Online savings accounts can be had that pay between 1 and 1.5%. That could up your 7 cents to around $10 per month. Not much, but would be noticeable over a year. Doesn’t cost anything to move money to or from the account, although they usually have a limit of 6 transfers out per month but if it’s for emergencies hopefully you won’t have more than half a dozen of those a month! I use one and move money between my checking account and the savings account with the click of a mouse.

Discover savings is currently 1.14%

quote:

Originally posted by PHPaul:
Anyway, the statement came in today and my interest for this month is...wait for it...$0.07

It cost them about 20¢ in paper, printing, postage, and handling to tell you, via hardcopy, that you earned 7¢.

I get my bank statements online, but they still wouldn't pay me the difference.

My checking account at my local bank pays way more than that. Shop around dude.

quote:

Originally posted by bryan11:
Just wait until we're at negative interest rates and you have to pay to bank to keep your money.

Just to be a tad more clear as to the true nature of the business transaction, let’s instead state “...and you have to pay the bank to loan it money.”

It’s a loan, pure and simple. But, it’s a FDIC-insured loan and you also have the ability to force immediate payoff by the bank at any time. The bank doesn’t enjoy such luxuries when loaning to you for a 30-year home loan at a very low rate.

The net interest margin spreads enjoyed by banks have been very low for quite some time. That’s why they push fees and other services.

I'm lucky. I have a pension, 403(B), and a nice Edward Jones account. I also keep an emergency fund savings account at a local bank. If the roof blows off, or a car blows up, I want to be able to put my hands on $20,000 immediately. Yes, the interest rates are terrible, but also remember the interest rates are so low the banks aren't lending money at a high rate also.

About 40 years ago thanks to financial lobbyists and congress the whole 'savings' thing for the serfs went to hell in a hand basket. The US is one of the few countries that discourages 'savings' in the fantasy and propaganda from the 'financial experts' that savings is inflationary negative. You should be a consumer and not a saver. Interest rates are a joke and thanks to the IRS (per mandate of congress etc.) not a viable option for 'savings'. Capital gains!

It is well enough that people of the nation do not understand our banking and monetary system,

for if they did, I believe there would be a revolution before tomorrow morning.
- Henry Ford

quote:

.01% interest

That finally got my wife's attention and her agreement to drop her BoA account.

quote:

Where's the incentive to save?

Indeed. Which prompted me to drop a large portion of cash toward a new house mortgage. I had a couple of hundred thousand sitting in a CU MM earning a mere $35 a month interest.

quote:

Not really looking for solutions, it just pisses me off to let them use eight grand of my money for nothing

...with absolutely no risk to you, you’re making money by doing literally nothing.

If you want greater return, you have to accept greater risk.

...and yes, interest rates are low now because they want to incentivize spending and investment, but no basic savings account is going to earn much at any time.

quote:

Which prompted me to drop a large portion of cash toward a new house mortgage

Paying down debt is almost always a better “investment” than investing. Interest on debt is virtually always higher than returns from investment.

Some thing you're all missing. The OP here is "making $1 a year". Or not. Depending on his other sources of income, he's paying 15% or higher Federal Income Taxes on it, plus who knows how much State Income tax. So lets just say the OP is "earning $.80" for him loaning his savings to the bank.

Long ago, like the year 2000 my wife was working for a doctors group, having finished her first career as a floor RN. She pulled a quick one, applying for the job and being asked to attend the doctors meeting so they could meet her. She's always been a good little girl and sat quietly listening to them discuss "business". But finally she was caught giggling. The head doctor asked her what was wrong. She said it was funny hearing a bunch of medical doctors discussing forms design. Then she pulled a quick one, suggesting they let her design a form and bring it back to them to view and discuss. Not liking what they were doing, they jumped at the chance to dump the job and have it done for them.

It got her the job, fast. So continue to fast forward, it became summer and the head doctor held a picnic for the "administration" at his home. Being a dutiful husband, I had to attend.

The format was simple. All the women folk gathered in a group to discuss trivial shit. The MDs in a second group. Leaving poor old Dick to suffer by himself. After a while the doctor who's house it was realized I was miserable. They'd been discussing where they had their money, they asked me what I'd been using. I was just a little embarrassed, but told them they'd laugh, but I was using U S savings bonds. Turning in an ugly 5%, give or take. I was right, they all laughed.

