how much do you keep in no interest checking?

[Marc]

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.

Fidelity SPRXX current yield is 1.72% and has only $2500 minimum investment. Very easy to move back and forth to checking.

Marc

 

[Another Reader]

Fidelity SPRXX current yield is 1.72% and has only $2500 minimum investment. Very easy to move back and forth to checking.

Marc

And the expense ratio is 0.42 percent. No thanks! I buy treasuries and CD's. Less risk and no overhead, similar or better returns.

 

[audreyh1]

And the expense ratio is 0.42 percent. No thanks! I buy treasuries and CD's. Less risk and no overhead, similar or better returns.

Yes, that is the expense ratio, but just to be clear, that has no impact on the 1.72% yield.

I think he was offering an alternative to FZDXX.

 

[street]

1K to 3K.

 

[target2019]

I think I am keeping too much . . . but then what is "too much" ? 1.5% interest (from moving it to savings) is hardly a going to make me wealthy so may be worrying about nothing.

Mostly I could use a card for an "emergency" and pay it off but some places will offer a discount if you just write a check so I like to have "extra" around. . .

So, for anyone who feels like offering advice, how did you arrive at your "number"?

Editing to add - no fees on balance regardless so that is not a factor.

Title says "how much do you keep in no interest checking?"

Answering that directly, we have 3.5% getting no/little interest. That is too much, so a good time to consider better opportunity.

One part of that is checking, and probably should hold 1.0%, instead of 1.6%. Account is used to pay ordinary bills and discretionary items like vacation.

Second part is where my pay is deposited (1.9%). That is used to fund Roth(s), and pay R.E. taxes. Also use that to pay some credit cards and utility bills, So the total draws down significantly by end of year.

This is a good "problem" to have.

 

[corn18]

Yes, that is the expense ratio, but just to be clear, that has no impact on the 1.72% yield.

I think he was offering an alternative to FZDXX.

That is a nice alternative.

 

[Another Reader]

Yes, that is the expense ratio, but just to be clear, that has no impact on the 1.72% yield.

I think he was offering an alternative to FZDXX.

I compare the net yield to me on these choices.

Vanguard's various money market funds have much lower expense ratios. The index fund expenses across the more competitive brokers have dropped to Vanguard's level as the result of market pressure. It's time to apply the same market pressure to money market and settlement accounts.

 

[audreyh1]

I compare the net yield to me on these choices.

Vanguard's various money market funds have much lower expense ratios. The index fund expenses across the more competitive brokers have dropped to Vanguard's level as the result of market pressure. It's time to apply the same market pressure to money market and settlement accounts.

Net what? The quoted yield is already net of expenses.

 

[Dtail]

I compare the net yield to me on these choices.

Vanguard's various money market funds have much lower expense ratios. The index fund expenses across the more competitive brokers have dropped to Vanguard's level as the result of market pressure. It's time to apply the same market pressure to money market and settlement accounts.

Not sure the expense matters much with MM funds.

 

[jollystomper]

Our paychecks (and soon my pension check) go into a non-interest checking account. What is not designated for the monthly bills and any other planned expenses for the month gets transferred to our savings accounts at online banks, which pay pretty good interest as MM interest goes these days. On average 1-2% of our cash is in the non-interest checking account at any time.

 

[aja8888]

$3952 per month in Chase very low interest checking. This account is for day to day bill paying. All other cash accounts are high interest bearing (Ally, etc).

 

[MuirWannabe]

$3952 per month in Chase very low interest checking. This account is for day to day bill paying. All other cash accounts are high interest bearing (Ally, etc).

This was probably answered earlier. But I just saw this thread and have not read through it’s entirety. Why keep the Chase low interest account at all? Why not just pay the day to day bills out of Ally? Thanks.

 

[aja8888]

This was probably answered earlier. But I just saw this thread and have not read through it’s entirety. Why keep the Chase low interest account at all? Why not just pay the day to day bills out of Ally? Thanks.

We have had the account for 25 years. Free premium checking because I am a military vet. DW has a debit card and we have three brick and mortar locations within a 3 mile radius. Plus, with the account is a free SD box.

The cash is a result of direct deposit SS payments and DW likes the convenience of the ATMs and having a check to write on occasion.

Plus, the cash goes out pretty quick each month. If it wasn't free then I would consider the move to Ally.

 

[audreyh1]

This was probably answered earlier. But I just saw this thread and have not read through it’s entirety. Why keep the Chase low interest account at all? Why not just pay the day to day bills out of Ally? Thanks.

