Sunday, April 23, 2006

Chasing the Bank Accounts Bogey and Illusory Float, Addendum

First see my original post...


Another "free" checking service (that isn't useful enough on the margin to make me want to get one) from WaMu:

Adds free checks for life, free outgoing wire transfers (w/certain conditions), free Overdraft or Non-Sufficient Funds Fee Refund -- one per year (but they carry over), free ATM withdrawals (not as good as USAA -- WaMu doesn't refund you the external ATM machine's charge -- they just don't charge you themselves...)



1 Comments:

At 4/26/2006 7:56 AM, Blogger Miserly Bastard said...

Many PF bloggers go overboard chasing return and freebies. As a practical matter, given the amount of money most of these guys are moving around, 30 to 50 basis points doesnt move the needle at all.

As the amounts of money start getting larger such that these basis point differentials add up (e.g., 6-handle, 7-handle), as you indicated in an earlier post, tax-advantaged instruments are going to have the clear edge. (For instance, the Vanguard NY MMF is paying 3.44% 7-day yield. At the 45% top marginal rate, this is around 6.25% nominal, which just crushes anything available on an M1 deposit account).

I think for most people, you get a near pareto-optimal solution at 4% or better. After that, stuff like ATM network, weekend branch availability, minimum deposits, online billpay, statement ease-of-use, "preferred customer services" like free cashier checks, special teller lines, etc. all matter more than the slightly greater marginal interest.

 

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