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Tempting Cash Rebate offers

Posted: Wed Nov 23, 2022 9:07 am
by vnatale
These are all quite tempting Cash Rebate offers but it all goes so counter to the Permanent Portfolio.

Currently all my cash is in the Vanguard short-term treasuries fund.

The risk going with this offer is that while you only have to keep your money there for 60 days and there seemingly is little risk putting one's money there .... something could happen in those 60 days which in hindsight might make this not a good decision.



https://banking.citi.com/cbol/R2C/check ... rf_ce=page

Re: Tempting Cash Rebate offers

Posted: Wed Nov 23, 2022 10:42 am
by dualstow
That link doesn’t really reveal much.
Anyway, yeah, sounds like VP territory.

Re: Tempting Cash Rebate offers

Posted: Wed Nov 23, 2022 11:56 am
by vnatale
dualstow wrote:
Wed Nov 23, 2022 10:42 am

That link doesn’t really reveal much.
Anyway, yeah, sounds like VP territory.


I see that that link does not reveal much. When I clicked on it in my email I got the below (but that is because I am a bank credit card holder).

Also, I'd argue this cash would be part of what some people here refer to as "deep cash".

Capture.JPG
Capture.JPG (81.77 KiB) Viewed 257 times

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 6:26 am
by welderwannabe
I'd take that in a heartbeat. Its an FDIC insured savings account. As long as you keep it at $250K or less to stay in the insurance band, its just as good as a Treasury bill in my workd.

If we truly have an issue where FDIC fails and the government doesn't back it, thats gonna be a scenario where cash is likely totally worthless anyways and you'll need to lean on your gold.

Times are tough. Take the bonus.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 6:54 am
by vnatale
welderwannabe wrote:
Thu Nov 24, 2022 6:26 am

I'd take that in a heartbeat. Its an FDIC insured savings account. As long as you keep it at $250K or less to stay in the insurance band, its just as good as a Treasury bill in my workd.

If we truly have an issue where FDIC fails and the government doesn't back it, thats gonna be a scenario where cash is likely totally worthless anyways and you'll need to lean on your gold.

Times are tough. Take the bonus.


An individual bank can fail which then leads to your money being tied for some time. So not as good as a Treasury Bill.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 7:11 am
by welderwannabe
vnatale wrote:
Thu Nov 24, 2022 6:54 am
An individual bank can fail which then leads to your money being tied for some time. So not as good as a Treasury Bill.
FDIC usually pays within 2 days, and anecdotally its usually faster than that.

Yes, its not as good as a treasury bill, but tbills arent paying $1000 bonuses!

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 8:29 am
by jhogue
welderwannabe wrote:
Thu Nov 24, 2022 6:26 am
I'd take that in a heartbeat. Its an FDIC insured savings account. As long as you keep it at $250K or less to stay in the insurance band, its just as good as a Treasury bill in my workd.

If we truly have an issue where FDIC fails and the government doesn't back it, thats gonna be a scenario where cash is likely totally worthless anyways and you'll need to lean on your gold.

Times are tough. Take the bonus.
I think you misunderstand. The problem isn't that the FDIC will fail. It won't. But if your bank fails, it could cause you no end of headaches before FDIC makes you whole.

Times are tough. Forget the bank bonus. Buy a plain vanilla Treasury on the secondary market at Fidelity.

Happy Thanksgiving Day to one and all!

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 9:43 am
by welderwannabe
jhogue wrote:
Thu Nov 24, 2022 8:29 am
I think you misunderstand. The problem isn't that the FDIC will fail. It won't. But if your bank fails, it could cause you no end of headaches before FDIC makes you whole.
Well since I use a lot of FDIC insured bank accounts, please educate me with some examples in recent memory where depositors had lots of headache and had to wait significant amounts of time to be made whole on insured deposits.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 11:23 am
by jhogue
welderwannabe wrote:
Thu Nov 24, 2022 9:43 am
jhogue wrote:
Thu Nov 24, 2022 8:29 am
I think you misunderstand. The problem isn't that the FDIC will fail. It won't. But if your bank fails, it could cause you no end of headaches before FDIC makes you whole again.
Well since I use a lot of FDIC insured bank accounts, please educate me with some examples in recent memory where depositors had lots of headache and had to wait significant amounts of time to be made whole on insured deposits.
One of our very own, Pugchief, and I discussed the problems that ensued when his bank, Washington Mutual went under. At the time, he had an account with that bank, and then its successor bank, arranged by the FDIC.

See:

https://gyroscopicinvesting.com/forum/v ... ef#p162756

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 11:58 am
by welderwannabe
jhogue wrote:
Thu Nov 24, 2022 11:23 am
One of our very own, Pugchief, and I discussed the problems that ensued when his bank, Washington Mutual went under. At the time, he had an account with that bank, and then its successor bank, arranged by the FDIC.

