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Best Bank Account Interest Rates - Summary for August 8, 2017

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Best Bank Account Interest Rates - Summary for August 8, 2017

We continue to be on track for a December Fed rate hike. The next Fed meeting on September 19-20 will likely announce the start of a program to reduce the Fed’s balance sheet. The latest economic news to support a December rate hike came on Friday, with the release of July’s job report. Economist Tim Duy summed up the jobs report in his Fed Watch blog post by saying:

A solid report that suggests further declines in the unemployment rate in the months ahead. The Fed will want to stay preemptive in this environment. I don't foresee them backing off their rate forecast for this year and next very easily.

Low inflation continues to be a possible excuse the Fed could use to pass on a December rate hike. Recent speeches by two Fed officials reinforced this possibility. In a speech Monday, St. Louis Fed President James Bullard said that “[e]ven if the U.S. unemployment rate declines substantially further, the effects on U.S. inflation are likely to be small.” Also on Monday, Minneapolis Fed President Neel Kashkari gave a speech that suggested that low inflation could cause the Fed to hold off on rate hikes. In the speech he said that “[i]nflation has been coming up short, a little low, relative to our 2 percent target. That actually matters.” It should be noted that both Fed officials have a record of being inflation doves. Bullard isn’t a voting member this year, and he won’t be a voting member until 2019. Kashkari is a voting member this year, but will not be in 2018. Kashkari was the lone dissenter at the Fed in both the March and June meetings. He was against the rate hikes.

In an unusual occurrence, most Treasury yields were up from last week except the 1-month yield and the 30-year yield. Both of those held steady from last week. The 5-year Treasury note had the largest yield change (an increase of 4 bps).

The odds of at least one more rate hike this year is now almost 50-50 according to the Fed funds futures. The odds of two rate hikes went up slightly from last week, but it still remains low at 3.4%.

The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

  • 1-month: 1.00% same as last week (0.52% on Jan 3)
  • 6-month: 1.16% up from 1.15% last week (0.65% on Jan 3)
  • 2--year: 1.36% up from 1.34% last week (1.22% on Jan 3)
  • 5--year: 1.84% up from 1.80% last week (1.94% on Jan 3)
  • 10-year: 2.29% up from 2.26% last week (2.45% on Jan 3)
  • 30-year: 2.86% same as last week (3.04% on Jan 3)

Fed funds futures' probabilities of future rate hikes by:

  • Sep 2017 - up by at least 25bps: 1.4% same as last week
  • Dec 2017 - up by at least 25bps: 50.4% up from 45.6% from last week
  • Dec 2017 - up by at least 50bps: 3.4% up from 3.0% from last week

Savings and Checking Account Rates

Even though the Fed skipped a rate hike last month and there is little chance of a rate hike before December, we’re still seeing savings account rate hikes at several internet banks. In the last two weeks, we’ve seen saving and money market account rate hikes at Live Oak Bank, PurePoint Financial, Northern Bank Direct, SFGI Direct, Popular Direct and Discover Bank. Most of the rate increases were small, ranging between 5 and 10 bps. Nevertheless, the fact that we are still seeing rate increases when the Fed rate hikes are so gradual is promising. Competition is definitely a factor, and that appears to be an especially important factor for internet banks.

Two of the most noteworthy rate hikes were today’s increase at Live Oak Bank and Friday’s increase at PurePoint Financial. Live Oak Bank increased its savings account rate to 1.40% APY. Live Oak Bank now shares the top spot for savings accounts with DollarSavingsDirect. Based on recent history, this might not last long. DollarSavingsDirect has been advertising that it’s “America’s highest rate,” and it has hiked rates twice before to maintain this designation.

Note, there are three money market accounts that have higher rates than 1.40% APY, but all three have issues. First State Bank of Texas offers a Jumbo Money Market Account with a 1.55% APY, but this requires a $100k minimum balance. No interest is paid if the balance falls below $100k. The two sister banks, All America Bank and Redneck Bank, both offer 1.50% APY on their Mega Money Market Accounts, but this applies to balance up to only $35k. The portion of the balance above $35k only earns 0.50%.

The second noteworthy rate hike was on Friday at PurePoint Financial. Its savings account rate increased to 1.30% APY for balances of at least $10k. There are now six banks offering 1.30% APY.

One thing to watch out for are banks that create new accounts with higher rates rather than raising the rates on their existing accounts. This forces existing customers to open a new account if they want to earn the higher rate. Last week, Popular Direct did this for the second time. It created the new Plus Savings Account with a 1.21% APY. Its old account, the High Rise Savings Account, is no longer being advertised and continues to earn 1.15% APY. Customers who have this High Rise Savings Account will have to open the new Plus Savings Account if they want to earn the higher rate.

One bank has been added to my 1.25% club. The number is now up to 11. The new bank is Northern Bank Direct which now has a money market account that earns 1.26% APY for balances up to $250k. This 1.25% club is the group of nationally available checking, savings and money market accounts that have rates of at least 1.25% APY and that are clearly not promotional or temporary. The old ten in the club include Sallie Mae Bank, CIT Bank, BankDirect, ableBanking, Self-Help FCU, BankPurely, UFB Direct, PurePoint Financial, Dollar Savings Direct and Live Oak Bank.

Reward Checking Accounts

There were again no changes to my list of nationally available reward checking accounts. Reward checking rates have been slower to respond to the Fed rate hikes as compared to internet savings account rates. Since much of the rates of reward checking accounts are paid for by debit card activity, banks may continue to go slow with rate hikes.

To find the highest reward checking rates and balance caps in your state or nationwide, please refer to our reward checking rate table. If you're new to reward checking, please refer to my blog post, Overview of Reward Checking and Our Reward Checking Table.

Certificate of Deposit Rates

I’m now publishing my CD survey as a separate post. Please refer to my survey of the best CD rates. This recap will focus on banking news of the week and liquid accounts.

CD Deals: I just wanted to include this reminder of a few noteworthy CD deals that are available.

The best CD rates are currently being offered by Advancial Credit Union which has recently been identified as having a backdoor to membership via an association. The best rates requires a $50k minimum deposit and range from 1.67% APY for a 6-month term to 2.67% APY for a 60-month term. More details about this credit union and its CDs are available in this blog post and in the comments of that post.

