Dividends4Life: Money Market Rates - How Low Can You Go?

Money Market Rates - How Low Can You Go?

Posted by D4L | Saturday, May 31, 2008 | | 7 comments »

Back in March I wrote "MMA Rates are Falling, What are You Going to Do?" Then my best money market earner was AmTrust Direct at what I described as a "measly 3.75%". In less than three months, AmTrust Direct is now at 2.75% and is no longer my best earner. That honor now goes to ING at 3.00%. This somewhat surprised me since ING has traditionally been my lowest account.

When I last discussed money market rates, I begun to accelerated the pace of moving funds from my money market account (MMA) to my stock investments. Since my annual bonus came in late March, I am now actually sitting on more cash than before. It is a delicate balance between finding good investments vs. effectively giving the bank an interest-free loan. My wife is doing her part - she found a mini-van to help lower the MMA balance.

On the positive side, each month as interest rates fall, my dividend income increases. Not only from additional investments, but from companies raising their dividend rate. It is comforting to know that even in these financially difficult times, there are still good companies out there succeeding in there business and rewarding their shareholders. I just need to get more money out of the MMAs and into these good companies - at the right price, of coarse.

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  1. D // May 31, 2008 at 10:45 AM


    For short term cash, i typically use a rewards checking account at my local credit union. The APY is 5.01% ( down form 6.01%). There are some requirements like 10 debit transactions pred month ( go 4 times to buy groceries, 4 times to fill up your gas tank, 2 times to go eat outside), a direct deposit and the interest is capped to the first $25k.

    Best Regards,


  2. Unknown // May 31, 2008 at 3:31 PM

    I think the question regarding money market accounts is what are you using it for?

    To serve as a holding tank for purchases in the short-term future or to serve as a long-term holding tank for emergencies? Etc...

    After all, you always want to buy low and sell high but in order to do that, you have to wait for the opportunity to open up.

  3. Anonymous // May 31, 2008 at 5:09 PM


    That's an excellent return from a bank right now. I'll have to check out similar offers in my area.


    Your last line is extremely important. As more and more people sweep cash from savings accounts to bonds and solid dividend payers, the share prices could easily get bloated beyond where they should be. Definitely needs to be kept in mind.

  4. Anonymous // May 31, 2008 at 10:23 PM

    Dividend Growth Investor: That is an incredibkle deal. I have not seen one like that where I live.

    TheLocoMono: Definitely looking for opportunities to get fully invested.

    Blake: I am always looking for the right entry point.

    Best Wishes,

  5. Anonymous // June 1, 2008 at 4:10 PM

    Am doing the same.
    Right now, 6/1/08 Capital One pays 3.5%, but with a caveat.
    They do not credit your account for 2 to 3 days after the debit is posted to you funding account, even when the transaction is initiated by them.
    Found that out after I opened an account with them. Well I'll let 'em keep my $1.00 initial deposit.
    E*Trade pays 3.15% (Savings) 3.25% (Checking).
    GMAC and Emigrant 3%
    Some pay higher returns on the first portion of a teared account.

  6. Anonymous // June 2, 2008 at 5:59 AM

    RW: There must be several options at Capital One. My account there is only paying 3.0%. Thanks for the info.!

    Best Wishes,

  7. Anonymous // June 5, 2008 at 4:57 AM

    The 3.5% is for their Online Savings Account with balances over 10k.
    BTW I use Bankrate.com to keep on top of rate offers and bank ratings.

    Good hunting

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