Where to hold EF? Can't open account at Ally or Capital360 due to H1b visa

[Dr. Mom]

pistolpete wrote:

Dr. Mom wrote:

Could you just open an account at a local bank?  We keep our EF in a bank MMF linked to our checking account.  The extra I could get by moving it online is not meaningful to us.  We live in an area where power loss and internet loss concern me as they limit my ability to access online funds.  I can move money between the accounts immediately so no worries about timeframe of fund availability.

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I could, but that would earn me almost nothing. I have a checking account with a major bank and could just open up a savings account, I suppose.

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Not a savings account.  Look for a bank Money Market account/fund.  Higher than savings account rate but not as good as online.  FDIC insured if you care about that or believe in it.

[pistolpete]

Crixus wrote:

Oh let me tell you a story about getting your money out of the bank. Don’t count on any quick transfers even if there is no crisis. I once had a measly 40K EBT that HSBC didn’t want to let go. It took a while, but I had raise ************************ to get it thru. You see what you think is your money really isn’t your asset as much it is a bank’s liability. A bank depositor is an unsecured creditor.

 

One thing to always keep an eye on are the transaction limit for external bank transfers. There didn’t used to be such things unless over 100K, but since 2008 some banks/credit unions won’t let you transfer more than 5k per day or 30K per month and this is when the system is calm. Imagine what’s going to happen if interbank lending freezes up? Gates are up. You might only be allowed a 1000 dollars per month. So think twice before socking away a pretty penny in a single institution.

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Wow, they can do that? I had no idea banks could just arbitrarily limit how much of MY money they will allow for ME to withdraw in a given month in a timely fashion. Guess I still have much to learn. So I'm curious, how many different banking accounts do you have your money sitting in, @Crixus? It sounds like you recommend putting in smaller amounts in several banks rather than one large amount in one bank.

[DMFA]

Clearly it's nice to earn every dollar you can, but 1% on a $25,000 emergency fund is $250/yr.  So just in case you don't get the best rate ever, it isn't the end of the world.  It's good to keep a decent chunk in your everyday bank anyway for complete availability since it can take a couple days to get it out of online accounts.

[pistolpete]

Crixus wrote:

If you have a SSN you can bypass the banking system and just buy Tbills direct from the government. 6mo paper gets you over 1% now. This way you have no counterparty bail-in risk be it the bank or the FDIC. All you have is currency risk.

 

https://www.treasurydirect.gov/RS/UN-AccountCreate.do

 

Ally has exposure to subprime auto.  CapOne360 probably the same. Stay away. Definitely not worth a crummy 1%.

Stay away from Money Market Funds even Vanguard. The gates will go up on these puppies during a crisis. This is what regulators have been prepping for by stipulating these funds have more sov debt as opposed to commercial paper. Problem is, commercial debt may actually be safer at least for awhile. It’s sov debt that will default with the next crisis.

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Interesting, thanks! I hadn't thought about T bills

[pistolpete]

Dr. Mom wrote:

Could you just open an account at a local bank?  We keep our EF in a bank MMF linked to our checking account.  The extra I could get by moving it online is not meaningful to us.  We live in an area where power loss and internet loss concern me as they limit my ability to access online funds.  I can move money between the accounts immediately so no worries about timeframe of fund availability.

Click to expand...

I could, but that would earn me almost nothing. I have a checking account with a major bank and could just open up a savings account, I suppose.

[Dr. Mom]

mamaham wrote:

Dr. Mom wrote:

Could you just open an account at a local bank?  We keep our EF in a bank MMF linked to our checking account.  The extra I could get by moving it online is not meaningful to us.  We live in an area where power loss and internet loss concern me as they limit my ability to access online funds.  I can move money between the accounts immediately so no worries about timeframe of fund availability.

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great that you get a good rate at the local bank.  we are about to move our EF to an online bank (with 1%) because our bank rate is so low.  Stinks because it is a nice piece of mind to know that in an emergency we could just walk into the local branch and ask for our money out.

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Not a "good rate."  Just worth the piece of mind for us.

[mamaham]

Dr. Mom wrote:

Could you just open an account at a local bank?  We keep our EF in a bank MMF linked to our checking account.  The extra I could get by moving it online is not meaningful to us.  We live in an area where power loss and internet loss concern me as they limit my ability to access online funds.  I can move money between the accounts immediately so no worries about timeframe of fund availability.

Click to expand...

great that you get a good rate at the local bank.  we are about to move our EF to an online bank (with 1%) because our bank rate is so low.  Stinks because it is a nice piece of mind to know that in an emergency we could just walk into the local branch and ask for our money out.

[Dr. Mom]

Could you just open an account at a local bank?  We keep our EF in a bank MMF linked to our checking account.  The extra I could get by moving it online is not meaningful to us.  We live in an area where power loss and internet loss concern me as they limit my ability to access online funds.  I can move money between the accounts immediately so no worries about timeframe of fund availability.

[mamaham]

good call... i did not even look at the dates... duh!

[jfoxcpacfp]

mamaham wrote:

looks like you can go with vanguard…

https://www.bogleheads.org/forum/viewtopic.php?t=141211

 

WCI just posted that his is invested in Vanguard Tax-Exempt MMF.  https://www.whitecoatinvestor.com/are-emergency-funds-for-the-weak-minded/

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Check directly with Vanguard. That thread is from 2014 and many big custodians have tightened their rules since then. I searched the site but didn't find either yea or nay so just give them a call to find out.

[mamaham]

looks like you can go with vanguard...

https://www.bogleheads.org/forum/viewtopic.php?t=141211

 

WCI just posted that his is invested in Vanguard Tax-Exempt MMF.  https://www.whitecoatinvestor.com/are-emergency-funds-for-the-weak-minded/

[pistolpete]

I'm on an H1b visa and likely won't get my green card for another 9 months at least. Now that I'll be taking an attending job, I will be building up an actual emergency fund. I was going to put it in Ally Bank or Capital360 to earn 1%, but they won't let me open an account since I'm not a US citizen or permanent resident yet. Where should I put my emergency fund?