PayPal offering savings account with 3.75% APY

[amyj05]

Just FYI in case anyone is in the neighborhood for a new or additional savings account - Paypal is now offering one with 3.75% APY. That’s the highest I’ve seen for a savings account lately.

[Photograph 51]

The highest yield listed on bankrate.com is 4.35% at MySavingsDirect.

[index]

VMFXX is 4.23% and Fidelity MMAs are at 3.92%.

[cool7hand]

Thanks all!

[rantk81]

Very short-term T-Bills are yielding over 4% right now, and are exempt from state and local taxes.

[Sugaree]

Having dealt with PayPal's customer service and fraud divisions in the past...I wouldn't touch this with a 10 foot pole.

[BlueMR2]

Having dealt with PayPal's customer service and fraud divisions in the past...I wouldn't touch this with a 10 foot pole.

Same.  Ex-paypal user here.  Perhaps things have changed, but had multiple bad experiences and eventually they made my banned for life list.  Well, at least as best I can...  I can't do anything about the fact that so many places use them as a credit card processor, but I CAN at least refuse to hold my own account with them.

[sailinlight]

UFB direct has a 4.11% FDIC insured account. Last I looked at Paypal they claimed they weren't a bank and you have no FDIC protection.

[amyj05]

Very short-term T-Bills are yielding over 4% right now, and are exempt from state and local taxes.

What are T-Bills?

[remizidae]

UFB direct has a 4.11% FDIC insured account. Last I looked at Paypal they claimed they weren't a bank and you have no FDIC protection.

PayPal Savings is FDIC-insured up to $250k per their website.

[joemandadman189]

Personal Capital's high yield savings account is around that same APY right now

[Holocene]

In this rising rate environment, I'm a fan of shorter-term T bills or money market funds.  Savings accounts are too slow to keep up.  I calculate my tax-equivalent yield (TEY) for Vanguard money market funds VMFXX or VUSXX to be around 4.5% now.  I've got various T bills maturing between Feb and May with TEY of 4.6-5.1%.

Very short-term T-Bills are yielding over 4% right now, and are exempt from state and local taxes.

What are T-Bills?

Treasury Bills offered by the US government.  They are available in maturities between 4 and 52 weeks.  The 4, 8, 13, 17, and 26 week bills are auctioned every week.  The 52 weeks bills are auctioned every 4 weeks.

You can buy at auction either directly at TreasuryDirect in $100 increments, or at most brokerages like Fidelity or Vanguard, usually in $1000 increments.  You can AutoRoll your purchases at some brokerages like Fidelity or at TreasuryDirect, which means it'll automatically buy another bill of the same maturity when your existing one matures.  Basically a rolling ladder and you can stop it at any time.  Brokerages are preferred (in my opinion) since you can easily sell if you need the money before maturity.    You can't sell at TreasuryDirect.  You can transfer to a brokerage and then sell, but I wouldn't count on that being able to be done quickly.

T bills are very liquid.  You can buy and sell on the secondary market, just like stocks.  You can find daily rates here: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView

You'll want to use "Coupon Equivalent" to compare to a savings account or other investments.  As mentioned, T bills are exempt from state and local taxes, so may give you an additional boost over regular savings as well.  If you buy at auction, you won't know exactly what rate you'll get until after you buy it.  But it'll probably be pretty close to the recent numbers posted here.

[amyj05]

@Holocene thank you for the explanation! I didn't know such a thing existed. I'll look into them some more.

[effigy98]

Paypal can take your money anytime they want, it is not your money once it goes into that account. They have this in the terms of service now. If they don't like what you say on the internet or you offended the wrong person. Many people cancelled their paypal accounts recently because of this evilness. They removed it when there was massive pushback from the public then quietly snuck it back in a few weeks later. Better to just invest in short term treasuries instead.

You should also look into the FDIC not being real insurance anymore. There was a recent meeting that was recorded where the leaders were discussion how they are not solvent and cannot afford to actually insure people and if they should tell the public, they all agreed this would cause wide spread panic and decided not to. This meeting was scary stuff!! I think I had to watch it 3x just because I was in such disbelief.

Expect bail-ins and plan accordingly if you have too much money in accounts. Maybe spread it around, use T-Bills, etc.

[bacchi]

You should also look into the FDIC not being real insurance anymore. There was a recent meeting that was recorded where the leaders were discussion how they are not solvent and cannot afford to actually insure people and if they should tell the public, they all agreed this would cause wide spread panic and decided not to. This meeting was scary stuff!! I think I had to watch it 3x just because I was in such disbelief.

Expect bail-ins and plan accordingly if you have too much money in accounts. Maybe spread it around, use T-Bills, etc.

What? Did you listen to the entire meeting or just the short clips going around conspiracy forums?

The FDIC doesn't need to maintain a balance to cover every dollar on deposit at every bank in the US. If it needs more, Congress will give it more (with the bill being held up for a few weeks by the bomb-throwing nihilists of a certain party). Over 150 US banks collapsed during the GFC and the FDIC handled them.

tl;dr If the FDIC collapses, and Congress doesn't support it, we'll have bigger things to worry about.