Caught by surprise- BOA savings account interest rates

[GON]

Have some funds not earning much interest in a savings account. Decided to do a nationwide search to see what financial instituions are paying on different savings accounts. I am not looking at CD rates, just savings accounts. A google search brought a "sponsored" Bank of America link. I was a bit surprised at how low interest. Guess this is the game with 99 percent of financial instutions, essentially no interest on savings. On a supplemental note, BOA pays somewhat lower CD rates. But going through BOA's rate sheet, if your CD expires, it gets auto rolled into a auto renewable 3 month CD at .03%. Seems a bit disengenous to have a auto roll over pay essential zero interest.

Anyways- here are today's BOA rates for my zip code:
Bank of America Advantage Savings† Standard Pricing Account Balance Rate % APY % Less than $2,500 0.01% 0.01% $2,500 and over 0.01% 0.01% Preferred Rewards Tier with Interest Rate Booster* Account Balance Rate % APY % Gold Less than $2,500 0.02% 0.02% $2,500 and over 0.02% 0.02% Platinum Less than $2,500 0.03% 0.03% $2,500 and over 0.03% 0.03% Platinum Honors Less than $2,500 0.04% 0.04% $2,500 and over 0.04% 0.04% Diamond Less than $2,500 0.04% 0.04% $2,500 and over 0.04% 0.04% Diamond Honors Less than $2,500 0.04% 0.04% $2,500 and over 0.04% 0.04%

 

[JayhawkRoy]

BOA doesn't have any of my money for this very reason. Lately, I have used Discover Bank and Everbank for savings accounts. Their rates are relatively competitive and easy to deal with.

 

[henni]

https://www.doctorofcredit.com/high-interest-savings-to-get/

 

[GON]

Forbes rated the below from Capital One to be the best savings account at 3.7%. Other institutions offer higher interest, but Capital One has some intangibles that Forbes thinks make the lower interest rate still a better overall savings account.

Among 370 savings accounts from 157 banks and credit unions, we found Capital One 360 Performance Savings to be the best high-yield savings account available. The account earns an impressive interest rate, offers in-person banking and has no maintenance fees or minimum balance requirements.

 

[RhondaHonda]

I’ve been using CIT Bank’s online account for years. Currently 4.10% APY. I’ve used Capital One, FNBO, ING and others in the past too.

 

[RDY4WAR]

They can't afford it. They've got to cover that ~$1.8 billion they spend a year in marketing.

 

[BC1]

4 week T-bills are still around 4.25% and not subject to state tax. IMHO any "savings account" money should be invested here.

 

[TwoC400s]

I get 4% on the uninvested cash in my Robinhood brokerage account...

 

[GON]

4 week T-bills are still around 4.25% and not subject to state tax. IMHO any "savings account" money should be invested here.

Last year I purchased a home..one requirement of the purchase is that I assumed a $47k USD solar loan. The loan is twenty years (18 years left), at 1.99 percent interest. Payment is $212 per month. I suspect the value of the solar new was about $15k-$20k USD, and this was a "hustle- tin man sale", that gave the homeowners a check from U.S. taxpayers for $10k USD, and eliminated their electric bill. Issue is, as almost all of the solar deals, the Seller/ Installer is out of business (I am sure they just reopened under a different name), and so if the system fails, likely marginal to service, system may in fact be junk.

I recently read an article of a guy who purchased new solar for his home, one of the brand new panels failed, and these Chinese panels that he purchased are not serviceable. The brand new Chinese solar panel is in a U.S. landfill today, and will be there for many centuries. It is not a reasonable assumption based on reading to expect solar panels, especially newer solar systems, to be serviceable, regardless of what the salesperson states.

I hate having debt, and contemplate daily paying off the $47k USD loan. Issue is, the home is a interim home. If I pay off the $47k USD, the home likely won't sell for a penny more. If I keep the loan going, I can tell the buyer same thing told to me when I purchased the home- assume the loan or no deal.

