Money Market Interest, what is the best

saphireFebruary 11, 2007

So far I found HSBC has a 6% intro rate until April

Anyone found anything better. I will not do CDs because I have a short time frame

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western_pa_luann

"I will not do CDs because I have a short time frame"

I thought CDs were offered from 1 month to 5 years....

    Bookmark   February 11, 2007 at 12:54PM
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kudzu9

"...until April" is about 6 weeks away. What happens to that rate then?

I am considering Orange Bank, at 4.5%. I have no connection to this company and am not suggesting you put your money there. However, I have heard good things about them from friends and it might be worth looking at.

Here is a link that might be useful: Orange bank

    Bookmark   February 11, 2007 at 4:34PM
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celticmoon

There are also some good military rates if you have any connection with the armd forces or the Pentagon. You will not likely beat 6% in a money market. Do read the fine print and check the expected duration of that rate, whether it applies only to new accounts, or requires other accounts and lastly, if there is a minimum deposit. I've seen rates linked to a "minimum" balance of $100,000.

Site below has good info. Scroll down to the third entry for a link to a lengthy discussion of the HSBC offering. Scroll further for current rates for money markets and different term CDs. Site seems to be updated weekly.

Here is a link that might be useful: site that tracks MM and CD rates

    Bookmark   February 11, 2007 at 9:29PM
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celticmoon

Just finished reading all the followup posts re: HSBC acounts. Interesting. Common complaint is that money seems to get waylaid for a couple days during transfers in and out, effectively reducing both interest and immediacy of access. Some posters believe the actual effective rate to be more like 5.7% because of that issue. One good tip was to move money on Monday or Tuesday so you don't lose additional interest for weekend days while the funds 'find their way'.

Here is a link that might be useful: HSBC discussion

    Bookmark   February 11, 2007 at 9:45PM
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devorah

I was excited about HSBC until I discovered the rate is only good until April. BIG FAT HAIRY DEAL! I keep most of my money in CDs. My credit union is paying 5.65% and if I have to break one - well so what!. My husband wanted me to ladder the CDs so that one was always coming due - so I would hold my $ in savings for six months so that I wouldn't lose 3 months interest in the off chance I had to break it mmmmmmmmm no!. What I did instead is have him buy multiple 10 & 20k CDs so that I won't have to break one huge one.

    Bookmark   February 11, 2007 at 9:49PM
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saphire

I believe the rate after April is 5.05 so still better than orange

Anyone else find anything close

    Bookmark   February 12, 2007 at 10:49PM
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celticmoon

Vanguard has several- one linked to Treasuries (4.8), one to the prime (5.1) and one linked to federal funds (5.04). Also several tax exempt MM funds around 3.5 - some exempt from state tax as well if you live in the right state - these can be better depending on your tax situation.

No teaser rates, and by history seem to run higher than typical MM funds. Like all things Vanguard: huge, stable, efficient and pretty user friendly.

Here is a link that might be useful: Vanguard MM options

    Bookmark   February 13, 2007 at 9:37AM
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lkplatow

Etrade bank has a new preferred savings that pays 5.05%. They probably started it to compete with HSBC.

    Bookmark   February 14, 2007 at 2:03PM
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blue_fastback

I am using GMAC bank. They pay over 5% and I can write a check to make purchases anytime I want.

    Bookmark   February 16, 2007 at 3:58AM
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jj145

Citibank e-savings gives 5% and it transfers right away so you don't loose those few days of interest. With a Citi checkings, this allows my to keep minimal $$$ in checkings (just upcoming bills that will hit) and earn interest on the savings. The minute I need more money in checkings, I just transfer it from savings and 2 seconds later I have it.

    Bookmark   February 25, 2007 at 11:57AM
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saphire

Its at 4.76 now

    Bookmark   March 2, 2007 at 2:02PM
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cmarlin20

Countrywide is (I think) 5.45% or 5.40

    Bookmark   March 2, 2007 at 11:53PM
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celticmoon

ooo, cmarlin, you made me look. Sounded good.

That Countrywide 5.4% is the yield on their 5.26% rate - BUT minimum balance to get that rate is $50,000!

For 10-15K, interest rate is 5.11% (yield 5.25%)
For under 10k, interest rate is 3.92% (yield 4.00%)

So maybe not so good unless you have a LOT of money to park.

