Gyroscopic Investing

http://bucks.blogs.nytimes.com/2011/11/ ... s-account/

The prepaid card mentioned above is linked to a savings account that pays 5.01% on up to $5,000. One used to have to be an AFL-CIO member to sign up for this but apparently now can just join Working America and then get the card. If at least $500 is direct-deposited to it every month then no fee; otherwise a $2 monthly maintenance fee applies.

It does charge an ATM withdrawal fee ( $1.50) but you can always go to a grocery store and get cash back on a purchase (if you don't need to buy any groceries at the time you need cash then buying pack of gum, a packet of Kool-Aid, or a single Jolly Rancher is an order of magnitude cheaper than an ATM fee) using your PIN. You can withdraw up to $600 a day via the above cash-back method (most grocery stores limit you to $100 cash back at a time but Super WalMarts and Sam's Clubs-at least here in Georgia-have let me get $500 cash back with no problem before) or at an ATM.

The savings account this card is linked to is of course FDIC insured.

Apparently only one card is allowed per name/SSN but there's nothing stopping you from getting one for yourself, your significant other, any kids you might have, etc. If you keep this thing fully loaded with $5,000 (you can load more than that but won't earn any interest on amounts above five grand) you will earn about $250 a year (vs 0% for short term t-bills) for each card/acount you open.

It will be interesting to see how long they keep the 5% rate before they drop it...apparently they think most people will actually use the card as a check card for everyday purchases instead of as a high-yielding savings account and the folks who use it and pay ATM fees, monthly fees, interchange fees paid by merchants, etc will help offset the interest paid. Who knows if they will get adverse-selected against by a bunch of rate-tarts or not.

So theoretically if I don't want to dick around with carrying the card and using it to buy gum and get $100 cash back at a time, here's my suggested workflow that might work:

Step 1) Open Card. Send $5k to them
Step 2) Set up $500 Direct Deposit from my Paycheck monthly to them (my employer lets me split my Direct Deposit to multiple accounts
Step 3) Go to an ATM machine and take out $500 each month that was DD in, for $1.50, plus the $21 interest on the $5k I earned in that month.

It costs me $18 per year in ATM fees, and I keep exactly $5k in there at all times, and deduct anything over $5k, once a month for $1.50.

This only works because I have an employer that lets me split my check into multiple direct deposits. For anyone else it would be a hassle.

So theoretically if I don't want to dick around with carrying the card and using it to buy gum and get $100 cash back at a time, here's my suggested workflow that might work:

You would actually only have to buy some gum once per month as well if you got $500 cash back at WalMart. I suggested gum or candy because cheapskate that I am I'd rather pay $0.25 for a pack of gum or $0.08 for a piece of candy than $3.50 ( $1.50 the card charges plus the $2 or so the ATM charges) for an ATM fee.

This only works because I have an employer that lets me split my check into multiple direct deposits. For anyone else it would be a hassle.

Don't most employers let you do that nowadays? My direct deposit is split five ways (four reward checking accounts; one regular checking account that gets used as an ACH hub).

It's not worth my 15 minutes plus $2 in gas to drive to Wal Mart, wait on line, and then hope they have $500 in cash in their register to give me. And then have the Wal Mart people watch me stuff $500 in cash in my pocket. I'll pay the $3.50 fee at the ATM.

Seriously have you seen these people:

http://www.peopleofwalmart.com/