how much do you keep in no interest checking?

[jazz4cash]

As little as possible. Three years into ER and I realized it was no need to recreate my paycheck. Funds for lumpy expenses are met with xfer from hi yield savings and a CD ladder.

 

[Scuba]

Zero. I have our spending money in an interest-bearing checking account paying somewhere around 1.5%+. Wont make me rich but better than nothing.

 

[brucethebroker]

Interesting article about the low/no rates given by the "biggie" banks:

https://wolfstreet.com/2018/05/28/for-new-money-only-banks-fight-for-deposits/

 

[tdv2]

~$10k

+1---~$10k

 

[athena53]

I looked at opening a USAA savings account since I have checking there and could be able to move funds back and forth easily. It pays a whopping 0.2% on balances between $10K and $24,999; .05% on balances under $10K. Not worth the effort.

When my Uncle died suddenly in the late 1970s, it took the family awhile to discover that he was manually moving money from checking into savings when he put something on the credit card (as in going to the bank and filling out a deposit slip) and then transferring the balance back into checking when the credit card bill came due. I know interest rates were higher then, but I wonder what he made and whether it was worth his time since he had a demanding FT job.

 

[calmloki]

I looked at opening a USAA savings account since I have checking there and could be able to move funds back and forth easily. It pays a whopping 0.2% on balances between $10K and $24,999; .05% on balances under $10K. Not worth the effort.

When my Uncle died suddenly in the late 1970s, it took the family awhile to discover that he was manually moving money from checking into savings when he put something on the credit card (as in going to the bank and filling out a deposit slip) and then transferring the balance back into checking when the credit card bill came due. I know interest rates were higher then, but I wonder what he made and whether it was worth his time since he had a demanding FT job.

“Take care of the pence, and the pounds will take care of themselves.” ?
William Loundes

 

[audreyh1]

Usually in the $10K-$20K range. As interests rates get higher, I'll manage it better, but when MM rates were well below 1% it just wasn't at all worth it. If PF MM or savings paid more I'd do it, but I don't want the delay of external transfers.

Plus, my PenFed checking pays some dividends, but not every month. I still haven't figured out why it does some months and not others. Something to do with deposits maybe? My balance rarely dips below $10K.

Yes. I think if you have a monthly deposit made you’ll get the higher interest rate.

 

[mexexpat]

Probably too much....40-45K. Frankly it just piles up in there from SS and pension checks. If there were decent interest rates, I would have moved it by now. Hardly worth the effort.

 

[swakyaby]

100K

Embarrassing really . . .

 

[Huston55]

100K

Embarrassing really . . .

Easily fixed. You have (at least used to per an old post) a taxable Fido account, where you can (currently) get 1.82% from FZDXX, and use it to auto-replenish your checking account to pay bills. Easy peasy.

 

[calmloki]

Easily fixed. You have (at least used to per an old post) a taxable Fido account, where you can (currently) get 1.82% from FZDXX, and use it to auto-replenish your checking account to pay bills. Easy peasy.

When I go to our FIDO account (for a couple credit cards and the little money market the 2% cash back dumps into) and look up FZDXX I get this:
https://fundresearch.fidelity.com/mutual-funds/summary/31617H805?type=o-NavBar

It shows YTD return of .65%, one year at 1.23%, seven day at 1.8%, and a "compound effective yield of 1.84%. But it has a .3% expense ratio. Obviously I'm missing something. Like how this all adds up to big annual interest. I like the idea of having our cash make as much as possible while we are marking time.

 

[UnrealizedPotential]

Right now $2400. But the amount bounces around a little to pay bills during the month.

 

[ER Eddie]

A little over $1000.

 

[Dtail]

When I go to our FIDO account (for a couple credit cards and the little money market the 2% cash back dumps into) and look up FZDXX I get this:
https://fundresearch.fidelity.com/mutual-funds/summary/31617H805?type=o-NavBar

It shows YTD return of .65%, one year at 1.23%, seven day at 1.8%, and a "compound effective yield of 1.84%. But it has a .3% expense ratio. Obviously I'm missing something. Like how this all adds up to big annual interest. I like the idea of having our cash make as much as possible while we are marking time.

With MM accounts like HY Savings accounts at online banks, I think just the current yield is relevant. MM rates have gone up just recently after being dormant for years.
Thus the 1.8% is the relevant yield and although it is not FDIC backed like a bank, Fidelity has never "broken the buck" on their MM accounts.

 

[Done]

Easily fixed. You have (at least used to per an old post) a taxable Fido account, where you can (currently) get 1.82% from FZDXX, and use it to auto-replenish your checking account to pay bills. Easy peasy.

+1
$150/mo interest is not bad if you keep that much cash. This is the MM fund my Fido advisor suggested in lieu of CDs if expecting rates to rise soon. The 1.8% current yield is after expenses.

 

[Huston55]

When I go to our FIDO account (for a couple credit cards and the little money market the 2% cash back dumps into) and look up FZDXX I get this:
https://fundresearch.fidelity.com/mutual-funds/summary/31617H805?type=o-NavBar

It shows YTD return of .65%, one year at 1.23%, seven day at 1.8%, and a "compound effective yield of 1.84%. But it has a .3% expense ratio. Obviously I'm missing something. Like how this all adds up to big annual interest. I like the idea of having our cash make as much as possible while we are marking time.

Good question. You’re missing nothing. Nobody said it’s “big annual interest.” It’s simply more than “zero” from the OP.

+1
$150/mo interest is not bad if you keep that much cash. This is the MM fund my Fido advisor suggested in lieu of CDs if expecting rates to rise soon. The 1.8% current yield is after expenses.

So, the 1.83% is net of expenses, per the note on Fido (see below).

