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Best Bank Account Interest Rates - Summary For January 8, 2019


This is my new weekly summary with the Fed review split off on a separate blog post. My weekly summaries will now be focused entirely on deposit rates and deals. This change was done to separate the economic and political discussion from the deal discussion. Often economic discussion leads to political discussion, and that can create lots of comments which drown out comments on deals and rates. Please keep all discussion about the Fed, the economy and politics to my Fed/Economy review blog post. Please use the comments of this blog post to discuss deposit rates and deals.

Savings and Money Market Account Rates

Below are the noteworthy savings and money market account rate changes that have occurred in the last two weeks:

  • NASB High Rate Savings (new, 2.53% APY, $50k+)
  • CIT Bank Savings Builder (+20 bps to 2.45% APY)
  • MemoryBank Online Money Market (+10 bps to 2.40% APY)
  • Marcus by Goldman Sachs 13-mo No Penalty CD (+10 bps to 2.35% APY)
  • PurePoint Financial Online Savings (+20 bps to 2.35% APY, $10k+)
  • USALLIANCE Financial High Dividend Savings (new, 2.30% APY)
  • MutualOne Bank Online Statement Savings (+15 bps to 2.27% APY)
  • Marcus by Goldman Sachs Online Savings (+20 bps to 2.25% APY)
  • HSBC Direct Savings (+17 bps to 2.22% APY)
  • Barclays Online Savings (+15 bps to 2.20% APY)

We have a new rate leader for nationally-available savings and money market accounts. North American Savings Bank (NASB) just introduced the High Rate Savings Account that earns 2.53% APY on balances from $50k to $5m. NASB doesn’t have much history on offering top savings account rates over the long-run. At least NASB is guaranteeing this rate for 6 months after account opening. I’ll have more on this NASB account soon.

CIT Bank moved into third place with its Savings Builder Account (2.45% APY). Customers can qualify for this rate in two ways: maintain a $25k minimum balance or by maintaining a monthly deposit of at least $100. As I mentioned in my account review, the Savings Builder Account is CIT Bank’s fifth liquid account in its product line. CIT Bank has a history of creating new accounts with top rates while leaving the old accounts stagnant.

MemoryBank moved into fourth place, tied with MySavingsDirect, with its Online Money Market Account. The rate increased to 2.40% APY, and this applies to balances up to $1m.

PurePoint Financial increased its Online Savings Account rate to 2.35% APY on balances of $10k+. This isn’t quite rate leader status, but it’s close to the leaders, and this account now has almost two years of history of very competitive rates. If you’re looking for an account with consistently high rates, and you don’t mind the $10k minimum, this Online Savings Account is something to consider.

If you’re looking for an account with consistently high rates without a minimum balance requirement, Marcus by Goldman Sachs is something to consider. It recently increased the rate of its Online Savings Account to 2.25% APY for all balances.

Competition from Money Market Funds

Another option for your cash instead of savings accounts and money market accounts are money market funds from brokerages. These don’t have FDIC coverage, but they can be reasonable alternatives to deposit accounts. Back when the Fed was holding rates near zero, money market funds had yields of around 0.01%. Keeping your cash at internet banks made a lot more sense back then. Now, it’s not so clear. Money market fund yields have been steadily rising as the Fed has been hiking rates.

Vanguard Prime Money Market Fund SEC yield continues to be over 2%. It had an increase in the last two weeks, rising from 2.40% to 2.44%. Fidelity Money Market Fund’s 7-day yield also had a nice increase. Its yield increased from 2.20% to 2.28%.

Allan Roth has a review at AARP of using money market funds to replace savings accounts. He suggests using funds such as Vanguard Federal Money Market and Vanguard Treasury Money Market instead of the Vanguard Prime Money Market Fund. The yields are slightly lower, but they are a little safer due to recent regulation changes. Treasury money market funds have an additional advantage of being exempt from state income taxes.

Municipal money market funds have the advantage of being exempt from federal income tax, but their yields continue to be quite a bit lower than the other money market funds. Vanguard Municipal Money Market Fund now has an SEC yield of 1.57%.

Reward Checking Accounts

There was just one change to my list of nationally available reward checking accounts. Superior Choice Credit Union’s AMP Checking has a new rate tier. Balances from $30k to $75k now earn 1.75% APY. Balances below $30k continue to earn 1.50% APY.

With savings and money market account rates up to 2.53% APY, it’s hard to get excited about reward checking accounts that earn 3% or less, especially when there are small balance caps. Unfortunately, most reward checking accounts have been slow in responding to the rising interest rate environment. As interest rates rise, their appeal as an online savings account alternative has been waning.

