Are high-yield online savings accounts BS?

Things that don't belong anywhere else. (Check first).

Moderators: Moderators General, Prelates, Magistrates

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Are high-yield online savings accounts BS?

Postby King Author » Mon Oct 14, 2013 5:37 pm UTC

Even the highest "high-yield" online savings accounts typically offer below 1% interest. So, if I put $10,000 in one of those things, I'd optimistically get $100 a year.

WTF is that supposed to do? Nab me one half of a free trip to the grocery store per year?

Granted, brick-and-mortar banks offer like, 0.15% APY, but still.

Reminds me of Futurama. "My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

Is there basically no value whatsoever to having money in a bank? Other than, obviously, a small emergency fund (since anything you have invested could literally disappear overnight)?
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

jasc15
Posts: 44
Joined: Fri Jan 21, 2011 7:53 pm UTC

Re: Are high-yield online savings accounts BS?

Postby jasc15 » Mon Oct 14, 2013 5:59 pm UTC

The flippant quote from Futurama is basically right. It is a good place to keep emergency cash, but not if you want to grow your money. You are paying for the liquidity and low risk by accepting low yield.

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Re: Are high-yield online savings accounts BS?

Postby King Author » Mon Oct 14, 2013 10:34 pm UTC

Didn't brick-and-mortar banks used to offer huge APYs a long time ago? Like 10% or more? Why'd that change so drastically? Is it just plain greed? Well, it absolutely is -- we've all heard the 90% of wealth in the hands of 10% of the population quote. The question, I suppose, is if there's more to that.

I dunno, it seems kinda...unethical, to offer such low APYs. The top dogs at banks make flazillions of dollars a year, they can afford to offer at least like, 4 or 5% APYs (not to mention probably pay lower-level employees more). People would put more money in banks, make more money and spend more money if they got decent APYs.

*sigh*

There's days when capitalism just seems indefensible.
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

jasc15
Posts: 44
Joined: Fri Jan 21, 2011 7:53 pm UTC

Re: Are high-yield online savings accounts BS?

Postby jasc15 » Tue Oct 15, 2013 12:08 am UTC

Maybe banks offered 10% on deposits when borrowing rates were 18-20%, but a 30 year mortgage is <4% today, and inflation is quite low, historically. They can't pay higher rates than they charge borrowers. You can't just jump to "gahh, greedy capitalist bankers" with this issue. Not that there aren't other good reasons.

User avatar
ucim
Posts: 6890
Joined: Fri Sep 28, 2012 3:23 pm UTC
Location: The One True Thread

Re: Are high-yield online savings accounts BS?

Postby ucim » Tue Oct 15, 2013 2:13 am UTC

You pays your money, you takes your chances. When you invest in stocks, you take the risk that the company doesn't do well, or even doesn't survive, and you lose your money. (This risk is parceled out bit by bit every time stock trades hands and a new price is posted). Companies do make mistakes, and they do it with your money. There is no insurance (unless you cover yourself with options). The stock goes down, you've lost money.

Banks, on the other hand, offer fixed yield guaranteed-principal products that are backed by the Full Faith and Credit of the United States of America.

Oh crap, never mind. :)

Jose
Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Heartfelt thanks from addams and from me - you really made a difference.

User avatar
Adacore
Posts: 2755
Joined: Fri Feb 20, 2009 12:35 pm UTC
Location: 한국 창원

Re: Are high-yield online savings accounts BS?

Postby Adacore » Tue Oct 15, 2013 2:19 am UTC

I don't know how global this is, but generally UK savings account rates are around half a percentage point above the Bank of England base rate*. At the moment the base rate is 0.5%, and savings accounts aren't offering much more than 1%. This is because, as others have said, bank savings accounts are very low risk. They're not quite as low risk as government debt, hence the higher interest rate, but the risk is still practically zero, so interest rates are very low (and often below inflation, so you're losing money in real terms) compared to almost any other form of investment. And if the base rate increases, so will the savings account rates.

*You can sometimes get a little more with limited-term offers, on which the bank loses money but is working on the basis that most people change banks very rarely, so once the offer expires the customer will continue to use that bank, and the bank can try to sell the customer some more profitable products.

User avatar
fizzgig
Posts: 218
Joined: Tue May 18, 2010 10:35 am UTC
Location: Canberra, Australia

Re: Are high-yield online savings accounts BS?

Postby fizzgig » Tue Oct 15, 2013 7:04 am UTC

Hm. My (Australian) online savings account advertises 4.31% pa. Is APY something different or are interest rates just that much higher here? What are home loan rates like in the UK?

User avatar
Adacore
Posts: 2755
Joined: Fri Feb 20, 2009 12:35 pm UTC
Location: 한국 창원

Re: Are high-yield online savings accounts BS?

Postby Adacore » Tue Oct 15, 2013 7:11 am UTC

For the best possible mortgages these days, rates are a little under 4% (with a lower introductory fixed rate in the 1-2% range for 1-2 years). That's assuming you're asking for 60% Loan-to-Value; the rate would be higher for a larger loan.

User avatar
Thesh
Made to Fuck Dinosaurs
Posts: 6598
Joined: Tue Jan 12, 2010 1:55 am UTC
Location: Colorado

Re: Are high-yield online savings accounts BS?

Postby Thesh » Tue Oct 15, 2013 8:42 am UTC

Adacore wrote:I don't know how global this is, but generally UK savings account rates are around half a percentage point above the Bank of England base rate*. At the moment the base rate is 0.5%, and savings accounts aren't offering much more than 1%. This is because, as others have said, bank savings accounts are very low risk. They're not quite as low risk as government debt, hence the higher interest rate, but the risk is still practically zero, so interest rates are very low (and often below inflation, so you're losing money in real terms) compared to almost any other form of investment. And if the base rate increases, so will the savings account rates.

*You can sometimes get a little more with limited-term offers, on which the bank loses money but is working on the basis that most people change banks very rarely, so once the offer expires the customer will continue to use that bank, and the bank can try to sell the customer some more profitable products.


Here in the US, you might be able to find a regular savings account with 0.1% APY; mine is currently 0.05% APY (although the higher paying accounts would probably charge me a $25 end of year fee for not meeting the minimum deposit, since I'm so broke).
Summum ius, summa iniuria.

User avatar
Diadem
Posts: 5654
Joined: Wed Jun 11, 2008 11:03 am UTC
Location: The Netherlands

Re: Are high-yield online savings accounts BS?

Postby Diadem » Tue Oct 15, 2013 9:40 am UTC

0.05% interest? At that point, why bother at all? Might as well cut down on overhead for all involved and leave out interest completely.
It's one of those irregular verbs, isn't it? I have an independent mind, you are an eccentric, he is round the twist
- Bernard Woolley in Yes, Prime Minister

Wooloomooloo
Posts: 129
Joined: Wed Mar 16, 2011 8:05 am UTC

Re: Are high-yield online savings accounts BS?