Ally Bank continues to offer a 1.50% APY on its 11-month No Penalty CD for balances of at least $25k. Balances of $5k to under $25k earn a 1.25% APY. Please refer to this blog post for more details.

For those who want a longer-term CD, Ally Bank’s 5-year CD (2.25% APY for all balances) is a good choice. It isn’t the 5-year rate leader, but its 5-year CD is very competitive when you factor in the mild early withdrawal penalty (150 days of interest). Sallie Mae Bank is giving Ally some competition. It recently raised its 5-year CD APY to 2.35%. This CD’s early withdrawal penalty is just slightly larger than Ally’s (180 days of interest). You can see the effective yields of these CDs when closed early by using the CD Early Withdrawal Penalty Calculator.

Rates as of August 8, 2017

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:
InstitutionRatesNotes
State Bank of Texas1.55% ($100k)Jumbo MMDA - Account review
All America Bank1.50% (up to $35k), 0.50% ($35k+)Mega Money Market Account - Account review
Redneck Bank1.50% (up to $35k), 0.50% ($35k+)Mega Money Market Account
DollarSavingsDirect1.40% (no min)Dollar Savings Account - Account review
Live Oak Bank1.40% ($250k max) Savings Account - Account review
Self-Help Federal Credit Union1.36% ($500k), 1.26% ($500) Money Market - Account review
BankDirect1.35% ($10k)MMA - Account review
Signal Financial Credit Union1.35% ($25k, enrollment in Premium Bundle) Premium Money Market - Account review
CIT Bank1.30% (up to $100k), 1.25% ($100k+) Premier High Yield Savings - Account review
Sallie Mae Bank1.30%MMA - Account review
BankPurely1.30% ($1 min) SavingPurely - Account review
ableBanking1.30% ($250 min)Money Market Savings - Account review
PurePoint Financial1.30% ($10k min)Online Savings - Account review
UFB Direct1.30% ($25k+), 0.20% ($100) Premium Savings - Account review
The Palladian PrivateBank1.30% (6mo intro rate) 1.10% blended APYSavings Account - Account review
Northern Bank Direct1.26% ($250k max) Money Market - See review
Salem Five Direct1.25% (guaranteed through July 1, 2018)eOne Savings, for new customers only Account review
BBVA Compass1.25% ($10k min)ClearChoice MMA Promo - Account review
EBSB Direct1.25% ($10k min)Money Market Special 3 - Account review
McGraw-Hill Federal Credit Union1.25% ($75k), 1.10% ($20k),1.00% ($5k) (guaranteed through 8/31/17)Ascend Account - Account review
EverBank1.21% (1yr intro rate) 0.71% ongoing rateMMA/Checking - Account review
SFGI Direct1.21%Savings account - Account review
Incredible Bank1.21% ($2.5k), 0.05% ($250k+)IncredibleBank Savings - Account review
Popular Direct1.21%Popular Direct Plus Savings - Account review
Barclays1.20%Online Savings - Account review
Synchrony Bank (formerly GE Capital Retail Bk) 1.20%High Yield Savings - Account review
GS Bank1.20%Online Savings Account - Account review
Radius Bank1.20% ($2.5k min)Radius High-Yield Savings - See review
Ally Bank1.15%Online Savings
American Express Bank1.15%High Yield Savings - Account review
My e-BAnC by BAC Florida Bank1.15%Super Saver - Account review
Discover Bank1.15% (no min) Online Savings - See review
MyBankingDirect1.15% ($5k+), 0.25% (less than $5k) Earn >More Money Market
SmartyPig1.15% ($10k min), 1.05% (less than $10k)SmartyPig Savings - Account review
Nationwide Bank1.15% ($10k), 1.00% ($1)Nationwide Member Checking Account
Connexus Credit Union1.15% ($100k), 1.00% ($50k,) 0.75% ($20k)MMA - active chk required
Northpointe Bank1.12% Statement Savings - Account review
Alliant Credit Union1.11% ($100 min)High-Rate Savings - See review
Northeast Bank1.10%Pearl Money Market Promo, new customers - Account review
Dime Savings Bank1.10% Dime Direct Money Market, new money - Account review
FNBO Direct1.10%Online Savings
Capital One1.10% ($10k+), 0.60% (up to $10k)360 Money Market - Account review
iGObanking.com1.10% ($25k min) MMA, New accounts and new money only, Account review
Chevron Federal Credit Union1.10% ($250k+), 1.00% ($2.5k+) MarketEdge Savings
AloStar Bank of Commerce1.05%Savings account - Account review
Discover Bank1.01% ($100k min), 0.95% ($2.5k) MMA - See review
Pacific National Bank1.00% Money Market Deposit Account - See review
iGObanking.com1.00%iGOsavings - Account review
MySavingsDirect1.00%MySavings Account - Account review
UFB Direct1.00% ($25k min)UFB Savings - Account review

Reward Checking Accounts:

