This is by invitation only for existing customers.
http://www.hustlermoneyblog.com/charles-schwab-checking-bonus/I ran the numbers and it seems like nuisance work for relatively little, even if you've got $10K in cash sitting idle for 90 days. Assuming a high tax state (10% state tax), you still double the return of a 3 month Treasury. But is it worth the effort?
Interest earned in 90 days: 0.20%/4 x $10K = $5 (HY Checking rate is 0.20%)
Bonus = $100
Total return: $105
After state tax deducted: $95. Subtract an extra 10% - 37% (of $105) for federal taxes.
3 Month zero projected yield (from Fidelity): 1.81%
Interest earned in 90 days ~= 1.81%/4 x $10K = $45
No state tax, so $45. Subtract an extra 10% - 37% for federal taxes.
For example, at 10%, $85 vs. $41, at 37%, $56 vs. $28,
(3 month CDs are currently yielding less than Treasuries, and are subject to state tax.)
Side note: The Schwab account is good to use as a cash machine when traveling abroad - no ATM fees even internationally, and no foreign exchange fee, not even the usual 1% network fee.
Comments
poorerthanyou.com-5-percent-savings-accounts/
https://www.synchronybank.com/banking/?UISCode=0000000
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But for existing customers, Schwab is giving you an APY of about 4.26% on $10K for 90 days.
I can't find a Syncrony new money bonus offer, exclusive or not. If I had $10K sitting around in Syncrony, I could get nearly triple the return by moving it to Schwab for 90 days. (With the higher, and state-tax-free, T-bill rate, the Schwab offer only doubles the achievable return.)
My question was whether it was worth the effort of moving money in and then back out after 90 days to get this doubling, or in the case of Syncrony, tripling, of interest.
If your question is, notwithstanding any bonus offers, how Syncrony compares with Schwab HY, then like many comparisons, neither product "wins" in all aspects.
Savings account rates at Syncrony or any internet bank, let alone several brick and mortar bank will beat most (non-reward) checking account rates, including Schwab's HY checking. On the other hand, most checking accounts will beat most savings accounts on ease/cost of access. Schwab's HY checking account is especially good on access:
- Check writing: Syncrony savings (no), MMA (limited); Schwab: unlimited.
- Withdrawals per month: Syncrony, 6; Schwab, unlimited
- Online bill pay: Syncrony: unclear (application refers to it but no terms); Schwab: yes.
- ATM rebates: Syncrony: only in US, only $5/mo until you've been them for 5 years or invest more money than the FDIC insures (over $250K); Schwab: unlimited, worldwide.
- Currency exchange fee rebates: Syncrony: no; Schwab: yes
- International POS (debit card) transactions: Syncrony: no; Schwab: yes.
Note that it's easy to couple Schwab's checking account with SWVXX (7 day SEC yield 1.69%). Transferring between the two doesn't entail a 2 day lag that one may see with ACH transfers from internet banks. On the other hand, bank accounts are FDIC-insured; MMFs are not.I'm taking an "all of the above" approach:
- MMFs (both muni and taxable prime) for slightly higher yield and almost certain liquidity
- internet bank for true emergency cash (in case MMFs do exercise their right to hold funds if their liquidity drops)
- ultra short muni MMFs to try to squeeze a little more return (and failing YTD)
- 3-6 month T-bills for a bit more return at the expense of a little liquidity
I may be a bit paranoid about debit cards (risk of account being drained), so I just keep pocket change balances in them so that I can get cash as needed.
If you still have that Schwab CC - it turned into a BofA cash rewards card - it has one feature that the "regular" BofA cash rewards doesn't have. It still doesn't charge for foreign transactions. So even at 1% cash back, it's as good as, say, the Fidelity Visa (2%) card when used abroad. The Fidelity card, like many cards, charges a 1% foreign transaction fee.