Postby Wooloomooloo » Tue Oct 15, 2013 12:02 pm UTC

Interestingly, this works in a remarcably similar fashion even for a ~5% interest - where such a thing exists: like in Eastern Europe where I live (yes that's actually a current number here). Obviously, for 10000 units I'd get 500 units bonus per year instead of 100, but the thing is that around here 10000 is rather large number (to obtain / save up in the first place), while 500 is a remarcably meager one (quickly spent on just about anything once you start spending it) - so everything is back to square one, at the earlier conclusion that it's utterly pointless to go for it at all. Obviously, interest rates for loans and inflation in general are rather higher than mentionen as well...

User avatar
JBJ
Posts: 1263
Joined: Fri Dec 12, 2008 6:20 pm UTC
Location: a point or extent in space

Re: Are high-yield online savings accounts BS?

Postby JBJ » Tue Oct 15, 2013 1:07 pm UTC

fizzgig wrote:Is APY something different or are interest rates just that much higher here?

APR is "Annual Percentage Rate", APY is "Annual Percentage Yield". They go together and APY will always be a smidge higher than APR.
APY is calculated as ei-1, where e = 2.71828 and i = annual interest rate expressed as decimal. So if you have a 4.31% APR, your APY is 4.404%

This is because banks don't compound interest just once a year. It's compounded either daily or continuously. If you put $1000 in a savings account with a 4.31% interest rate and didn't touch it for a year, you would end up with $1,044.04 instead of $1,043.10, because you are making around 11 cents per day and the interest rate gets applied to the new balance each day instead of the original principle.
So, you sacked the cocky khaki Kicky Sack sock plucker?
The second cocky khaki Kicky Sack sock plucker I've sacked since the sixth sitting sheet slitter got sick.

User avatar
eran_rathan
Mostly Wrong
Posts: 1846
Joined: Fri Apr 09, 2010 2:36 pm UTC
Location: in your ceiling, judging you

Re: Are high-yield online savings accounts BS?

Postby eran_rathan » Tue Oct 15, 2013 1:16 pm UTC

King Author wrote:Didn't brick-and-mortar banks used to offer huge APYs a long time ago? Like 10% or more? Why'd that change so drastically? Is it just plain greed? Well, it absolutely is -- we've all heard the 90% of wealth in the hands of 10% of the population quote. The question, I suppose, is if there's more to that.

I dunno, it seems kinda...unethical, to offer such low APYs. The top dogs at banks make flazillions of dollars a year, they can afford to offer at least like, 4 or 5% APYs (not to mention probably pay lower-level employees more). People would put more money in banks, make more money and spend more money if they got decent APYs.

*sigh*

There's days when capitalism just seems indefensible.


I get about 3% APY at my credit union. Restrictions: Have to have a minimum of $2000 balance each month, have to use your debit card at least ten times a month, and must have direct deposit.

If you don't, APY is about 1%.
"Does this smell like chloroform to you?"
"Google tells me you are not unique. You are, however, wrong."
nɒʜƚɒɿ_nɒɿɘ

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Re: Are high-yield online savings accounts BS?

Postby King Author » Tue Oct 15, 2013 1:17 pm UTC

I think I may've misspoke -- you're all talking about mortgages now? I don't know anything about that. I'm talking about opening a regular bank account, like to deposit your paychecks in and spend from.

jasc15 wrote:Maybe banks offered 10% on deposits when borrowing rates were 18-20%, but a 30 year mortgage is <4% today, and inflation is quite low, historically. They can't pay higher rates than they charge borrowers. You can't just jump to "gahh, greedy capitalist bankers" with this issue. Not that there aren't other good reasons.

Given the recent recession, I think I absolutely can jump to "greedy capitalist bankers." They make billions of dollars off me and everyone else -- they can afford to offer better APYs for most peoples everyday bank accounts.

Thesh wrote:
Adacore wrote:I don't know how global this is, but generally UK savings account rates are around half a percentage point above the Bank of England base rate*. At the moment the base rate is 0.5%, and savings accounts aren't offering much more than 1%. This is because, as others have said, bank savings accounts are very low risk. They're not quite as low risk as government debt, hence the higher interest rate, but the risk is still practically zero, so interest rates are very low (and often below inflation, so you're losing money in real terms) compared to almost any other form of investment. And if the base rate increases, so will the savings account rates.

*You can sometimes get a little more with limited-term offers, on which the bank loses money but is working on the basis that most people change banks very rarely, so once the offer expires the customer will continue to use that bank, and the bank can try to sell the customer some more profitable products.


Here in the US, you might be able to find a regular savings account with 0.1% APY; mine is currently 0.05% APY (although the higher paying accounts would probably charge me a $25 end of year fee for not meeting the minimum deposit, since I'm so broke).

Can't say "greedy capitalist bankers," huh? It's absolutely criminal how they dick people like this.

JBJ wrote:
fizzgig wrote:Is APY something different or are interest rates just that much higher here?

APR is "Annual Percentage Rate", APY is "Annual Percentage Yield". They go together and APY will always be a smidge higher than APR.
APY is calculated as ei-1, where e = 2.71828 and i = annual interest rate expressed as decimal. So if you have a 4.31% APR, your APY is 4.404%

This is because banks don't compound interest just once a year. It's compounded either daily or continuously. If you put $1000 in a savings account with a 4.31% interest rate and didn't touch it for a year, you would end up with $1,044.04 instead of $1,043.10, because you are making around 11 cents per day and the interest rate gets applied to the new balance each day instead of the original principle.

You gotta watch out for that -- I'm looking at HYSAs and a lot of them don't compound on your interest at all -- if you put $100 in a 3% APY account and leave it there for ten years, you'll have earned $30 dollars -- they only give you interest from the $100, not the amount they're paying you.

F everyone's I, I'm looking at this...
http://www.altoonabank.com/rates.html

...and things like this...
http://www.nerdwallet.com/blog/banking/ ... -accounts/
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

Chen
Posts: 5580
Joined: Fri Jul 25, 2008 6:53 pm UTC
Location: Montreal

Re: Are high-yield online savings accounts BS?

Postby Chen » Tue Oct 15, 2013 1:37 pm UTC

King Author wrote:
jasc15 wrote:Maybe banks offered 10% on deposits when borrowing rates were 18-20%, but a 30 year mortgage is <4% today, and inflation is quite low, historically. They can't pay higher rates than they charge borrowers. You can't just jump to "gahh, greedy capitalist bankers" with this issue. Not that there aren't other good reasons.

Given the recent recession, I think I absolutely can jump to "greedy capitalist bankers." They make billions of dollars off me and everyone else -- they can afford to offer better APYs for most peoples everyday bank accounts.


How can they offer a better rate than the rate they let you borrow at? My mortgage (for example) is something like 3.7%. If I could get 4% on money in my bank account I could borrow money via the mortgage and then dump it all into the account. And repeat. How would that make any sense?

As to the greedy capitalist bankers part, just don't use banks if you don't like the return. I mean do you call people greedy capitalist software designers when you have to pay for their products? Or greedy capitalist fast food workers when they charge you $0.99 for soda that cost them less than a penny to make?