  • Noteworthy Accounts Available Nationwide:
InstitutionRatesNotes
Northpointe Bank5.00% (up to $10k), 0.10% ($10k+) UltimateAccount - Account review
Consumers Credit Union4.59% (up to $20k) Rewards Checking - debit card and $1k credit card requirements
Consumers Credit Union3.59% (up to $15k)Rewards Checking - debit card and credit card requirements
One American Bank3.50% (up to $10k), 0.25% ($10k+)Kasasa Cash - Account review
Consumers Credit Union3.09% (up to $10k)Rewards Checking - debit card with NO credit card requirements
Evansville Teachers Federal Credit Union3.00% (up to $15k), 0.00% ($15k+)Vertical Dividend Checking - Account review
Lake Michigan Credit Union3.00% (up to $15k), 0.00% ($15k+)Max Checking
Great Lakes Credit Union3.00% (up to $10k), 0.10% ($10k+)Ultimate Checking
Security State Bank3.00% (up to $10k), 0.25% ($10k+)Kasasa Cash - Account review
Partner Colorado Credit Union3.00% (up to $10k), 0.50% ($10k+)High Interest Checking
American Bank & Trust2.51% (up to $10k), 0.25% ($10k+)Kasasa Cash
Industrial Bank2.50% (up to $15k), 0.25% ($25k+)Kasasa Cash
Capital Educators Federal Credit Union2.50% (up to $10k), 0.20% ($10k+)High Yield Checking
New Buffalo Savings Bank2.27% (up to $35k), 0.2497% ($35k+)Kasasa Cash - Account review
Bellco Credit Union2.25% (up to $25k), 0.25% ($25k+)Boost Interest Checking - Account review
Main Street Bank2.25% (up to $25k), 0.25% ($25k+)Kasasa Cash - Account review
Altra Federal Credit Union2.25% (up to $15k), 0.50% ($15k+)A+ Checking
Coastal Credit Union2.25% (up to $10k), 0.10% ($10k+) Go Green Checking - Account review that includes companion Go Green MMA
Georgia Bank Company2.15% (up to $25k), 0.40% ($25k+)Kasasa Cash - Account review
TruStone Financial Credit Union2.02% (up to $20k), 0.10% ($20k+)TruRate Checking - Account review
BankFirst2.02% (up to $10k), 0.15% ($10k+)Kasasa Cash
Finex2.018% (up to $25k), 0.20% ($25k+)Axcess Rewards Checking, Premier Account (formerly First New England Federal Credit Union)
XCEL Federal Credit Union2.01% (up to $25k), 0.03% ($25k+)Kasasa Cash Checking
Bay State Savings Bank2.01% (up to $20k), 0.25% ($20k+)Kasasa Cash - Account review
Legence Bank2.01% (up to $10k), 0.25% ($10k+)Kasasa Cash
5Star Bank2.00% (up to $25k), 0.15% ($25k+)Kasasa Cash Checking Account review
Country Bank2.00% (up to $20k), 0.25% ($20k+)Kasasa Cash Checking Account review
Elements Financial2.00% (up to $20k), 0.10% ($20k+)High Interest Checking - Account review
MainStreet Bank2.00% (up to $15k), 0.25% ($15k+)Kasasa Cash - Account review
Blue Federal Credit Union2.00% (up to $15k), 0.25% ($15k+)Extreme Checking (up to 4% w/account relationships) - Account review
All America Bank2.00% (up to $10k), 0.50% ($10k+)Ultimate Rewards Checking
United Educators Credit Union2.00% (up to $10k), 0.25% ($10k+)Kasasa Cash
KS StateBank1.95% (up to $25k), 0.50% ($25k+)Check PLUS - Account review
Connexus Credit Union1.75% (up to $25k), 0.25% ($25k+)Xtraordinary Checking
First Tech Federal Credit Union1.58% (up to $10k), 0.16% ($10k+)Dividend Rewards Checking
MemoryBank1.50% (up to $250k) EarnMore Interest Checking - Account review
Superior Choice Credit Union1.50% (up to $30k)AMP Checking
Heritage Bank1.26% (up to $25k), 0.10% ($25k+)eCentive Account
Bank of Internet USA1.25% (up to $150k), 0.00% ($150k+)Rewards Checking
ABCO Federal Credit Union1.01% (up to $25k), 0.10% ($25k+)Rewards Checking
Community Bank of Raymore1.01% (up to $10k), 0.20% ($10k+)Kasasa Cash
Community Bank of Pleasant Hill1.01% (up to $10k), 0.20% ($10k+)Kasasa Cash
First American Bank1.00% (up to $15k), 0.21% ($15k+)Everyday Rewards Checking
Bank of Blue Valley1.00% (up to $10k), 0.10% ($10k+)$1k/month debit card req (formerly Ultimate Checking)

Certificates of Deposit:

Bank Account Alternatives - NOT FDIC Insured

InstitutionRatesNotes
Ally Financial Demand Notes1.15% rate for $50k+
Duke Energy PremierNotes1.15% rate for $50K+Duke Energy PremierNotes review
Ford Interest Advantage1.15% rate for $50k+Ford Interest Advantage review
Vanguard Prime Money Market Fund1.11% 7-day yield
Fidelity Money Market Fund0.98% 7-day yieldreviews on Fatwallet
Vanguard Tax-Exempt Money Market Fund0.73% 7-day yield
Fidelity Municipal Money Market Fund0.53% 7-day yield

Removed, No Longer Available Nationally

M.Y. Safra Bank1.10% (up to $500k), 0.20% ($500k-$1m)Direct Online MMA - Account review

Post Publication Edits

8/10/2017: Radius Bank High Yield Savings rate raised.

Related Pages: savings accounts, money market accounts, checking accounts, reward checking accounts, nationwide deals, Internet banks
Comments
rhutnik
rhutnik   |     |   Comment #1
Last time I asked about the All America Bank and Redneck Bank MMAs I couldn't get a solid answer... are you able to have an account at both banks for the 1.50% rate for $35k and below? Or are these banks somehow linked/sister banks so you can only hold one of these accounts at any given time?
good news
good news   |     |   Comment #2
good news I now have both All America Bank and Redneck Bank with both balances under $35K and both are getting the 1.50% rate, they are linked but not in that you can't get the 1.50% on both as long as their under $35K each.
deplorable 1
deplorable 1   |     |   Comment #15
@Good news: Let me get this straight you have a Redneck bank mega money market account and a All America bank mega money market account both earning 1.5% on up to $35,000 under the same social security number? If that is true then a married couple could have $140,000 earning 1.5% which almost makes the cap meaningless. I'm really surprised because I called on this before and they said they don't allow it because it is the same bank. Did you call and ask a CSR or you just did it and it worked?
Kaight
Kaight   |     |   Comment #3
Ken, I dunno on that December hike. Absent this war thing currently playing out I would say "sure". And I really do not expect a hot war; I guess few of us do. But the war of words is surely on.