See:

https://gyroscopicinvesting.com/forum/v ... ef#p162756
Appreciate you digging that up. I can't seem to find his posts, I assume he deleted himself and the posts?

From the post that you shared, which was your recollection of the event it appears, he got all his money back in a timely fashion, but kept his account with the bank which was taken over by chase? Then after a year or so they changed the account structure and fees so he had to move? If im understanding this right, this really has nothing to do with FDIC insurance, or access to funds, but the hassle of moving banks. Which I agree sucks, but in my mind isn't any different than using a Fidelity or Vanguard to buy your bills, or even a Treasury MM. They can change their fees at a moments notice and you may have to move brokerages.

Anyways, different stokes for different folks. I keep plenty of my cash in bills, at a brokerage, and I also keep plenty of my cash in FDIC insured accounts. Spreading out the risk.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 8:57 pm
by vnatale
welderwannabe wrote:
Thu Nov 24, 2022 11:58 am

jhogue wrote:
Thu Nov 24, 2022 11:23 am

One of our very own, Pugchief, and I discussed the problems that ensued when his bank, Washington Mutual went under. At the time, he had an account with that bank, and then its successor bank, arranged by the FDIC.

See:

https://gyroscopicinvesting.com/forum/v ... ef#p162756


Appreciate you digging that up. I can't seem to find his posts, I assume he deleted himself and the posts?

From the post that you shared, which was your recollection of the event it appears, he got all his money back in a timely fashion, but kept his account with the bank which was taken over by chase? Then after a year or so they changed the account structure and fees so he had to move? If im understanding this right, this really has nothing to do with FDIC insurance, or access to funds, but the hassle of moving banks. Which I agree sucks, but in my mind isn't any different than using a Fidelity or Vanguard to buy your bills, or even a Treasury MM. They can change their fees at a moments notice and you may have to move brokerages.

Anyways, different stokes for different folks. I keep plenty of my cash in bills, at a brokerage, and I also keep plenty of my cash in FDIC insured accounts. Spreading out the risk.


Try this one:
https://en.wikipedia.org/wiki/Rhode_Isl ... ing_crisis


The Rhode Island banking crisis took place in the early 1990s, when approximately a third of the US state of Rhode Island's population lost access to funds in their bank accounts. The events were triggered by the failure of a Providence bank, Heritage Loan & Investment, due to long-term embezzlement by its president. News of its problems led to a bank run in which customers tried to withdraw money from the bank which did not have enough money available. In normal circumstances, depositors would be protected by the bank's insurance, but the state's private insurer had a long history of problems and was unable to fulfill its commitments. When the insurer collapsed, Governor Bruce Sundlun announced the closure of 45 credit unions and banks just hours after his inauguration.

In the first banking emergency in the state since the Great Depression, 300,000 depositors lost access to their money. Though some of the institutions reopened relatively quickly after obtaining federal insurance, many did not qualify and remained closed for an extended period of time. The state government set up an agency to manage the crisis, selling $697 million in bonds to repay people while filing about 300 lawsuits against the closed institutions and other companies that played a role in the crisis.

The shutdown sparked demonstrations and protests. Corruption hearings added to public frustration, when several executives and public officials were called to testify about their last minute withdrawals from banks just before their closure. The manhunt for the Heritage Loan & Investment president, who had fled to Utah, took nearly 18 months before he turned himself in. He was convicted, and given what at that time was the state's most severe sentence for a "white collar" offense.

Though all depositors were eventually repaid, most had to wait months or years for compensation. Most of the big banks remained closed for more than a year, and several never reopened.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 9:01 pm
by vnatale
jhogue wrote:
Thu Nov 24, 2022 11:23 am

welderwannabe wrote:
Thu Nov 24, 2022 9:43 am

jhogue wrote:
Thu Nov 24, 2022 8:29 am

I think you misunderstand. The problem isn't that the FDIC will fail. It won't. But if your bank fails, it could cause you no end of headaches before FDIC makes you whole again.


Well since I use a lot of FDIC insured bank accounts, please educate me with some examples in recent memory where depositors had lots of headache and had to wait significant amounts of time to be made whole on insured deposits.


One of our very own, Pugchief, and I discussed the problems that ensued when his bank, Washington Mutual went under. At the time, he had an account with that bank, and then its successor bank, arranged by the FDIC.

See:

https://gyroscopicinvesting.com/forum/v ... ef#p162756


When I spent all that time in the archives I had never been led to this topic. Looking at it now it seems like it sparked a lot of interest seeing that it went on for three pages.

