![]() (A subset of government funds invest primarily or exclusively in Treasurys.) Municipal funds buy securities issued by state and local governments the interest they pay is exempt from federal tax and from state tax to the extent they own securities issued in your home state. ![]() government and government-agency securities. There are three types of money funds: Prime funds invest in a wide range of government and corporate securities and are the most diversified. The vast majority of money funds are now yielding between 4.0% and 5.0%,” said Peter Crane, president of Crane Data, which tracks money funds.įunds pay out the interest earned on investments in the form of dividends, which are generally taxable. “They all move with the market, so you’ll get a competitive yield with even the lower ranked options. They generally follow the federal funds rate, with a short lag. Their yields are based on their underlying securities, not the whims or needs of the management company. You can access your money on a daily basis. They invest in a range of high-quality, short-term, liquid securities. Unlike deposit accounts, they are not FDIC insured, but they are regulated by the Securities and Exchange Commission. Money market funds are offered by mutual fund companies, many of which are owned by banks and brokerage firms. These include CIT Bank (4.75%) and BMO Harris (4.3%) Money market funds “Some well established online banks that are rarely at the top, but have a long history of remaining competitive, are offering in the mid-4s,” Tumin said. Sometimes the banks offering the highest yields will suddenly drop their rates below average once they have gathered enough deposits, Tumin said. You’ll generally have to open the savings account online and jump through some hoops such as confirming tiny trial deposits sent to your checking account and temporarily lifting any security freezes you may have on your credit reports.Īlso, check to see if the bank charges a fee if you exceed a certain number of monthly withdrawals or payments from the savings account.īe aware that these rates can change at any time. Just make sure to keep enough money in your checking account to avoid fees. You can link an online savings account to your existing checking account and toggle money between the two as needed, said Ken Tumin, founder of. ![]() The average yield on accounts from well-established online banks is 3.8%, versus 0.4% for all savings accounts, according to. Some banks pay to have premium placement on these sites, so be sure to scroll through. You can find high-yield savings accounts from (mostly) online banks at, and other websites. (Goldman Sachs, the bank behind Apple’s credit card and savings account, declined to comment on the Forbes report, which cited unnamed sources.) ![]() If you want to earn 4.15% or more on a savings account insured by the Federal Deposit Insurance Corp., you don’t need an Apple credit card. Remember that interest is generally taxable, unless the money is held in an Individual Retirement Account or other tax-deferred vehicle. If you’re in the other 78%, here are six ways to make your money work harder. Now, “as a saver, you want to lock in higher rates to keep the advantage of those high rates for longer.”Īlthough it’s pretty easy to earn more than 4% with almost no risk these days, a recent Bankrate survey found that only 22% of savers are earning 3% or more. When mortgage rates were around 3%, everyone wanted to refinance their home to lock in a low rate for 30 years. It’s like the opposite of mortgages, said Richard Zak, a managing director with Charles Schwab. But if you think the Fed is done raising rates for now - and the jury is still out on this - it may be time to put some cash you don’t need for emergencies or short-term goals into longer-term bank certificates of deposit or Treasury securities. When interest rates are going up, it pays to keep cash in short-term instruments that will move up with Fed increases, such as money market funds or high-yield savings accounts. The Federal Reserve raised the short-term federal funds rate on Wednesday by a quarter point to between 5% and 5.25%, a 16-year high. Some online and lesser-known banks and credit unions have been attracting customers with high-yield savings accounts - at least 30 are yielding more than Apple’s 4.15% according to, a banking research website. By comparison, Wells Fargo, Citi, Bank of America and Chase are paying between 0.01% and 0.35% on their basic savings accounts. Savers have been flocking to better-paying alternatives such as money market funds, which are yielding up to 5%, Treasury bills and the government’s inflation-linked savings bonds.
0 Comments
Leave a Reply. |