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.

Navy Federal Credit Union just introduced a new 17-month Certificate Special. It earns 3.25% APY, and it allows unlimited add-on deposits. Maximum balance is $50k. Navy Federal continues to offer a 40-month IRA CD special. This has a 3.75% APY, and it allows unlimited additional deposits for a maximum balance of $150k. Unfortunately, it’s not available as a regular CD (only an IRA CD).

For January, United States Senate Federal Credit Union increased the rate of its 60-month Jumbo CD by 6 bps to 3.69% APY. This requires a $60k minimum deposit. This CD continues to hold the top spot on the 5-year category.

INOVA Federal Credit Union came out with new CD specials just before Christmas. However, the 5-year (3.85% APY) and 6-year (4.00% APY) specials lasted less than a week, and they are no longer available. INOVA still has some very nice CD rates on shorter terms. This is especially the case for IRA CDs. The top three are its 30-month (3.50% APY), 20-month (3.40% APY) and 14-month (3.25% APY). The non-IRA CD rates are 25 bps lower: 30-month (3.25% APY), 20-month (3.15% APY) and 14-month (3.00% APY).

Andrews Federal Credit Union came out with a Black Friday CD special that is still available. It’s an 8-month CD with a 2.86% APY. It’s just a slightly better special than the 2.75% APY 9-month CD that Andrews has been offering since July.

