Where to keep cash?

[JerseyGirl37]

I was about to suggest TIAA Direct as well but jon-nyc beat me to it. That is where we keep our cash reserves. I didn't realize they were not accepting new accounts though.

 

[steelyman]

It appears some of you don't subscribe to keeping 1, 2 even 3 years of cash on hand once you retire. I only kept an emergency fund when I was working, now I've let cash grow to 2-3 years worth of

I'm not in that camp. I have about a year's worth in VG MMF, another year in a deferred compensation stable value fund, and the rest is going to VFIIX. I think/hope that'll work fine.

 

[donheff]

It appears some of you don't subscribe to keeping 1, 2 even 3 years of cash on hand once you retire. I only kept an emergency fund when I was working, now I've let cash grow to 2-3 years worth of annual expenses.

I think that is prudent. I only keep a little real cash -- although I expanded that to cover most of the current year's anticipated withdrawals this year. But I keep several years worth of withdrawals in the TSP G fund which is as safe as cash. If we get a big down turn I want to be able to rely on that to protect the equities.

 

[braumeister]

A ladder of CDs, maturing every six months, works well for me.
I also keep a chunk in a Discover bank savings account earning 0.8% for emergencies.

 

[MDJO]

Capone? Bet it was tough to make a withdrawal...

You just need a tommy gun

 

[Gotadimple]

Do you know whether it's possible to electronically transfer funds to the American Express savings account from a brokerage account or a mutual fund account - initiated from the brokerage/mutual fund account?

Fidelity says that bank "non-passbook savings accounts" are eligible for electronic fund transfers, so I'm wondering if the American Express Bank "high yield" savings account would fall in that category.

Audrey,
I can't answer that. But as they are a bank, I can't see why not.

I have tied my credit union account to Amex and transfer back and forth that way. I haven't tried to tie my Schwab account to Amex.

 

[scrabbler1]

I transfer funds between my BOA checking account and my Fidelity accounts all the time. I always initiate it from Fidelity, so I've never paid a fee.

Same here. All of the electronic transfers to and from my BOA account are initiated from the non-BOA account, such as Fidelity and ACH bill payments. Even a large one-time transfer which needed a medallion signature from BOA did not result in a fee.

As to where I keep cash, I do not keep a large cash account anywhere because I have set up a monthly cash flow via bond fund dividends. I don't like the idea of keeping a large amount of money earning next to nothing, I keep just enough in my local bank account to meet minimum balance requirements along with a small buffer or cushion (about $750) to cover small, unforeseen expenses.

 

[traineeinvestor]

If you have a mortgage then an offset account with the same institution can be a good option: Offset accounts help lower costs | News.com.au

BUT check the numbers .... I looked into doing this with a bank in Hong Kong a few years ago and was told that while they would do it (in fact they advertised the product extensively at the time), they would charge a slightly higher rate on the mortgage which meant that it only worked for me if I had a lot of money in the offset account.

 

[bUU]

I'm finding this discussion a little strange. Before we closed our account two weeks ago, we have had BoA since they took over BankBoston and we've never been charged for an electronic funds transfer. Is that fee waived for folks with a certain balance? That's got to be it. They make you keep an ungodly high balance making practically no interest in order to have such annoying fees waived. Good riddance!

 

[Lazarus]

I am willing to store cash for only 1% of the total amount.
The same price financial advisors charge. And I can guarantee you will get the original amount back which is more than they can do.

 

[rbmrtn]

since this got posted I went looking to see what the current rates are for a place to store my emergency/contingency funds. Not much, hard to believe actually thinking 1% is a good deal!

CitBank @1% > $25K https://www.bankoncit.com/product-savings.htm

Barclays @1% https://www.banking.barclaysus.com/index.html

SallieMae bank @1.05% https://www.salliemae.com/banking/money-market/

Ally @ 0.95% Online Banking | CDs | Money Market | Savings and Checking | Ally

CaptialOne has dropped to 0.5% and is in some merger/takeover with ING

Schwab Checking @ 0.25%
Schwab MM @ 0.01%
Vanguard MM @ 0.01%

 

[Gotadimple]

since this got posted I went looking to see what the current rates are for a place to store my emergency/contingency funds. Not much, hard to believe actually thinking 1% is a good deal!

CitBank @1% > $25K https://www.bankoncit.com/product-savings.htm

Barclays @1% https://www.banking.barclaysus.com/index.html

SallieMae bank @1.05% https://www.salliemae.com/banking/money-market/

Ally @ 0.95% Online Banking | CDs | Money Market | Savings and Checking | Ally

CaptialOne has dropped to 0.5% and is in some merger/takeover with ING

Schwab Checking @ 0.25%
Schwab MM @ 0.01%
Vanguard MM @ 0.01%

I checked these out through Bauer Financial (bauerfinancial.com) or bank rate. At Bauer Financial:

Citibank 4 star Excellent
Barclays 4 star Excellent
Sallie Mae 4 star Excellent
Ally 3-1/2 star Good
CapitalOne 3-1/2 star Good (acquiring ING)
Schwab 5 star Superior

ING 5 star Superior


-- Rita

 

[imoldernu]

We have used Money Market accounts to transfer from CD's or IRA's in the same bank for 20 years... at one time with MM account earning 9%.
Bankrate now lists highest yields. 1%+-
The main reason we do it is for neartime accessibility. In the case of IRA withdrawals, original signatures are needed. This meant 7 days mail, and 2 days processing each way, to obtain cash. With the MM a/c in the same bank, can now do an online transfer from IRA or CD to MM and then to our local banks as needed. Actual time is about 3 days. No cost.