Just subscribed to it for maybe later reading all of it sometime in the future.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 10:33 pm
by whatchamacallit
My calculations show this worse deal than Treasury money market.

It would only be about annual 4% return if you could replicate every 60 days. Rough estimate 2000 of 300000 is .66 % , x 6 is 3.96.


You would be better off buying 2 month Treasury that doesn't have state income tax for sure.

Re: Tempting Cash Rebate offers

Posted: Thu Nov 24, 2022 11:01 pm
by vnatale
whatchamacallit wrote:
Thu Nov 24, 2022 10:33 pm

My calculations show this worse deal than Treasury money market.

It would only be about annual 4% return if you could replicate every 60 days. Rough estimate 2000 of 300000 is .66 % , x 6 is 3.96.


You would be better off buying 2 month Treasury that doesn't have state income tax for sure.


Thanks for pointing out that super simple way of evaluating the offer.

Basically, just multiply the reward by six and then divide by the minimum balance.

So it tops out at 4% for $300,000. 4.5% for $200,000. Keeps going higher as you make a smaller investment. Tops out at 20% for investing $3,000 (earning $600 on a $3,000 investment).

However, I'm sure that in all cases you are only able to take advantage of this offer for one 60-day period since their goal is for your money to stay there once you put it there to get that initial one-time reward.

Re: Tempting Cash Rebate offers

Posted: Fri Nov 25, 2022 2:15 am
by mathjak107
We have been doing the citi bank priority account bonus for years .

My wife and I each get 700 for putting 50k in ..then i get 100 as a referral fee for a total of 1500 .. it stays gfor 60 days and then figure a weeks for the bonus

They let us repeat every 6 months .

I will check next month and see if they still have the promo

Re: Tempting Cash Rebate offers

Posted: Fri Nov 25, 2022 7:44 am
by welderwannabe
vnatale wrote:
Thu Nov 24, 2022 8:57 pm
Try this one:
https://en.wikipedia.org/wiki/Rhode_Isl ... ing_crisis


The Rhode Island banking crisis took place in the early 1990s, when approximately a third of the US state of Rhode Island's population lost access to funds in their bank accounts. The events were triggered by the failure of a Providence bank, Heritage Loan & Investment, due to long-term embezzlement by its president. News of its problems led to a bank run in which customers tried to withdraw money from the bank which did not have enough money available. In normal circumstances, depositors would be protected by the bank's insurance, but the state's private insurer had a long history of problems and was unable to fulfill its commitments. When the insurer collapsed, Governor Bruce Sundlun announced the closure of 45 credit unions and banks just hours after his inauguration.

In the first banking emergency in the state since the Great Depression, 300,000 depositors lost access to their money. Though some of the institutions reopened relatively quickly after obtaining federal insurance, many did not qualify and remained closed for an extended period of time. The state government set up an agency to manage the crisis, selling $697 million in bonds to repay people while filing about 300 lawsuits against the closed institutions and other companies that played a role in the crisis.

The shutdown sparked demonstrations and protests. Corruption hearings added to public frustration, when several executives and public officials were called to testify about their last minute withdrawals from banks just before their closure. The manhunt for the Heritage Loan & Investment president, who had fled to Utah, took nearly 18 months before he turned himself in. He was convicted, and given what at that time was the state's most severe sentence for a "white collar" offense.

Though all depositors were eventually repaid, most had to wait months or years for compensation. Most of the big banks remained closed for more than a year, and several never reopened.
That refers to non FDIC insured bank failures, and while really interesting (and scary) to read about, it isn't 100% relevant to the discussion.

We can also talk about FDIC failing, which would have to assume the Fed Reserve or US Treasury wouldnt step in to help. I think they would step in, as they even have been backtopping money markets. However jhogue stated that the FDIC failing wasn't the concern, but having to wait a long time for your money from a failed FDIC insured bank was. I've only ever heard of the opposite, that the FDIC made people whole and restored accounts within a day or two of a failure...many times over the weekend before people even knew the bank failed.

What this all boils down to is counterparty risk. A bank is effectively the counterparty between you and the Federal Reserve, storing your 'Federal Reserve Notes' aka dollars in their vault (electronically, but U get the point). A broker does the same thing, but with Treasury Bills. You have risk if either fails and i'm not sure one is any worse than the other. Imagine if Fidelity failed tomorrow and website was down, phones werent answered, and you had Tbills maturing? Where would the money go and how would you get to it? Only alternative is Treasury Direct, as no counterparty there, but look at stories people have about getting locked out of even that.

A Treasury money market, IMHO, is more risky than the above, as not only do you have risk with the brokerage stealing your money and not putting it into the fund, but you also have the possibility of the fund mgmt pilfering funds.