Weirdest part is that if you park a WAY big chunk of money there, say 2.5 million, site says the rate then is 1.48% (yield 1.5%) What's with that?!?

Here is a link that might be useful: Countrywide rates

    Bookmark   March 3, 2007 at 12:17AM
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bobleilani

Capital One (through Costco) offers 5.20% APY, no fees and a minimum initial deposit of $1,000. We were thinking of opening an account there to use for our new construction draws/deposits (it beats our credit union rate of 5.00%).

Here is a link that might be useful: Capital One Money Market (through Costco)

    Bookmark   March 3, 2007 at 2:01AM
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joyfulguy

Most personal financial advisors suggest having 3 - 6 mos. level of income available immediately in case of emergencies, lay-off, etc.

I routinely recommended that, as well - but I haven't followed that course, myself, a good bit of the time, even in my earning years, when income was dependent on turning up for work. And usually told my clients the following story, in case they chose to use it.

Now that I'm retired, all that I have to do to qualify to have my monthly pension amount deposited into my bank account is ...

... stay alive.

I may have a back so decrepit that I can hardly walk, be sick abed, travelling in Mongolia, or whatever - it still gets deposited.

Which means that I am less at risk of needing emergency money than when employed, with less assurance of continuing income.

Sometimes I've had a substantial balance on hand, usually mostly in stockbroker account, often mainly in money market funds, especially when the stock market seemed too high.

But I have drawn a number of certificates for my equity-based mutual funds (no fee), and paid to have certificates issued for a number of my stocks, then have used them as collateral underlying a fully secured Letter of Credit at the bank (lower interest rate than borrowing from broker), currently 6%.

I think that setting up a Home Equity LOC often requires some fees, and there were none asociated with mine, based on easily saleable securities.

Some charge a fee to let it lie unused, but mine does not, and it lies unused a good portion of the time.

Sometimes I use it when in need of unexpected purchase, e.g. buying a car (but bought two older models within the past year and a half, for - under $3,000. - cheque).

I have a "credit" (really "debt") card, which I don't use much, but I could use it for immediate emergency, drawing on the LOC to pay the balance before the due date, so no interest.

One problem with this system is that one usually needs about $20,000. of asset value in order to qualify for a $10,000. loan. And I would recommend that one not draw full value of that credit available - for if the value of the underlying stocks decreases by 20% ... the amount of loan allowed will decrease by 10%. If a larger amount has been borrowed, the lender will require cash or more securities - today ... or tomorrow, at the latest. I've never borrowed so close to my credit limit that I suffered a margin call - don't ever want to, either.

If I borrow for emergency use, the interest that I pay on the loan is not deductible (but the underlying mutual funds and stocks continue to earn - and grow, most of the time).

If I use the LOC to borrow to invest, the interest is deductible. I wrote a post starting a thread here a few week s ago telling how I thought that I can make such a loan at almost no net cost.

Which makes it wise for me to have two letters of credit, one for emergency use, one to use for investment loans, when I choose to make them.

(I should have made some of the latter about three or four years ago - but didn't).

Over a substantial period, the mutual funds pay me a variable current rate of return. The dividend rates on the stocks tends to grow, over time. Usually lower than the interest that I could earn, I agree, but that's fine - I don't need the money now. Most of those earnings come to me at a much lower rate of tax than I'd have to pay on interest income, which is taxed at top rate.

When I put my money into a CD, GIC, bond or other instrument where the number of base dollars is guaranteed not to shrink, there's another guarantee that the bank never mentions - it can't grow, either.

The only earning that I can obtain from that money is the interest. And interest income is all earned now. And it's taxed at top rate - I like to avoid that, when possible.

Most of my equity-based mutual funds, and stocks, increase in value over time. I don't receive any of that value now. So I'm not taxed on it now.

I only have to realize that increased value when I sell them - or die - which gives me a good deal of the value obtained in tax-deferred retirement accounts, which defer tax liability until withdrawals are made.

But those with retirement accounts have every dollar withdrawn added to income and taxed at regular rate.

When I cash my investments, I usually pay tax at a much reduced rate.

I like that system better than having my invested dollars earn all that they'll ever earn relative to this year, right now, and taxed now, plus taxed at top rate.

I'd prefer to defer part of the income - and pay tax then ... at a reduced rate.

Such a system might work for some of you, should you so choose.

ole joyful

    Bookmark   March 3, 2007 at 7:29PM
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