I think we saw the impact of all the verbiage yesterday in the stock market.  Of course one day certainly does not make a trend. But if stocks are unable to sustain themselves, I believe that will mitigate against another Fed rate increase this year.
Bozo
Bozo   |     |   Comment #12
Kaight, with respect to your comment #3, bellicosity usually results in a flight to safety (as in Treasuries), with rates going down as buying ramps up. I, personally, just don't see anything favorable on the horizon for savings or CD rates. It might well just be one of those periods where you are thankful for what you can get, and give a big smooch to the FDIC and/or NCUA.
spraytanprez
spraytanprez   |     |   Comment #17
@ I, personally, just don't see anything favorable on the horizon for savings or CD rates.
Bozo,
I believe people are coming to the realization that rates we be low for years to come. I look back at the comments for the last 6-7 months and many people thought Trump would roll into town and rates would go up. If one looks back 6 years ago, a 5 year cd was around 2.25%. Just look what the stk market has done since that time. The bond market is trying to tell people who will listen that the economy is very weak and is only where it is today because it is juiced by the fed. $1.5T in student loans,$1.3T in subprime auto loans, $4.5T on feds balance sheet. The bond market doesn't lie. I cannot envision a future that does not include "the mother of all crashes".
Bozo
Bozo   |     |   Comment #18
Spraytanprez (re comment #17), being old enough to remember the debacle of 1987, along with 2008 - 2009, all I can say is: "hope for the best, but plan for the worst". As a wise stock investor once mentioned, your wife will seldom fault you for taking gains too early. One can be "in" the market, without being "absorbed" by the market. Diversification seems to be the key. Folks who go "all in" on any one asset class tend to be disappointed.

Stocks, bonds and bond funds, CD ladders, plain-vanilla savings accounts, real estate, even precious metals, can have a place in a balanced retirement portfolio.
Martin
Martin   |     |   Comment #4
""""The next Fed meeting on September 19-20 will likely announce the start of a program to reduce the Fed’s balance sheet.""""

That is a bad news for savers, what it really means is that the FED will be selling back those notes, bonds and other instruments back to the banks and the open market, in other words, will flood the banks with money and that means our savings will not be needed by the banks for the next 4-5 years if the sell out at the FEDs level is gradual ($1 trillion a year).
Nothing
Nothing   |     |   Comment #5
I'm confused...if the Fed will be selling for money, isn't that taking money out of the system? (Too slow down an apparent, to the Fed, overheated economy) And, if so, if there is to even be a status quo in money available, the banks may need to raise more funds (to replace the purchase of the notes, etc.) causing CD rates to go up with demand?
Kaight
Kaight   |     |   Comment #6
The Fed will be selling nothing. Instead they will very, very slowly be allowing securities on their balance sheet to mature without replacing those securities with new. IOW, their level of buying will be diminished.

With the Fed buying level reduced a bit, the overall fixed income marketplace will experience the usual number of sellers and fewer buyers. This situation will force sellers to increase the interest rate they pay on their securities being offered for sale in order to entice the remaining buyers in the marketplace to buy more and to attract new buyers into the marketplace.

For sake of contrast, back during the economic collapse (2008-2009 etc.) the Fed was buying fixed income securities like a drunken sailor, increasing the size of its balance sheet enormously.  With such a gigantic buying presence in the marketplace back then, sellers of securities were able to pay very low rates of interest and still, regardless, successfully sell the securities they needed to sell.  The resultant low interest rate environment went a long way toward supporting the stock market and helping it to recover from the drubbing it had experienced in 2008.

More recently, in the last few years, the Fed has maintained a neutral posture, neither increasing nor decreasing the size of its balance sheet.  This means when securities owned by the Fed matured they would be replaced, but no new securities would be purchased as happened during the crisis.
spraytanprez
spraytanprez   |     |   Comment #7
If we were in normal economic times, the dow would be down 500-600 pts today.
But this is what low rates do to the market. Warren Buffet said if rates are still low 10 years from now stocks are dirt cheap today. Many Companies have been giving caution to the 4th quarter. I still believe there will be no unwinding this year and no rate hike in Dec. The fed can let the bonds mature and not rebuy, even though that would take forever to unwind. But they are not in a hurry.
The question is do you lock in now or wait for December.
Also as the stk market has been going up the last few weeks, the 10yr. remained the same. 2.25 range. Someone is controlling things.
Kaight
Kaight   |     |   Comment #9
"The question is do you lock in now or wait for December."

I went the Bellco route myself, which offers a high rate now and a higher rate in December if the FOMC hikes the federal funds rate. But in so doing I had to swallow two problems:

First, my CD interest rate could fall if the Fed lowers rates.

Second, Bellco allows purchase of only one indexed CD. It's one and done . . unfortunately. I would definitely buy another such CD in a heartbeat were this permitted. It is not.  And if another financial institution is offering these (CD indexed to federal funds rate) I am unaware.
deplorable 1
deplorable 1   |     |   Comment #16
@Kaight: That was a very well thought out and informed comment. In my view when the FED stops replacing the fixed income securities it should have almost the same effect as a rate hike. What would be great is if they would continue to hike rates as well.
MR.LABOR ECON
MR.LABOR ECON   |     |   Comment #25
ATT: KAIGHT,,,,YOUR PITHY REASONING CAN'T BE MISSED EITHER,,,,,,here's an easy question for ya.....NAME AS MANY BLACK SWANS AS YOU CAN,,,,,the prize is a GREAT POLISH JOKE you have never heard.
spraytanprez
spraytanprez   |     |   Comment #8
Many people have bought gold over the last 8 years, some wishing they never made the purchase.
It is times like this when war and bellicose talk is in the air that gives people a chance to sell. After paying a premium for their purchase and only being able to sell at spot price, breaking even or even a small profit might be possible now or in the next couple of weeks.
Kaight
Kaight   |     |   Comment #10
Stock market doing quite well today . . . . . considering. Forgetting Korea completely, are we not due for a correction anyway? Well, don't ask me or my opaque crystal ball. We both are clueless. For me a 10% correction would be unsurprising. Goes to show how much I know!
spraytanprez
spraytanprez   |     |   Comment #11
I could see a correction causing panic buying, causing the market to go even higher.
Martin
Martin   |     |   Comment #13
I did read all of the comments and concluded that some of you are still confused why the rates will fall when the bonds are sold by the FED. Please read the following:
The Federal Reserve Act specifies that the Federal Reserve may buy and sell Treasury securities only in the "open market." The Federal Reserve meets this statutory requirement by conducting its purchases and sales of securities chiefly through transactions with a group of major financial firms--so-called primary dealers--that have an established trading relationship with the Federal Reserve Bank of New York (FRBNY). These transactions are commonly referred to as open market operations and are the main tool through which the Federal Reserve adjusts its holdings of securities. Conducting transactions in the open market, rather than directly with the Treasury, supports the independence of the central bank in the conduct of monetary policy. Most of the Treasury securities that the Federal Reserve has purchased have been "old" securities that were issued by the Treasury some time ago. The prices for new Treasury securities are set by private market demand and supply conditions through Treasury auctions.
Bonds go down when the interest rates go up and the opposite is true the other way around. In order the primary dealers to make money, they must create spread between buy and sell levels. The spread is the one that determines the interest rates on the CDs, savings and other instruments. If a bank can make more money selling cheap CDs to buy FED's bonds, the savings rates get depressed and if the FED flood the markets with bonds, the rates across the board will fall.