So the following year, I again tried to beg out of the party. No joy. Women still off on the side, still discussing trivial shit. But the doctors were all moaning about how much they were losing, like in the double digits. Then the head doctor pointed out that none of them would be laughing and again asked at my return. I told him about the same as the last couple of years, about 5% or so. They all wanted details.

OK, I still have those, and I'm getting maybe 4% now. Of course that damn democrat Obammo lowered the amount we could buy from $30,000 to $10,000 per year. Those bastards ruin everything.

To the OP. You can still buy I bonds, but to cash them, you'll take a haircut the first few years,.

Are you say that it's possible that by keeping it in a safe deposit box

he won't have to report it in his income tax return, and there fore , not pay the tax on it ?

No. He's pointing out that you have to pay income tax on any interest that you earn, so you're not actually profiting the full interest rate advertised for the account.

If you're supposed to earn 1% interest for that account, you're only really pocketing 0.8% interest once you deduct the 20ish percent income tax from the interest.


Sticking a sum of money in a safe deposit box prevents you from having to pay any additional tax from interest, because you're not earning any additional interest with it just sitting there. But it in doesn't absolve you from having to pay income taxes on that sum of money when initially earned.

I trust we aren’t arguing that 80 cents on the dollar is not better than -0-.

A good goal is to build / accumulate a sufficiently-large portfolio that can both provide the needed earnings growth towards your long-term needs, and yet also provide a sufficient source of liquidity for uncertain economic periods.

If the overall portfolio is deficient, then one is unwilling to set aside a sufficient portion into safe, liquid, low-yield instruments.

quote:

Originally posted by FHHM213:
I trust we aren’t arguing that 80 cents on the dollar is not better than -0-.

Certainly not. I'm clarifying to bendable that stuffing income under the mattress, instead of in an investment or interest-earning account, doesn't hide that money from the IRS.

(Unless, of course, it's unreported cash income that that you're stuffing under the mattress... But in that case it's the fraudulent failure to report that is hiding it from the IRS, not the mattress itself. )

Also that you can shelter it from both FIT and SIT in government bonds. You've still gotta pay, but maybe at a lower rate when you're retired and broke/not earning anything else. I'm very insecure and don't trust state and municipal bonds because so many cities and states are poorly managed and near bankrupt.

There are lots of ways to skin a cat.

In this case the 'cat' is keeping some money accessible in emergencies, while earning more than 0.05% APR.

Option 1: easy-peasy (even in tinytown)
Without changing banks, see if your bank has a 'linked money market' account that is also covered by FDIC insurance, and ask them what interest rate that's paying, and then move some of that checking account cash to that MM account. Those should offer on the order of 1-2% (20-40X what they pay on checking) and have no incremental risk over having that money in a checking account at that bank.

What you give up is a bit of convenience - regulations restrict MM accounts to 6 withdrawal transactions a month, so you still need that checking account for day-to-day stuff. Most banks have web/phone apps where you can transfer back and forth, so you need to keep track and put cash into the checking account before it gets too low.

TL: DR. Put money you won't need this month into a new money market account at your existing bank, which will earn a meaningful, while still small, amount of interest. All deposits go into that account, and you transfer from there into your checking account to pay bills.

Option 2: live on the edge
That MM account linked to your checking account mentioned in option 1? It doesn't 'have' to be at the same bank as your checking account, and the alternatives probably pay more than your home bank. There are a lot of alternatives here - I tend to like Ally Bank and Capital One, but check to find reputable outfits offering high yields and low minimum balances on FDIC-insured MM accounts, and you can link that one to your existing checking account too.

quote:

Originally posted by joel9507:
What you give up is a bit of convenience - regulations restrict MM accounts to 6 withdrawal transactions a month, so you still need that checking account for day-to-day stuff.

Which is basically identical to the monthly withdrawal restrictions on a standard savings account, while offering significantly greater interest rates.


Something else to keep an eye out for is that higher-earning money market accounts are sometimes more likely to have account maintenance fees, higher minimum balances, etc. than many of the lower-earning standard savings accounts that have no fees and low minimums.

You will want to check on that before opening an account, so you don't end up in a situation like paying an extra $5/month in fees just to be earning an extra $3/month in additional interest, for a net loss.

$8,400.00 !

Isn't that pretty much pocket money for people in the poultry / egg game these days ?