Cash Parking

[Rob L]

Here's the 1.50% APY fully liquid checking acct the depositaccounts.com guy found earlier this week:

https://www.depositaccounts.com/banks/memorybank/offers/

Only catch that I saw was 5 debit uses per month, but no cap.

There's another catch:

"MemoryBank currently does not have a procedure for designating beneficiaries to an account (i.e. establishing POD accounts)."

[nonattender]

Now, I'm not 100% on how this "payable on death" thing works, but, unless I call them after I die to tell 'em, I suspect they won't know.

[Rob L]

Now, I'm not 100% on how this "payable on death" thing works, but, unless I call them after I die to tell 'em, I suspect they won't know.

I'd never seen any type of an "account" where the owner(s) could not name a beneficiary. Google'd a question I'd never considered. Which takes precedence; your will or named beneficiaries? All the answers I saw pointed to named beneficiaries taking precedence over your will (life insurance proceeds too). Guess the big deal is that payable on death "accounts" avoid probate. Probate courts take a cut of what one would prefer to go to one's heirs (and they are a big hassle for the undead).

BTW my wife and I did apply for accounts at Andrews FCU today. We each promptly got a hard pull via TransUnion (Credit Karma sent emails informing which was kinda neat). Andrews FCU says it takes a couple of days for applications to be processed. Plan to move 1% APR cash parked at Ally Bank to 3% Andrews CD's. For the record I had parked other cash in the VCSH fund (around 2.25% yield) until it was obvious the Fed would move and VCSH would take a hit. Luckily I was light on equities and put some cash taken from VCSH into stocks. Always better to be lucky than good. Meanwhile, I hope you're not expecting a finder's fee

Competition is heating up for your LC investment dollars. Expect more to come.

[nonattender]

Now, I'm not 100% on how this "payable on death" thing works, but, unless I call them after I die to tell 'em, I suspect they won't know.

Always better to be lucky than good. Meanwhile, I hope you're not expecting a finder's fee

Competition is heating up for your LC investment dollars. Expect more to come.

Half the expected return with 0% of the risk/work is compelling for some people.  One thing I did notice is that the depositaccounts site has an early withdrawal penalty calculator, which is kinda cool, but it assumes that one isn't reinvesting dividends/interest, so, it's 'low' - but that's another one of those "how many angels on the head of a pin" theological/accounting-methodology convos, which I find fun and interesting, but which haven't really turned out to be profitably insightful wrt marketplace lending, at least in the last couple years - all of the really interesting arb opportunities seem kinda tapped out and even LC's saying "expect about 6%, regardless of selectivity".

This is probably good for them / the industry - but it sucks lotsa fun right out of it for the clever and lazy who like to micromanage stuff.

"Our baby's growing up."  (Maybe.)

[rawraw]

IIRC, I think payable on death also increases your FDIC insurance

[Rob L]

Had to ask myself some questions about the Andrews FCU CD.

Assuming early withdrawal (it's 7 years after all), at what new interest rate would I break even at the non-early withdrawal end date?



And what would be my compounded APR at early withdrawal (this one was quite interesting)?



And finally what would my penalty be as a percent of interest earned at early withdrawal?



Now I'm gonna go watch a movie or something ... 

[nonattender]

Yup - that's one reasion I keep coming back here... the quant-ephemera are high quality.

BTW, logged into Amex to pull down yearly summaries and got followed around their site by a little popup for something they're calling "NextStep" which desperately wanted to lend me up to a very large amount at a rate of 8.98% or lower.  I think I mentioned in a FICO thread somewhere that I was going to let myself look like a "normal consumer" (non-christmas-curmudgeon) in January - they've got a fresh (soft) credit pull on me showing piles of charges from December, now, and they're just dying to pay off my other cards for me, via personal loan, and are even willing to directly disburse some or all of the loan proceeds straight to any of my non-amex credit accounts.

Guess they got tired of being on the receiving end of that transaction and whipped something up for retention/competition purposes.

My junkmail's getting interesting, too...  Discover is back (with shiny and never before seen metallic-hydrogen envelope colors, from the in-house stationery-store/materials-science-lab/marketing-research-firm that they run).  Nothing from any of the non-bank outfits - yet.

[rawraw]

Had to ask myself some questions about the Andrews FCU CD.

Assuming early withdrawal (it's 7 years after all), at what new interest rate would I break even at the non-early withdrawal end date?



And what would be my compounded APR at early withdrawal (this one was quite interesting)?



And finally what would my penalty be as a percent of interest earned at early withdrawal?



Now I'm gonna go watch a movie or something ... 

Ha I used to do this same analysis for bank CDs.  It is funny, because plenty of banks have not thought through these penalties.  As a result, they will have penalties that used to be meaningful but aren't anymore given the low rate.  Who cares about a penalty of one month interest when rates are 20bps?

