Gyroscopic Investing

My fiancée has been asking me about these accounts for a while now. Is anyone familiar with these?

https://www.discover.com/online-banking ... s-account/

She has already opened one, and now wants me to help fund it. There appear to be few limitations, in terms of minimum balance, etc. I don't understand how they can offer such higher interest than a regular bank. Is it not FDIC insured? Is there some other catch?

Another one is Goldman Sachs Bank: https://www.gsbank.com/en.html
(I know the name is off-putting... Until recently it was GE Bank... Great interest rate though.)

To answer your question I don't know how they do it.

It's simple. No massive overhead of people and retail branches.

Xan wrote:Another one is Goldman Sachs Bank: https://www.gsbank.com/en.html
(I know the name is off-putting... Until recently it was GE Bank... Great interest rate though.)

To answer your question I don't know how they do it.

GE Bank was Synchrony one of the absolute worst in the business. It would be fitting that Goldman Sachs would buy it out.

I wouldn't touch it with a ten foot pole. Goldman Sachs is responsible for the subprime crisis and Greece's bankruptcy among other things. What bullshit will they sell you as a depositor? They specialize in ripping people's faces off.

Look at Ally bank's 1% offering.
BofA in comparison is paying .01%
That's a 100x lower.

Where does ally fall on the disgust ladder?

I've been using Ally Bank for several years now, and am very happy with their service & lack of fees. It has limited services like all online banks, so it doesn't obviate the need for an account at a brick and mortar bank.

The best Ally features are the automatic withdrawals from savings if you over-draw your checking account, and the reimbursement of ATM fees so I can just use any ATM I come across and not play the "search for the right bank" game. I also find their website to be the easiest to navigate out of all the ones I looked at, and have no complaints about their customer service which I've chatted or phoned several times.

And the 1% interest on savings is nice! I do try to balance this with US government bonds and bills though, because keeping PP cash there is clearly "chasing yield" and giving up a degree of safety. Most of the money in there is short term savings outside of the PP.

buddtholomew wrote:Look at Ally bank's 1% offering.
BofA in comparison is paying .01%
That's a 100x lower.

Where does ally fall on the disgust ladder?

They used to be General Motors' bank (GMAC) but they sold it off during the subprime crisis. Not cool but not bad either.

What you guys are really asking is what is the safety ratings of these banks? Go to Weiss Research: https://www.weissratings.com/safety-ratings
TheStreet used to offer the ratings for free but it got neglected like everything else Cramer touches so Weiss Research bought it back from them.

I would avoid C or lower, but with FDIC and the Treasury backstopping, it's really much ado about nothing. You have more to fear from management incompetence and/or fraud than a run on the bank these days. That's not to say there won't be a panic where ignorant people line up and try to withdraw their deposits in cash, but that is a different form of money than what banks normally provide. It would take some time for there to be enough FRN's available for everybody and their mother.

https://redneck.bank/mega-money-market/
aka
https://allamerica.bank/mega-money/

1.25% on up to 35k

You can go through it as it will be help you in future.