geo123 said:scott1961 said:Not my high yeild checking, is 5.21% now and will be over 5.40% come 7/1You're with MBNA, correct? I thought that it had a $15K minimum and a 5.06%APY. Where's the 5.21% coming from? Do you seriously expect them to follow the fed's lead and bump it up by 25bps? Regardless, even at 5.06%apy and unlimited checkwriting, it is quite good.
Scott's account isn't good for new accounts. He got in when the getting was good.

Cheap said:Scott's account isn't good for new accounts. He got in when the getting was good.Thank goodness. I was starting to think that I missed yet another great deal that is right under my nose.

AnonymousCoward said:

Here is a heads up warning to you, geo123. Scott has a magical checking account that was available for brief moment in time more than half a year ago. He loves to trot it out whenever he can (it was great find, who can blame him). But under no practical circumstances can we copy him, he is specially grandfathered in. Additionally, it requires $200,000 at all times or the rate drops below 1% or something terrible.

yes, I kid Scott, it is a great account for you and even though I call it "magical" it is very real
Yep it is a checking account that pays the current one month libor rate, Today's rate is 5.302% and moving up everyday should be a bit over 5.40% come 7/1 which will give it an APY over 5.50%. Very close to the T-Bills but totally liquid and use it to pay all my bills. This account moves in line with our fed rate so has kept me out of the T-Bill party but if they eventually ungrandfather me I would start doing some T-Bills

geo123 said:What's the minimum balance requirement, Scott? It's with MBNA, correct?

I'll let Scott correct me although I think it is this.... linky

Although like I say, he gets straight Libor and $200,000 minimum while if you were to do it today you'd get Libor-margin and a $50,000 minimum.

Edit: Margin=.5% we suckers don't get.
Edit2: linky # 2

Note that if you read it carefully, the deal was dead before it actually was posted in it's own thread.

AnonymousCoward said:geo123 said:What's the minimum balance requirement, Scott? It's with MBNA, correct?

I'll let Scott correct me although I think it is this.... linky

Although like I say, he gets straight Libor and $200,000 minimum while if you were to do it today you'd get Libor-margin and a $50,000 minimum.

And I get a $1,000,000 Max instead of that measley $500,000 they now give

AnonymousCoward said:

Note that if you read it carefully, the deal was dead before it actually was posted in it's own thread.
That discussion thread was started about 7 weeks after I posted the new account the first week it was offered in the "The Daughter of The Mother - Checking, Saving, and Money Market" thread. You will see it was heavily negged and put down, Glad I did not listen

Text
Date Posted: Oct/30/2005 10:55 AM
Rating:

Interesting new account offered by Salem five bank. It's called the "The Platinum Cash Account" It sets it rate every month by going with the 1-Month Libor rate. If you go back and check historic 1-Month Libor rate it becomes pretty clear that most of the best MM and savings account the last few years seem to stay right with it. Right now it's rate is 3.95% but look for it to go up on Nov 1 as they change to new 1-Month Libor rate on 1st of every month. Account is not for everyone as it has a $200,000 Min, But with it you get unlimited check writing, debit transactions and free ATMs worldwide. Might be a nice way to stop chasing rates and having numerous bank accounts, as it should stay right near the top and they also offer DIF which covers any amount over FDIC

mariojm said:
But wouldn't it be more effective to lock up that 200,000+ in a CD or elsewhere for an even higher long term rate?

Thank you, this is what I have been saying for a while. As soon as the account drops below 200K the rate drops to below 1% (or something very uncompetitive). So presumably he's locked up that $200,000 for over 6 months now.

My weighted average of my no interest checking account balance and my CDs beats the LIBOR rate quite handily. Even if I could go back in time to when this deal active I wouldn't take it. To each his own but I'll take my chances that over th next few months my CDs will continue ot beat LIBOR.

AnonymousCoward said:mariojm said:
But wouldn't it be more effective to lock up that 200,000+ in a CD or elsewhere for an even higher long term rate?

Thank you, this is what I have been saying for a while. As soon as the account drops below 200K the rate drops to below 1% (or something very uncompetitive). So presumably he's locked up that $200,000 for over 6 months now.


Actually the rate is .10% if I drop below $200k, also anything over $1 Million goes into what's called the platinum funding account and gets .10%. I do have a number of CDs paying higher than this account. Maturing CDs go into it and then when I find a good deal like Worlds 5.61% I fund from it. Like I have said in the past this account is not for everyone but is very useful to me.

whitelephant said:Have not seen anyone mention this - At World if you purchase a CD (for example for $100,000) and before the maturity you realize you need cash out of it, you can take only what you need - you do not need to close the whole thing AND you are only penalized for the portion you take out, not the entire amount. I learned this when I heard a CSR telling a customer he didn't have to purchase 10 CD @ $10,000 each and explained why.

Most banks will allow you to take out any interest you've earned without penalty, at any time.

Once all the interest is withdrawn, any early withdrawal penalty is based only on the amount of original principal withdrawn.

So it seems preferable to have one large CD rather than many small ones in many cases.

dasachs

New Member

Date Posted: Jun/22/2006 10:24 AM
Rating:

Good points, mhesidence. I respectfully disagree with your conclusions however so can we bat this around a little further ?

There are some respectable observers - including the Fed - who think the economy will slow early next year or later this year. Some futures markets are predicting a cut in Fed rates in the first half of next year.

So there is a reasonable chance of Fed rates declining early next year or late this year.

Before this happens, once it becomes clear the Fed has paused, with a chance they may cut in the near-future
(< 6 months), history says that often market rates start declining.

I conclude that there is a non-negligible chance that CD rates may start declining by the end of the year.

And, historically, Fed rates change significantly over time frames of 6 months to a year most of the time. It is relatively rare when Fed funds remain constant for a year or more.

These kinds of observations lead me to the strategy of locking in historically high rates (like ~ 6%) when they occur (like now) for a long time, and then paying penalties to secure even higher rates if rates go up significantly further.

For example, if rates go up by 1%, if your penalty is 3 months interest, you make it up in about one year; if the penalty is 6 months, you make it up in about two years. After the make-up period, you start to make more money over the remainder of the duration of the new CD.

If rates go up by 2%, cut the make-up periods in half.

If you start to view penalties as a neccessary part of 'doing business', you avoid the huge problem of having to pick the precise times that rates peak. And with long-duration CDs and a willingness to pay penalties, you aren't forced to renew at times when rates may be low.Text

By the chart on this link I would disagree that 6% is near a "historically high" rate. The chart looks to me that we are coming out of a period of historically low rates.
That's why I have a CD ladder with mostly short term CD's for now.
However dasachs,I do like your idea except for that nagging old problem,timing rates.