Primary Dealers
Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman Sachs & Co. LLC
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA LLC
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
Societe Generale, New York Branch
TD Securities (USA) LLC
UBS Securities LLC.
Wells Fargo Securities, LLC
Smokeboat
Smokeboat   |     |   Comment #14
AKA..."Friends of the Fed"
Bozo
Bozo   |     |   Comment #19
Martin (re comment #13). As I have never been totally savvy on such matters (unlike you), I asked my local banker quite many months ago why her CDs were lagging. She answered, quite diplomatically, but quite succinctly, that if her bank could get money to lend cheaper "wholesale" than that on offer by the general public, rates would stay low for as far as the eye could see. Was she wrong, or did I misunderstand her? Again, quite diplomatically, she characterized funds we might have for CDs as "retail money", which (she implied) the bank really didn't need.
Martin
Martin   |     |   Comment #20
Bozo, I assume she works for a major bank and as such, they have choice of funds at wholesale and retail level and on top of that, they can issue all kinds of investment instruments including bonds, notes and unsecured IOUs and even sell derivatives.
When she said "retail money", she meant money that cost them money to receive them and maintain them.
Retail money must be insured by FDIC, retail money are entered in the books as liability (not assets), retail money carry risk because they must be re-invested or lent against them to keep the ledgers in balance, in other words, the retail money cost them twice as much than the money borrowed from the FEDs and other banks or issuing other instruments to raise capital.
Retail money, if any left in the balance from the day are swept into US treasuries overnight and the money earned on them are fully taxable to the banks. In other words, the big banks shy away from retail money, on the other hand, a smaller bank or a CU may be more favorable to retail money and that is why we see better interest rates and deals at them.
Bozo
Bozo   |     |   Comment #27
Martin (re comment # 20), thank you for the prompt and informative explanation. I think I now understand why we with "retail money" can be at a disadvantage. The bank in question probably would fall between a "major" and a CU, as it is sometimes classified as a regional bank, although it has branches in many states.
MR. LABORECON
MR. LABORECON   |     |   Comment #24
ATT: MARTIN,,,,,,,your financial ""expertise"cannot be missed on ALL these MANY scrolls,,,,therefore; UNDER WHAT ECONOMIC CONDITIONS WOULD THE FED BE FORCED TO RAISE INTEREST RATES QUICKLY, METHODICALLY, AND DRAMATICALLY, screaming and kicking to the delight of depositor savers and **** the legations,,,,,,,,IF YOU CANNOT ANSWER THE QUESTION IN LESS THAN 1000 WORDS OR LESS, than you are just another forum bloviator with a fine print memory but lacking in economic and financial reasoning ability. HERE IS AN EASY ONE,,,for the consolation prize,,,,IF THE FED SHOULD GO NEGATIVE, WOULD LOCAL CCU'S BE OUT OF REACH, OF THE FED,,state your authorities, CFR's ,,,,the usual legal citations. I WOULD BE IMPRESSED AND PROMISE NEVER EVER TO POST ON THIS DOMAIN AGAIN.,,,and you cannot google or wikki up an answer.
mr. laborecon
mr. laborecon   |     |   Comment #26
ATT; MARTIN, ET AL,,,,,,,,you have until, ''HIGH NOON'' tomorrow CDT,,,,,,,DON'T FORSAKE ME,,,,,,I'LL BE ON THE NOONDAY STAGE,,,,
???
???   |     |   Comment #30
ahhhh now I get all the caps, (bloviator) cult password
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Martin
Martin   |     |   Comment #35
I do not reply to persons who post under different names, are rude and have no common character of decency. What I'm replying to, is your last sentence: ".,,,and you cannot google or wikki up an answer."
If your life is based on somebody else's knowledge for your education and well being, there is no answer on "google and wikki".
The "google and wikki" are controlled by the globalist, communists, socialist and the liberals.
The information on "google and wikki" are there to mislead you, brain wash you and seed falls knowledge.
If you can get millions of search results just by typing a single word, it tells you a lot of what is referenced and connected to what (which most of the time is irrelevant, old and misleading info).
If "google and wikki" know the answer to your request, why don't you find it yourself, instead of wasting your time and our time and make us replying to a person (you), who does not even care for the right answer, but wants to show authority with demands.
The information you did read in this blog is voluntary and personal opinion, demanding from someone something is not allowed in public blogs.
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Martin
Martin   |     |   Comment #47
Globalist, Communist, Socialist and Liberals, You are so misinformed that I feel sorry for you, please read the following:
http://www.infoworld.com/article/2610434/cringely/google--evil--you-have-no-idea.html

http://www.naturalnews.com/2017-04-21-pure-evil-how-google-steals-content-crushes-small-publishers-and-monopolizes-the-internet-for-profit.html
When done please let me know, I have a list of over 100 proofs of what they do to the world.
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RJM
RJM   |     |   Comment #21
After a couple weeks of doing very little in the way of rate chasing, I went ahead and bought yet another 1.5% no penalty at Ally. I'm considerably over the insured limit right now but, I really don't think its all that risky. And, this is not for the very long term. I'm probably going to move most of the excess out of there within the next few months as higher rates continue to shake out.

The market was down a lot today. That might provide opportunities too if it continues. Id need a significant correction to buy significant amounts though.