Rates as of January 8, 2019

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:
NASB2.53% ($50k-$5m) High Rate Savings - Account review
CIT Bank2.45% ($25k min)Savings Builder - Account review
MySavingsDirect2.40%MySavings Account - Account review
MemoryBank2.40% ($1 million max) Online Money Market - Account review
Quontic Bank2.40% ($100k), 2.27% ($5k), 2.00% APY (up to $5k)Personal Money Market - Account review
CIBC USA (formerly The Palladin PrivateBank)2.39%Agility Savings Account - Account review
Virtual Bank2.36% eMoney Market Special - Account review
Popular Direct2.36% ($5k min) Popular Direct Plus Savings (60-day freeze on new accounts, see details)Popular Direct Plus Savings - Account review
Vio Bank2.35% Online High Yield Savings
Marcus by Goldman Sachs2.35%13-month No Penalty CD ($500) - Account review
PNC Bank2.35% Online High Yield Savings (not available in all states) - Account review
Bay State Savings Bank2.35% ($5k)Smile Worcester County Consumer Money Market - Account review
PurePoint Financial2.35% ($10k min)Online Savings - Account review
earn.bank2.31%Money Market Account
Salem Five Direct2.30% eOne Savings (up to $1m), for new customers only - Account review
USALLIANCE Financial2.30% ($500)High Dividend Savings - Account review
UFB Direct2.30% ($5k min)Premium Money Market - Account review
Northpointe Bank2.30% ($25k-$1m, guaranteed for 2 years) Ultimate Money Market - Account review
United Bank (CT)2.30% (6mo rate guarantee) Advantage Money Market, not available in all states - Account review
Ally Bank2.30% ($25k)No-Penalty 11-month CD - Account review
MutualOne Bank2.27% ($1m max)Online Statement Savings - Account review
Zions Bank2.26% ($25k min)Online Money Market (not available in all states) - Account review
Marcus by Goldman Sachs2.25%High-Yield Online Savings Account - Account review
Live Oak Bank2.25% ($5 million max) Savings Account - Account review
Citizens Access2.25% ($5k min)Online Savings Account - Account review
Pacific National Bank2.25% ($5k min) Money Market Deposit Account - Account review
Customers Bank2.25% ($25k min)Ascent Money Market Savings (rate guarantee through 6/30/2019 - Account review
BankPurely2.25% ($25k min) PurelyMoneyMarket - Account review
iGObanking.com2.25% ($25k min) MMA, New accounts and new money only - Account review
Northfield Bank2.25% ($100k max) Online Platinum Savings - Account review
All America Bank2.25% (up to $50k), 0.50% ($50k+)Mega Money Market Account - Account review
Redneck Bank2.25% (up to $50k), 0.50% ($50k+)Mega Money Market Account
CommunityWide Federal Credit Union2.25% (penalty-free withdrawals first 5 days of each calendar quarter)High Rate Quarterly Funds Account - Account review
Presidential Bank2.25% ($100k+), 1.25% ($250k+), 0.25% (less than $100k)Money Market Plus Checking - Account review
HSBC Direct2.22%HSBC Direct Savings
Barclays2.20%Online Savings - Account review
Synchrony Bank2.20%High Yield Savings - Account review
Sallie Mae Bank2.20%Money Market Account - Account review
Incredible Bank2.20% ($25k+), 1.21% ($2.5k), IncredibleBank Savings - Account review
TIAA Bank2.15% (1yr intro rate) 1.90% ($100k+) ongoing rateYield Pledge Money Market - Account review
FNBO Direct2.15%Online Savings
Franklin Synergy Bank2.15% ($500k), 2.05% ($250k), 1.95% ($100k), 1.85% ($50k) Synergy Money Market
Discover Bank2.10% Online Savings - Account review
American Express National Bank2.10%High Yield Savings - Account review
Sallie Mae Bank2.10%High Yield Savings - Account review
SFGI Direct2.07%SGFI Direct Savings Account - Account review
Bank 72.05% ($100 min)High Rate Online Savings Account
Bank5 Connect2.05% ($100 min) High Interest Savings - Account review
CIT Bank2.05% ($1k min)11-month No-Penalty CD - Account review
Bank 72.05% ($5k min)High Rate Online Money Market
Radius Bank2.05% ($25k+), 1.50% ($2.5k+)Radius High-Yield Savings - Account review
NASB2.02% ($25k+), 1.77% (up to $25k), 0.10% ($1.5m+)MMA Special Online Only - Account review
First Internet Bank2.02% ($250k+) 1.81% (up to $250k)Money Market Savings
M.Y. Safra Bank2.01% ($500k max)MYSB Direct Online Money Market - Account review
BankUnitedDirect2.01%Online Money Market - Account review
UmbrellaBank.com2.01% ($25k min), 1.00% ($1k)Money Market
Empower2.00% Savings
Ally Bank2.00%Online Savings - Account review
Alliant Credit Union2.00% ($100 min)High-Rate Savings - Account review
PenFed Credit Union2.00%Premium Online Savings
Chartway Federal Credit Union2.00% ($500)12-month No Penalty CD - Account review
Bethpage Federal Credit Union2.00% ($500 min)Money Market
Capital One2.00% ($10k+), 0.85% (up to $10k)360 Money Market - Account review
American Heritage Credit Union2.00% ($10k min)High Yield Savings (guaranteed through 12/31/2019)
Discover Bank2.00% ($100k min), 1.95% ($2.5k) MMA - Account review
Northpointe Bank1.95% ($25k+), 1.12% (below $25k and $1m+)Ultimate Savings - Account review
Self-Help Federal Credit Union1.91% ($500) Money Market - Account review
iGObanking.com1.90%iGOsavings - Account review
BankPurely1.90% ($1 min) SavingPurely - Account review
Colorado Federal Savings Bank1.90% ($50k+) Premier Savings (New customers) - Account review
CIT Bank1.85% ($100 min)Money Market - Account review
McGraw-Hill Federal Credit Union1.85% ($100) (guaranteed through 3/31/19)S3 Prime Money Market - Account review
ableBanking1.85% ($250 min)Money Market Savings - Account review
Spectrum Credit Union1.85% ($2.5k+), 0.50% ($1+) MarketEdge Money Market
MyBankingDirect1.85% ($25k+), 1.50% ($5k+), 0.25% (less than $5k) Money Market
DollarSavingsDirect1.80%Dollar Savings Account - Account review
BBVA Compass1.80% ($10k min, 12mo rate guarantee)ClearChoice MMA Promo - Account review
EBSB Direct1.80% ($10k+), 0.80% ($2m+), 0.50% ($10+)Money Market Special 3 - Account review

Reward Checking Accounts:

  • Noteworthy Accounts Available Nationwide:
Consumers Credit Union5.09% (up to $10k), 0.20% ($10k-$25k), 0.10% ($25k+) Rewards Checking Tier A- debit card and $1k credit card requirements (Changes effective 10/1/18)
La Capitol Federal Credit Union4.25% (up to $3k), 2.00% ($3k-10k), 0.10% ($10k+)Choice Checking
Consumers Credit Union4.09% (up to $10k), 0.20% ($10k-$25k), 0.10% ($25k+)Rewards Checking Tier B- debit card and $500 credit card requirements (Changes effective 10/1/18)
One American Bank3.50% (up to $10k), 0.25% ($10k+)Kasasa Cash - Account review
Heritage Bank3.33% (up to $25k), 0.15% ($25k+)eCentive Account
Consumers Credit Union3.09% (up to $10k), 0.20% ($10k-$25k), 0.10% ($25k+)Rewards Checking Tier C - debit card with NO credit card requirements (Changes effective 10/1/18)
Legence Bank3.05% (up to $10k), 0.25% ($10k+)Kasasa Cash
Market USA Federal Credit Union3.01% (up to $15k), 0.05% ($15k+)VIP Checking Platinum Tier - Account review
Evansville Teachers Federal Credit Union3.00% (up to $20k), 0.00% ($20k+)Vertical Dividend Checking - Account review
MainStreet Bank3.00% (up to $15k), 0.25% ($15k+)Kasasa Cash - Account review
Lake Michigan Credit Union3.00% (up to $15k), 0.00% ($15k+)Max Checking
INOVA Federal Credit Union3.00% (up to $15k), 0.07% ($15k+)Shield Checking - Account review
Signature Federal Credit Union3.00% (up to $15k), 0.10% ($15k+)Choice Checking
Great Lakes Credit Union3.00% (up to $10k), 0.20% ($10k+)Free Checking
Partner Colorado Credit Union3.00% (up to $10k), 0.10% ($10k+)High Interest Checking
Georgia Banking Company2.95% (up to $25k), 1.00% ($25k+)Kasasa Cash - Account review
All America Bank2.75% (up to $10k), 0.50% ($10k+)Ultimate Rewards Checking
Redneck Bank2.75% (up to $10k), 0.50% ($10k+)Redneck Rewards Checking
Campus Federal2.51% (up to $10k), 0.05% ($10k+)Lagniappe Checking
The State Bank (MI)2.50% (up to $50k), 0.15% ($50k+)Kasasa Cash - Account review
Hanscom Federal Credit Union2.50% ($15k min), 0.40% ($15k+)Kasasa Cash Checking - Account review
Industrial Bank2.50% (up to $15k), 0.25% ($25k+)Kasasa Cash
Altra Federal Credit Union2.50% (up to $15k), 0.40% ($15k+)A+ Checking
New Buffalo Savings Bank2.27% (up to $15k), 0.2497% ($15k+)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
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
Hawaii Pacific Federal Credit Union2.00% (up to $25k), 0.25% ($25k+)Kasasa Cash Checking
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
First Tech Federal Credit Union2.00% (up to $15k), 0.20% ($15k+)Dividend Rewards Checking
Blue Federal Credit Union2.00% (up to $15k), 0.10% ($15k+)Extreme Checking (up to 4% w/account relationships) - Account review
Northwest Federal Credit Union2.00% (up to $15k min)Kasasa Cash - Account review
United Educators Credit Union2.00% (up to $10k), 0.25% ($10k+)Kasasa Cash
KS StateBank1.90% (up to $25k), 0.50% ($25k+)Check PLUS - Account review
Connexus Credit Union1.75% (up to $25k), 0.25% ($25k+)Xtraordinary Checking
Superior Choice Credit Union1.75% ($30k-$75k), 1.50% (up to $30k)AMP Checking
Axos Bank1.25% (up to $150k), 0.00% ($150k+)Rewards Checking

Certificates of Deposit:

Bank Account Alternatives - NOT FDIC Insured

GM Financial Right Notes2.75% ($50k+), 2.60% ($15k+), 2.50% ($500+)
Duke Energy PremierNotes2.65% ($50k+), 2.50% ($10k+), 2.45% (less than $10k)Duke Energy PremierNotes review
Ford Interest Advantage2.65% ($50k+), 2.50% ($15k+), 2.45% (less than $15k)Ford Interest Advantage review
Vanguard Prime Money Market Fund2.44% 7-day yield
Fidelity Money Market Fund2.28% 7-day yield
Ally Financial Demand Notes2.10% ($50k+), 1.95% ($15k+), 1.75% (less than $15k) (
Vanguard Municipal Money Market Fund1.57% 7-day yield
Fidelity Municipal Money Market Fund1.41% 7-day yield

Removed, No Longer Available

EBSB Direct2.50% ($5k min)High-Yield Statement Savings - Account review

Removed, Rate Too Low

Marine Federal Credit Union1.26% (up to $10k), 0.05% ($10k+)Kasasa Cash Checking

Post Publication Edits

1/9/2019: Salem Five Direct eOne Savings rate raised.
1/9/2019: Live Oak Bank Savings rate raised.
1/10/2019: EBSB Direct High-Yield Statement Savings removed.
1/10/2019: UFB Direct Premium Money Market added.
1/11/2019: Discover Bank Online Savings rate raised.
1/11/2019: Discover Bank Money Market rate raised.

