Author Topic: Saving accounts suck!  (Read 5985 times)

akajoe87

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Saving accounts suck!
« on: July 29, 2013, 07:52:54 AM »
I have 5K in a savings and only got roughly $3 in interest last year. I use my savings to save for another vehicle in the next 3yrs and mechanical maintance for my automobiles and as an emergancy fund. I would rather draw more interest from my 5K while I am waiting to use it. If I am going to use the money in the next 3 yrs or emergancy cash, where should I stash it to get the most return from my hard earned money? Vanguard? It needs to be liquid just in case of emergency!

fiveoclockshadow

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Re: Saving accounts suck!
« Reply #1 on: July 29, 2013, 08:02:39 AM »
You've got a few options.

First are some high yield checking or savings accounts that can get in the range of a 3% APR.  However, that is usually only up to 5K-10K after which the interest rate drops.  Also you usually need to have direct deposits going to the account and use a debit card a few times a month to get that rate.  Might be a hassle depending on how you spend.

Second are higher yield CDs with low early withdrawal penalties.  The Ally Bank 5 yr CD yields 1.5% right now and the withdrawal penalty is only 60 days of interest.  Would be a good choice for known spending that is 3 to 5 years out that needs to stay liquid for emergencies before that date.

Third would be I bonds, they are inflation adjusted and currently yield about 1.2%.  However, these are not liquid for the first year so perhaps not appropriate.

One of the first two options should improve things a little, but right now you just aren't going to get much in any short term savings.

bkru21

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Re: Saving accounts suck!
« Reply #2 on: July 29, 2013, 08:16:54 AM »
Unfortunately, there are not many avenues for short-term savings/high interest options. I personally have money I am saving for a house in the Barclays Online Savings account, yielding .9% interest. It was 1% last year. Not the greatest, but better than 0.05% account at my brick & mortar bank.

KingCoin

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Re: Saving accounts suck!
« Reply #3 on: July 29, 2013, 12:24:40 PM »
where should I stash it to get the most return from my hard earned money? Vanguard? It needs to be liquid just in case of emergency!

Vanguard is a brokerage company, not an investment.

There are some more exotic options, like buying a structured note such as ticker MKN which matures in less than 1 year. This will return about 2% + and positive performance on a commodity index (subject to a 30% knockout). I think it's a very nice cash replacement with a decent baseline return and the potential for a big kicker if commodities rally.  Note that it is subject to Citibank risk (if Citi defaults in the next year, you'll have to get in line with other Citi creditors).
« Last Edit: July 29, 2013, 01:20:41 PM by KingCoin »

Frankies Girl

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Re: Saving accounts suck!
« Reply #4 on: July 29, 2013, 12:47:34 PM »
I've got 0.15% interest currently on my savings account with our brick and mortar bank. We're still figuring out where to roll all of that, but it's not staying there.

I'm getting to the point where this savings account is only going to be a short term holding bucket for a month or so worth of funds - basically where we funnel money coming in and then direct it back out to earn better. We've a line of credit of over $20K instantly available from our credit cards (which we do pay off in full every month). I'm seeing that even if we had an emergency, we could charge it, and then pull funds from one of our other accounts (earning MUCH better %) to pay off before the card was due, so that's sort of where we're heading for our emergency fund. (not recommended if you have debt or difficulties controlling your credit card spending. We don't - we use a rewards card for everyday purchases to earn freebies, and have been given a laughably high credit limit considering we've never paid them a penny of interest)

I am not going to invest the EF, rather find a higher yield savings account like the others suggest. If I can get 2-3% and still have access in under a week, that's good enough as we'd technically never need a huge sum instantly, due to the credit card backup.

madage

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Re: Saving accounts suck!
« Reply #5 on: July 29, 2013, 01:01:57 PM »
You can get much better rates with Mango. Earn 6% interest on up to $5,000, though the $5 monthly fee knocks it down to 4.8%. My credit union counts as a direct deposit for them to activate the 6% on the savings account. I've had my account for three months and the interest reliably shows up on the last day of the month. I've heard the customer service is pretty terrible if you have problems, but I haven't had a reason to call, and even the aggravation would probably be worth it to me.

The Finance Buff and Bogleheads both have posts on this. It's legit, and there are others offering similar rates on similar products.

If BBVA Compass is in your area, another option is their Build My Savings account. Play around with the calculator to figure out how to earn the most interest.

DK

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Re: Saving accounts suck!
« Reply #6 on: July 29, 2013, 07:19:02 PM »
wow. that mango is crazy. 6% is very impressive. i think i will be transferring some of my ING money there instead...

madage

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Re: Saving accounts suck!
« Reply #7 on: July 29, 2013, 08:05:58 PM »
I didn't even realize this thread existed. The original poster in that thread (Jarvis) has a good review of Mango. Recommended.