WasteProfession8948 t1_je3dnww wrote on March 29, 2023 at 2:51 AM

Reply to comment by Mayor__Defacto in [Beginner] In my location, my bank (PNC) has a savings account interest rate of 0.03%. Capital One is 3.4%. American Express is 3.75%. Is there any reason not to switch to one of those? by Flopcandy

There are much better rates available right now - over 5% - with brokered CDs through Schwab and Fidelity. All FDIC insured.

Mayor__Defacto t1_je3ed6x wrote on March 29, 2023 at 2:57 AM

Yep, they offer them as well. I’m less familiar with their rate schedule though, and I know Fidelity won’t give just anyone a CD, you have to be a brokerage client and that entails a minimum $5k account balance on the brokerage side (you can’t count the CD balance towards that), and they charge a $20 commission in some cases. They also have to be multiples of either $100 or $1000, where traditional CDs can be down to cents if you wish. On top of that, the interest does not go into the CD, it goes back into your brokerage account, where with a traditional CD it would go back into the CD and compound.

So it’s a bit of arbitrage on which is the better option for you. For most people that do not already do business with Fidelity, a traditional CD is the better option.

LarryCraigSmeg t1_je3nf6e wrote on March 29, 2023 at 4:18 AM

Yeah but there are still multiple savings accounts offering over 4%. Including Wealthfront at 4.3 with no hoops to jump through.

So why go with a CD at 3.5?

Runfish t1_je3f97k wrote on March 29, 2023 at 3:04 AM

Came here to say this. Brokered cds have better rates without the banks hassle. (Short grace periods to do something with it) Just set up a Fidelity account for my daughter for this purpose.

Also, the cash sitting In Fidelity’s invest accounts makes 4.4% currently. Varies slightly by the day.