You’ve mentioned several accounts that pay 1% APY or more. Can you suggest some? I have some serious cash that needs to park for a year or so (high 6 figures). Would welcome any suggestions how I could use it to maximize points, cash or miles.
– SM
In this post I am going to make several assumptions and I’ll explain why:
- You’re unwilling or unable to make use of rewards checking accounts or high yield prepaid cards. If you have high six figures that needs to be parked, you’d need to open a lot of these accounts to get the higher rate on your full balance. I just don’t think that is feasible to juggle that many accounts and requirements for most people, that said you might still consider looking at some of them.
- Interest rates are going to stay the same on all of these accounts. It’s extremely difficult to determine if a financial institution is likely to decrease or increase the interest rate they offer in the short term, we can look at rate history and a bunch of other things but I think considering you want to park this money for twelve months you should be OK.
- You’re not interested in putting the money towards bank bonuses. I love bank bonuses, but most of the ones that require large cash deposits actually offer worse rates than high interest accounts.
- You have $1,000,000 to park. This will give us more options and that way I know I’ve covered what you want to park.
- You want near immediate access to your funds. If you knew that you wanted to park your funds for a full twelve months, then you’d need to look at CD’s as well.
Whatever account you choose, you should always make sure it has insurance. There are two main bodies that offer insurance for deposit accounts: FDIC & NCUA. Both of these offer insurance on up to $250,000 in funds, this means that you’ll need four accounts (although if you have a partner then you’d only need two accounts).
You should also keep in mind any fees they might charge, in general savings accounts have low or no fees as they make the majority of the money by putting your deposit to work.
- UFB Direct. 1.25% APY as long as your balance is in excess of $24,999. FDIC insurance.
- Salem Five Direct. 1.05% APY, FDIC & DIF insurance.
- My Savings Direct. 1.05% APY FDIC insurance.
- GE Capital Bank. 1.05% APY FDIC insurance.
You’ll likely be able to find some local banks that offer more than 1.05% APY, I decided not to include any local banks so that everybody could use this list. If you had $1,000,000 to invest you could put $250,000 in each of these accounts, if you had a partner you’d obviously put $500,000 into UFB direct and another $500,000 into the other accounts.
I did find some other interesting products:
- Ultima bank. 2.05% APY, but you need to be under 18 years of age. If you withdraw before your 18 then you receive a penalty of six months interest.
Now my readers are all highly educated and good at finding deals, so let’s see if anybody can beat those rates in the comments. If you have a question about anything, feel free to contact me. I try to answer at least one reader question publicly every week on Saturday and I also answer a lot during the week privately via e-mail.
Salem Five is a member of the DIF which insures balances above the FDIC’s limit with no max, so you only need one account. DIF is an insurance fund only for Massachusetts-chartered banks.
GE Capital changed its name to Synchrony last year, and the MM account is called Optimizer.
They were tough to set-up an account with but have done well since.
Obviously the highest income earners pay high taxes on these small returns also. In my lifetime the past number of years have been the lowest in recent history. Helps those getting a mortgage or a car loan. Business loans are not as sharp as they could be. The way I see it the bank bonuses are worth grabbing for the sheer reason these rates are so low. Not too hard to pull 1000-1200 from bank bonuses. Although these are one time deals generally.
Hi, just to suggest another possibility: Barclays offers a 1% saving account and 1.05% what they call a “dream account”.
Everything is not just the highest current rates. Both UFB Direct and Salem 5 Direct have had consumer complaints in dealing with bank customer service. I believe that Salem 5 Direct has may fees. UFB Direct has been known to raise and then lower rates. If you want to just park your money in banks with solid finances, good customer service, and CONSISTENT high rates, GE Capital Bank is the only one on your list above to choose. Also, 3 additional banks with solid finances, good customer service, and CONSISTENT high rates also include Ally (0.99), CIT (1.00), and Optimizer Plus (Synchrony) (1.00). These banks also have high CD rates too. Also, Ally for many years has has an unadvertised CD 12 month renewal bonus. It used to be 0.25% and now has been 0.15%.
UFB Direct has high rates (if calling 1.25% is “high”) for a reason – they don’t offer many frills. But if that’s acceptable (ie, no live CS on weekends), hard to beat 1.25%. I recently opened a UFB Savings account – pretty painless as already had their miles-checking account.
FWIW, if you have $1MM cash lying around, you aren’t much concerned about your ROR. You want safety. And I’d stick it in some well capitalized banks (of which none of the top 5 qualify as you can’t trust a thing on the Too Big To Fail bank’s balance sheets – still mostly phony accounting tricks being used)
As I stated in the post, I made the assumption that the rate will stay the same for twelve months. In terms of customer service, that’s difficult for me to comment on without having accounts with all of those banks.
I’ve had issues with Ally for example.