So, I contemplate moving $47k USD in a savings account, hopefully above 3.5%, and have a electronic withdraw from the savings account for the monthly $212 payment. This is what smart money reportedly does. I have never been a smart money guy, so trying to figure it out.

Now you now the rest of the story.

 

[TwoC400s]

Last year I purchased a home..one requirement of the purchase is that I assumed a $47k USD solar loan. The loan is twenty years (18 years left), at 1.99 percent interest. Payment is $212 per month. I suspect the value of the solar new was about $15k-$20k USD, and this was a "hustle- tin man sale", that gave the homeowners a check from U.S. taxpayers for $10k USD, and eliminated their electric bill. Issue is, as almost all of the solar deals, the Seller/ Installer is out of business (I am sure they just reopened under a different name), and so if the system fails, likely marginal to service, system may in fact be junk. I recently read an artile of a guy who purchased new solar for his home, one of the brand new panels failed, and these Chinese panels that he purchased are not serviceable. The brand new Chinese solar panel is in a U.S. landfill today, and will be there for many centuries. It is not a good assumption based on reading to expect solar panels, especially newer solar systems, to be serviceable, regaurdless of what the salesperson states.

I hate having debt, and contiplate daily paying off the $47k USD loan. Issue is, the home is a interim home. If I pay off the $47k USD, the home likely won't sell for a penny more. If I keep the loan going, I can tell the buyer same thing told to me when I purchased the home- assume the loan or no deal.

So, I contemplate moving $47k USD in a savings account, hopefully above 3.5%, and have a electronic withdrawl from the savings account for the monthly $212 payment. This is what smart money reportedly does. I have never been a smart money guy, so trying to figure it out.

Now you now the rest of the story.

this is what is commonly called "arbitrage."

Ideally the difference between your loan interest paid and your interest revenue would be greater than the rate of inflation.

 

[SC Maintenance]

When SVB failed a lot of money poured into BoA and the other big banks - since there "too big to fail". They don't need to pay for deposits - they have plenty.

I agree with @BC1 , a 4 week T-bill is the safest, most secure instrument out there, and it pays 4.293% as of last week, and is state income tax free. I fail to comprehend why people put their savings in a bank.

 

[GON]

When SVB failed a lot of money poured into BoA and the other big banks - since there "too big to fail". They don't need to pay for deposits - they have plenty.

I agree with @BC1 , a 4 week T-bill is the safest, most secure instrument out there, and it pays 4.293% as of last week, and is state income tax free. I fail to comprehend why people put their savings in a bank.

Here is why (in my case).

It is Saturday for me. I can transfer $47k USD from a savings account paying essentially zero percent interest, to capital one paying 3.5 percent interest. I can then setup a electronic withdrawal for a monthly $212 payment from the savings account. And I can pay off the loan anytime.

Not sure I can setup a like process for a Treasury bill, from OCONUS hotel on. Saturday morning.

A factor in all this, triggered by a contribution to this thread, is income taxes. Is it work trying to make a 1.5 percent arbitrage spread, and now have to pax income taxes on the spread. Not a lot of money in play, I also hate rewarding the solar finance company that likely took a 25 percent cut if the $50k usd sales price, knowing they more likely than not will reap even higher returns if I payoff the 1.99 percent loan.

 

[BC1]

You buy a $50k bill for say 49800, depends on the rate at auction. The treasury department puts the $200 "profit" back into your saving account each renewal. You can still pay the loan out of that savings account.

 

[2strokeNorthstar]

BOA is consistently the worst. No idea why anyone would give them money.

 

[SC Maintenance]

Here is why (in my case).

It is Saturday for me. I can transfer $47k USD from a savings account paying essentially zero percent interest, to capital one paying 3.5 percent interest. I can then setup a electronic withdrawal for a monthly $212 payment from the savings account. And I can pay off the loan anytime.

Not sure I can setup a like process for a Treasury bill, from OCONUS hotel on. Saturday morning.

