VMMXX > Ally > VMFXX

[Midpack]

After years where I didn’t have to worry about where we kept our cash accounts, yields induced us to move our cash as the title shows. After years using VMMXX, I got used to Ally but they’re not keeping up with VMFXX so I’ve moved our cash again. Seems odd that they’re not allowed to stay competitive with each other. Our cash bucket is big enough to matter.

And does anyone keep savings at brick-n-mortar banks anymore? I just looked and BoA is offering 0.04% - seems ridiculous compared to 4-5% at online banks and MMFs…

 

[audreyh1]

I just move back and forth between MM funds and online high yield savings as interest rates change. I’ve already been through several long periods where high yield savings rates beat brokerage MM funds. When the Fed is raising rates it goes the other way until the Fed stops.

BTW - I moved most of my Ally money into their 4.75% no penalty CD (multiple CDs) back in March when they offered that rate. That rate didn't last long. But the spread with my MM funds at Fidelity which are now paying 4.75% and 4.94% is quite small. And these no penalty CDs don't mature or pay interest until next Feb.

 

[njhowie]

And does anyone keep savings at brick-n-mortar banks anymore? I just looked and BoA is offering 0.04% - seems ridiculous compared to 4-5% at online banks and MMFs…

We have had our checking account with BofA for 30 years. We do have a savings account with $10k in it - which is what I would keep at home in the safe in case of the apocalypse. Although it earns nothing, I can get to it immediately...easier than if I had to get it out of Fidelity, for example. Lately I have considered if sacrificing the roughly $500/year it could be getting in SPAXX or similar was worth it to have it sitting locally at the BofA that I can walk into and have immediate access, and I am on the fence, so for now I just leave it there.

 

[Montecfo]

I have cash at CFG Bank which is a brick and mortar bank. Current yield 5.17%.

 

[Dtail]

We have had our checking account with BofA for 30 years. We do have a savings account with $10k in it - which is what I would keep at home in the safe in case of the apocalypse. Although it earns nothing, I can get to it immediately...easier than if I had to get it out of Fidelity, for example. Lately I have considered if sacrificing the roughly $500/year it could be getting in SPAXX or similar was worth it to have it sitting locally at the BofA that I can walk into and have immediate access, and I am on the fence, so for now I just leave it there.

Perhaps a hybrid answer. MM at an online bank will get you there in less than 24 hours.

 

[njhowie]

Perhaps a hybrid answer. MM at an online bank will get you there in less than 24 hours.

I was even closer than that previously - with the cash in a linked Merrill Edge account - the money could be transferred instantly between the two in either direction. Then one day, ML locked me out of the account and I could not access anything. Took 2 hours on the phone with them to get access back. They said it was a joint account with DW and they did not have her personal details on file...and yet weeks earlier while getting online notifications, I did update all of her info. Additionally, the linked BofA checking account was there for 30 years with all the info they could want.

Anyhow, that one incident said to me that if the money is going to serve the purpose I had for it, then it should be in BofA and not even one hop away from it, no matter how close.

Thanks, you've just reminded me why I did this in the first place.

 

[audreyh1]

I worry mostly about extended power failure. In that case I don’t even know how banks operate.

Regardless I have surplus in checking and multiple backup sources assuming I can access them. I do have some cash at home.

 

[SecondCor521]

I worry mostly about extended power failure. In that case I don’t even know how banks operate.

Regardless I have surplus in checking and multiple backup sources assuming I can access them. I do have some cash at home.

Banks - at least the one I used to work for a long time ago - have backup and disaster recovery procedures. The general idea is that they physically move daily backups offsite from the main central computer system. Every three months or every six months, they'll take a copy of the backup tapes, select crack IT staff, fly to another city where there's a duplicate central computer system, be told what the "fake disaster" is (earthquake, flood, fire, power loss, whatever) and they have to try to get the bank back up and running in like 4 hours.

When I worked there, which was only a year or so, they did several of these exercises. They never fully succeeded but they usually learned something by their failures and came back and tried to implement improved processes.

I have approximately two dozen different payment methods spread across 15 different financial institutions and all four major credit card processing networks. 99.9% of the time I don't need my money today, and 99.9% of the time, the 24+ payment methods work. I don't keep enough money around to where the interest rate matters.

 

[audreyh1]

Yeah, but how to they get cash to customers? Do they operate the teller window or the inside with no power?

 

[jebmke]

The only money I keep in the bank is three quarters of ES tax payments that I load in April. EFTPS hits it three times (along with state system) so it is gone by the end of January.

 

[PaunchyPirate]

I keep $25,000 in my local PNC Bank savings account as “just in case” money. Interestingly, the published interest rate for this account is a measly .03%. However, for 4-6 months, they have been giving an unadvertised rate exceeding 4%. My June statement shows 4.13% paid. So, someone shopping for a new account wouldn’t know this from the website. But it seems they are giving it to (some) existing customers.

 

[Another Reader]

I had to pay a contractor a large sum in October 2008, on the Friday before things almost collapsed. I drove to my bank, withdrew the cash, and drove to B of A to deposit it in his account. An experience I won't forget. Now I maintain enough cash in multiple bricks and mortar banks to cover a similar scenario.

