Thursday, January 22, 2009

Money Market Rates Dropping

Interest rates have dropped considerably over the past few months. My October post on the same topic will give you a historical point of reference. It has been difficult to keep track of the rates that I've been getting in my various money market accounts. So, I've decided to periodically post a list of the annual percentage yields (APYs) for institutions that I have accounts at, or have otherwise mentioned in the blog. These rates are sorted by APY.

3.01% E*TRADE Complete Savings
2.60% Umbrellabank Pot O'Gold Money Market
2.60% HSBCDirect Online Savings
2.50% Citibank Ultimate Savings
2.40% ING Direct Orange Savings
2.22% Western FCU Money Market
1.65% Countrywide SavingsLink
1.50% Guaranty Bank Gold Rewards Money Market
1.15% Washington Mutual (WaMu) Online Savings
0.77% PayPal Money Market*
0.00% TD Ameritrade Money Market* (not a typo!)

Rates are believed to be accurate as of 1/21/09. I did not include banks that had special, or introductory rates in the list because these are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

*Note that the PayPal Money Market and the TD Ameritrade Money Market funds are NOT FDIC insured.

Overall, I think that the results of my survey have been dismal. Though I do business with both E*TRADE and Umbrellabank, I don't have the specific types of accounts that I mentioned in this post. I guess it is time to move some money around.

Also, the 1.15% rate at Washington Mutual (WaMu) is particularly disappointing since WaMu was at the top of my list last time around with a 4.00% APY. Lastly, I want to mention the two money market funds that I mentioned. Historically, money market funds (offered through brokerages) pay a higher interest rate than their counterparts at commercial banks. However, this situation has reversed itself, and the money market funds are now at the bottom of the list. Money market funds are NOT insured by the FDIC. However, money market accounts offered through banks are.

The TD Ameritrade money market fund rate is not a typo! They are indeed paying 0.00% to hold onto your money. This situation has me very nervous. Coupled with other ongoing issues I've had with TD Ameritrade, I'm seriously beginning to consider moving my assets to another brokerage.

In these times of uncertainty, I can offer two pieces of advice that I think few people would disagree with:
1) Never exceed the FDIC insurance limits.
2) Don't keep all of your money in one place.


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