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So can someone explain to me how these high-yield savings accounts are playing into this? I read somewhere that these savings accounts are basically loss leade
by diminoten 7y ago
So can someone explain to me how these high-yield savings accounts are playing into this?
I read somewhere that these savings accounts are basically loss leaders and don't actually matter much cost wise to the banks offering them, but if I can park my cash in a 2.4% APR savings account, why would I ever buy a 6 month treasure note that's at ~2%?
- lh7777 7y agoI don't if/how the banks make money with high-yield accounts, but you might be better off with treasury bills if: 1. You're in a high income tax state -- interest is taxed as income but t-bill yields are exempt from state taxes. 2. You have more than the $250k FDIC limit (although that limit is per bank, so you can safely exceed it by opening accounts with multiple institutions). 3. You expect interest rates will decrease in the future and want to lock in your rate for a certain amount of time (of course, a high-yield CD would do the same thing, potentially at a better rate).