but I would probably get Redneck Bank out of this pack, if only for the look.

But really Vanguard is a better one to start with. Then you will always have that money sitting there, bugging you, until you start putting it to real work.

[Candyland33]

Thanks for the Vanguard Money Market idea.  I was reading up on it and the website states, "Vanguard Federal Money Market Fund has a 0.11% expense ratio (as of December 31, 2018) and invests mostly in short-term U.S. government securities, including treasuries and agencies. A $3,000 minimum initial investment is required for a mutual fund account (no minimum if you're using the fund as your brokerage settlement fund). Account service fees may apply. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee that it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency." . The not insurance part got me. 

I rather have a lower return rate than not have money insured by FDIC.  If the gains were not insured, I can understand but not the initial money. 

[ditheca]

I use HeritageBankNA, which has a 3.3% checking account.

Their web portal and services are lacking compared to competitors, but you can't beat the interest rate.

[FIREstache]

Thanks for the Vanguard Money Market idea.  I was reading up on it and the website states, "Vanguard Federal Money Market Fund has a 0.11% expense ratio (as of December 31, 2018) and invests mostly in short-term U.S. government securities, including treasuries and agencies. A $3,000 minimum initial investment is required for a mutual fund account (no minimum if you're using the fund as your brokerage settlement fund). Account service fees may apply. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee that it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency." . The not insurance part got me. 

I rather have a lower return rate than not have money insured by FDIC.  If the gains were not insured, I can understand but not the initial money.

I actually mentioned Vanguard Prime MM earlier in the thread.  Note, that the compounded yield figure I gave already factors in the expense ratio on the fund.  Unfortunately, it's been trending down some this year.

Although, it's not FDIC, it's considered a very safe investment.  I do get better in my Ally CDs at 2.7-2.8%, which are FDIC insured, but I'm committing to a year in order to avoid a penalty.

[Radagast]

Thanks for the Vanguard Money Market idea.  I was reading up on it and the website states, "Vanguard Federal Money Market Fund has a 0.11% expense ratio (as of December 31, 2018) and invests mostly in short-term U.S. government securities, including treasuries and agencies. A $3,000 minimum initial investment is required for a mutual fund account (no minimum if you're using the fund as your brokerage settlement fund). Account service fees may apply. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee that it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency." . The not insurance part got me. 

I rather have a lower return rate than not have money insured by FDIC.  If the gains were not insured, I can understand but not the initial money.

People raise that a lot and I doubt it is a valid concern. If Federal Money Market Fund, which owns federal bonds expiring in the very near future, is going through a desperate fire sale, will Federal Deposit Insurance be worth anything? The same entity, the federal government, backs both bank deposits and federal government debt. Banks keep their reserves in the same types of short term federal government paper as the money market fund uses. If everybody flees the safest US dollar denominated assets because they expect them to fail within three months, the bank's reserves will suddenly lose value, and investors will makes runs on the banks, and the federal government (which everyone was fleeing for a good reason) will simply disregard FDIC.

Basically this is putting the cart before the horse. The federal government started FDIC during the Great Depression to make bank deposits as safe as federal government debt. Not safer. In fact some people (eg. Rowland in The Permanent Portfolio) recommend treasury money market funds instead of FDIC funds because FDIC is theoretically less safe. Personally I doubt there is any foreseeable difference.

Language semantics, the Constitution says that federal treasury debt is backed by the "full faith and credit" of the government. Whereas a 1930's law says the federal government will back small depositors with "insurance." "Insurance" vs. "full faith and credit".... hmmmm....

But, it is true, money market funds do not always yield more than high yield savings accounts. It might not be worth frequent changing to justify the extra 0.x%. Which is why I recommend Vanguard :-) because there are loads of great options a few clicks away. You can even get brokered FDIC CDs! Way easier than opening an entire new bank account to get a few basis points. Or in this case lose them ;-)

[Radagast]

Basically FDIC will function as long as the government is stable and solvent. If it isn't stable and solvent, FDIC won't be reliable. Exactly like a federal money market fund ;-).

Apart from the constitutional backing of treasury debt, there is also an argument that money market funds are better because they are marketable. If there is a crisis, money market yields will increase to match the world's collective estimate of the risk vs the reward. However, in a crisis, FDIC entities can set their rates to be whatever they want, and they will probably set them low and delay payment as much as possible, a one-sided affair. In the extreme, money market funds are safer because their value can fluctuate, and you will always be able to get some% from a willing participant. Or else a higher yield to match the higher risk. Anyhow that is one theory. Personally I do not think we can reliably predict which would be better in an extreme situation.

[Rosy]

NFCU - Navy Federal Credit Union if you have a military connection
I like their CD options - 3.5% up to $3K - 12 mo
My second CD - 3.25% - (min $1K) you can keep adding anytime up to $50K - 17mo.
They do run different offers throughout the year.

MidFlorida CU - Holiday Club savings account - 2.5% - annual.
You can keep adding up to $4K or start out with $4K
Penalty for withdrawing funds is only $5.

That more than takes care of my cash cushion needs, keeps my funds local and instantly accessible if needed.
The CDs are a cinch to set up online and transfer the money back into checking at the end of term.