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Nov. 5th, 2005 11:32 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
which_chickAs per yesterday's advice (you gotta play to win), I checked out rates again at good old bankrate while I was waiting for my pie to bake. It's another iteration of the squash pie, this time with the extra egg and the proper amount of cornstarch and I whipped the third egg white and we'll see what happens. Anyway, I surfed for better interest rates while I was waiting for my pie to bake because they ain't no frilly aprons around here. Green eyeshades, mebbee, but no fucking frilly aprons.
A spot of internet research showed that I can score 4.50% APY on a MMA through Superior Whatsis of New England. (They have a minimum balance for the rate so YMMV. Caveat Emptor. Close cover before striking!) I called their toll-free number this morning to get a lead on what I had to do to nail me that rate. Go to website, download form, complete, mail off with check. Righty-ho, I can do that. I'm currently getting 4.00% APY from EmigrantDirect, which is nice but, hey, if I can do better than that, I will. Damn skippy I will.
The rate will be good "for a while" but they wouldn't tell me how long. It's a promotional deal -- banks run teaser rates to attract new money because a lot of people rate shop once and then forget that they have the money there or at least don't take the time to re-shop the rate when they get past the promotional teaser rate period. (Most people are bored stiff by finance. It turns out that I'm not. I don't much care if all ya'll are interested or not. It's like the porn and cooking and stuff. I talk about what I want to talk about and all ya'll can listen or not, as you see fit.) Anyway, banks benefit from having a higher average daily balance because it means that they can loan out more money. Basically, subject to the federal reserve's Reserve Requirement thing, banks that have more money on deposit can LOAN more money and that (along with selling the resulting mortgages to aggregators for use as mortgage-backed securities) is where banks make their money. Banks are profit-making institutions, make no mistake about it. All that stuff about serving the community and caring about friends and neighbors is basically incidental to the making of profit. If more profit could be made by being less friendly, they'd do it. People like the friendly, so banks make with the friendly to get the profit, brick and mortar banks more so than online banks. (As an example of being all about the profit, did you know that INGDirect.com fires between three and four percent of its customers every month? For real. It's all about the profit.)
Interestingly, once the bank has sold off the mortgages to an aggregator, it is once again free to loan more money because those sold-off mortgages do not count as liabilities against its reserve requirement anymore... so there is not a huge need for the bank to CONTINUE the teaser rate once they've made the new loans and sold off the paper. On consideration, this behavior causes mini-bubbles in interest rates... and the smart liquidity follows the teaser rates because it can do better hopping from teaser rate to teaser rate than it can just sitting still in any given account. My default account is INGDirect, an internet bank currently paying 3.50%. If I go with Superior Whatsis, I will be getting a full percentage point better and ING will still be at 3.50% (or better) when the teaser rate ends. Since I maintain the ING account with a minimal placeholder balance so that I can shift money back to it easily when the teaser rates expire and I'm between deals, my cost of pursuing the higher rates is pretty minimal... an hour's time, the cost of a stamp, and three days of interest because I don't write checks unless the money is actually in my account and I can see it there. The one time I anticipate a transaction hitting my account is the one time the fucking check will bounce because of inexplicable delays..
Teaser rates are for real, btw, and some of them may not even show up on bankrate.com -- my local bank, referred to here as Suck-Me-Hanna, had a similar deal for 3.50% on new-deposit MMAs a couple of months back. (You can generally tell teaser rates because they specify "new money" as opposed to money already on deposit at that institution.) Generally the teaser rate lasts at least two or three months so's to motivate people to move their damn money. Nobody's going to move money around and open a new account for one month of better rate. Diminishing returns and all that, you see. Anyway, I'll have to make a mental note to keep track of what the damn thing's paying, but it's half a point better than what I'm getting now and nicely better than anything else on the market at the moment.
Is it worth my time? Yes. If I open an account at Superior Whatsis with the minimum balance for the 4.50% APY, I will make $93.75 in one month. At the current location (Emigrant Direct, paying 4.00% APY), I'm making $83.33 on that amount in one month and their guaranteed rate expires at the end of December, 2005. Teaser rates are generally for three months, so I'm going to clear better than thirty dollars (there's compounding and shit in there) for an hour's work. Yay! If I had that money in INGDirect, which is currently paying 3.50%, I'd be making $72.91 in a month. Yes, Virginia, it really is worth my time. Besides, finance! What's not to like?
