Friday, February 13, 2009

Shuffling cash around due to shifting interest rates

All good things sometimes come to an end. I was earning 3.25% APY in my Sovereign Bank money market account, but that rate has now fallen to 1.75% APY. Similarly, my Capital One Direct Banking online savings account fell to 2.50% APY. My GMAC Bank online savings account has fallen to 2.75% APY. Even my new DollarSavingsDirect account has fallen to 3.05% APY, but at least that is still the top rate for non-CD bank accounts.

I am no longer a net saver, but have become a net spender since I do not have any current professional income. I am looking for some new work, but given the nature of the current economic environment, I am not expecting any new work for at least the next two months, if not a lot longer.

I transferred cash from my Sovereign Bank account to my main Fidelity account which I use as my "checking" account sufficient to cover all of my anticipated expenses for the next two months. That account earns a very tiny interest rate, but at least I will not have to do any shuffling of cash to cover expenses for another two months.

I also transferred a big chunk of my Sovereign Bank cash to my new DollarSavingsDirect account where it earns that top 3.05% APY rate.

At the rate things are going [sorry for that pun!], the return on my cash from the much lower rates that we will be seeing in another month or two will probably quickly negate the value of spending any of my time searching and shuffling to maximize income on my cash.

My main wish is that Fidelity would offer a decent rate so that I would not need to do all of this shuffling of simple cash to begin with.

-- Jack Krupansky


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