Recently, GE took over the MM and CD/IRA so now have opened savings @ .09... must keep min $100 Bal.
Same deal for transfers... free online.

 

[imoldernu]

We have used Money Market accounts to transfer from CD's or IRA's in the same bank for 20 years... at one time with MM account earning 9%.
Bankrate now lists highest yields. 1%+-
The main reason we do it is for neartime accessibility. In the case of IRA withdrawals, original signatures are needed. This meant 7 days mail, and 2 days processing each way, to obtain cash. With the MM a/c in the same bank, can now do an online transfer from IRA or CD to MM and then to our local banks as needed. Actual time is about 3 days. No cost.

Probably a better way, but am not money smart.

 

[Packman]

At ER - about a year and a half ago - I opened a Cap One online savings account in which I hold about two years of living expenses (call it an emergency fund). The rate was 1.15%. About every two months they lowered the rate by a tenth or so. I finally got fed up with that game and transferred over to Ally at .95%. No fees, and so far no gimmicks with teaser rates. The transfers from my Fidelity brokerage account are simple. 24/7 customer support.

The fun part is that I haven't touched the account for spending since I opened it. I'm doing fine living on dividends from my taxable account, so far.

 

[Midpack]

I asked Vanguard if they were ever going to get into online banking, and they told me "no" (as expected, just wanted to confirm). So I'll be opening an online savings or MMA account very soon, I'm leaning toward Ally or ING.

 

[bUU]

My spouse is very change-averse. We just closed our Bank of America accounts, relying instead on a trio of accounts: A new checking account at a local cooperative bank for cashiers checks and ATM deposits; a new Fidelity Cash Management Account for day-to-day checking, direct deposits, etc.; and a preexisting ING checking account, for high-yield. We also closed brokerage accounts at E-Trade (our pre-Fidelity brokerage), Columbia Management (inherited), Ameriprise (inherited), and earlier last year, and Wachovia (inherited), and did a lump-sum distribution rollover from a prior-employer pension plan, consolidating everything at Fidelity except current-employer 401(k)s, previous employer ESPPs, and the few funds we hold at Vanguard. Besides adding a cash management account at Fidelity, we've also added Roth IRAs, and we're now talking about doing Roth conversions. That's not to mention the closing of an old VISA account, and the opening of a new AMEX account. The number of changes have been overwhelming and so there is strong resistance to making further changes, even if they make sense.

What would make sense is switching from ING to Ally Bank. Besides the extra $250 in interest we'd earn each year, it seems like it might be a better overall solution. The website just seems more well-put-together as compared to ING's (and definitely better than Fidelity's). I'll be interested to hear anyone's in-depth impressions of the experience of doing things like Bill Paying, Remote Deposits, and electronic fund transfers on Ally Bank's website.

 

[audreyh1]

Well thanks for all the good info folks!

I'll be setting myself up one of these high yield savings accounts to store money I have set aside to pay estimated taxes and 1 year's expenses.

Probably American Express Bank, FSB.

 

[samclem]

So I'll be opening an online savings or MMA account very soon, I'm leaning toward Ally or ING.

FWIW, (per your earlier comment), GM isn't the majority owner of Ally anymore (they own about 9% of Ally). The US government owns 70% of the company (for better or worse).

 

[rbmrtn]

I checked these out through Bauer Financial (bauerfinancial.com) or bank rate. At Bauer Financial:

Citibank 4 star Excellent


-- Rita

Just to clarify, CIT bank is not Citibank, both have 4 stars. Citibank rates are low, 0.20% for savings.

 

[brewer12345]

I checked these out through Bauer Financial (bauerfinancial.com) or bank rate. At Bauer Financial:

Citibank 4 star Excellent
Barclays 4 star Excellent
Sallie Mae 4 star Excellent
Ally 3-1/2 star Good
CapitalOne 3-1/2 star Good (acquiring ING)
Schwab 5 star Superior

ING 5 star Superior


-- Rita

Frankly, as long as you stay under the FDIC limits, who cares what the rating is?

 

[pb4uski]

Frankly, as long as you stay under the FDIC limits, who cares what the rating is?

I was thinking the same thing other than perhaps a slightly higher risk of a temporary inability to access your savings if the bank was taken over but I think those takeovers are pretty seamless these days.

 

[Midpack]

Frankly, as long as you stay under the FDIC limits, who cares what the rating is?

Good point. While there may be differences in service, apps/access and/or fees, with only a handful of transactions each year, "ratings" are probably pretty meaningless for me. YMMV

 

[NW-Bound]

Several posters have mentioned Capital One or "capone" . I had that too.

I opened an account with them a few years ago, back when they had a deal for Costco members. Then, their rate kept dropping, and when it was below 1%, I closed the account a couple of months ago.

I have had an account with Ford Interest Advantage for > 10 years. Their rate dropped like everyone else's, but it is still 1% minimum, and up to a whopping 1.10% for > $50K.

For most people wanting to park 1-year expenses, that's several hundred bucks, compared to what my BofA is paying me.

I never thought much about where to keep my cash, as I spent more time watching my stocks, but I will take a bit more care about this matter. May not be worth the trouble for somebody else to open an account, but since I already have one, I am going to transfer some money there.

PS. Ford Interest Advantage is not a bank, and not FDIC insured! I used to keep more money there, then transferred most out during the crisis of 2008-2009. Now that Ford seems to survive well, I am going to put some money back.

 

[obgyn65]

I use BoA, ING and Edward Jones for cash. I would like to keep about $40k in my current accounts, even at 0% interest.