Mayor__Defacto t1_je2r4f9 wrote on March 28, 2023 at 11:59 PM

Reply to comment by Flopcandy in [Beginner] In my location, my bank (PNC) has a savings account interest rate of 0.03%. Capital One is 3.4%. American Express is 3.75%. Is there any reason not to switch to one of those? by Flopcandy

If you’re wanting a CD; Chase has a 3.5% rate on a 3 month CD if you deposit >$10,000 right now. Good balance between long and short term IMO.

WasteProfession8948 t1_je3dnww wrote on March 29, 2023 at 2:51 AM

There are much better rates available right now - over 5% - with brokered CDs through Schwab and Fidelity. All FDIC insured.

Mayor__Defacto t1_je3ed6x wrote on March 29, 2023 at 2:57 AM

Yep, they offer them as well. I’m less familiar with their rate schedule though, and I know Fidelity won’t give just anyone a CD, you have to be a brokerage client and that entails a minimum $5k account balance on the brokerage side (you can’t count the CD balance towards that), and they charge a $20 commission in some cases. They also have to be multiples of either $100 or $1000, where traditional CDs can be down to cents if you wish. On top of that, the interest does not go into the CD, it goes back into your brokerage account, where with a traditional CD it would go back into the CD and compound.

So it’s a bit of arbitrage on which is the better option for you. For most people that do not already do business with Fidelity, a traditional CD is the better option.

LarryCraigSmeg t1_je3nf6e wrote on March 29, 2023 at 4:18 AM

Yeah but there are still multiple savings accounts offering over 4%. Including Wealthfront at 4.3 with no hoops to jump through.

So why go with a CD at 3.5?

Runfish t1_je3f97k wrote on March 29, 2023 at 3:04 AM

Came here to say this. Brokered cds have better rates without the banks hassle. (Short grace periods to do something with it) Just set up a Fidelity account for my daughter for this purpose.

Also, the cash sitting In Fidelity’s invest accounts makes 4.4% currently. Varies slightly by the day.

[deleted] t1_je2smkj wrote on March 29, 2023 at 12:10 AM

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Mayor__Defacto t1_je2vl00 wrote on March 29, 2023 at 12:32 AM

That’s an annualized rate, it’s $90 for 3 months.

Additionally the rate is variable based on the amount you put in; I don’t remember the table off the top of my head but I believe the 3 month CD only has the 3.5% rate up to $25k.

misha511 t1_je354s9 wrote on March 29, 2023 at 1:44 AM

Does anyone have a link to this table? I’ve never heard of these variable rates. As far as I’ve known, it’s always been the same rate no matter how much you deposit

Mayor__Defacto t1_je39x7e wrote on March 29, 2023 at 2:21 AM

JP Morgan Chase uses them as sort of variable term financing devices for themselves, so the rate offered depends upon duration and amount of money you’re locking up. The rate is basically zero unless it’s what they want you to do, which right now at least in NY is: 2% for 3mo <10k, 3.5% 3 month 10k-100k, 4% 3 month 100k+, 3% 12 month <10k, 3.25% 12 month 10k to 100k, 3.75% 12 month 100k+.

They go all the way out to 10 years, but they don’t want you doing that and that is around 1%.

Even if you don’t want to buy the product, it’s an interesting portal into what america’s largest bank thinks its short, medium, and long term cash needs look like.

The current setup of rates indicates they think their short term cash needs are greater than their medium term needs, that they’ll still need cash over the medium term, but they think that maybe in 3 months they’ll have less need for short term cash.