Electrical failure is a problem that is difficult to overcome. The 1989 Loma Prieta earthquake knocked out the power in my area. My neighbor cleaned out the local KFC, paying cash, and fed the neighbors as well as his family that evening.

 

[SecondCor521]

Yeah, but how to they get cash to customers? Do they operate the teller window or the inside with no power?

Excellent question. I don't know.

The bank I worked for was based in Idaho and during regular operations highly computerized.

We don't actually have extended power outages here ever. I've lived here for about 46 years and I don't recall any widespread power outages in my life time, and I don't recall any of the rare local outages lasting for more than half an hour.

If I had to guess, I think branches located in the area of the power outage would just remain closed and refer customers to the closest branch with power. Perhaps one of the main branches in the capital city might have generator backup power, but that's conjecture. It's theoretically possible to run a bank branch for a day and do basic deposits and withdrawals just with pen and paper, but I doubt any bank would do that these days.

(There may have been a widespread power outage during the Teton dam disaster back in 1976, but I was young enough not to remember any of that.)

 

[HI Bill]

...does anyone keep savings at brick-n-mortar banks anymore? I just looked and BoA is offering 0.04% - seems ridiculous compared to 4-5% at online banks and MMFs…

I have a checking and savings account at brick and mortar bank. The bank gives me easy access to ATMs locally, and a safe deposit box for just $5 a year. But that's costing me about $800 annually in lost interest, so I should definitely reconsider.

 

[Koolau]

After years where I didn’t have to worry about where we kept our cash accounts, yields induced us to move our cash as the title shows. After years using VMMXX, I got used to Ally but they’re not keeping up with VMFXX so I’ve moved our cash again. Seems odd that they’re not allowed to stay competitive with each other. Our cash bucket is big enough to matter.

And does anyone keep savings at brick-n-mortar banks anymore? I just looked and BoA is offering 0.04% - seems ridiculous compared to 4-5% at online banks and MMFs…

Local bank offering 4.5% with 10K. Haven't checked details so YMMV.

 

[Texas Proud]

With a power outage the bank is closed... if you want something you drive to a branch that has power..

 

[rkser]

The expense ratios of Money Market Funds at Fidelity take away some of the Yield where as the return rate at Online Discover Bank though less there is no expense ratio.

 

[target2019]

I poke through this linked thread to stay up-to-date with rates and how others seek better rates:

Best CD, MM Rates & Bank Special Deals Thread 2023
https://www.early-retirement.org/fo...ead-2023-please-post-updates-here-116449.html

I note that there seem to be many who are better decision makers about this.

For us, money comes into bank checking where it earns very little (.01%). Target balance there is 10K. Excess is transferred to Schwab for further decision. In the past, excess in checking went to Discover Bank, but now that is just a small amount.

 

[audreyh1]

The expense ratios of Money Market Funds at Fidelity take away some of the Yield where as the return rate at Online Discover Bank though less there is no expense ratio.

The quoted MM fund yield is already net of the expense ratios, so you are comparing apples to apples.

 

[Still Learning]

Shifted most investor funds to VMFXX earlier this year and kept 5 smaller mutual and ETF funds. Our VOO ETF has had decent returns but the others not so much.



Used to keep about a million in local and state banks waiting for rates to rise like they did in the 1980's inflation years. Well that never happened so shifted $400K into investments and purchased CDs. Today we keep between $50-100K in banks and about $1K in cash at home. When we hit $100K we purchase another CD. Most monthly bills are paid thru bank credit cards so as long as the data centers function our bills will be paid.


It took awhile to stop chasing higher returns, but now that we are in "safe" mode awaiting better times.

 

[rkser]

The quoted MM fund yield is already net of the expense ratios, so you are comparing apples to apples.

Thankyou, I did not know that

 

[Texas Proud]

The expense ratios of Money Market Funds at Fidelity take away some of the Yield where as the return rate at Online Discover Bank though less there is no expense ratio.

The banks do not have to disclose an expense ration but you can be sure that what they are paying has a much higher expense ratio than Fido...


There is also different motives... Fido is investing your money in other financial instruments.... Discover is doing it so they have deposits which they lend out...

 

[rayvt]

I have cash at CFG Bank which is a brick and mortar bank. Current yield 5.17%.

CFG says external in/out transfer limits are $5000/day and $30,000/in rolling 30 days.

 

[Montecfo]

CFG says external in/out transfer limits are $5000/day and $30,000/in rolling 30 days.

I initiate transfers from my broker so this is not a concern for me.

Plus CFG will lift the limits for a large inbound transfer in my experience. The bigs will not in my experience.

 

[Turbo29]

I keep $25,000 in my local PNC Bank savings account as “just in case” money. Interestingly, the published interest rate for this account is a measly .03%. However, for 4-6 months, they have been giving an unadvertised rate exceeding 4%. My June statement shows 4.13% paid. So, someone shopping for a new account wouldn’t know this from the website. But it seems they are giving it to (some) existing customers.

I have seen ads for PNC at ~4% for a while now. They are always on the login page for both AOL and Yahoo emails. As you point out though, If you go directly to their site and look up their savings rate, it is 0.03%.