I’m new to the US banking system and BoA is the only banking institution I’m currently dealing with.
I have an Advantage Savings account, and this month I’m about to hit Platinum Member rewards ($50k+) which gives me a 50% booster on credit card cashback.
I’m happy with BoA’s service and I like having everything in one place for simplicity, but I’m not thrilled with the nonexistent interest rate on the $50k in savings.
I’m considering moving to Capital One’s 360 Performance Savings account as a HYSA. Should I also open a checking account with them for easier access to funds? Is it worth moving to a HYSA, dealing with multiple banks, and giving up the 50% booster? Keep in mind, I will likely leave the country in about 8 months due to visa constraints. Would you make the switch anyway?
I’ve also read about Merrill Edge’s Money Market Funds (MMF), but they seem a bit complicated for me, and they’re not FDIC insured like a HYSA.
Best of both worlds: use a Merrill self-guided brokerage account to meet the Preferred Rewards requirements. You can then put the money in a money market fund, ETF, or whatever you like.
Lennon said:
Best of both worlds: use a Merrill self-guided brokerage account to meet the Preferred Rewards requirements. You can then put the money in a money market fund, ETF, or whatever you like.
I’ve considered that, but MMF is an investment and not FDIC insured. That scares me off since this is my savings.
@MoneyMatters
Merrill does have an insured savings option that yields 3.54%, and a ‘Preferred Deposit’ option with 4.71% (requires a $100k minimum). You could also buy Treasuries, which are very safe and liquid.
@Lennon
I’d recommend opening a Merrill CMA and purchasing a Fidelity Money Market (FISXX) yielding 5.14%. Transfers between Merrill and BoA accounts are easy. You could also look into CDs offering 4.70-4.80% APY.
Yeah, I’d move to a HYSA for the better rate. Transfers could be as fast as one business day, and many HYSAs have high transfer limits. The 50% booster is only useful if you’re utilizing Merrill Lynch. If you’re willing to invest long-term, index funds like VOO are solid. Also, for credit cards, you can find something else with better or close rewards depending on your spending.
MoneyMatters said: @Budget
Thanks! Do you think I should open a Capital One checking account too for easier access, or is the savings account enough?
You can just open a savings account. Having a checking account won’t speed up transfer limits. If you’re concerned about access, transfers from savings to checking within Capital One are immediate.
If you move to a HYSA like Capital One, you’ll get a way better interest rate, around 4.25% APY compared to BoA’s 0%. While the 50% cashback boost at BoA is nice, the extra interest from a HYSA is more valuable. Opening a checking account with Capital One can make transfers easier, and since you’re leaving in 8 months, it might be worth switching. Just remember, HYSA rates can change, so keep an eye on comparison sites for updated rates.
What do your cashback rewards look like? If you’re earning something like 5% on a Fidelity MMF, the lack of FDIC insurance shouldn’t scare you too much. With MMFs, your money is spread across multiple issuers, and there are safeguards in place since 2008.
@StephieStephie
With BoA Platinum, I’d get 4.5% cashback on a selected category and 3% on groceries for up to $2,500 spent quarterly. Then 2.25% unlimited. Without it, I’d get 3%, 2%, and 1.5%.
MoneyMatters said: @StephieStephie
With BoA Platinum, I’d get 4.5% cashback on a selected category and 3% on groceries for up to $2,500 spent quarterly. Then 2.25% unlimited. Without it, I’d get 3%, 2%, and 1.5%.
If you move $50k to a HYSA like Capital One at 4.25%, you’ll make $2,150 in interest compared to nothing at BoA. Maxing out your category spend of $2,500 quarterly for a year only earns you an extra $150 with Platinum status. It would take spending over $266,000 annually to surpass the interest you’d make at Capital One.
Capital One’s HYSA is easy to open and free. You can also use Zelle for easy transfers between Cap1 and BoA. I’d recommend looking into TTTXX money market fund at BoA if you want to leverage Preferred Rewards for your credit cards.
@NellieB
I was considering TTTXX, but Merrill’s disclaimer on MMFs about potential loss during ‘market stress’ scares me off. With HYSA, I feel more secure with FDIC insurance.
MoneyMatters said: @NellieB
I was considering TTTXX, but Merrill’s disclaimer on MMFs about potential loss during ‘market stress’ scares me off. With HYSA, I feel more secure with FDIC insurance.
That’s a valid concern. TTTXX is tied to US Treasury bills, so it’s low-risk, but yes, no FDIC insurance. If you want the safety net, a HYSA is the way to go.
MoneyMatters said: @NellieB
I was considering TTTXX, but Merrill’s disclaimer on MMFs about potential loss during ‘market stress’ scares me off. With HYSA, I feel more secure with FDIC insurance.
I also saw Capital One is offering a $750 bonus for new accounts with a $50k balance for 90 days. It’s tempting to switch!