7-Day Yield

The current yield reflects the current earnings of the fund, while the total return refers to a specific past holding period. The 7-Day Yield is the average income return over the previous seven days, assuming the rate stays the same for one year. It is the Fund's total income net of expenses, divided by the total number of outstanding shares and includes any applicable waiver or reimbursement.

 

[MrLoco]

100K

Embarrassing really . . .

Embarrassing? Really ? Why? I have twice as much sitting in a checking account at my local bank. But I need quick access to cash. I routinely withdraw $5,000 before going to my local card room. More if I will be playing in a few tournaments. Plus, the $200k represents less than 4% of investable assets. If one has 50% of their assets sitting in a checking account ....yes that is an issue. Plus, any expenditure on the spur of the moment......a month long cruise, a new car, gifting to the children....I can just write a check and not have to deal with "moving money around."


Trying to squeeze every last dollar out of the lemon seems like a little obsessive to me.


Now, writing a check...and having it bounce....that is embarrasing!

 

[audreyh1]

When I go to our FIDO account (for a couple credit cards and the little money market the 2% cash back dumps into) and look up FZDXX I get this:
https://fundresearch.fidelity.com/mutual-funds/summary/31617H805?type=o-NavBar

It shows YTD return of .65%, one year at 1.23%, seven day at 1.8%, and a "compound effective yield of 1.84%. But it has a .3% expense ratio. Obviously I'm missing something. Like how this all adds up to big annual interest. I like the idea of having our cash make as much as possible while we are marking time.

The stated yield is after expense ratios. Are you just trying to understand how they manage it? With rates increasing, YTD and one year returns have nothing to do with current yield either.

 

[calmloki]

The stated yield is after expense ratios. Are you just trying to understand how they manage it? With rates increasing, YTD and one year returns have nothing to do with current yield either.

I guess just trying to understand the reason to have money there and being sure I don't understand the income/expense quotes. If it is 1.84% net of expenses for the last week but the YTD return is only .65% that seems really volatile for a savings account. How is this more attractive than letting cash sit in Discover bank and earn a boring but slow to change 1.3%January to 1.5%April YTD?

 

[VanWinkle]

I only have rewards checking pays 1.95% for up to 30,000. I keep 30,000 in the account and consider it like a CD with no penalty for early withdrawal. I have pension and investment withdrawals sent direct to this account.

 

[corn18]

I guess just trying to understand the reason to have money there and being sure I don't understand the income/expense quotes. If it is 1.84% net of expenses for the last week but the YTD return is only .65% that seems really volatile for a savings account. How is this more attractive than letting cash sit in Discover bank and earn a boring but slow to change 1.3%January to 1.5%April YTD?

Not sure which is better, but the reason I use FZDXX is I can buy it for free in my USAA brokerage account and then my wife doesn't have to search all over kingdom come to find all of our money if I die. And USAA money market funds are the worst for yield.

 

[audreyh1]

I guess just trying to understand the reason to have money there and being sure I don't understand the income/expense quotes. If it is 1.84% net of expenses for the last week but the YTD return is only .65% that seems really volatile for a savings account. How is this more attractive than letting cash sit in Discover bank and earn a boring but slow to change 1.3%January to 1.5%April YTD?

No. First of all YTD (year to date) covers just less than 5 months, plus earlier months were paying lower interest rates. It would represent 4 months of interest if the May dividend is not included.

It’s a MM fund. There has been no volatility.

Your cash in Discover bank did not return 1.3% to 1.5% YTD, that’s the annual interest rate. It will return that over 12 months assuming no change in rates, so the gain YTD will be partial just like the MM fund.

Data reporting for mutual funds is more comprehensive than savings accounts and even simple MM funds that mimic savings accounts must comply. Of course savings accounts have expenses and YTD gains, but those aren’t published because all that really matters is the current APR.

 

[calmloki]

Ahh - the misunderstanding on my part appears: so for purposes of example, if the MM fund paid .65%YTD for a 4 month period the annual interest would be for 12 months or assuming no further changes 3*.65%= 1.95% while the Discover account might average out to 1.4% return for the year. OK. An extra .5% without getting into CDs and early withdrawal penalties I understand. The volatility I was referring to was the change in earning rate in the MM.

Thank you for clearing that up for me.

 

[audreyh1]

Ahh - the misunderstanding on my part appears: so for purposes of example, if the MM fund paid .65%YTD for a 4 month period the annual interest would be for 12 months or assuming no further changes 3*.65%= 1.95% while the Discover account might average out to 1.4% return for the year. OK. An extra .5% without getting into CDs and early withdrawal penalties I understand. The volatility I was referring to was the change in earning rate in the MM.

Thank you for clearing that up for me.

Sure. But the easiest comparison is the current interest rate, without looking at past rates or return. The current rate is what both the savings account and the MM fund will earn over the next 12 months assuming no additional interest rate changes. That’s why folks only compare current yield.

So if Discover bank is yielding 1.5% today, and FZDXX is yielding 1.83% today, 0.33% is the difference.

Of course we have to check back frequently in periods of changing interest rates like now, because who knows how things might compare 6 months from now?

I’m not considering FZDXX at the moment because of the $100K minimum. But as other CDs mature I suppose it is an option. However, I have funds I can let sit for 3 months or more and T-bills are paying a bit more - over 1.9% for 13 week (3 month).

I see YTD quoted for FZDXX as 0.66% as of 5/31 so they seem to be taking May interest into account - 5 months earnings.

 

[Rickt]

$25K in MM checking account at all times plus monthly deposits for expenses.
We feel it makes sense for us to keep liquid cash in MM account for urgent/unexpected expenses.