Author Topic: "Earn 1.0% Guaranteed For 3 Months"  (Read 5083 times)

New Jersey Guy

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"Earn 1.0% Guaranteed For 3 Months"
« on: July 29, 2013, 09:44:22 AM »
"Get started now! Open a new Premium Money Market account with a minimum of $10,000 in new deposits and earn a 1.0% introductory interest rate, guaranteed for 3 months. "

And Now the small print:

"The initial introductory interest rate for your account is 1.0%. You will be paid this rate for the first 3months after account opening. The annual percentage yield is as follows: $1,000–$9,999.99 receives a variable rate, currently 0.08% APY (the introductory interest rate does not apply to this balance tier). The APY for balances of $10,000–$24,999.99 is 0.35%, 0.36% APY for balances of $25,000–$49,999.99, 0.4% APY for balances of $50,000–$99,999.99, and 0.4% APY for balances of $100,000–$499,999.99."

This Money Market Account offer is being made by PNC Bank.

Now, I fully understand how a money market account works and the convienence behind it.  I also understand it's a temporary place for investors to put money between transanactions.  But ever since expanding to P2P, 1% is a joke!  And that's the bonus rate!

A $25K balance earns a whopping .4% interest.  And that's before taxes.  Add in inflation, and you probably lose money.

For the $10 I'd make in a year, I'd be better off keep my money in the First National Bank of My Matress.
     - I can make more than that on a single trade.
     - I think I make at least that amount per month on my "Penny Notes" and I don't even have $1K in that particular portfolio.

People who claim that P2P is a risky investment need to address people who keep large sums in money market accounts for long period of time.  It's a guaranteed loser.
« Last Edit: July 29, 2013, 09:47:26 AM by New Jersey Guy »
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

SarahV

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #1 on: July 29, 2013, 10:25:18 AM »
I am pretty sure one of my co-workers keeps his 401k in a Money Market account. Conspiracy theory type who doesn't trust banks or the stock market, or something like that.

core

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #2 on: July 29, 2013, 01:17:54 PM »
Yes, rates are very low right now.  That doesn't mean money market accounts are a joke in general though.  When the stock market's on a multiyear losing streak you wouldn't say the whole thing is a joke?  It's just a bad time to be comparing your apples.

There is nothing remotely safe about P2P.  It doesn't matter what your NAR is or how many penny notes you have which generate safe income on paper.  Because of possible bankruptcy issues, your P2P investments are almost as risky as if you had put all your money in a single startup stock... in this case LendingClub or whatever company you use.

By the way you can get 3-4% using rewards/high-yield checking accounts if you want to put up with the fuss.  So yes right now it makes little sense to be putting cash in a money market account. 

SeattleSun

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #3 on: July 29, 2013, 01:24:54 PM »
The Federal Reserve is running a "financial repression" operation  http://en.wikipedia.org/wiki/Financial_repression   and the Zero Interest Rate Policy (ZIRP) is a key feature. 

Savers are Enemies of the State and are being punished for hording cash with negative real interest rates.

Although financial repressions operations have been run before (see table) it is hard to draw any conclusions as to how long it will last due to the small sample size and many were in response to the same event i.e. the debt the allies ran up during WW2. 

The table immediately below shows the 13 previous periods of financial repression.


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« Last Edit: July 29, 2013, 01:42:51 PM by SeattleSun »

SeattleSun

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #4 on: July 29, 2013, 01:46:36 PM »
That doesn't mean money market accounts are a joke in general though. 

Money Market Fund become a "joke", a bad joke, when they "break the buck".  That is when you put in a dollar and get back 99 cents. 


http://en.wikipedia.org/wiki/Money_market_fund
« Last Edit: July 29, 2013, 01:53:58 PM by SeattleSun »

SeattleSun

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #5 on: July 29, 2013, 02:55:48 PM »
The offer I keep getting is from Chase see below and they have walked it from $50 now up to $300 in the past year.   It’s an effort to pump up falling deposits without offering a better interest rate which would get them in trouble with the FDIC.    Chase which was force fed Washington Mutual during the Panic of 2008 was just replaced as the #2 "bank" in the Seattle area by a non profit credit union i.e. BECU  https://www.becu.org/  Bank of America remains #1.

I always thought the credit unions (friends lending money to friends) would be the big beneficiaries of the Financial Panic if they played their cards right.         IMO it’s the part of the same backlash against the Big Banks that is empowering P2P lending.


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« Last Edit: July 29, 2013, 09:49:51 PM by SeattleSun »

DutchNurse

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #6 on: September 05, 2013, 02:07:49 AM »
I'm definitely with core. Money markets never break a buck. Your right they did in September 08, but that will almost assuredly probably not happen ever again. Ill never say never but if at happens it doesn't really matter anymore because nowhere is safe. Besides with the first positive signs of life in yield curves in a while things look somewhat positive economy wise in the next year or so here.

I'm definitely NOT saying the problems here are all fixed (har har) but breaking a buck probably will only ever have happened once in my lifetime. That said - there's a possibility we're not done seeing bubbles pop...hedge with inverse bond funds with a small portion of a portfolio.


AmCap

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Re: "Earn 1.0% Guaranteed For 3 Months"
« Reply #7 on: September 05, 2013, 05:13:53 AM »
Yes, rates are very low right now.  That doesn't mean money market accounts are a joke in general though.  When the stock market's on a multiyear losing streak you wouldn't say the whole thing is a joke?  It's just a bad time to be comparing your apples.

There is nothing remotely safe about P2P.  It doesn't matter what your NAR is or how many penny notes you have which generate safe income on paper.  Because of possible bankruptcy issues, your P2P investments are almost as risky as if you had put all your money in a single startup stock... in this case LendingClub or whatever company you use.

By the way you can get 3-4% using rewards/high-yield checking accounts if you want to put up with the fuss.  So yes right now it makes little sense to be putting cash in a money market account.

But LC isn't a startup anymore, really...