25
votes
Are demand and time deposit accounts really loans _to_ the bank?
Yes.
When you deposit a sum of money into a bank account, that account is an asset for you. At the same time, it is a liability for the bank.
Let's say that you are depositing $1000 to your bank ...
- 115k
23
votes
Accepted
What's up with banks closing down their high yield savings accounts and incentives lately?
Generally high yield savings accounts are used by banks to increase the deposit base. The banks are required to keep a certain ratio of loans outstanding to deposits in the bank, and paying high ...
- 166k
20
votes
How are the banks behind high yield savings accounts able to pay such high rates?
How are the banks behind high yield savings accounts able to pay such
high rates? Where does their yield come from?
The money deposited in the checking accounts, savings accounts, high yield accounts,...
- 136k
17
votes
How are the banks behind high yield savings accounts able to pay such high rates?
Since we are currently coming out of a zero-interest-rate regime you may be wondering how the bank can make money offering 4% on a savings account while getting 2% on the loans it made last year.
The ...
- 2,620
12
votes
pending recession: keep money in 401k or savings account?
You are asking whether you should withdraw money from your 401k because you are concerned about economic downturn which might cause your investments to decline in value.
No. You should not.
The reason ...
- 3,118
10
votes
Are high yield savings accounts as secure as money market checking accounts?
It's actually the other way around: a savings account (high yield or otherwise) is likely to be insured by the FDIC. We can't verify without knowing the exact account, but this should be prominently ...
- 762
10
votes
Are demand and time deposit accounts really loans _to_ the bank?
Conceptually, yes, we are lending our money to the bank, and it is leveraging those loans to make other loans at higher interest rates.
It differs from most loans in that we can increase or decrease ...
- 42.9k
9
votes
How are the banks behind high yield savings accounts able to pay such high rates?
A variety of factors
Some view the interest as a marketing cost. If it costs $x to attract a customer, a bank can either spend that on a flashy marketing campaign with TV ads and direct mailers or ...
- 26.5k
6
votes
How are the banks behind high yield savings accounts able to pay such high rates?
For the most part interest rates are relative to the fed rate, which is currently at 4.58%. This is the rate at which banks lend each other money and I have not seen any bank offering a savings rate ...
- 394
5
votes
How are the banks behind high yield savings accounts able to pay such high rates?
The majority of high yield savings accounts are tied to a specific lender with a specific type of investment.
For example, American Express's HYSA will be used to fund American Express credit card ...
- 3,272
3
votes
Are high yield savings accounts as secure as money market checking accounts?
Assuming US: If your account is insured by the FDIC, it's as safe as any other account.
- 42.9k
2
votes
Why can't I find an online savings account that supports revocable trust?
I think the answer is that the profit margins on those online accounts are very slim, so they limit customers to the easiest to service.
The suggestion to open an online brokerage account is good. ...
- 149
2
votes
Are high yield savings accounts as secure as money market checking accounts?
Generally speaking, the safest money markets and any savings account are equally safe up to $250,000. Beyond that, the safest money markets are generally safer.
Each can be safer, depending on the ...
- 129
1
vote
What's up with banks closing down their high yield savings accounts and incentives lately?
Banks compete for deposits and smaller banks that aren't household names need to incentivize depositors to open an account there rather than one of the big national chains or putting their savings ...
- 8,468
1
vote
Transfer over $10k
I've moved amounts larger than that between my investments and my bank account, or between accounts I have in two different banks, on a fairly regular basis over the years with no problems. The bank ...
- 42.9k
1
vote
To park cash and have no risk of losing principal, how can I achieve in my IRA or brokerage a counterpart of a bank-like savings account?
They're called brokerage bank/insured sweep or bank deposit programs. The brokerage takes your cash and puts it into an insured bank and takes a cut of the interest. Simple as that. Some programs are ...
- 3,272
1
vote
Why can't I find an online savings account that supports revocable trust?
But why won't these only online banks accept a trust?
They will. I know for a fact because my trust has such an account. Call their customer service and ask for instructions on how to open it. ...
- 166k
1
vote
pending recession: keep money in 401k or savings account?
Actually, if you are in the phase where you are drawing down the 401k (and/or other investments), it's worth considering keeping six months to a year's worth living expenses in cash or cash equialent. ...
- 42.9k
Only top scored, non community-wiki answers of a minimum length are eligible