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Financial Update, May 11, 2020

Started by Istefan Perþonest, May 11, 2020, 11:19:25 PM

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Istefan Perþonest

In reaction to the US Federal Reserve's recent actions in cutting interest rates, Ally Bank is cutting the interest rate on the Kingdom's savings account from 1.5% to 1.25% effective tomorrow (following up a previous cut from 1.6% to 1.5% on March 13).

1.25% is still a solid rate for a savings account (better than the current yield on 20-year Treasuries), but I've done a little bit of shopping around other possibilities as a result, and am somewhat tempted by Varo.  I'm going to see if they cut their rates soon, or stick to the 1.61% they're currently quoting on their website.
Istefan Éovart Perþonest
Puisne Judge of the Uppermost Cort
Cunstavál of Fiôvâ

Açafat del Val

Thank you ever for your service and keeping the public knowledgeable.
Cheers,

AdV
ex-Senator for Florencia
Jolly Good Fellow of the Royal Talossan College of Arms

Breneir Tzaracomprada

Burgermeister,

Can you share a bit more info about Varo? I am familiar with Ally Bank but not this particular institution.

Breneir

Istefan Perþonest

Quote from: Breneir Itravilatx on May 15, 2020, 04:09:30 PM
Burgermeister,

Can you share a bit more info about Varo? I am familiar with Ally Bank but not this particular institution.

Breneir
Varo Money is a app-centered "fintech" startup base in San Francisco, something like three years old, that just got formal regulatory approval to be a "real" national US bank.

That kind of background means I'm a little bit concerned that if we swapped to them, we could have troubles as a result of them going under.  Not lose-the-deposit troubles, since they're FDIC insured (that is, the US government backs depositors to $250,000, an amount we're well under), but still various possible difficulties involving access.  That made a switch not worthwhile given that it translated to a bit over $3/year in interest at our current balance, but if Ally cut rates again this year and if Varo Money stayed where it was, then it might have become worthwhile, which is why I was keeping an eye on them.

You might notice I used the past tense there.  They've dropped their rate to 1.41% since my last post, which not only means the immediate incentive went down, but indicates that they will indeed drop rates pretty much in concert with the overall market (including Ally) in the future.  Which isn't remotely surprising, but also means it's not worth the hassle of a switchover, or risks that might attend their going under.
Istefan Éovart Perþonest
Puisne Judge of the Uppermost Cort
Cunstavál of Fiôvâ

GV

Quote from: Istefan Perþonest on May 16, 2020, 12:22:46 AM
Quote from: Breneir Itravilatx on May 15, 2020, 04:09:30 PM
Burgermeister,

Can you share a bit more info about Varo? I am familiar with Ally Bank but not this particular institution.

Breneir
Varo Money is a app-centered "fintech" startup base in San Francisco, something like three years old, that just got formal regulatory approval to be a "real" national US bank.

That kind of background means I'm a little bit concerned that if we swapped to them, we could have troubles as a result of them going under.  Not lose-the-deposit troubles, since they're FDIC insured (that is, the US government backs depositors to $250,000, an amount we're well under), but still various possible difficulties involving access.  That made a switch not worthwhile given that it translated to a bit over $3/year in interest at our current balance, but if Ally cut rates again this year and if Varo Money stayed where it was, then it might have become worthwhile, which is why I was keeping an eye on them.

You might notice I used the past tense there.  They've dropped their rate to 1.41% since my last post, which not only means the immediate incentive went down, but indicates that they will indeed drop rates pretty much in concert with the overall market (including Ally) in the future.  Which isn't remotely surprising, but also means it's not worth the hassle of a switchover, or risks that might attend their going under.

Based on what you said about Varo previously, I would have been very leery of switching to that outfit.  Ally has been solid for us so far, I think?  Thanks for all you do!

Istefan Perþonest

Quote from: GV on May 28, 2020, 10:11:50 AMAlly has been solid for us so far, I think?
Yep.  Nary a problem in the 7+ years we've been with 'em for checking, no fees, and the savings account rate's always been at least competitive.

(There are a few established places offering 1.30% APY right now for balances in our range, but they're places that don't also support checking accounts.  Trading $0.50 or so a year in interest for fast and easy transfers from savings to checking and back is, in my opinion, entirely worthwhile.)
Istefan Éovart Perþonest
Puisne Judge of the Uppermost Cort
Cunstavál of Fiôvâ