How to Replace Your Bank Account

Hello, YieldAlley readers! In this week’s newsletter:

• Rates Roundup for money market funds, brokered CDs, Treasury bills, and ultra short-term bond ETFs.

• Read of the Week: How to Replace Your Bank Account

• Elsewhere: Real estate commissions, American retirement savings, TikTok ban, Young people and money, Auto insurance rates.

For the Week Ending March 15, 2024

Government Money Market Funds (7-Day Yields)

Charles Schwab Money Market Funds

• SNVXX (Schwab Government Money Fund - Investor Shares): 5.04%

• SNSXX (Schwab U.S. Treasury Money Fund - Investor Shares): 5.03%

Fidelity Money Market Funds

• SPAXX (Fidelity Government Money Market Fund): 4.96%

• FDLXX (Fidelity Treasury Only Money Market Fund): 4.96%

Merrill Edge and Merrill Lynch Money Market Funds

• TTTXX (BlackRock Liquidity Funds: Treasury Trust - Institutional Class): 5.18%

• TOIXX (Federated Hermes Treasury Obligations Fund - Institutional Class): 5.16%

Vanguard Money Market Funds

• VMFXX (Federal Money Market Fund): 5.27%

• VUSXX (Treasury Money Market Fund): 5.28%

Brokered CD Rates (6-Month)

• Charles Schwab: 5.37%

• E*Trade: 5.30%

• Fidelity: 5.30%

• Merrill Edge and Merrill Lynch: 5.30%

• Vanguard: 5.35%

T-Bill Rates

• 3-Month: 5.39%

• 6-Month: 5.34%

• 1-Year: 5.08%

Ultra Short-term Treasury Bill and Floating Rate Note ETFs (30-Day Yields)

• SGOV (iShares 0-3 Month Treasury Bond ETF): 5.26%

• BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): 5.19%

• USFR (WisdomTree Floating Rate Treasury Fund): 5.37%

• TFLO (iShares Treasury Floating Rate Bond ETF): 5.38%

How to Replace Your Bank Account

From an everyday perspective, a bank account only serves two purposes: a place to deposit our cash and a place to withdraw our cash (for payments or outgoing transfers).

We believe these days, you can fully replace your bank account with your brokerage account. Earlier this week, we wrote a comprehensive guide on how to do this with a Fidelity brokerage account or Cash Management Account.

Why would you do this?

By using a brokerage account to manage our cash, we can take advantage of higher interest rates in a fully automated manner. Traditional checking accounts pay an average APY of 0.07%, and the national average APY for savings accounts is 0.57%.

Meanwhile, a Fidelity Cash Management Account (CMA) pays 2.72%, and with some innovative fine-tuning, we can automate our income and direct deposits to earn 5% or more.

A checking account should offer:

• Direct deposit

• Bill pay

• Check writing features

• Check deposits

• Routing and account numbers for direct deposit and bill pay

• ACH transfers

• Wire transfers

• Debit card and global ATM withdrawals

• Physical cash deposits

• Zelle support

Most brokerage accounts offer almost all the features above. In some cases, they offer an even better user experience than traditional banks (for example, Fidelity offers free ATM withdrawals worldwide).

To handle non-everyday bank activities like cash deposits or taking out a loan, we recommend having a separate bank account or credit union account on standby. But for tasks like online direct deposits and bill payments, your regular brokerage account should satisfy all your needs.

Read our “Fidelity as a bank” guide to learn how to use your Fidelity brokerage account for everyday cash management needs.

• Home buyers and sellers will soon negotiate their own commissions with agents (link)

• 28% of Americans have $0 saved for retirement. (link)

• Former Treasury Secretary Mnuchin is putting together an investor group to buy TikTok (link)

• TikTok is teaching young people about money (link)

• Auto insurance costs are rising at the fastest rate in 47 years (link)

We’d love to hear from you. If you have any feedback or thoughts, please feel free to directly respond to this email with your message. Our ChatGPT bot is also available for your questions, as is our Facebook group.

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