Related Pages: savings accounts, money market accounts, reward checking accounts, 1-year CD rates, nationwide deals, Internet banks
RonPaul   |     |   Comment #1
Why continue to talk about INOVA? Nobody on here was able to get the deal that was posted. I applied for membership within an hour of the posting on here and they refused to honor the rate.
tck   |     |   Comment #9
Oddly, Inova never even followed thru with me after my membership application to finalize it. After that whole debacle, I don't want to join anyway. Just thought it was strange.
LargeTuna   |     |   Comment #11
Agreed. INOVA seems shady. I got a call from one of the reps there (manager I believe). Just seems fishy.
deplorable 1
deplorable 1   |     |   Comment #2
Nice to see a new savings rate leader but the banks that do rate guarantees never stay competitive past the guarantee period. I don't think I have ever seen one hike rates either. Look at Northern Bank Direct for a example 2.26% is the guaranteed rate yet they are only paying 1.51% on their current MMA.
111   |     |   Comment #7
Well sure - but that's because Northern clearly telegraphed that their 2.26% rate (guaranteed at the time thru June) might end. And so it did.
deplorable 1
deplorable 1   |     |   Comment #12
Right 111 agreed but can you name a bank that had a top "guaranteed" interest rate that has continued to hike interest rates with the FED moves? I can't think of any. Every time I open one of those I end up having to drain it and close it later. Then you take a bank like All America/Redneck for example who does not do the "guaranteed" thing and the regularly hike their rates along with FED moves consistently. No need to close the account and keep switching banks which makes life easier. They need to hike their rate again soon to remain competitive though.
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censoring foul ?
censoring foul ?   |     |   Comment #27
frigging amazing deletes
dollarsncents   |     |   Comment #28
The very first paragraph of this blog clearly explains the reason why so many comments were deleted.
exactly   |     |   Comment #29
should have put a smiley for clarity
Anonymous   |     |   Comment #3
Help me but since T Bills yield roughly 2.4% for 4 weeks - if you live in nyc and have gross income above 200k your marginal tax rate 6.85% so your taxable equivalent yield is 2.6%. Then one can just roll over treasury direct every 4 weeks - not as liquid as savings account but still **** good
MichaelP   |     |   Comment #4
I agree, this is currently a great alternative for some individuals. I bought a 4-week T-Bill last week which had a rate of 2.43% through Fidelity. With my taxable income and the fact that I live in CA, the taxable equivalent yield is 2.70%. I'm buying another this week to complete a four step T-Bill ladder. That way I have one maturing each week.
MichaelP   |     |   Comment #5
To determine if it is an appropriate alternative for your situation, check out the following taxable-equivalent yield calculator:
solarado   |     |   Comment #8
Thanks, MichaelP, for the calculator -- I didn't even know you could purchase T-bills through Fidelity.
MichaelP   |     |   Comment #10
You are welcome solarado. Yes, you can buy Treasuries for no fees or commission at most brokerages. Here is an article on how to do it at Fidelity, Vanguard, and Schwab:
chuck shumer
chuck shumer   |     |   Comment #19
Can you buy Treasuries of any duration (length) with no fees or commission at most brokerages? For example, 2 year, 3 year, 5 year, 10 year, etc.?
jrz83   |     |   Comment #23
Yes, so long as they are new-issue Treasuries. Charges occur for secondary-issue Treasuries however. Fidelity, Vanguard & Schwab offer the following new-issue Treasuries: T-Bills (4, 8, 13, 26, & 52-week), Notes (2, 3, 5, 7, & 10-year), and 30-year Bonds. I am not sure if each brokerage firm offers TIPS.
jrz83   |     |   Comment #26
It looks like I was wrong. You can buy secondary-issue Treasuries at most brokerages without paying charges also.
Luvcd   |     |   Comment #6
Michael...decrease your expenses and less income is needed...perhaps eventually resulting in not owing any taxes...focus on the front end is what “a lot” of us do!
Paul Manafort
Paul Manafort   |     |   Comment #30
Is INOVA legitamite or is it a scam?
AnnO   |     |   Comment #33
Inova is a real credit union. This particular CD offering was timed such that it was almost impossible for anyone not already a member of them to get.
rockies   |     |   Comment #40
AnnO, Actually, if you check out gregk's comments in the original INOVA stream, current INOVA members were at a disadvantage because new members had a "paper trail" of interest based on their member applications vs. current members who did not.

This sentence from gregk sums it up "Sorry for being a member so long, Inova, and thanks for making that a distinct disqualification for receiving even the same courtesy given those who haven't supported you with their business for almost a decade as I have."