Now, if your cash exceeds that of FDIC insurance, then I would take a Treasury MM any day over uninsured funds in a bank. My position is simply that cash in an FDIC insured bank, within insurance limits, is as good or better than that of a TreasuryMM.

Re: Tempting Cash Rebate offers

Posted: Fri Nov 25, 2022 8:03 am
by mathjak107
I had a money market fail in 2008 …we were locked out for a while .

While not fdic it did show that you may need multiple sources to pay bills with

Re: Tempting Cash Rebate offers

Posted: Fri Nov 25, 2022 8:38 am
by vnatale
mathjak107 wrote:
Fri Nov 25, 2022 2:15 am

We have been doing the citi bank priority account bonus for years .

My wife and I each get 700 for putting 50k in ..then i get 100 as a referral fee for a total of 1500 .. it stays gfor 60 days and then figure a weeks for the bonus

They let us repeat every 6 months .

I will check next month and see if they still have the promo


I was going to invoke your name, mathjak, as I had known that you regularly did this.

I'm assuming that the two of you are putting in a total of $100,000? If so that would be an excellent annualized return of 9%.

Re: Tempting Cash Rebate offers

Posted: Fri Nov 25, 2022 8:39 am
by mathjak107
Yes 100k plus. 100 each in a checking account which you needed for the deal ..

So 100k in savings and 200 in total in two checking accounts

Re: Tempting Cash Rebate offers

Posted: Fri Nov 25, 2022 8:41 am
by vnatale
welderwannabe wrote:
Fri Nov 25, 2022 7:44 am



That refers to non FDIC insured bank failures, and while really interesting (and scary) to read about, it isn't 100% relevant to the discussion.

We can also talk about FDIC failing, which would have to assume the Fed Reserve or US Treasury wouldnt step in to help. I think they would step in, as they even have been backtopping money markets. However jhogue stated that the FDIC failing wasn't the concern, but having to wait a long time for your money from a failed FDIC insured bank was. I've only ever heard of the opposite, that the FDIC made people whole and restored accounts within a day or two of a failure...many times over the weekend before people even knew the bank failed.

What this all boils down to is counterparty risk. A bank is effectively the counterparty between you and the Federal Reserve, storing your 'Federal Reserve Notes' aka dollars in their vault (electronically, but U get the point). A broker does the same thing, but with Treasury Bills. You have risk if either fails and i'm not sure one is any worse than the other. Imagine if Fidelity failed tomorrow and website was down, phones werent answered, and you had Tbills maturing? Where would the money go and how would you get to it? Only alternative is Treasury Direct, as no counterparty there, but look at stories people have about getting locked out of even that.

A Treasury money market, IMHO, is more risky than the above, as not only do you have risk with the brokerage stealing your money and not putting it into the fund, but you also have the possibility of the fund mgmt pilfering funds.

Now, if your cash exceeds that of FDIC insurance, then I would take a Treasury MM any day over uninsured funds in a bank. My position is simply that cash in an FDIC insured bank, within insurance limits, is as good or better than that of a TreasuryMM.


All excellent points. Seems one would have to weigh the risks of Vanguard experiencing what you describe above (and, I believe Vanguard is now THE largest financial institution?) versus the extreme case with a bank failure and the FDIC's resources getting exhausted.

Re: Tempting Cash Rebate offers

Posted: Sat Nov 26, 2022 12:51 am
by boglerdude
Vanguard is too big to fail and too big to take your calls

Re: Tempting Cash Rebate offers

Posted: Sat Nov 26, 2022 2:31 am
by mathjak107
Just a heads up with citi bank ..
Don’t just draw the money out when the promo is done , you must actually close the account out or there are monthly fees for falling below the min balance .

It is a simple process but you do have to close it

Re: Tempting Cash Rebate offers

Posted: Sat Nov 26, 2022 7:05 am
by dualstow
boglerdude wrote:
Sat Nov 26, 2022 12:51 am
Vanguard is too big to fail and too big to take your calls
O0 Pretty much!

Re: Tempting Cash Rebate offers

Posted: Sat Nov 26, 2022 7:52 am
by vnatale
boglerdude wrote:
Sat Nov 26, 2022 12:51 am

Vanguard is too big to fail and too big to take your calls


I have not been happy with their recent (last year or two's) customer service and that I no longer get the special team that had been available to me.

Re: Tempting Cash Rebate offers

Posted: Sat Nov 26, 2022 7:53 am
by vnatale
mathjak107 wrote:
Sat Nov 26, 2022 2:31 am

Just a heads up with citi bank ..
Don’t just draw the money out when the promo is done , you must actually close the account out or there are monthly fees for falling below the min balance .

It is a simple process but you do have to close it


After someone above pointed out the actual return on an annualized basis I am no longer interested in the offer that I used to start this topic.