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P2P-Loans.com is happy to publish our first listing of the best places to park your hard-earned cash. Below, we review some of the best options on the web and outline the key criteria for you to keep in mind when selecting a CD, money market investment or other high yield product. In search higher yield, I recently went through a difficult
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(and scary, at least initially, experience with NetBank). For those of you that don't know, NetBank's assets were recently siezed by the FDIC (Federal Deposit Insurance Corporation) because NetBank went BUST!! Ultimately, my money was insured and I was able to access my cash and open a new bank account elsewhere. But I can't say I wasn't a little worried when I read the press release.
So, how can you get the highest interest rate on your idle cash without the NetBank risk (i.e. your bank going out of business)? We explore a number of attractive options below.
1) Make sure your account is FDIC (e.g. government) insured. In the event that your bank goes bust, the FDIC insurance will cover the losses up to $100,000 per account.
2) Don't put more than $100,000 in any single account. The FDIC only insures up to $100,000 in any given account. If you were one of the many customers at NetBank that had more than $100,000 in a CD, checking or Money Market account, you are out of luck. If you have more money to invest, open several different accounts to ensure you are covered.
3) Do business with a reputable company. While the FDIC will ultimately bail you out if your bank goes bust, it is a little scary and a major hassle to change your bank, re-input all of your bill payment information, reset your direct deposits and automatic transactions, order new checks, etc.
So, with all that being said, here is our list of high quality, high yielding places to store your money:
Countrywide Financial: Despite its well-publicized financial challenges due to the sub-prime mortgage market, Countrywide is a great place to park your spare cash these days especially since Bank of America just announced plans to acquire the company. This company is offering some of the best savings account interest rates on the Internet and they are 100% FDIC insured (up to $100,000). Details of their online savings account (and its features) are below and rates on an Internet were recently 4.05% (Table source: Countrywide Bank). But, check the link below as rates change frequently.
E*Trade Financial: E*Trade has long been known for its discount stock trading, but has more recently become a leading online bank (despite some recent challenges with its sub-prime mortgage portfolio). E*Trade is currently offering 3.45% interest on its savings account and 4.0% on its checking account. Better yet, you can quickly and easily transfer money between your checking and savings accounts enabling you to maximize your interest earnings. What's the catch? E*Trade has very few physical branches, which makes things like depositing money into your account more difficult. While E*Trade allows you to send deposits in via USPS, things do get lost in the mail. If a deposit is lost, it will be your responsibilty to get another check so you can re-deposit it into the account.
Vanguard: Vanguard is consistently one of the best yielding money market accounts around due to it's low fee structure. Although I am breaking rule #1 (Vanguard money market accounts are classified as investment money markets, not bank money markets and are, therefore, not FDIC insured), Vanguard does purchase private insurance from the SPIC and they are the largest mutual fund company in the world. I am comfortable recommending this option to you as I have used Vanguard in the past and have been happy with the results. In addition to great money market rates, Vanguard offers many other investment options including a tax free money market (no federal income tax on interest) as well as a plethora of choices ranging from short term, intermediate term to long-term or high yield bond funds. These are much more risky than a money market or CD, but they offer higher yields (this is the very basic risk vs. reward equation).
ING Direct: (check back soon)
Capital One: (check back soon)
So, you don't like the options I've provided above? Well, there are lots of tools on the web to help you find the best rate available. Bankrate offers a great tool for searching current CD or money market rates as does RateWatcher, etc. etc. Just use the Google search bar below and type in the product and site you want (e.g. Bankrate CD Rates - see below - or Ratewatch Money Market Rates) to find the link.
So, how can you get the highest interest rate on your idle cash without the NetBank risk (i.e. your bank going out of business)? We explore a number of attractive options below.
1) Make sure your account is FDIC (e.g. government) insured. In the event that your bank goes bust, the FDIC insurance will cover the losses up to $100,000 per account.
2) Don't put more than $100,000 in any single account. The FDIC only insures up to $100,000 in any given account. If you were one of the many customers at NetBank that had more than $100,000 in a CD, checking or Money Market account, you are out of luck. If you have more money to invest, open several different accounts to ensure you are covered.
3) Do business with a reputable company. While the FDIC will ultimately bail you out if your bank goes bust, it is a little scary and a major hassle to change your bank, re-input all of your bill payment information, reset your direct deposits and automatic transactions, order new checks, etc.
So, with all that being said, here is our list of high quality, high yielding places to store your money:
Countrywide Financial: Despite its well-publicized financial challenges due to the sub-prime mortgage market, Countrywide is a great place to park your spare cash these days especially since Bank of America just announced plans to acquire the company. This company is offering some of the best savings account interest rates on the Internet and they are 100% FDIC insured (up to $100,000). Details of their online savings account (and its features) are below and rates on an Internet were recently 4.05% (Table source: Countrywide Bank). But, check the link below as rates change frequently.
E*Trade Financial: E*Trade has long been known for its discount stock trading, but has more recently become a leading online bank (despite some recent challenges with its sub-prime mortgage portfolio). E*Trade is currently offering 3.45% interest on its savings account and 4.0% on its checking account. Better yet, you can quickly and easily transfer money between your checking and savings accounts enabling you to maximize your interest earnings. What's the catch? E*Trade has very few physical branches, which makes things like depositing money into your account more difficult. While E*Trade allows you to send deposits in via USPS, things do get lost in the mail. If a deposit is lost, it will be your responsibilty to get another check so you can re-deposit it into the account.
Vanguard: Vanguard is consistently one of the best yielding money market accounts around due to it's low fee structure. Although I am breaking rule #1 (Vanguard money market accounts are classified as investment money markets, not bank money markets and are, therefore, not FDIC insured), Vanguard does purchase private insurance from the SPIC and they are the largest mutual fund company in the world. I am comfortable recommending this option to you as I have used Vanguard in the past and have been happy with the results. In addition to great money market rates, Vanguard offers many other investment options including a tax free money market (no federal income tax on interest) as well as a plethora of choices ranging from short term, intermediate term to long-term or high yield bond funds. These are much more risky than a money market or CD, but they offer higher yields (this is the very basic risk vs. reward equation).
ING Direct: (check back soon)
Capital One: (check back soon)
So, you don't like the options I've provided above? Well, there are lots of tools on the web to help you find the best rate available. Bankrate offers a great tool for searching current CD or money market rates as does RateWatcher, etc. etc. Just use the Google search bar below and type in the product and site you want (e.g. Bankrate CD Rates - see below - or Ratewatch Money Market Rates) to find the link.
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