I think your quote could be simplified to " was almost impossible for anyone." Period
AnnO   |     |   Comment #68
I thought at least one person had reported being able to get it done, by already being a member and going in-person to a branch nearby.
deplorable 1
deplorable 1   |     |   Comment #31
GTE is giving away cruises with it's CD's now! lol You either get a "entry" with $500 or a free cruise with a jumbo CD for $100,000. The top rate is only 3.3% for the jumbo but I thought this looked like a interesting perk.
deplorable 1
deplorable 1   |     |   Comment #32
Bad news looks like EBSB direct has dropped their high yield saving account again. I hope we are still grandfathered in to the 2.5%. Their new account is only paying 1.8%.
EBSB Comment
EBSB Comment   |     |   Comment #35
My EBSB account is still showing 2.5% when I log in. It may just be no longer available for new customers.
Milty   |     |   Comment #43
Same here . . .
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Bozo   |     |   Comment #41
In terms of ease of access, Vanguard's Money Market Fund (VMMXX) still seems the winner in this category. I had expected the yield to fall a bit this week, but, if it did, I missed it. Full disclosure: I swapped out the remaining amount in my Vanguard Total Bond Fund (VBTLX) into VMMXX recently.

The NAVs were driving me nuts.
warren   |     |   Comment #42
Bozo, I agree with your comment about VMMXX. However, I disagree with your comment about VBTLX. You actually still have money remaining in just happens to be disquised. As I recall from communication we had on this blog site back in October, you also own the fund VBIAX. VBIAX is a hybrid (balanced) fund which is composed of 40% VBTLX and 60% VTSAX. So unless you recently sold all of your VBIAX fund, you technically still own some $$$ in VBTLX!
RZ   |     |   Comment #44
Bond funds are generally less desirable than buying individual bonds because the NAV even with short term BFs will fluctuate inversely with the direction of interest rates. In the rate increasing environment that we are now in, the decrease in NAV will not offset the increase in interest earned and unfortunately in a taxable account you will still pay taxes on the distributions as ordinary income. The loss from NAV is not realized until shares are actually sold. Unless you hold them for the long term and sell only during times of decreasing interest rates or for tax loss offsetting, I see very little benefit over the more stable MM funds.
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Brokered   |     |   Comment #46
CD's maintain principal until maturity. A $100K brokered CD paying 5% for 10 years pays $5,000/annum interest; $100K is returned to the owner at the end of ten years. Total after 10 years is $150K minus annual taxes on interest.

I'm sure you know this so Bozo is correct: CD's don't necessarily "lose" value as rates rise. Rising inflation WILL affect the value of a matured CD. $100K in 2008 = $116K in 2018. This is why CD's are often considered a hedge against inflation and not a wealth building vehicle. FDIC insurance has a price.
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Brokered   |     |   Comment #48
Of course 3.5% is a better return than 1.5%. However, since CD's are generally considered "time deposits" we aren't concerned with trading as we are in the stock market. A $100 stock that falls to $80 has lost value. A $100 CD is $100 at maturity (plus interest payments). Ignoring inflation, the stock has lost purchasing value, the CD has not.

One obviously risks missing higher CD rates when buying long-term CD's. I recently sold two brokered 10-yr 3.3% CD's for a small loss in principal (much less than any EWP). I immediately reinvested in a stable stock paying 5.8% dividend. Last year I sold a 10-yr 3.3% for 103% of principle (made a profit on a CD sale). I also reinvested that in a dividend stock paying 5.7%. I'm not sure how one values value but I'm perfectly happy with boring CD rates and old-folk dividend paying utilities. Oh, and we cashed in a local non-IRA $250K CD at 2.5%, paid the EWP and reinvested in a brokered at 3.65%.
Regarding EWP...don't forget line 30 on your 1040.
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Brokered   |     |   Comment #50
We can discuss duration if you please but CD's are not bonds. Fixed income is easy to understand. Gibberish not so much. Your posts are light on specifics.
Have a great year!
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lou   |     |   Comment #51
Brokered, is there a wide spread between bid/ask for brokered CDs? How liquid are they at sale? For instance, some bonds will not receive a bid even though you're offering to sell it. At Fidelity, they call it "depth of book" and not all bonds or CDs have one, meaning they can't be sold on the secondary market. Has that ever happened to you?
Brokered   |     |   Comment #53
I've sold three brokered CD's at Schwab. One year ago (1/8/18) I sold a 3.3% $50K CD due in 2024 at 2% above par (interest not included). Proceeds, including three months interest: $51,400.

Recently I sold two smaller 3.3% CD's (final amount includes interest) slightly below par. I put the proceeds in a stable stock that pays a 5.8% dividend (at current pricing).

All of these CD's were aged...most were now competing with 5-yr offerings. The one sold a year ago at a premium was prior to major rate increases. Recent sales suffered from rate increases, but that is changing. We have a lot in brokered CD's and I use the spinoff interest to purchase additional CD's or one of the dividend stocks I follow, depending, of course, on the price of the stock. The stocks are all stable utilities.