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Re: Are high-yield online savings accounts BS?

Postby King Author » Tue Oct 15, 2013 3:04 pm UTC

Chen wrote:
King Author wrote:
jasc15 wrote:Maybe banks offered 10% on deposits when borrowing rates were 18-20%, but a 30 year mortgage is <4% today, and inflation is quite low, historically. They can't pay higher rates than they charge borrowers. You can't just jump to "gahh, greedy capitalist bankers" with this issue. Not that there aren't other good reasons.

Given the recent recession, I think I absolutely can jump to "greedy capitalist bankers." They make billions of dollars off me and everyone else -- they can afford to offer better APYs for most peoples everyday bank accounts.


How can they offer a better rate than the rate they let you borrow at? My mortgage (for example) is something like 3.7%. If I could get 4% on money in my bank account I could borrow money via the mortgage and then dump it all into the account. And repeat. How would that make any sense?

"If you could get 4% on the money in your bank account." That's a pretty big effing "if!" The U.S. nationwide average APY of brick-and-mortar banks is 0.26%! They're making not just a killing, but a genocide from your 3.7% mortgage.

Plus, who said a bank has to offer house loans and stuff? A bank could essentially work like a crowd-sourced investment banker -- they use the money people put in their bank to make investments in stocks and stuff (i.e. things where they don't have to lend out money). Since lots of people would be putting little bits of money into this bank, the bank would have lots of money to invest with. They could make a killing if they're anywhere as good as the average personal investment banker (just google how much those people make), and reward their customers with massive APYs.

Chen wrote:As to the greedy capitalist bankers part, just don't use banks if you don't like the return. I mean do you call people greedy capitalist software designers when you have to pay for their products? Or greedy capitalist fast food workers when they charge you $0.99 for soda that cost them less than a penny to make?

That's a false analogy and you know it. First of all, a software designer makes like $75k a year -- it's his corporate overhead that makes billions and billions off of his hard work. So the designer isn't a money-grubbing bastard, but his corporate slavers sure are. Same with the fast food worker -- the worker doesn't make all that profit, the corporate overhead does. And yes, I would call it greedy, capatalism at its worst, if it cost McDonalds a fraction of a penny to make the drinks they sell for $0.99.

In fact, many people agree with me, which is why the unethically low wages McDonalds pays its workers is such a contentous issue right now.

A few hundred thousand people make billions - trillions all told - while the rest of us wallow in squalor, not because they contribute more to society, not because they have more merit or talent, not because they work harder, but because they're deceitful, manipulative, corrupt (just read up on special interest groups and lobbyists sometime) and use underhanded, borderline-legal tactics to keep the poor poor as they get richer. And we sit back and take it. We accept it, using justifications like you're spouting right now.

I mean, to be fair, it's not capatalism's fault per se. To use McDonalds as an example, they could pay their cashiers and cooks a minimum of $20 an hour easy. It wouldn't put the company at risk, they have more than enough money to pay like that. It's just that, right now, all that pay goes to corporate, not the low-level workers.

http://newsone.com/2665823/jay-z-employees-bonuses/

That's how the world should work.
(Oh, and surprise surprise -- the one guy doing it right is a black guy who grew up rough and knows the value of a dollar.)
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

User avatar
SecondTalon
SexyTalon
Posts: 26529
Joined: Sat May 05, 2007 2:10 pm UTC
Location: Louisville, Kentucky, USA, Mars. HA!
Contact:

Re: Are high-yield online savings accounts BS?

Postby SecondTalon » Tue Oct 15, 2013 3:10 pm UTC

King Author wrote:I think I may've misspoke -- you're all talking about mortgages now? I don't know anything about that. I'm talking about opening a regular bank account, like to deposit your paychecks in and spend from.

You realize the two are related, yes? Not mortgages specifically, but all loaning a bank does (of which the Big Loans most people think of would be mortgages, but plenty of business loans too) is what they use to pay out to their depositors. That all the loaning is what is paying the interest on your deposits. That if the average mortgage is at 8% or less, the average savings account is going to be 1% or less because otherwise the bank won't be able to keep the lights on if they pay out any higher.

... well, keep the lights on AND make their shareholders happy. Hence the rise of the Credit Unions, which are a bit more interesting...

At any rate, I'm sure a fair amount of this has something to do with all the de-regulation that happened in the mid 90s that was a fair part of the banking crash in the late 2000s. I'm sure you remember that one.
heuristically_alone wrote:I want to write a DnD campaign and play it by myself and DM it myself.
heuristically_alone wrote:I have been informed that this is called writing a book.

User avatar
eran_rathan
Mostly Wrong
Posts: 1846
Joined: Fri Apr 09, 2010 2:36 pm UTC
Location: in your ceiling, judging you

Re: Are high-yield online savings accounts BS?

Postby eran_rathan » Tue Oct 15, 2013 3:23 pm UTC

King Author wrote:Plus, who said a bank has to offer house loans and stuff? A bank could essentially work like a crowd-sourced investment banker -- they use the money people put in their bank to make investments in stocks and stuff (i.e. things where they don't have to lend out money). Since lots of people would be putting little bits of money into this bank, the bank would have lots of money to invest with. They could make a killing if they're anywhere as good as the average personal investment banker (just google how much those people make), and reward their customers with massive APYs.


They are called credit unions.
"Does this smell like chloroform to you?"
"Google tells me you are not unique. You are, however, wrong."
nɒʜƚɒɿ_nɒɿɘ

User avatar
Zassounotsukushi
Posts: 76
Joined: Wed Oct 26, 2011 8:38 pm UTC
Contact:

Re: Are high-yield online savings accounts BS?

Postby Zassounotsukushi » Tue Oct 15, 2013 7:42 pm UTC

ucim wrote:You pays your money, you takes your chances. When you invest in stocks, you take the risk that the company doesn't do well, or even doesn't survive, and you lose your money. (This risk is parceled out bit by bit every time stock trades hands and a new price is posted). Companies do make mistakes, and they do it with your money. There is no insurance (unless you cover yourself with options). The stock goes down, you've lost money.

Banks, on the other hand, offer fixed yield guaranteed-principal products that are backed by the Full Faith and Credit of the United States of America.


The second sentence here is much closer to the truth than the first one. Currently rates are at a certain level in the US because of federal policy.

http://en.wikipedia.org/wiki/Federal_funds_rate

This number, the federal funds rate, is the rate banks can borrow at from the central bank and associated organizations. Not all banks can do this, but it sets the market price, and the number is basically determined by the treasury. The decisions of Timothy Geithner basically resulted in your account paying what it does. That sounds somewhat absurd... and it's totally correct.

There is much ado about the issue of the federal funds rate hovering around zero. There's a word for this - ZIRP.

http://en.wikipedia.org/wiki/Zero_interest-rate_policy

The reasons they set this rate is up for discussion (and boy, is it discussed), but the reason banks pay <1% are not surprising. If a bank can get a loan from our government at a lower rate, then obviously they won't offer you a higher rate.

