One unfortunate result of the Fed's attempts at economic stimulus is the ever-lowering rates of interest offered by money market funds. How low? Today even most Vanguard money market funds yield under 2% TAXABLE (higher fee funds yield even less). Apparently the Federal Reserve is more concerned with encouraging borrowing (and why not, it has worked so well in the past...) and supporting asset bubbles and speculators in higher risk investments than looking out for the few, the proud, the low-risk money savers.
What's a guy to do? While those with millions of dollars to park are basically hosed, small investors can find some great teaser deals in FDIC-insured bank products. An article. by Laura Bruce for Bankrate.com notes some of the best:
HSBC, for example, has raised the rate on its HSBC Direct Online Savings Account to 3.5 percent, from 3.05 percent. The yield is good through Aug. 15 and applies to new and current funds.
Some institutions, such as EverBank, seem to a have an introductory offer for new money. EverBank is paying a yield of 4.01 percent for the first three months on its money market and interest checking accounts.
Some yields are eye-popping, such as Shore Bank's 10 percent for 90 days on its Grand Slam Checking account. You have to live in Maryland or Virginia to take advantage of the offer. The same goes for Flagstar Bank's 10 percent, six-month CD that you can get if you open a checking account at one of the bank's offices in Michigan, Indiana or Georgia."
To play the game right, be prepared to move on to the next teaser when yours expires (though some of these companies have decent deals even after the teaser period ends). Not worth the effort? Perhaps, but just think about how much time you spent finding the best deal on your T.V.
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