Ive been in SO, a utility that provides my power for a little over 5 years now. I added slowly here and there on pullbacks. Finally, I own enough to cover my power bill. (If I wanted to)

Not a huge position but more significant than anything else Ive been buying in recent years. I still buy things but dabbling. And more selling than buying as things happen. (Buyouts, mergers & so forth)

Id be a lot richer today if I took bigger stock market risks over the last 10-15 years. Way too conservative in hindsight.
Crooked H.
Crooked H.   |     |   Comment #22
I've owned SO for awhile now too. Been way to conservative over the years also. I now realize a Bozo approach is the way to go , he did it right. Had i been heavy in stocks may have done the wrong thing over the last 2 crashes. I started from scratch this year and started cost averaging into the market . Now have 2% of my portfolio in a stock etf.
Bozo
Bozo   |     |   Comment #29
Crooked H., with respect to comment # 22, if starting from scratch, wrap your arms around Vanguard, Fidelity, or Schwab. While my personal preference is Vanguard, each will get you started with low-cost index funds. For a person starting out, there is no better default option than VBINX. 60% stock, 40% bonds. When you get above a certain invested amount, VBIAX kicks in, which has a lower ER. Once you get acclimated, you can swap out into a bit of international (VTIAX) or even total stock (VTSAX).

Moving right along, after a few decades or so, you might want to harvest some gains and move a bit more of your asset allocation to CD ladders. Which is what I did. Back right about 2006.
Bozo
Bozo   |     |   Comment #31
Crooked H., I was a tad aggressive in moving into a CD ladder, but back in 2006, rates were close to 6%, so it was a no-brainer. These days, CD ladders are a bit "sub-par", so a bit of patience might be warranted. I suspect the best counsel is to have a long-term strategy. And, by long-term, I don't mean to imply five or ten years. Think twenty or thirty. Over the really long-term, a balanced, low-cost, index fund (such as VBIAX) probably eliminates the possibility of a wholescale rout to your portfolio, while providing for measured growth.

Shifting a tad, over time, to a CD ladder, provides guaranteed cash for retirement. A healthy dollop in a garden-variety savings account (to pay for recurrent expenses, such as a car, roof, or HVAC), even better.
HappyTimes
HappyTimes   |     |   Comment #41
Your AGE is a prime determinant in market risk tolerance. Time is a friend when you're young and a scarce resource after you've aged many decades. When I read more comments about stocks and bonds than CD's on a site dedicated to safe investments at a time when the stock market is ballooning irrationally I know the crash is near. When the last sucker (aka the old investor who can't stand 1.5% CD's any longer and reenters the market fray in hopes of accomplishing the impossible) the plug will be pulled. It happens every single time..."I'm missing out on the biggest bull market and I better get in before it's too late." The only problem is you're already too late!
Bogie
Bogie   |     |   Comment #43
You are precisely correct, HappyTimes! That is why most, but apparently not all of us, monitory this site so often. It certainly isn't for stock market advice. Deposit Accounts=Savings, CDs, Interest Bearing Checking Accts., etc.

The web is full of other sites dedicated to stock and bond market blogs with "would have, should have, could have" stock market tales and advice.
Bozo
Bozo   |     |   Comment #53
HappyTimes, re comment #41, those of us in the "aging but not yet senile" boomer category might opine on asset allocations. I think my posting history will reflect a cautious, diversified, approach. Stocks, bonds, bond funds, CD ladders, and cash should all be of relevance to DA readers. Real estate and precious metals as well.

Just because a site is dedicated to deposit accounts does not preclude a measured discussion of asset allocation. After all, even with deposit accounts, folks discuss CDs, CD ladders, cash, and Treasuries.
deplorable 1
deplorable 1   |     |   Comment #56
OK HappyTimes the stock market is high but you are forgetting about long term monthly and quarterly paying dividend stocks. Many are even in the ultra safe utilities sector of the market. Almost all of them have consistently paid more than 10 year CD's for decades whether the market is up down or sideways. Some of us on here are not that old like myself and time is still on our side and we need to earn over 2%.
spraytanprez
spraytanprez   |     |   Comment #49
I don't like individual stks, but I could sleep at night owning SO. However, if I had a medium to large position in XOM, I'd be tossing and turning all night long.
Bozo
Bozo   |     |   Comment #54
Spraytanprez, re comment #49, I must admit I cannot understand the infatuation with Southern. As I noted, the dividend is right up there with a 5-yr CD, without any of the benefits. Utility stocks are a valid ballast to any portfolio, but stock-picking is something I gave up long ago.
Martin
Martin   |     |   Comment #23
For you who own SO stock. The SO is loosing money (in billions) because they fell victim of Obama's cap and trade and carbon initiative drive. SO built CO2 converter and enrichment of fossil fuel utility plant that cost more to operate then to use any other fuel as is. They borrowed billions and issued bonds and stocks to finance the project and when they tried to use it, it produced more carbon then if there was no conversion. SO scrapped the project and now are in debt for long long time to come. Do not expect any movement in the stock, if you bought for the dividend only, keep it.
Bozo
Bozo   |     |   Comment #28
Martin (re comment #23), Southern Company (SO), as far as I understand, is basically a utility stock. Last I checked, the stock has basically flat-lined over the past year, with a dividend yield right up there with a 5-yr FDIC/NCUA-insured CD. In my humble opinion, utility stocks are a wonderful ballast to the overall market index in general. Would I own them to the exclusion of other sectors, probably not. I would "buy the market", which, by definition, would include SO, among many other utilities. My favorite low-cost index fund for this purpose is VTSAX. You don't try to beat the market, you "own" the market. The ER, at 0.004%, is hard to beat.

I've long been a fan of the adage "it's not the market, it's the fees".
Martin
Martin   |     |   Comment #32
Bozo, I think you are doing OK with VTSAX, it is not paying much interest and the expenses of 0.04% of the assets are OK too. What I worry about is the size, $ 596.5 billions is difficult to manage should a downturn in the stocks happen fast. The Vanguard managers will have to ride it out with huge losses because they practically have invested in every utility out there, also in Technology, Financial Services, Health care, Industrials and so on.
The 12 b-1 charge is 0.0070% and the Turnover is very low 4.00%, which is almost like a passive ETF fund. Such low turnover has good and bad side, the good side is low fees, the bad side is, on a downturn years, it will become unmanageable and poised for huge losses.