And yet, while this seems like an obvious "Tea Party" issue, you don't often see signs protesting the actions of the Fed. That's because what the Fed actually does is complicated. Even if you make a sign, you're likely to just not understand their organization or the complicated asset flows and obligations which constitute the Fed and the banks that commune with them. Note: I wish that I had made up the word "commune" in this context, but it's actually used quite seriously.

User avatar
SecondTalon
SexyTalon
Posts: 26529
Joined: Sat May 05, 2007 2:10 pm UTC
Location: Louisville, Kentucky, USA, Mars. HA!
Contact:

Re: Are high-yield online savings accounts BS?

Postby SecondTalon » Wed Oct 16, 2013 2:38 am UTC

Shit, another thing mentioned in some NPR thing on the way home I'd forgotten about.... Banks are (presumably) safe investments, in that you will get a return every single time.

Safe investments don't pay shit. One of the benefits over a more volatile investment with a much higher yield is that safety. The FDIC insures your shit to.. what, $250,000 now? No matter what, you'll get your money up to that amount. That's why they can pay shit for interest and still get takers.
heuristically_alone wrote:I want to write a DnD campaign and play it by myself and DM it myself.
heuristically_alone wrote:I have been informed that this is called writing a book.

User avatar
Jave D
chavey-dee
Posts: 1042
Joined: Mon Oct 18, 2010 4:41 pm UTC

Re: Are high-yield online savings accounts BS?

Postby Jave D » Wed Oct 16, 2013 6:34 pm UTC

I sometimes put money in my 0.05% APY savings account.

I don't know why I bother. I think I might have almost one month's rent stored up after a year of working. Add the interest, and that's almost one months' rent PLUS fifteen cents. Just a few thousand years of minimum wage work and I could retire.

Living the American Dream, baby.

User avatar
DaBigCheez
Posts: 838
Joined: Tue Jan 04, 2011 8:03 am UTC

Re: Are high-yield online savings accounts BS?

Postby DaBigCheez » Wed Oct 16, 2013 7:50 pm UTC

Well, if you disregard inflation, at least. Which I'm pretty sure high-yield savings accounts still don't beat in general, but hey, at least it's something more than you'd get by keeping your money in a sock.
existential_elevator wrote:It's like a jigsaw puzzle of Hitler pissing on Mother Theresa. No individual piece is offensive, but together...

If you think hot women have it easy because everyone wants to have sex at them, you're both wrong and also the reason you're wrong.

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Re: Are high-yield online savings accounts BS?

Postby King Author » Wed Oct 16, 2013 9:35 pm UTC

Just for the sake of it, let me say this -- I'm not in financial straits. I'm actually perfectly comfortable. It's the principle of the matter that has me up in arms.

SecondTalon wrote:
King Author wrote:I think I may've misspoke -- you're all talking about mortgages now? I don't know anything about that. I'm talking about opening a regular bank account, like to deposit your paychecks in and spend from.

You realize the two are related, yes? Not mortgages specifically, but all loaning a bank does (of which the Big Loans most people think of would be mortgages, but plenty of business loans too) is what they use to pay out to their depositors. That all the loaning is what is paying the interest on your deposits. That if the average mortgage is at 8% or less, the average savings account is going to be 1% or less because otherwise the bank won't be able to keep the lights on if they pay out any higher.

... well, keep the lights on AND make their shareholders happy. Hence the rise of the Credit Unions, which are a bit more interesting...

At any rate, I'm sure a fair amount of this has something to do with all the de-regulation that happened in the mid 90s that was a fair part of the banking crash in the late 2000s. I'm sure you remember that one.

I don't believe that for a second. They'd be unable to offer six- and seven-figure paychecks to their top dogs, maybe, but not go out of business. The people with all the money and power in the world have done a damn good job convincing us that this is the way it must be, or it all comes tumbling down, but I don't believe it.

eran_rathan wrote:
King Author wrote:Plus, who said a bank has to offer house loans and stuff? A bank could essentially work like a crowd-sourced investment banker -- they use the money people put in their bank to make investments in stocks and stuff (i.e. things where they don't have to lend out money). Since lots of people would be putting little bits of money into this bank, the bank would have lots of money to invest with. They could make a killing if they're anywhere as good as the average personal investment banker (just google how much those people make), and reward their customers with massive APYs.


They are called credit unions.

Oh. That's pretty cool.

*googles local CUs*

Holy shiz -- those are way higher APYs than banks. Not as high as the high-yield savings account I'm looking at, but still.

Is there some kinda catch? How can CUs offer way higher APYs than banks and still stay in business? Is it the thing I was talking about -- being fair and even-handed with how the wealth gets spread around? Certainly, whenever I've ever heard about the wealthiest people in the world, I often hear the names of bankers, never heard of one of them being the head of a CU.

Zassounotsukushi wrote:
ucim wrote:You pays your money, you takes your chances. When you invest in stocks, you take the risk that the company doesn't do well, or even doesn't survive, and you lose your money. (This risk is parceled out bit by bit every time stock trades hands and a new price is posted). Companies do make mistakes, and they do it with your money. There is no insurance (unless you cover yourself with options). The stock goes down, you've lost money.

Banks, on the other hand, offer fixed yield guaranteed-principal products that are backed by the Full Faith and Credit of the United States of America.


The second sentence here is much closer to the truth than the first one. Currently rates are at a certain level in the US because of federal policy.

http://en.wikipedia.org/wiki/Federal_funds_rate

This number, the federal funds rate, is the rate banks can borrow at from the central bank and associated organizations. Not all banks can do this, but it sets the market price, and the number is basically determined by the treasury. The decisions of Timothy Geithner basically resulted in your account paying what it does. That sounds somewhat absurd... and it's totally correct.

There is much ado about the issue of the federal funds rate hovering around zero. There's a word for this - ZIRP.

http://en.wikipedia.org/wiki/Zero_interest-rate_policy

The reasons they set this rate is up for discussion (and boy, is it discussed), but the reason banks pay <1% are not surprising. If a bank can get a loan from our government at a lower rate, then obviously they won't offer you a higher rate.

And yet, while this seems like an obvious "Tea Party" issue, you don't often see signs protesting the actions of the Fed. That's because what the Fed actually does is complicated. Even if you make a sign, you're likely to just not understand their organization or the complicated asset flows and obligations which constitute the Fed and the banks that commune with them. Note: I wish that I had made up the word "commune" in this context, but it's actually used quite seriously.

If it's "impossible" for banks to offer better APYs, how come CUs do? And what about HYSAs? Clearly, it's not "impossible" to offer 2~3% APYs if CUs and HYSAs are doing it.

Also, everyone keeps saying "oh, it's impossible for banks to offer better APYs, they'd shut down, you're lucky to get your 1%." Then riddle me this -- how is it that bankers make billions of dollars? Where's that money come from?

It's just like in the private sector in general -- everyone at the bottom scrounges, everyone at the top enjoys preposterous, humanly-unnecessary amounts of wealth. "I do all the work, and he gets paid for it."