Also, for your amusement: [04:49] <ripper> I told u I was hardcore
A spot of internet research showed that I can score 4.50% APY on a MMA through Superior Whatsis of New England. (They have a minimum balance for the rate so YMMV. Caveat Emptor. Close cover before striking!) I called their toll-free number this morning to get a lead on what I had to do to nail me that rate. Go to website, download form, complete, mail off with check. Righty-ho, I can do that. I'm currently getting 4.00% APY from EmigrantDirect, which is nice but, hey, if I can do better than that, I will. Damn skippy I will.
The rate will be good "for a while" but they wouldn't tell me how long. It's a promotional deal -- banks run teaser rates to attract new money because a lot of people rate shop once and then forget that they have the money there or at least don't take the time to re-shop the rate when they get past the promotional teaser rate period. (Most people are bored stiff by finance. It turns out that I'm not. I don't much care if all ya'll are interested or not. It's like the porn and cooking and stuff. I talk about what I want to talk about and all ya'll can listen or not, as you see fit.) Anyway, banks benefit from having a higher average daily balance because it means that they can loan out more money. Basically, subject to the federal reserve's Reserve Requirement thing, banks that have more money on deposit can LOAN more money and that (along with selling the resulting mortgages to aggregators for use as mortgage-backed securities) is where banks make their money. Banks are profit-making institutions, make no mistake about it. All that stuff about serving the community and caring about friends and neighbors is basically incidental to the making of profit. If more profit could be made by being less friendly, they'd do it. People like the friendly, so banks make with the friendly to get the profit, brick and mortar banks more so than online banks. (As an example of being all about the profit, did you know that INGDirect.com fires between three and four percent of its customers every month? For real. It's all about the profit.)
Interestingly, once the bank has sold off the mortgages to an aggregator, it is once again free to loan more money because those sold-off mortgages do not count as liabilities against its reserve requirement anymore... so there is not a huge need for the bank to CONTINUE the teaser rate once they've made the new loans and sold off the paper. On consideration, this behavior causes mini-bubbles in interest rates... and the smart liquidity follows the teaser rates because it can do better hopping from teaser rate to teaser rate than it can just sitting still in any given account. My default account is INGDirect, an internet bank currently paying 3.50%. If I go with Superior Whatsis, I will be getting a full percentage point better and ING will still be at 3.50% (or better) when the teaser rate ends. Since I maintain the ING account with a minimal placeholder balance so that I can shift money back to it easily when the teaser rates expire and I'm between deals, my cost of pursuing the higher rates is pretty minimal... an hour's time, the cost of a stamp, and three days of interest because I don't write checks unless the money is actually in my account and I can see it there. The one time I anticipate a transaction hitting my account is the one time the fucking check will bounce because of inexplicable delays..
Teaser rates are for real, btw, and some of them may not even show up on bankrate.com -- my local bank, referred to here as Suck-Me-Hanna, had a similar deal for 3.50% on new-deposit MMAs a couple of months back. (You can generally tell teaser rates because they specify "new money" as opposed to money already on deposit at that institution.) Generally the teaser rate lasts at least two or three months so's to motivate people to move their damn money. Nobody's going to move money around and open a new account for one month of better rate. Diminishing returns and all that, you see. Anyway, I'll have to make a mental note to keep track of what the damn thing's paying, but it's half a point better than what I'm getting now and nicely better than anything else on the market at the moment.
Is it worth my time? Yes. If I open an account at Superior Whatsis with the minimum balance for the 4.50% APY, I will make $93.75 in one month. At the current location (Emigrant Direct, paying 4.00% APY), I'm making $83.33 on that amount in one month and their guaranteed rate expires at the end of December, 2005. Teaser rates are generally for three months, so I'm going to clear better than thirty dollars (there's compounding and shit in there) for an hour's work. Yay! If I had that money in INGDirect, which is currently paying 3.50%, I'd be making $72.91 in a month. Yes, Virginia, it really is worth my time. Besides, finance! What's not to like?
Also, for your amusement: [04:49] <ripper> I told u I was hardcore