The three brokered sales on Schwab were timely and efficient. I requested a bid, received a response within an hour and accepted or rejected it. Start to finish the two most recent sales took less than 30 minutes. Again, these CD's were relatively small (15K/25K). I wanted to increase my stock position (I liked the price) and I thought transferring from a 3.3% return to 5.76% dividend was a good move. While I wait for a 10-15% stock appreciation I pick up the dividends. Anyone doing this should perform all the necessary math beforehand. The last two sales incurred a small loss (penalty) that was much lower than a normal bank EWP. If I sold other CD's we own we would incur a more substantial penalty.
lou   |     |   Comment #72
Brokered, the 10-yr CDs you bought in 2014 at 3.3% were probably the highest rates you could have received during that time period. I bought the 5-yr 3.04% CDs at PenFed and the 7-yr 3.10% CDs at Navy in Jan of 2014. The only time I was ever willing to go out 10 yrs were the 5% CDs at PenFed in 2011.

You did, however, take a risk going out that long in 2014 when rates were at a generational low point. No one can foresee where rates are going to be 5 years out or even a few years. You could have been easily stuck with these CDs for 10 yrs if rates had gone to 6% (which is where they were in 2006--7) over even higher. It turned out buying brokered 10 yr CDs in 2014 was a pretty good move but it easily could have gone the other way. We all have are own criteria when buying fixed income investments. For me, however, 10 yrs is too long a period unless the rate is so much higher than what is currently out there.
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jrz83   |     |   Comment #61
lou (comment #51), at Fidelity "Depth of Book" refers to the display of all of the various bids and offers (asks) in a single security, in addition to the best bid and the best ask price. You can still buy or sell a listed security at Fidelity even if it doesn't have a "Depth of Book" display. In that case it just indicates the listed security currently has only one ask price, and at most one bid price.
lou   |     |   Comment #62
jrz83, I have found that I have not been able to sell when there was no "Depth of Book" for a particular bond. In those times, I have spoken to fixed income Fidelity reps who tell me there are no dealers who will trade or make a market for the bonds. Generally speaking there needs to be at least $100 million of the bonds in circulation to attract dealers willing to create a market for them.

Years ago after the financial crisis, the govt prohibited banks from buying bonds to trade so they could create a market for them, which had a deleterious impact on liquidity for the fixed income markets. Since I have never bought brokered CDs, I'm not sure the same dynamic applies to them. I do know from experience it does apply to individual high yield bonds.
jrz83   |     |   Comment #63
lou, so Fidelity was never able to sell your high yield bonds? Did you ever try lowering your asking price? Do you still own the bonds today? I've purchased several new-issue & secondary-issue treasuries and brokered CDs with Fidelity and never had a problem. I have always held the securities to maturity so I haven't sold any securities through Fidelity. Your experience is news to me. Dr Dumb is correct, there is a wide spread between most brokered CD bids and asks since their market is not liquid. The opposite is true for treasuries. There is a narrow spread between their bids and asks since their market is very liquid.
lou   |     |   Comment #64
It has happened from time to time. Over a period of years I have owned a portfolio of intermediate high yield bonds. One of my criteria is I will only buy bonds that have traded everyday for at least 30 days before I purchase them. Generally speaking, I only buy bonds where there is a least $100 million (preferably $500 million) of them in circulation.

Sometimes, the issuing company will offer to partially purchase the bonds at a premium before maturity or there may be call for a percentage of the total issuance. This will negatively affect the liquidity of the bonds because now only a fraction of the bonds are in circulation. Consequently, the bonds will no longer have a "depth of book" (meaning there are no active bids) and I will have no choice but to keep the bonds until they mature. I have requested the Fidelity bond desk if they would shop my ask price, but they claim they can't do it because the bonds lack a depth of book.

I would imagine many CDs must be fairly illiquid because they are sold in small odd lots and the dollar volume isn't sufficient for a dealer to make a market for them.
Brokered   |     |   Comment #66
I read all your posts. I have not sold bonds; only brokered CD's. Two were from Goldman Sachs, one from Citigroup. Par values were 50K, 25K and 15K. All were 10-yr CD's purchased almost five years ago (making them roughly competitive with current 5-yr). From bid request to cash in my account: longest time was about 30 minutes; shortest was about 15 minutes.

I only commented on my experience because brokered CD's have some advantages and I like the ease of seeing everything on one screen with one point of contact (the brokerage). I've had several bank CD's over the years and it just became a management headache I did not want during retirement. I'm also planning for the eventual...end of life. When two PenFed CD's mature in 2020 all investments will be under one roof along with a local bank for direct deposit/savings/checking.