SecondTalon wrote:Shit, another thing mentioned in some NPR thing on the way home I'd forgotten about.... Banks are (presumably) safe investments, in that you will get a return every single time.

Safe investments don't pay shit. One of the benefits over a more volatile investment with a much higher yield is that safety. The FDIC insures your shit to.. what, $250,000 now? No matter what, you'll get your money up to that amount. That's why they can pay shit for interest and still get takers.

HYSAs and CUs are typically FDIC insured, yet they offer much higher APYs than banks. Explain that.

Jave D wrote:I sometimes put money in my 0.05% APY savings account.

I don't know why I bother. I think I might have almost one month's rent stored up after a year of working. Add the interest, and that's almost one months' rent PLUS fifteen cents. Just a few thousand years of minimum wage work and I could retire.

Living the American Dream, baby.

Dude, get your money out of there! Just google "high yield savings <where you live>"

I'm about to start up a 2.75% APY, FDIC-insured savings account.
Granted, it's debit, not credit, and you have to make ten purchases a month, but still.

DaBigCheez wrote:Well, if you disregard inflation, at least. Which I'm pretty sure high-yield savings accounts still don't beat in general, but hey, at least it's something more than you'd get by keeping your money in a sock.

Well my takeaway from the past 72 hours of reading up on money-related stuff for the first time in my life is...

King Author's How-To-Get-Wealthy List
1) Create an "emergency fund" of ~$1000 in a high-yield savings account. Just in case. And it's slowly building wealth anyway, so that's an added bonus.

2) Have some kind of "working money" account that you make your monthly expenditures out of. (You can work out of the HYSA if you're disciplined, but if you don't trust yourself not to dip into the $1000, you'll probably wanna open a separate account -- most banks/CUs/whatever will even let you link the two.) Make sure those "monthly expenditures" are reasonable and budgeted. Follow that budget strictly.

3) Get a personal investment banker and give them everything else. You'd be a fool to try to play the stock market or whatevs yourself -- let somebody else do it; the cut they take will be more than offset by their expertise.

By the way, to make sure I've got it right -- a personal investment banker is a guy or gal you give money to, and they use it to play the stock market or whatever to build your money up, taking a cut for themselves, right? That's how most rich people get rich, isn't it?

Naturally, your investments could fail. That's why you don't invest out of the money you live off of. If you're living "paycheck to paycheck" (which few people literally are -- you don't need cable and internet and a 4G smartphone and an Xbox, which everyone I've ever known who's claimed to be living paycheck-to-paycheck has had), you can still probably afford to put two or three dollars a month into a no-minimum-amount HYSA. It'll take a few years, but you'll eventually build up enough to give a personal investment banker a whirl. Which, again, might tank, but at least you'll've had a chance.
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

User avatar
Jave D
chavey-dee
Posts: 1042
Joined: Mon Oct 18, 2010 4:41 pm UTC

Re: Are high-yield online savings accounts BS?

Postby Jave D » Wed Oct 16, 2013 10:11 pm UTC

King Author wrote:Dude, get your money out of there! Just google "high yield savings <where you live>"

I'm about to start up a 2.75% APY, FDIC-insured savings account.
Granted, it's debit, not credit, and you have to make ten purchases a month, but still.


The "high" yield savings would mean that after a year I might have a couple dollars instead of less than a dollar. Either way it is literally more efficient that I simply pick up spare change wherever I find it and keep my money in my mattress. The best part is sometimes when going to my mattress I find a few coins hidden in the carpet. HIGH YIELD SAVINGS EVENT!

If you're living "paycheck to paycheck" (which few people literally are -- you don't need cable and internet and a 4G smartphone and an Xbox, which everyone I've ever known who's claimed to be living paycheck-to-paycheck has had)


You don't know enough people.

User avatar
fizzgig
Posts: 218
Joined: Tue May 18, 2010 10:35 am UTC
Location: Canberra, Australia

Re: Are high-yield online savings accounts BS?

Postby fizzgig » Thu Oct 17, 2013 9:00 am UTC

SecondTalon wrote:That if the average mortgage is at 8% or less, the average savings account is going to be 1% or less because otherwise the bank won't be able to keep the lights on if they pay out any higher.

... well, keep the lights on AND make their shareholders happy. Hence the rise of the Credit Unions, which are a bit more interesting...



But that doesn't seem right either. Somehow Australian banks offer mortgages around 5% while offering savings accounts between 2.5 and 4%. And I'd find it hard to believe that Australian bankers somehow have lower costs than everywhere else given that everything is more expensive here. (Unless, of course, you have some evidence to the contrary. That would make it easier to believe). Although it's also possible that Australian banks aren't keeping their shareholders happy (I'm pretty sure they're keeping their lights on).

User avatar
eran_rathan
Mostly Wrong
Posts: 1846
Joined: Fri Apr 09, 2010 2:36 pm UTC
Location: in your ceiling, judging you

Re: Are high-yield online savings accounts BS?

Postby eran_rathan » Thu Oct 17, 2013 12:04 pm UTC

King Author wrote:
eran_rathan wrote:
King Author wrote:Plus, who said a bank has to offer house loans and stuff? A bank could essentially work like a crowd-sourced investment banker -- they use the money people put in their bank to make investments in stocks and stuff (i.e. things where they don't have to lend out money). Since lots of people would be putting little bits of money into this bank, the bank would have lots of money to invest with. They could make a killing if they're anywhere as good as the average personal investment banker (just google how much those people make), and reward their customers with massive APYs.


They are called credit unions.

Oh. That's pretty cool.

*googles local CUs*

Holy shiz -- those are way higher APYs than banks. Not as high as the high-yield savings account I'm looking at, but still.

Is there some kinda catch? How can CUs offer way higher APYs than banks and still stay in business? Is it the thing I was talking about -- being fair and even-handed with how the wealth gets spread around? Certainly, whenever I've ever heard about the wealthiest people in the world, I often hear the names of bankers, never heard of one of them being the head of a CU.


That's because the Board for a Credit Union is elected from the members of the credit union. It is also generally an unpaid or moderately compensated position (our board are volunteers, and they get I think $2500/year - basically enough to cover gas for meetings).


SexyTalon wrote:Shit, another thing mentioned in some NPR thing on the way home I'd forgotten about.... Banks are (presumably) safe investments, in that you will get a return every single time.

Safe investments don't pay shit. One of the benefits over a more volatile investment with a much higher yield is that safety. The FDIC insures your shit to.. what, $250,000 now? No matter what, you'll get your money up to that amount. That's why they can pay shit for interest and still get takers.

HYSAs and CUs are typically FDIC insured, yet they offer much higher APYs than banks. Explain that.


Significantly less overhead, not-for-profit status, and being tax-exempt.

Oh, and the shareholders are those with deposits - so basically, the dividends they'd normally have to show investors are instead returned to the depositors.