A factor in all this, triggered by a contribution to this thread, is income taxes. Is it work trying to make a 1.5 percent arbitrage spread, and now have to pax income taxes on the spread. Not a lot of money in play, I also hate rewarding the solar finance company that likely took a 25 percent cut if the $50k usd sales price, knowing they more likely than not will reap even higher returns if I payoff the 1.99 percent loan.

Your conflating things.

You either need $47K @ immediate liquidity (in which case its not savings) or you do not?

You could put $212 x 12 months in your checking account, and refill it once a year, and put the other $45K in bills and make an extra $225 per year - essentially one of your payments. If you do T-bills in a brokerage account you can sell them at any time and transfer the money. Will be in your bank in 3 days or so at most.

Obviously it’s your money, not telling you what to do. Just showing you how to maximize interest. And it’s not an arbitrage, that would be you borrow from one place at a low rate to invest in another place at a higher rate. It’s all your money so no arbitrage.

 

[football]

I dump all my extra (savings) money into SPAXX through Fidelity. It’s usually around 4%. Its benefits are that you can withdraw at anytime and you don’t have to wait for it to mature. I used to park money in a pitiful savings account but SPAXX nets me several thousand a year in interest. Lately I’ve bought the dip in the stock market and have some things up 20-30% in the past month. But that’s risky and tricky.

 

[SC Maintenance]

Another question - do you know who holds your solar note. ie is it held by itself by say a bank, or was it collateralized.

If its held by itself, you might be able to convince the bank to give you a discount on the payoff amount in order to shed the low rate. Depends on how they have it on their books - ie mark to market or hold to maturity, and of course finding a banker that actually cares about a $47K note. Might be worth a phone call at least.

 

[RhondaHonda]

4% on $47,000 is $1,880. Paying income tax on $1,900 is not much tax and not difficult. They send you a 1099-INT.

 

[alarmguy]

I’ve been using CIT Bank’s online account for years. Currently 4.10% APY. I’ve used Capital One, FNBO, ING and others in the past too.

Exactly!!
As far as I’m concerned, nothing beats it. No games, no baloney, just a flat out great interest rate.
Can’t be beat and your money is insured.
https://www.cit.com/cit-bank/platinum-savings

In the last couple years it became a subsidiary of first citizens, bank, and trust. The great rate still remain.

With some spare money we do take up bank offers, recently Chase Bank offered us $900 to open up a checking account and savings account with $15,000 put into it
We had to keep that balance for about three months. True you don’t end up with exactly that $900 because we’re giving up the 4.1% that CitBank pays us but you still come out way ahead.

We do offers like that pretty frequently and then just close the account 90 days later. Anyway, I look at it this way Chase bank just bought me my new iPhone 15+

 

[GON]

Another question - do you know who holds your solar note. ie is it held by itself by say a bank, or was it collateralized.

If its held by itself, you might be able to convince the bank to give you a discount on the payoff amount in order to shed the low rate. Depends on how they have it on their books - ie mark to market or hold to maturity, and of course finding a banker that actually cares about a $47K note. Might be worth a phone call at least.

A San Francisco firm named Mosiac.

Mosiac has a brutal reputation. I spent hours reseaching Mosiac and every review was worse than brutal. I was suprised I was approved to assume the solar loan; almost every assumable loan that had a review, stated Mosiac declined the assumption, with no publised criteria for assumptions.

Mosiac likely has a good business model. On a $50k USD loan, charge the Solar company a 25 percent underwriting fee ($12,500). So Mosiac is really only loaning $37,500. Market the loan as assumable, but almost nobody qualifies for the assumption. Mosiac then gets very early payoff of the loan, which they wrote at prime rate. Its good to own a finance company like this. It is not good for the consumer, in so many ways. Mosaic puts a lein on the home, so home can't sell without lien satisfied.

One of many reviews found online reference Mosaic:
"I had to contact my attorney general against Mosaic. I was trying to refinance the house, and they blocked it with their lien that they refused to lift temporarily. I had auto-pay with them. In order to refinance, I had to pay them off to get rid of them. By the time you are done paying them anyway on a 20-year loan, you would have paid close to the same amount of the loan. They are awful. Find a way to pay them off."