Apple Card Savings Account Receives Another Interest Rate Cut

[ctyrider]

Theres some good advice here but the challenge for most people is that money in the markets needs to be actively managed. It’s not difficult but it’s not a passive thing. If you’re like me, you can hire a professional but they take a cut of your gains.

You do not need to actively manage your money in the markets. There are plenty of low cost funds that will do it for you. Vanguard has a number of well managed funds, like VTI, and there are many others.

Park your money there and don‘t worry about market fluctuations and buying/selling individual stocks (which is a fools game).

Nice side benefit is that you will get a good chunk of quarterly dividends, which you can use as cash.

Last thing you want to do is pay a “professional“ to “manage“ your investments. They add as much value as real estate agents (which is to say little to none). They will not make you more money than you will do on your own with a few well selected index funds.

 

[Kevin2055]

Theres some good advice here but the challenge for most people is that money in the markets needs to be actively managed. It’s not difficult but it’s not a passive thing. If you’re like me, you can hire a professional but they take a cut of your gains.

You also need to be able to tolerate down cycles. I had 7-figure paper losses in the last market crash. They have all since recovered and then some, but it hurts to see the values so low when the market has a downturn.

index fund is the choice

 

[dynamojoe]

You left out transfering balance to a 0% interest rate credit card. There are quite a few of them out there where you get 0% interest from 12 months up to 21 months (Wells Fargo Reflect Card).

Back when I was reading those offers I noted that there was always a fee of 3%-5% of the total amount being transferred. So (for example) moving $1k to such a card would immediately incur a $30 fee. It's still a useful option, especially if you're paying a high rate, but always read the fine print. Banks don't do anything for free if they can help it.

My fave is the "Get $300 in points for spending $3k in the first six months!". I love those cards. That's free money if you pay your balance in full every month.

 

[barkomatic]

If you have trouble managing money and need to move it to a savings account as a middle ground this is better than nothing.

But honestly savings accounts are a ripoff IMO, I've yet to see one that has a rate that can stay ahead of that periods current inflation. I'm comparing any historical month inflation vs that months savings account rates, not the long term averages. It can slow the bleeding of actively losing money but that's about it. I'm also convinced the federal posted inflation rates are very flawed data, on purpose because it suits politically. Get your real inflation data elsewhere based off of what YOU buy.

I don't like it but you pretty much have to have your money in the market somewhere to stay ahead of inflation. If you need to get your money out it generally only takes a couple days to sell something in your money market account and ACH transfer to checking.

I don't think having a portion of your money in a savings account indicates you have trouble managing money. In fact, I believe its a good idea to keep emergency funds in a high yield savings account so that you *don't* have to sell off investments at a time when the market may or may not be doing well.

If one doesn't have enough money for both a savings account and investments then a savings account with emergency funds is the first priority in fact.

 

[platinumaqua]

Fidelity's SPAXX - the default position the money is parked for brokerage accounts - is 4.67% today

 

[california_kid]

I don't think having a portion of your money in a savings account indicates you have trouble managing money. In fact, I believe its a good idea to keep emergency funds in a high yield savings account so that you *don't* have to sell off investments at a time when the market may or may not be doing well.

If one doesn't have enough money for both a savings account and investments then a savings account with emergency funds is the first priority in fact.

True. A good example is saving money each month for an upcoming tax payment (income and/or property). It would not be wise to put those funds in equities that could lose value. Why not earn some guaranteed money before you have to make the payment with zero risk you won't have enough when it's due?

 

[stephenschimpf]

I don't think having a portion of your money in a savings account indicates you have trouble managing money. In fact, I believe its a good idea to keep emergency funds in a high yield savings account so that you *don't* have to sell off investments at a time when the market may or may not be doing well.

I totally agree. I have a regular checking account and savings accounts at a local bank for my monthly expenses (autopay) and at least enough that if something happens to my car today I can go buy a new one for cash tomorrow. The rest of my "cash" is in HYSAs, but since those are only insured to $250K, I have several to spread the money around. Then there are retirement accounts at work, other investments, my stock portfolio, and my condo (I paid cash, so I have no mortgage). I think it's best and safest to spread your money around, and make sure some of it is available relatively quickly for emergencies.

 

[svish]

Expecting the rate to further drop in the coming months.

 

[ZipZap]

Not sure I understand why a Fed drop in lending rate means a Saving account rate must be lowered.

 

[webkit]

Not sure I understand why a Fed drop in lending rate means a Saving account rate must be lowered.

A major way banks profit off of savings deposits, and are able to pay interest to the depositors, is by lending money. When the interest (rate) they are able to charge to lend money goes down, the interest (rate) they are willing/able to pay depositors goes down.

 

[rwh63]

Back when I was reading those offers I noted that there was always a fee of 3%-5% of the total amount being transferred. So (for example) moving $1k to such a card would immediately incur a $30 fee. It's still a useful option, especially if you're paying a high rate, but always read the fine print. Banks don't do anything for free if they can help it.

My fave is the "Get $300 in points for spending $3k in the first six months!". I love those cards. That's free money if you pay your balance in full every month.

that's why i signed up for the apple card recently. earn $300 after charging $1500. really the only reason i jumped on this (plus the titanium card!). want to apply that $300 towards a replacement laptop.

 

[SnowCrocodile]

It’s still much better than a traditional savings account for parked funds.

There are better options.
Although 4.25% is still decent.

 

[SnowCrocodile]

A major way banks profit off of savings deposits, and are able to pay interest to the depositors, is by lending money. When the interest (rate) they are able to charge to lend money goes down, the interest (rate) they are willing/able to pay depositors goes down.

Also, with the volume of money that Fed pumped into this economy, individual customers’ savings are just a fraction of banks’ money supply. It’s the smallest banks that need your money the most. So they are offering better rates. The big players make so much money by other means, they would probably drop retail customers completely if they could.