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If you want a more liquid option then a CD where you can access your cash instantly, look at HSBC. They have an online savings account that pays 1.85%. I like options so I asked them can I set up a regular checking account with them so I can transfer money instantly from that online savings to the checking. They said yes. This is important in case I ever have an emergency and want to get cash from a branch, get a cashiers check in person with the money the same day etc. Its hard to do that with online only banks. Considering the highest high yield savings accounts that don't have physical locations only offer 1.9% max; I was willing to take a .05% hit for this convenience. I have a quite a bit deposited with them. Its good to know that my money isn't losing a lot of its value while I look to find a good investment opportunity.
I have the HSBC direct savings online account that I linked to my HSBC branch accounts so I can easily access the account by moving money online to or from my other branch accounts. They have cut the Direct Savings interest rate twice in recent months to 1.85% and I have to believe another rate cut is coming after the Fed rate cut of 50 basis points last week.
One weird thing about opening the online account is that the account doesn’t actually open online, somebody has to review and approve the application offline. I’ve opened other online accounts and they get approved online but not this one. It might be because I already was an HSBC branch customer and wanted to link the accounts. I called them and they said it can take five business days or longer to be approved as it was the day after a holiday and they were backlogged. After I complained a bit they opened it the same day.
From what I read, the No Penalty doesn’t charge a penalty if after 6 days from the deposit. An online savings account can change the interest rate at any time, while a CD does not during the 11-month term. Considering where interest rates are heading, I think that it’s better to have a licked-in rate.
Correct. If you are not potentially planning on doing anything else with the money then the CD would be the better choice.
You can by an additional asset insurance policy from the FDIC for a tiny amount of money. But, in truth, the chances of your bank failing and leaving you with no money is almost non-existent. The Federal Reserve requirements today make it incredibly tough to fail and, even then, they're standing by to give the banks assets to a more stable institution.
I’ve had well over the $250k limit in a DiscoverBank account because the interest rate is so much higher than everywhere else. The recent happenings have made me question if that’s unwise? My Wells Fargo pays MUCH MUCH LESS. The local credit unions only pay .5%!!
I’m not even so sure for how much longer the 1.59% Discover rate will continue. I HATE it the way that this country has become. Long Gone are the days when a person could survive off of the interest. If I were a senior citizen, I’d be Even MORE PISSED.
If one has $250,000 in two different banks, will both accounts be insured for up to $250,000 by the FDIC?
If one has $250,000 in two different banks, will both accounts be insured for up to $250,000 by the FDIC?
This is precisely how Fidelity Cash Accounts are able to provide $2.5 million in FDIC insurance. They use sweep accounts. Essentially, it appears like you have one account in Fidelity, but behind the scenes, they have agreements with multiple banks and split your money across those banks. Each bank is insured for $250,000. Fidelity even lets you see which banks your money is in.
So, if you have $350,000 deposited at one bank, it would be wise to deposit $100,000 of the $350,000 into another account at a different bank?
Last edited by tillman7; 11-15-2020 at 12:19 PM..
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