Also, many are insured through NCUA, not FDIC.
"Does this smell like chloroform to you?"
"Google tells me you are not unique. You are, however, wrong."
nɒʜƚɒɿ_nɒɿɘ

Chen
Posts: 5580
Joined: Fri Jul 25, 2008 6:53 pm UTC
Location: Montreal

Re: Are high-yield online savings accounts BS?

Postby Chen » Thu Oct 17, 2013 12:09 pm UTC

King Author wrote:I don't believe that for a second. They'd be unable to offer six- and seven-figure paychecks to their top dogs, maybe, but not go out of business. The people with all the money and power in the world have done a damn good job convincing us that this is the way it must be, or it all comes tumbling down, but I don't believe it.


Looking at Royal bank of Canada, their current interest rates on savings accounts and the like are extremely low (1.1% is their high yield, their highest other account looks to be 0.35% if you have over 250k in the account). So lets say they triple those values (3.3% on high yield and a little ove 1% on their best other accounts). The high yield one isn't bad, but the others are still laughably low. Now lets look at Royal Bank of Canada's 2012 Financial statements (http://annualreports.rbc.com/ar2012/PDF ... _notes.pdf), Interest Expenses on deposits totaled around $6 billion. Their net income was $7.5 billion. So tripling their rates and having them still be absurdly low would put them WELL into the red (somewhere to the tune of -5 billion). Their total payroll expenses appear to be around $5 billion (doesn't include employee benefits). With numbers that large, CEO pay (~12.5 million in 2012) is pretty negligible.

User avatar
gmalivuk
GNU Terry Pratchett
Posts: 26824
Joined: Wed Feb 28, 2007 6:02 pm UTC
Location: Here and There
Contact:

Re: Are high-yield online savings accounts BS?

Postby gmalivuk » Thu Oct 17, 2013 7:48 pm UTC

JBJ wrote:
fizzgig wrote:Is APY something different or are interest rates just that much higher here?

APR is "Annual Percentage Rate", APY is "Annual Percentage Yield". They go together and APY will always be a smidge higher than APR.
APY is calculated as ei-1, where e = 2.71828 and i = annual interest rate expressed as decimal. So if you have a 4.31% APR, your APY is 4.404%

This is because banks don't compound interest just once a year. It's compounded either daily or continuously. If you put $1000 in a savings account with a 4.31% interest rate and didn't touch it for a year, you would end up with $1,044.04 instead of $1,043.10, because you are making around 11 cents per day and the interest rate gets applied to the new balance each day instead of the original principle.
What bank compounds continuously? The only time I've seen continuous compounding is in math problems.

In the US, APY has a clear definition, which amounts to the actual real percentage increase your principal would have after one year. For fast compounding, this *approaches* exp(i)-1, but that isn't the number they can report unless they really are compounding continuously.

(And the difference between APY and APR is that APR is quoted for loans while APY is for investment products.)
Unless stated otherwise, I do not care whether a statement, by itself, constitutes a persuasive political argument. I care whether it's true.
---
If this post has math that doesn't work for you, use TeX the World for Firefox or Chrome

(he/him/his)

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Re: Are high-yield online savings accounts BS?

Postby King Author » Thu Oct 17, 2013 10:44 pm UTC

fizzgig wrote:
StupidTaIon wrote:That if the average mortgage is at 8% or less, the average savings account is going to be 1% or less because otherwise the bank won't be able to keep the lights on if they pay out any higher.

... well, keep the lights on AND make their shareholders happy. Hence the rise of the Credit Unions, which are a bit more interesting...



But that doesn't seem right either. Somehow Australian banks offer mortgages around 5% while offering savings accounts between 2.5 and 4%. And I'd find it hard to believe that Australian bankers somehow have lower costs than everywhere else given that everything is more expensive here. (Unless, of course, you have some evidence to the contrary. That would make it easier to believe). Although it's also possible that Australian banks aren't keeping their shareholders happy (I'm pretty sure they're keeping their lights on).

See? Pure, uncut American greed.

eran_rathan wrote:(snip)

That's because the Board for a Credit Union is elected from the members of the credit union. It is also generally an unpaid or moderately compensated position (our board are volunteers, and they get I think $2500/year - basically enough to cover gas for meetings).

*gesticulates*
See? See?

eran_rathan wrote:(snip)

Significantly less overhead, not-for-profit status, and being tax-exempt.

Oh, and the shareholders are those with deposits - so basically, the dividends they'd normally have to show investors are instead returned to the depositors.

Also, many are insured through NCUA, not FDIC.

As long as it's insured. And I'm just a regular guy, I don't need insurance up to $100,000 (which is what I keep hearing for current FDIC rates, though someone else said $250,000). Up to $10,000 would be just dandy.

I keep waiting for a catch, though. You know what they say -- if it seems too good to be true...

Why does anybody deal with banks if Credit Unions exist? Maybe just never having heard of them. I didn't, until this topic.

Chen wrote:
King Author wrote:I don't believe that for a second. They'd be unable to offer six- and seven-figure paychecks to their top dogs, maybe, but not go out of business. The people with all the money and power in the world have done a damn good job convincing us that this is the way it must be, or it all comes tumbling down, but I don't believe it.


Looking at Royal bank of Canada, their current interest rates on savings accounts and the like are extremely low (1.1% is their high yield, their highest other account looks to be 0.35% if you have over 250k in the account). So lets say they triple those values (3.3% on high yield and a little ove 1% on their best other accounts). The high yield one isn't bad, but the others are still laughably low. Now lets look at Royal Bank of Canada's 2012 Financial statements (http://annualreports.rbc.com/ar2012/PDF ... _notes.pdf), Interest Expenses on deposits totaled around $6 billion. Their net income was $7.5 billion. So tripling their rates and having them still be absurdly low would put them WELL into the red (somewhere to the tune of -5 billion). Their total payroll expenses appear to be around $5 billion (doesn't include employee benefits). With numbers that large, CEO pay (~12.5 million in 2012) is pretty negligible.

Well, nobody's saying the Royal Bank of Canada is filled with greedy bastards, and the Candian Dollar is the RC Cola to America's Pepsi. Show me something like that in America and we'll talk.
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

User avatar
gmalivuk
GNU Terry Pratchett
Posts: 26824
Joined: Wed Feb 28, 2007 6:02 pm UTC
Location: Here and There
Contact:

Re: Are high-yield online savings accounts BS?

Postby gmalivuk » Thu Oct 17, 2013 11:28 pm UTC

1.0000 USD = 1.0288 CAD, but RC Cola is much better than Pepsi, so I'm not sure what point you're trying to make there.
Unless stated otherwise, I do not care whether a statement, by itself, constitutes a persuasive political argument. I care whether it's true.
---
If this post has math that doesn't work for you, use TeX the World for Firefox or Chrome

(he/him/his)

elminster
Posts: 1560
Joined: Mon Feb 26, 2007 1:56 pm UTC
Location: London, UK, Dimensions 1 to 42.
Contact:

Re: Are high-yield online savings accounts BS?

