Ben Carlson: Interest Rate Chasing In Your Savings Account

Ted

FYI: Yesterday Ben got an email from Marcus, his online savings account.

They lowered the interest rate on my savings (and everyone else’s) from 2.25% to 2.15%.

I heard stories from people who use other savings accounts that also saw a drop. These online savings accounts are obviously getting ahead of the possible Fed rate cut because these short-term interest rates typically track the Fed Funds Rate.

I put out the following on Twitter and got some interesting feedback:
Regards,
Ted
http://awealthofcommonsense.com/2019/06/interest-rate-chasing-in-your-savings-account/

msf

Let’s say I could earn an extra quarter of a percent by moving my money to another online bank offering better rates. For every $10,000 that would net me a whopping $25 a year in additional interest.

Is it worth it to go through the account opening process, move my money and change my automated savings goals for a measly $25 extra bucks on every ten grand?

But what if you could earn, well not quite an extra quarter of a percent but an extra fifth of a percent without moving your money to another bank? Would it be worth it to open a higher yielding account at the same Marcus bank?

No penalty CDs at one's current bank are worth a look. They're easy to open, you don't have the hassle of dealing with a new institution, you can leave the old account open (with a minimal balance) so that you can maintain your automated deposits. The only downside is that your money is locked up for the first week of the CD.

https://www.depositaccounts.com/banks/marcus-goldman-sachs/offers/
Goldman Sachs Bank USA Cuts Rates Except the 13-Month No-Penalty CD

the 13-month No-Penalty CD ... continues to earn 2.35% APY. The new lower APYs are shown below in bold and are effective as of 6/28/2019. The previous APYs are noted inside parentheses.

Online Savings Account - 2.15% (2.25%)
7 mo NPCD - 2.15% (2.25%)
11 mo NPCD - 2.20% (2.30%)
12 mo - 2.50% (2.60%)
18 mo - 2.50% (2.60%)

24 mo - 2.55% (2.65%)
36 mo - 2.60% (2.70%)
48 mo - 2.65% (2.75%)
60 mo - 2.80% (2.90%)
72 mo - 2.85% (2.95%)

Ted

The Linkster's CD's:

Buy 12/3/18
BANKOFBARODA NEW YORK NY CD
CPN: 2.750% Due : 12/12/2019

Buy 12/3/18
FRANKLN SYN BK CD FRANKLIN TN CD
CPN: 2.500% Due : 8/7/2019

Buy 6/5/19
STATE BANK IND NEW YORK CITY NY CD
CPN: 2.400% Due : 9/16/2019

Buy 6/17/19
TRISTATE CAP BK PITTSBURGH PA CD
CPN: 2.350% Due : 10/21/2019
Regards,
Ted