I personally prefer funds between $500 millions and $1 Billion and in specific sectors only. It has been proven over a long time, that the exit door is more important than the entry door, the fees are important too, anything over 0.1% eats a lot over a long time period, especially on a down turn years.

I also invested in QQQ in 2012, now is more than double in value. I alway have order to sell at bellow 5-10% of the present value, in perpetual renewal dates (every 30-60) days, I re-value it and place the order to sell should a sudden downturn happen, I will be out without big losses.
Dunmovin
Dunmovin   |     |   Comment #33
Personly I like Vegas odds better than the stock market
Bozo
Bozo   |     |   Comment #34
Martin (re comment #32), as I understand VTSAX, it is, indeed, a passive fund. As are VBINX, VBIAX, and VTIAX. Although I have a "fun money" trading account at Schwab, wherein I can set limit orders, I've found my ability to predict the market lame, at best. Invariably, my limit order would fill, and within a week or two, I'd be scratching my head, thinking "why did I do that"? The problem with market-timing, as they say, is you have to be right twice: (1) when you bail, and (2) when you buy back in. Lower commissions these days make it less painful, but the timing issue remains. I gave up day (or week, or month) trading years ago.
Bozo
Bozo   |     |   Comment #36
Martin (further to my comment #34), back in my "trading" days, I'd be in and out of the market regularly. Then, one day, I added up all the trading gains, subtracted all the trading losses (and commissions), and figured out, as a hobby, I could do better selling painted flowers on e-bay.
Martin
Martin   |     |   Comment #38
Bozo, Every person has different risk tolerance ratio. I for one, will not ride on the down side, 5-10% loss limit is perfect for me and I have alway succeeded to get back with a spread of buy low and sell high. The trick is not to panic and have 2 orders, one to exit and one to get in at a certain spread. It can be done and I have done it many times, the timing is irrelevant, you are playing the in and out numbers and nothing else.
Think of a thermometer, at night the numbers fall to a certain level and then they rise the next day. The stocks are the same thing, put a sell and a buy order with a spread tolerance to your liking and is done.
That way, the timing is wiped out as a variable.
Example: Stock present value is $100, I put sell limit at $90 and a buy order at $80, done. The momentum into sale may go even lower then $80, no problem buy some more at $70 and that way you made a profit when everyone lost 20-30% of their value and you still own the same stock.
Think just numbers, the timing is irrelevant on such trades.
P.S. You can do the same thing if you know how to short a stock, but that is for more experienced traders.
Bozo
Bozo   |     |   Comment #39
Martin (re comment #38), I suspect I could have penned your comment back in my testosterone-fueled days. The first time I got tripped up was when Schwab advised me of the rule on "settled trades". Oops. So, I then learned to keep enough "settled funds" so as not to run afoul of the rule. Second oops. Now I had to keep a third of my account (minimum) in settled cash. That was a bummer.

Then, I went to a class at Schwab (in Walnut Creek, CA) to learn how to short. I took the class, and realized options were way over my head.

Stated another way, trading was fun (while it lasted). I actually made a few bucks. Finally, I realized the psychic and emotional toll it took on me, and the scant rewards, and, as they say, that was that.
Bozo
Bozo   |     |   Comment #40
Martin, moving along with comment #39, I eventually realized that, with the settled funds at hand, and a "really" good trade, I could pick up only a thousand bucks (max). On the other hand, I could sit back and watch my index funds go up (or down) multiples of that. I tried playing with leverage (e.g. SPXU), and that worked, until it didn't. Finally, it was a big "nuts to it."

Trading was fun. I give all who attempt it great fortune. I made a few bucks, and got out when the getting was good.
Martin
Martin   |     |   Comment #42
Bozo, on your statement "Schwab advised me of the rule on "settled trades"". I think settled trades rule apply if you want to take the money and run, but you can put them back in the stock immediately without any settlement, I mean the very next second after a sell, you can use the funds to buy at once. This rule applies at most stock brokerages I have accounts with. I think you misunderstood the settled dates with trade dates, unless Charles Schwab has a special rule for such trades, I have never seen such restriction at any other broker. (I have 4 brokerages accounts)

At ETrade, you can buy a stock(s) without money ($0.00) available in the cash account and sell at the end of the day for a profit or a loss, actually you can do 3 such trades per day without any money. The bad thing is, you can lose money if the stock drops, but then again, you have 3 days to pay for the stock if you do not want to book loses for the day. Most of the time I have made good amount of money without having any money in the cash account.
Bozo
Bozo   |     |   Comment #55
Martin (re comment #42), you were too kind in (indirectly) pointing out that I had no idea what I was doing or worried about. OK, (1) I'm a dinosaur, who (2) should never have been "trading" stocks in the first place. As a dinosaur, I hid underground just before the meteor crashed, and survived to become a mammal.
Jack Bogle
Jack Bogle   |     |   Comment #45
Once again, you kind of missed the point.
VSTAX doesn't time the market, it is the market.
Vanguard doesn't panic sell.
And, your platitudes like,
"It has been proven over a long time, that the exit door is more important than the entry door."
are nothing short of idiotic.
Just the opposite has been proven.
And, don't count on those stop loss orders protecting you.
If there's a sudden downturn, they might not be executed in the manner you're expecting.
Martin
Martin   |     |   Comment #46
Jack Bogle, who is talking about VSTAX, the post was in general terms, applying on all stocks, stop being devil's advocate. VSTAX is a fund that is so huge, that nobody can get out of in a fast downturn of the stocks. You are twisting and misinforming the readers.
Bozo
Bozo   |     |   Comment #57
Martin, re comment #46, you are indeed correct that one cannot trade VTSAX intra-day. That has its good points. In a "flash crash", such as we saw in May, 2010 (I think I have the date correct), many folks with limit orders got positions wiped out. With all the funny stuff going on these days, I'm not so sure I'd put on a sell limit order on a large position. While I suppose it is (theoretically) possible to back out of a trade caused by a computer glitch or a market manipulation, I suspect the process might be challenging.