In any case, my brokered CD's were very liquid. One turned a profit while two did not. The two "losses" were but a fraction of a normal EWP and I had a happy home for the proceeds. The transactions were simple and efficient.
Slim Jim
Slim Jim   |     |   Comment #67
Dear Brokered. What is the basis for claiming the CDs "were very liquid?"

Did you check them daily, weekly or monthly during your holding period? What was the bid ask spread? Any idea?

Because that is the definition of liquidity.
Brokered   |     |   Comment #69
I could have sold them at anytime during the years I held them. Yes, I checked prices during a five year time period. Easily converting an asset to cash = liquidity. I converted my holdings to cash in less than 30 minutes.

I did not and do not care about bid/ask spreads. I asked for a bid, received a bid and sold the assets. I've asked for bids, received bids and rejected bids.
Fixed Income 101
Fixed Income 101   |     |   Comment #70
Brokered, you may not care about spreads, but that is the definition of liquidity.

You may not care about changes in the value of a CD as interest rates change, but it is a simple fact, whether you realize it or not.
Brokered   |     |   Comment #73
I realize your purpose is to attack whatever I say. My bid/ask was zero. I accepted the bid offered. It's that simple. The value of an asset or the measure of liquidity are dynamic concepts, subject to market forces. I am fully aware of the changes in CD pricing (current market value) because I've engaged in transactions above and below par. Experentia Docet.

The definition of market liquidity is how easily one can dispose of an asset regardless of gain or loss. The bid/ask spread is an indicator of the measure of liquidity. If there was no secondary market for brokered CD's they would be considered illiquid. As my experience demonstrates, my CD's were liquid.

I hope your investments do well in 2019!
Fixed Income 101
Fixed Income 101   |     |   Comment #74
Brokered, you have the time, check out Vanguard's CD book. The same secondary CDs are listed, day after day, most with only a sale offer and no bids.

You are not being attacked, you are being corrected and educated.
Brokered   |     |   Comment #75
Many are small quantities, callable, restricted etc. I guess I chose more "liquid" CD's to buy and...sell in a timely manner.
Brokered   |     |   Comment #76
Oh, and Vanguard list liquidity under Secondary Pros...
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Dr Dumb
Dr Dumb   |     |   Comment #78
Wow, DA won't allow a listing of Vanguard's definition of liquidity.
Brokered   |     |   Comment #79
No problem...

Under Secondary Market/Pros (Cons are dealt with separately)
A measure of how quickly and easily an investment can be sold at a fair price and converted to cash.

My three CD's were very liquid. I guess viscosity should be applied to your examples.
Dr Dumb
Dr Dumb   |     |   Comment #80
Mr Brokered, no need to add to Vanguard's definition.

"Fair Price" = Small Bid Ask Spread.

I didn't provide any examples, only provided the definition. You provided the examples. It sounds like you don't really know how liquid they were, only that they were sold with a loss less than the early termination penalty, which is not at all relevant.
Nothing   |     |   Comment #82
Dr Dumb (aka: Slim Jim, Fixed Income 101) please educate us. What do you recommend for fixed income?
Brokered   |     |   Comment #83
In the real world gains and losses matter far more than debating the definition of liquidity. The liquidity quote from V is, "A measure of how quickly and easily an investment can be sold at a fair price and converted to cash." Their quote, not mine.

Comparing the sale of brokered CD to an equivalent local bank CD with an EWP is absolutely relevant. I can sell an aging $200k CD right now for $199K. A standard EWP of 12 months interest would result in proceeds of $194K. My math says I'd be $5,000 ahead. Let's stop playing word games and part company.
Dr Dumb
Dr Dumb   |     |   Comment #84
Yes, the Vanguard definition is correct. Liquidity means being able to sell at a fair price, which means a liquid market with low bid and ask spreads.

The EWP is not at all relevant to whether brokered CDs is a liquid market.
dollarsncents   |     |   Comment #71
Brokered, you are not alone in your reasoning relating to brokered CDs. I too am in the process of having my CDs all under one roof in a brokerage Acct. for the very same reasons you stated in your comment #66.

Although I still continue with my tried and true ladder approach. Purchasing only new CDs and never cashing any in before maturity, bid and ask price never concerns me.
Brokered   |     |   Comment #81
I'm looking at my account and a few of my CD's just went green in the Gain/Loss column. New issue rates are falling.
Milty   |     |   Comment #65
Looks like ableBanking has lowered all its CD offerings.
MDH71   |     |   Comment #85
Received my cash bonus email from Ally at 3:07pm ET today. It stated that the bonus would be deposited into my savings account on or around 2/5/2019.

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