Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.
Wealthfront Cash is 5%
Banks Are Now Accused of Cheating Customers Billions
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Re: Banks Are Now Accused of Cheating Customers Billions
#62Earlier quoted context omitted.
> Every year I find a mistake in at least one bank statement. And it's always in the bank's favor. Sometimes it's a few cents, but once it was a few hundred dollars across multiple errors. How much time have you spent on this overall compared to the amount of money you saved by noticing these errors? I certainly don't think it's fair for banks to get away with this, but I'm not convinced that tracking things at that…
How do we know that banks are making these errors if no one checks? It might be a few bucks on your account here and there but if that happens over millions of customers... That's a nice little scheme for banks to get away with.
Startup idea: we audit your financial accounts for you. Do a Plaid-style link, and we take it from there. Charge whatever antivirus subscriptions cost.
Of course the startup also charges banks to find errors in the customers' favor.
Re: Banks Are Now Accused of Cheating Customers Billions
#63Earlier quoted context omitted.
For money markets, it's typically vanguard. Other brokers that are not bad for sweep include IBKR, Fidelity, Schwab, etc. But vanguard will always have higher interest on cash. Marcus is FDIC insured savings though, which has slightly different implications. There's websites that compare current highest savings rates (nerdwallet, bankrate, whatever). Going in the other direction, there are things like SGOV or Treasur…
> Going even farther than that direction, there's muni bonds, funds, or money markets. At which point you're probably back to Vanguard for the best rates. (But again, not the same exact characteristics as a savings account) Yeah, very different product. Muni bonds are riskier than treasuries and much longer term than money market funds / treasury bills. E.g., VWSTX ("ultra short term muni") has an average maturity of…
For the sake of completeness, it important to recognize that muni money market funds exist, such as VMSXX, VCTXX, and VYFXX.
My impression is that the current yields of these funds are not high enough to justify for most taxpayers, compared to other funds. But since everyone is different, it can be helpful to sit down and do the math for your individual situation.
https://thefinancebuff.com/best-vanguard-money-market-fund-y...
Re: Banks Are Now Accused of Cheating Customers Billions
#64Earlier quoted context omitted.
My parents instilled in me a mild distrust of banks. It's for this reason that I get my statements mailed to me each month, and each month I reconcile what's on the paper with what's in my spreadsheet. Guess what? Every year I find a mistake in at least one bank statement. And it's always in the bank's favor. Sometimes it's a few cents, but once it was a few hundred dollars across multiple errors. When I've told peop…
Unless you hold a lot of money, you're at the mercy of someone actually caring to fix it, and if not an annoying and possibly expensive lawsuit It's not I trust the bank, its just the times they've stolen under $500 from me they've more or less said 'fuck you deal with it' and after that I can just work to make the cash back a lot easier than I can sue for it. So I just closed my accounts and did that. Fighting the b…
Unless you hold a lot of money, you're at the mercy of someone actually caring to fix it, and if not an annoying and possibly expensive lawsuit
My experience has been the exact opposite.
Even for errors under a dollar, even big banks like Chase and Bank of America have fallen all over themselves to fix things immediately.
Re: Banks Are Now Accused of Cheating Customers Billions
#65Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.
For money markets, it's typically vanguard. Other brokers that are not bad for sweep include IBKR, Fidelity, Schwab, etc. But vanguard will always have higher interest on cash. Marcus is FDIC insured savings though, which has slightly different implications. There's websites that compare current highest savings rates (nerdwallet, bankrate, whatever). Going in the other direction, there are things like SGOV or Treasur…
Agree in general, with minor caveats:
* Schwab's roboadvisor product has decent rates for cash sweep, but their self-directed brokerage has the rather weak rate of 0.45%.
* The first $10k at IBKR earns 0%. Also, IBKR Lite also has a weaker rate (3.83%) compared to IBKR Pro (4.83%).
Of course, with a bit of extra effort, you can buy SGOV etc. in your brokerage for better rates.
[1] https://www.schwab.com/cash-investments
[2] https://www.interactivebrokers.com/en/accounts/fees/pricing-...
Re: Banks Are Now Accused of Cheating Customers Billions
#66Relevant recent Levine article on this from last week: https://www.bloomberg.com/opinion/articles/2024-08-07/ai-com... > Cash sweep sweep > If you go to a bank and say “I’d like to open an account and deposit some cash,” they will happily open a checking account for you, take your cash, and pay you an interest rate that is, in round numbers, zero. [4] (My checking account pays 0.01%.) If you say “no, I want a savings…
One data point: IBKR pays you 4.83% right now so I think it's quite good. Not the full interest rate but it's a reasonable in my view payment for their service. They also pay you for every day the cash sits in the account. You can also buy any market funds and pay very little for the transaction. Just 2 days ago they also told me that I paid enough in market data refresh request (they are very explicit that those are…
One big caveat is that IBKR gives you nothing on the first $10,000 of cash. At current rates, they would be making ~$500 a year from you doing this.
https://www.interactivebrokers.com/en/accounts/fees/pricing-...
Re: Banks Are Now Accused of Cheating Customers Billions
#67Earlier quoted context omitted.
> Every year I find a mistake in at least one bank statement. And it's always in the bank's favor. Sometimes it's a few cents, but once it was a few hundred dollars across multiple errors. How much time have you spent on this overall compared to the amount of money you saved by noticing these errors? I certainly don't think it's fair for banks to get away with this, but I'm not convinced that tracking things at that…
How do we know that banks are making these errors if no one checks? It might be a few bucks on your account here and there but if that happens over millions of customers... That's a nice little scheme for banks to get away with.
We don't, unless they take a large enough mount that someone notices anyways. To me, that's more an argument that there should be more regulation here (Glass-Steagall was mentioned in another comment, which doesn't directly address this specific issue but it helps address perverse incentives in general) than the idea that people should have to spend time on this. Given how vital banks are to modern life and the number of purchases that an average household would need to check against each month, this seems like a case where the common good is better served by holistic changes than telling people "just do the work yourself". I'm politically more on the left than the average person though, so obviously opinions here will differ.
Re: Banks Are Now Accused of Cheating Customers Billions
#68Re: Banks Are Now Accused of Cheating Customers Billions
#69Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.
Discover bank and Apple bank are both above 4% for the last year.
Re: Banks Are Now Accused of Cheating Customers Billions
#70Yup my broker did this and I now put everything into ICSH. It goes up everyday and back down at the first of the month when it pays dividend. So you can get your interest early when moving cash in and out of investments.