While I understand the concept of limit orders, in these days of smart phones, does anybody really need them? Back when I actually worked for a living, I thought of a sell limit order as protection while I was doing something productive, but away from the computer. Is that even relevant today?
Crooked H.
Crooked H.   |     |   Comment #59
I've watched a few times when the makets went locked limit down ....so much for hard stops then
Bozo
Bozo   |     |   Comment #37
RJM (re comment #23): By definition, everybody starts at ground zero. My wife and I started at ground zero with VBINX (60 % stocks 40% bonds), very low cost. There is nothing that says you need to keep your current asset allocations where they are. You can swap out of actively-managed funds. You can swap out of individual stocks into index funds. Imagine, for a moment, you got a do-over. Then as they say, "do the do-over".

Even for folks in their 40s or early 50s, there is usually enough time to right the ship. The absolutely, positively, worst thing you can do is stay with horrid, high ER, investments, thinking they will somehow "snap out of it". They probably won't, as history shows stock-picking and actively-managed funds under-perform low-cost index funds. It's just a fact.
spraytanprez
spraytanprez   |     |   Comment #48
Bozo,
I believe Jack Bogle is the longest living recipient on a heart transplant. After reading your various posts ( which are spot on in every respect, especially hitting home for me from the late 90's - " trading was fun (while it lasted)" I could see you replacing Jack as the new man reputing all the fantasy claims out there from people who "know how to beat the market".
Bozo
Bozo   |     |   Comment #51
Spraytanprez, re comment #48, Martin's (very discreet) comments above about my basic misunderstanding of how settled funds work (or don't) in my "fun money" account nailed it. While I was "trading" in said account, I basically was a monkey with a dartboard. Now, had poster Martin been more blunt, he could have said as much, but (as with most posters here on DA) he tried to be gentle. That said, I realize now that my fiddling around with trading was silly. When I finally put down the fiddle (before Rome burned), my wife and all who share my DNA breathed a sigh of relief.

Jack Bogle (the real one) is a living legend. He "invented" the concept of low-cost passive index funds. His tombstone might read "he saved ordinary investors trillions." For those of us boomers who got in early on Vanguard funds (mostly via 401K plans which were looking out more for participant returns than high fees), Vanguard has been a godsend for retirement planning. OK, I'll stop gushing.
HappyTimes
HappyTimes   |     |   Comment #50
There's a REASON Buffet holds nearly $100,000,000,000 in cold hard cash. That's 100 billion dollars for the numerically challenged.
Bozo
Bozo   |     |   Comment #52
HappyTimes, with reference to comment #50, those of us with more modest means appreciate the benefits of "cold, hard cash." My wife and I had the misfortune of having both a vehicle and the entire HVAC system fail within the span of a month. Alliant Credit Union, and out trusty savings account, to the rescue.

The last thing a retiree wants to do for those periodic but painful expenses is cash out dedicated retirement funds. Cash is always nice to have.
Bozo
Bozo   |     |   Comment #58
Moving right along with comment #52, many popular financial writers and bloggers try to "guesstimate" how much cash any particular person should hold in a "ready reserve". Most predicate the amount on a certain amount of months, implying it's just an issue of unemployment between layoffs. That, of course, assumes folks live paycheck-to-paycheck. It's not that simple.

Realistically, how much "emergency" cash should you have? It depends on how old you are, how employable you are, whether you are married (and whether your spouse is employed), and whether you have income-producing assets. The old adage of "six months in an emergency fund" is somewhat quaint.

As an extreme example, take someone like yours truly (and wife). We have three "cash lockers". One is in a garden-variety savings account. Another is in after-tax-CDs. The third is in laddered IRA CDs.
Martin
Martin   |     |   Comment #60
Bozo, You wrote: "Realistically, how much "emergency" cash should you have?"
It all depends on your age or life style is NOT the right answer, in reality all of our money including IRAs, properties, CDs, savings, cash, stocks, bonds, expensive jewelry, gold, silver, credit cards, line of credits and so on, are emergency money.
Most of us have repetitive monthly expenses and once they are paid with repetitive monthly incomes like salary, interest received from savings, CDs, dividends, SS (for people over 62) and so on, you do not need any emergency money at all.
For unexpected repairs, medical accidents, house repairs and so on, use already cash you have in your savings accounts or preferably your credit cards. If there is major emergency that needs lots of money, use line of credits or insurances on hand to cover it or cash a CD or negotiate with the creditor for monthly payments (they can not demand to be paid in full) and you may have other recourses to fight the invoice in court if they are outrageous or not reasonable or made under duress when you or your spouse where desperate of highly emotional when the contract was signed.
My inflow is higher than the outflow of money and therefore no need for specific fund for emergency. Credit cards and line of credits are second defense and the savings, CDs, stocks, bonds and so on are the third defense (they all can be called) emergency money.
The definition for emergency money is mostly psychological then actual.
Dunmovin
Dunmovin   |     |   Comment #61
Commercial paper in 2008 wasn't deemed cash yet it had a very low default rate until then. Cash is king when rates are low and if one wants to be prepared for son of 2008!
fred
fred   |     |   Comment #64
I learn something new every day.
Now that I know credit cards and expensive jewelry can be used as emergency money I can now take my $20,000.00 emergency cash fund and buy a new car.
Thanks for your help.
Bozo
Bozo   |     |   Comment #65
Fred, re comment #64, might I assure you my wife would have throttled me if I sold or pawned her jewelry to pay for ANYTHING. Despite the rather paltry returns on my Alliant Savings account, it is nice to have liquidity.
Bozo
Bozo   |     |   Comment #66
Moving along with comment #65, during one's pre-retirement years, as poster Martin noted, options are greater. However, when one or both spouses are retired, options narrow. My point about a "six month emergency fund" as being quaint refers to folks, among others, in such a category. To my knowledge, little research on the academic level has focused on retired or split (one retired, one not) households. And, of course, as poster Martin pointed out, many variables come into play even then. I guess it all boils down to whatever "helps you sleep well at night". For me, that's after-tax cash in a savings account and, if need be, after-tax CDs. I decided long ago to pump our RMDs back into our savings account. Now that we both have hit the magical age (70 1/2 this year), it's just a matter of follow-through.
Nothing
Nothing   |     |   Comment #67
Look at QCDs, too
HappyTimes
HappyTimes   |     |   Comment #69
In #50 I was using Buffet's hoard of cash as a harbinger against buying at the top of the market. Cash, as always, is king!
#68 - This comment has been removed for violating our comment policy.