Ally interest checking is still very low (0.1%) unless you keep $15K in it, and then you only get 0.6%. Better to keep excess in high yield savings.

 

[MuirWannabe]

Ok. Thanks aja and Audrey. I’m in the process of switching my checking and savings to Ally. My plan is to ditch the current low/no interest CU I’ve used for years and just use Ally for all functions like bill pay and ATM.
Glad to hear there’s nothing you know of about Ally that might make this a bad idea.

Muir

 

[Surewhitey]

$25k in 1.5-2% accounts.

 

[Another Reader]

Net what? The quoted yield is already net of expenses.

Yes, and that's what I compare.

My complaint is about the high MM expense ratios at Fidelity. On the Federal Treasury Money Market Fund, the ER is 0.42 percent. The total yield is 1.39 percent plus 0.42 percent, or 1.81 percent. So 22 percent of the income goes to management. Similar numbers apply to the default settlement fund, SPAXX, which is a government money market fund, and FDRXX, government cash reserves at 0.37 percent ER.

Vanguard's VMFXX, their federal money market fund, charges 0.11 percent. Compound yield is 1.73 percent. Add in the 0.11 percent ER, and Vanguard is charging you 6 percent of the gross income.

A LOT of cash is held in these MM funds. Fidelity's funds are a very expensive way to hold cash. I have diverted most of the cash out of Fidelity's MM accounts into treasuries and CD's to avoid the ER and earn a better return.

 

[audreyh1]

Ok. Thanks aja and Audrey. I’m in the process of switching my checking and savings to Ally. My plan is to ditch the current low/no interest CU I’ve used for years and just use Ally for all functions like bill pay and ATM.
Glad to hear there’s nothing you know of about Ally that might make this a bad idea.

Muir

It's fine.

I don't mind no interest checking, because it's used for funds that are spent within a month, and otherwise balances are at a minimum.

And I'm not willing to jump through the debit card hoops some of the higher interest checking accounts require.

It's so quick and easy to transfer from high-yield savingsthat I don't worry about what the money in checking is earning

The catch is the 6 debits per statement cycle limit, but I tend to only have 2 at most, so lots of leeway for an extra transfer or two if needed.

 

[audreyh1]

I'm about ready to dip my toe in with purchasing t-bills as I just pulled funds from a matured CD. Going to try 13-week and 26 week and implement the auto roll feature at Fidelity.

Auction is tomorrow as far as I can tell, and Fidelity is allowing me to use a transfer that hasn't completed yet (they say it will complete Monday), because the issue date is actually Thursday.

 

[Another Reader]

I'm about ready to dip my toe in with purchasing t-bills as I just pulled funds from a matured CD. Going to try 13-month and 26 month and implement the auto roll feature at Fidelity.

Auction is tomorrow as far as I can tell, and Fidelity is allowing me to use a transfer that hasn't completed yet (they say it will complete Monday), because the issue date is actually Thursday.

I think you mean weeks, not months. I have some money in on both offerings at Fido. Interestingly, they are both reopened issues. I guess that means they did not sell enough initially.

 

[audreyh1]

I think you mean weeks, not months. I have some money in on both offerings at Fido. Interestingly, they are both reopened issues. I guess that means they did not sell enough initially.

Yes - was even thinking weeks. Not sure how months happened.

 

[kcowan]

about 35K in checking.

We keep 2 months expenses on average. Anything less requires too much tracking. I suppose that means we are rich by the standards here?

 

[Nature Lover]

Yep, same here. Typically 1-2 months expenses in low interest checking.

 

[audreyh1]

I think you mean weeks, not months. I have some money in on both offerings at Fido. Interestingly, they are both reopened issues. I guess that means they did not sell enough initially.

I see what you mean now that I have discovered the Auction Query stuff and the announcements over at Treasury Direct. https://www.treasurydirect.gov/instit/annceresult/press/preanre/2018/A_20180531_2.pdf

I didn't know they would do that.

Well - it seems that it's offering additional securities. So not sure what to think.

Treasury Reopenings
In a security reopening, the U.S. Treasury issues additional amounts of a previously issued security. The reopened security has the same maturity date and coupon interest rate or spread as the original security, but with a different issue date and usually a different purchase price.

https://www.treasurydirect.gov/instit/auctfund/work/reopenings/reopenings.htm

OK - I see the 26 week is a reopened 52 week, and that the 13 week is a reopened 26 week. Don't know if that has any significance.