Postby elminster » Fri Oct 18, 2013 7:43 am UTC

I find it quite annoying how banks give these interest offers at say 3%, then after 1 year that drops to like 0.6%. They do it all the damn time though. Need a system to automatically transfer money between the high interest accounts before they drop so I don't need to do it manually.
Saying that, it's not even worth having money in banks. There are plenty of investments with higher rewards at a relatively low risk. E.g. Some top companies pay more in dividends, while having year on year growth. Granted, higher risk - higher reward, but seems like banks aren't exactly risk free either.
Image

Chen
Posts: 5580
Joined: Fri Jul 25, 2008 6:53 pm UTC
Location: Montreal

Re: Are high-yield online savings accounts BS?

Postby Chen » Fri Oct 18, 2013 11:35 am UTC

King Author wrote:Well, nobody's saying the Royal Bank of Canada is filled with greedy bastards, and the Candian Dollar is the RC Cola to America's Pepsi. Show me something like that in America and we'll talk.


Here's the Bank of America financial statement

http://media.corporate-ir.net/Media_Fil ... AR2012.pdf

We have 5.3 billion on "interest on borrowed funds" (I assume that interest paid to depositors and such since I couldn't find anything else close to that in the report). Net income is around 4.1 billion. Seems pretty similar to the RBC financial statement.

User avatar
ahammel
My Little Cabbage
Posts: 2135
Joined: Mon Jan 30, 2012 12:46 am UTC
Location: Vancouver BC
Contact:

Re: Are high-yield online savings accounts BS?

Postby ahammel » Fri Oct 18, 2013 1:28 pm UTC

elimster wrote:Saying that, it's not even worth having money in banks. There are plenty of investments with higher rewards at a relatively low risk. E.g. Some top companies pay more in dividends, while having year on year growth. Granted, higher risk - higher reward, but seems like banks aren't exactly risk free either.
Savings accounts are lousy investments, yes, but that's not what they're for. A HISA is for those situations where you've got a chunk of cash that you're not planning to spend in the immediate future, but that you need to remain liquid (an emergency fund, for instance).

Buying stock in individual companies is a terrible idea. Invest in a mutual fund or something.
He/Him/His/Alex
God damn these electric sex pants!

User avatar
eran_rathan
Mostly Wrong
Posts: 1846
Joined: Fri Apr 09, 2010 2:36 pm UTC
Location: in your ceiling, judging you

Re: Are high-yield online savings accounts BS?

Postby eran_rathan » Fri Oct 18, 2013 3:28 pm UTC

King Author wrote:
eran_rathan wrote:(snip)

That's because the Board for a Credit Union is elected from the members of the credit union. It is also generally an unpaid or moderately compensated position (our board are volunteers, and they get I think $2500/year - basically enough to cover gas for meetings).

*gesticulates*
See? See?

eran_rathan wrote:(snip)

Significantly less overhead, not-for-profit status, and being tax-exempt.

Oh, and the shareholders are those with deposits - so basically, the dividends they'd normally have to show investors are instead returned to the depositors.

Also, many are insured through NCUA, not FDIC.

As long as it's insured. And I'm just a regular guy, I don't need insurance up to $100,000 (which is what I keep hearing for current FDIC rates, though someone else said $250,000). Up to $10,000 would be just dandy.

I keep waiting for a catch, though. You know what they say -- if it seems too good to be true...

Why does anybody deal with banks if Credit Unions exist? Maybe just never having heard of them. I didn't, until this topic.


It is $250,000 through NCUA, and then some (not all) are further insured for $250,000 (for a total of $0.5 million covered). And yeah, I think that people haven't used them because they don't know about them.

During the Occupy thing, a TON of people moved money into credit unions to get away from Wall Street banks.
http://en.wikipedia.org/wiki/Bank_Transfer_Day
"Does this smell like chloroform to you?"
"Google tells me you are not unique. You are, however, wrong."
nɒʜƚɒɿ_nɒɿɘ

User avatar
King Author
Posts: 736
Joined: Sun Apr 12, 2009 12:30 pm UTC
Location: Pennsylvania, USA

Re: Are high-yield online savings accounts BS?

Postby King Author » Sat Oct 19, 2013 6:46 pm UTC

gmalivuk wrote:1.0000 USD = 1.0288 CAD, but RC Cola is much better than Pepsi, so I'm not sure what point you're trying to make there.

Hey, everybody! livuk's cute and clever!
*rolleyes*

elminster wrote:I find it quite annoying how banks give these interest offers at say 3%, then after 1 year that drops to like 0.6%. They do it all the damn time though. Need a system to automatically transfer money between the high interest accounts before they drop so I don't need to do it manually.
Saying that, it's not even worth having money in banks. There are plenty of investments with higher rewards at a relatively low risk. E.g. Some top companies pay more in dividends, while having year on year growth. Granted, higher risk - higher reward, but seems like banks aren't exactly risk free either.

Because they're perfectly safe, it's a good idea to have an emergency fund in an FDIC-insured bank. But yeah, you're not turning any profit with money in a bank. Consider that rich people don't keep their money in banks -- it's all in investments.

For someone like you or me, I suppose the thing to do is get a decent personal investment banker or whatever.

Chen wrote:
King Author wrote:Well, nobody's saying the Royal Bank of Canada is filled with greedy bastards, and the Candian Dollar is the RC Cola to America's Pepsi. Show me something like that in America and we'll talk.


Here's the Bank of America financial statement

http://media.corporate-ir.net/Media_Fil ... AR2012.pdf

We have 5.3 billion on "interest on borrowed funds" (I assume that interest paid to depositors and such since I couldn't find anything else close to that in the report). Net income is around 4.1 billion. Seems pretty similar to the RBC financial statement.

1) How do I know that's not a lie? How do I know that's true in the first place? And how do I know those numbers mean anything even if they are true? Banks use all sorts of legal but BS methods of data manipulation to play the system (like this crap http://www.techdirt.com/articles/201210 ... able.shtml). I'll bet they don't even pay a single percent income tax on any of that, either.

2) Net income of 4.1 billion isn't chump change. Someone run the numbers -- how much higher APY could they offer and still make a cool billion profit?

3) I wonder how that 4.1 billion is distributed. Do clerks make six-figure paychecks? Or do they scrape by at less than $30,000 a year, as indicated by indeed.com...
http://www.indeed.com/salary/Bank-Teller.html
...while fatcat CEOs make millions?

ahammel wrote:
elimster wrote:Saying that, it's not even worth having money in banks. There are plenty of investments with higher rewards at a relatively low risk. E.g. Some top companies pay more in dividends, while having year on year growth. Granted, higher risk - higher reward, but seems like banks aren't exactly risk free either.
Savings accounts are lousy investments, yes, but that's not what they're for. A HISA is for those situations where you've got a chunk of cash that you're not planning to spend in the immediate future, but that you need to remain liquid (an emergency fund, for instance).

Buying stock in individual companies is a terrible idea. Invest in a mutual fund or something.

You may as well play the lottery.

