Interest rates will likely stay low for the foreseeable future. While this is beneficial to many as they borrow money for business expansion, or personally to purchase a car or home, these low rates have hurt people who are saving in banks.
We encourage all of our clients to have a cash reserve account for the unexpected situations which arise in all of our lives. The interest rates that traditional bank savings checking accounts pay continue to be minuscule. There is a company called Max My Interest that helps individuals holding cash gain significantly more interest than their local bank account pays.
The individual who started Max My Interest (Max) discussed how he had sold his home and placed all of the proceeds into a bank account after the house sale before leaving for Europe. Unfortunately, while in Europe the 9/11 attack occurred. He was panicked that the money in the one bank account was above the limit covered by FDIC insurance. He figured that there had to be a better way.
The solution that he created was using online banks which have lower operating costs allowing them to pass along the savings to depositors in the form of higher rates. If you join and become a Max member, you will benefit by earning substantially higher interest rates on the cash held in your online savings accounts, compared to those available from most brick-and-mortar banks. Max will also review the online bank rates monthly and move your money into another online bank to capture the higher rates as they change the deposit interest rates.
For example, National Bank Savings Rate was 0.10% in December 2019 while Max My Interest was 1.91%. (1)
Max supports linking your checking account at your choice of the some of the nation’s leading FDIC-insured online banks in the country. We suggest linking your existing checking/brokerage account if you would like Max to help you maintain a constant checking account balance from month to month.
HOW DOES IT WORK:
You’ll specify a Target Balance — the amount of funds that you would like to keep in your checking account. Each month, Max will optimize your accounts to help you earn more while keeping all funds FDIC-insured; as part of that optimization, Max will sweep funds to/from checking to help you maintain your Target Balance. If your checking account balance exceeds your Target Balance at the time of your monthly optimization, excess cash will be swept to your higher-yielding online savings accounts; if your checking balance is lower than your Target Balance, funds will move from your online savings accounts back to your checking account to restore your checking account to your Target Balance.
If your balances are not fully FDIC-insured, you may need to open / link additional online savings accounts to Max. This ensures that your cash can be spread across a sufficient number of banks, as FDIC insurance is currently capped at $250,000 per depositor per account type per bank.
Max costs 2 basis points (0.02%) per quarter, or $20 per $100,000 held in your savings accounts, subject to a minimum fee of $12 every 3 months. No other costs or fees.
Take a look to decide if this would be beneficial for you: MAX MY INTEREST:
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(1) “The Max Average” is calculated as the average interest rate offered by the online banks which you have linked to Max, weighted by the balances in your accounts. “National Average” is based on data published by Bankrate.