[Rob L]

Ha I used to do this same analysis for bank CDs.  It is funny, because plenty of banks have not thought through these penalties.  As a result, they will have penalties that used to be meaningful but aren't anymore given the low rate.  Who cares about a penalty of one month interest when rates are 20bps?

Yeah, it's hard to see this as anything but a no lose situation (given the objective of a risk free rate of return). Upon re-reading that sentence it sounds really dumb; as in no such thing. However, if rates go up surprisingly quickly and I trade up for a minimal fee. Recession comes, rates slip back, and I'm locked in way above inflation. Hopefully, rates will go up a percent or more over the next three years, I'll trade up, and Andrews FCU will have done pretty well for themselves too. They are certainly way above the curve here.

Maybe I should I should add some context. My first bank account was a passbook savings account where I put the money from my paper route. It paid 4%. Then inflation and even stagflation were the problems throughout my young adult life and interest rates went to the moon (and we did too). My Mom locked in her retirement CD's at 12% for like 10 years at the peak in '82. To think I'd be fawning over a 3% sure thing feels simply ridiculous. But looking at the big picture and it would be a huge reversal of trends for the 10 year Treasury to see 4% again any time soon. Guess this is really a good deal (until it isn't). If it isn't I'll trade up. There isn't enough penalty here to get hurt badly.

[jheizer]

Geez. Why is their rate so high?  It seems like they could offer a rate way lower and still be attracting people like crazy.  If we were a few years in the future I'd probably be all over this but at my age I'm still limiting fixed income investments.

[Rob L]

If we were a few years in the future I'd probably be all over this but at my age I'm still limiting fixed income investments.

Don't know your age, but presuming it's under 60 that's very, very smart.

[jheizer]

Don't know your age, but presuming it's under 60 that's very, very smart.

33.  P2P is my only "fixed income" right now.

[Rob L]

Geez. Why is their rate so high?  It seems like they could offer a rate way lower and still be attracting people like crazy.

Well, I seem to be the only fish on the hook here on this forum so go figure. I'll admit to my human frailty and admit 3% APR seems way more than 2.99%. That "3" handle sets the hook. I can't help but think that anything less and I might have waited as interest rates "certainly appear" to be on the way up. A higher penalty may have put me off too.

[nonattender]

Geez. Why is their rate so high?  It seems like they could offer a rate way lower and still be attracting people like crazy.

Well, I seem to be the only fish on the hook here on this forum so go figure. I'll admit to my human frailty and admit 3% APR seems way more than 2.99%. That "3" handle sets the hook. I can't help but think that anything less and I might have waited as interest rates "certainly appear" to be on the way up. A higher penalty may have put me off too.

I don't advertise my moves (or talk my own book)...  maybe I should start.   Anyway, the highest tier CD's are all coming up to ~2.50% APY on the 5 year products, so, 3% on a 7 year is not too "crazy"...  It's actually pretty smart of them to lead, now, rather than later...

I'm still considering AFCU, but I did do the 1.5% liquid checking and already got the welcome kit/card and am now filling it up via ACH - that'll replace a 1.11% apy acct that I had somewhere else, so, I'll make a little under a grand a year for doing a pretty easy switch...

On talking my own book, I bought these two super-exciting penny stocks today:   IXP and XLV

I am truly living on the edge.  I put about half-a-shot of Bailey's into two coffees earlier, today, too.  (REG FD:  I own shares in Diageo.)

[Rob L]

I don't advertise my moves (or talk my own book)...  maybe I should start.
On talking my own book, I bought these two super-exciting penny stocks today:   IXP and XLV
 

You know you aren't gonna start doing that. Personally, I consider that a very rigid rule, but more for stocks and not so much something so docile as parking cash somewhere (or clearly not my LC/MPL opinions as I blather on about them ad nauseum). No emotional attachment to consider.

I had trouble finding your penny stocks on the pink sheets. Uranium, gold or oil? 

Anyway, the highest tier CD's are all coming up to ~2.50% APY on the 5 year products, so, 3% on a 7 year is not too "crazy"...  It's actually pretty smart of them to lead, now, rather than later...

You put it better than I did, but that's just it. I think they are making a smart bet here too, getting ahead of the curve.

I'm still considering AFCU, but I did do the 1.5% liquid checking and already got the welcome kit/card and am now filling it up via ACH - that'll replace a 1.11% apy acct that I had somewhere else, so, I'll make a little under a grand a year for doing a pretty easy switch...

I mailed in the papers for an IRA account and money xfer today.
If anyone is seriously considering this I'll be glad to post the process I've been through.

I am truly living on the edge.  I put about half-a-shot of Bailey's into two coffees earlier, today, too.  (REG FD:  I own shares in Diageo.)

Hey, me too. I have a very very small position in Diageo. Maybe we could keep them afloat simply with our retail purchases.