It kills me how many chumps play the lottery, or put $500 into a single stock, thinking they'll get rich quick. I mean, how many millionaires do they think there are in the world whose success story is, "Well, I was making $10 an hour working at a diner, and I played the lottery every week for thirty years, and then I hit the $20 million jackpot, and here I am." Or - slightly less ridiculously - whose story is "I put a couple hundred dollars stock in Foobar Incorporated at $0.20 a share and the next day, it shot up to $55 and now I'm a millionaire!"

eran_rathan wrote:
King Author wrote:
eran_rathan wrote:(snip)

That's because the Board for a Credit Union is elected from the members of the credit union. It is also generally an unpaid or moderately compensated position (our board are volunteers, and they get I think $2500/year - basically enough to cover gas for meetings).

*gesticulates*
See? See?

eran_rathan wrote:(snip)

Significantly less overhead, not-for-profit status, and being tax-exempt.

Oh, and the shareholders are those with deposits - so basically, the dividends they'd normally have to show investors are instead returned to the depositors.

Also, many are insured through NCUA, not FDIC.

As long as it's insured. And I'm just a regular guy, I don't need insurance up to $100,000 (which is what I keep hearing for current FDIC rates, though someone else said $250,000). Up to $10,000 would be just dandy.

I keep waiting for a catch, though. You know what they say -- if it seems too good to be true...

Why does anybody deal with banks if Credit Unions exist? Maybe just never having heard of them. I didn't, until this topic.


It is $250,000 through NCUA, and then some (not all) are further insured for $250,000 (for a total of $0.5 million covered). And yeah, I think that people haven't used them because they don't know about them.

During the Occupy thing, a TON of people moved money into credit unions to get away from Wall Street banks.
http://en.wikipedia.org/wiki/Bank_Transfer_Day

Well, if they're insured and free to join, and if I can withdraw all my money and close my account without a fee, I should probably give a credit union a whirl. The big banks in this nation are getting away with murder, and it's all legal. The only thing in my power I can do to stop them is refuse to do business with them. If everyone did that, they'd go out of business like they should have when they crashed the economy.
I have signitures disabled. If you do, too...you can't read this, so nevermind >_>

User avatar
gmalivuk
GNU Terry Pratchett
Posts: 26824
Joined: Wed Feb 28, 2007 6:02 pm UTC
Location: Here and There
Contact:

Re: Are high-yield online savings accounts BS?

Postby gmalivuk » Sat Oct 19, 2013 6:52 pm UTC

King Author wrote:
gmalivuk wrote:1.0000 USD = 1.0288 CAD, but RC Cola is much better than Pepsi, so I'm not sure what point you're trying to make there.

Hey, everybody! livuk's cute and clever!
*rolleyes*
So instead of actually explaining what point you were trying to make, you just skip to personal insults?

Also, while we're picking random substrings of people's usernames to use when referring to them, you're now going to be ng Aut.

Chen wrote:
King Author wrote:Well, nobody's saying the Royal Bank of Canada is filled with greedy bastards, and the Candian Dollar is the RC Cola to America's Pepsi. Show me something like that in America and we'll talk.


Here's the Bank of America financial statement
1) How do I know that's not a lie? How do I know that's true in the first place? And how do I know those numbers mean anything even if they are true?
Way to move the goalposts, dude.

You asked for something like that in America, and that's what Chen did. Now you demand proof that it is accurate and meaningful information (which for some reason you didn't demand with the Canadian example).

2) Net income of 4.1 billion isn't chump change. Someone run the numbers -- how much higher APY could they offer and still make a cool billion profit?
If they spend more than 4.1 billion in interest, then doubling the interest would mean negative net income.
Unless stated otherwise, I do not care whether a statement, by itself, constitutes a persuasive political argument. I care whether it's true.
---
If this post has math that doesn't work for you, use TeX the World for Firefox or Chrome

(he/him/his)

billy joule
Posts: 54
Joined: Tue Jun 11, 2013 7:14 am UTC

Re: Are high-yield online savings accounts BS?

Postby billy joule » Sat Oct 19, 2013 9:06 pm UTC

King Author wrote:It kills me how many chumps play the lottery, or put $500 into a single stock, thinking they'll get rich quick. I mean, how many millionaires do they think there are in the world whose success story is, "Well, I was making $10 an hour working at a diner, and I played the lottery every week for thirty years, and then I hit the $20 million jackpot, and here I am." Or - slightly less ridiculously - whose story is "I put a couple hundred dollars stock in Foobar Incorporated at $0.20 a share and the next day, it shot up to $55 and now I'm a millionaire!"


How many millionaires got there by making low risk/low return (eg mutual funds) investments?

How many millionaires got there by making high risk/high return (eg shares in start ups)investments?

Reading something like 'rich dad, poor dad' would do you a lot of good.

User avatar
ahammel
My Little Cabbage
Posts: 2135
Joined: Mon Jan 30, 2012 12:46 am UTC
Location: Vancouver BC
Contact:

Re: Are high-yield online savings accounts BS?

Postby ahammel » Sat Oct 19, 2013 10:36 pm UTC

King Author wrote:How do I know that's not a lie? How do I know that's true in the first place?
Pretty sure falsifying that information would be illegal.

billy joule wrote:How many millionaires got there by making low risk/low return (eg mutual funds) investments?

How many millionaires got there by making high risk/high return (eg shares in start ups)investments?
A better question might be, 'how many people have lost their shirts doing the same?'
He/Him/His/Alex
God damn these electric sex pants!

User avatar
Thesh
Made to Fuck Dinosaurs
Posts: 6598
Joined: Tue Jan 12, 2010 1:55 am UTC
Location: Colorado

Re: Are high-yield online savings accounts BS?

Postby Thesh » Sat Oct 19, 2013 10:47 pm UTC

ahammel wrote:
King Author wrote:How do I know that's not a lie? How do I know that's true in the first place?
Pretty sure falsifying that information would be illegal.


Not to mention that it would be really really stupid for a public company to under-report income as well. They bow to their shareholders, their shareholders become richer when their shares go up, the more income they have the more profits (or less losses) they have, and the more their shares go up (or less they go down), and the wealthier their shareholders become. If anything, they are over-reporting income, not under-reporting it as King Author is, apparently, suggesting, as if major Canadian corporations are any more corrupt than American corporations.
Summum ius, summa iniuria.

billy joule
Posts: 54
Joined: Tue Jun 11, 2013 7:14 am UTC

Re: Are high-yield online savings accounts BS?

Postby billy joule » Sun Oct 20, 2013 12:22 am UTC

ahammel wrote:
billy joule wrote:How many millionaires got there by making low risk/low return (eg mutual funds) investments?

How many millionaires got there by making high risk/high return (eg shares in start ups)investments?
A better question might be, 'how many people have lost their shirts doing the same?'


Well, obviously much less than those who come out with high returns.

If there were more losers than winners it wouldn't be investing, it'd be a drain to throw your money down like gambling is.

But I'm sure you or King Author can find many harrowing anecdotes of people losing their retirement funds/life savings while the evil bankers make millions :wink:


Return to “General”

Who is online

Users browsing this forum: No registered users and 23 guests