New CD rates question

Ah, so you think I should cash out and run off to Mexico before the wife finds out?

1.4% seems to be the going rate - according to Bankrate

And the difference is a whopping $25

How can you say no to that rate of return?

quote:

---

For 25 K Find a bank , credit union that has the high rate checking accounts and park it there- my bank pays 4.01% up to 35k

---

Looked into it. Too many bells and whistles. When I asked them to explain it they said "We don't really know." Big red flag.

quote:

---

Now why do banks do it? It is all about cash flow, sweep, short term loans- - easy money for the bank and they are willing to compensate you for it- the trade off is they keep the overhead on your account low-

---

Then why don't credit unions do it?
Why don't banks get the same flow, sweep, short term loan adv with CDs?
What does "keep the overhead on your account low" even mean?

quote:

---

Then why don't credit unions do it?

---

I've seen a few CUs in the BR area that offer these type of accounts.

quote:

---

Why don't banks get the same flow, sweep, short term loan adv with CDs?

---

The big incentive for them with offering these high interest checking accounts is to get you to forge a relationship with them. I think thats why you mostly see it offered from upstart banks who are trying woo new customers. They figure most people won't switch once a relationship has been developed with automatic payments setup, etc.

I don't think you'll be able to park money in one bank for a decade at a time and see a competitive rate the whole period. The banks will offer the best rates as they are getting started and then gradually reduce the rate as they draw in more customers. I've had my account for about 3 years and the rate started at 5 percent. It recently just dropped from 4 percent to 3 percent last week - it is time to find a new place. The good news is that there does not seem to be a shortage of new banks offering great rates. I'm just going to go ahead a switch to another bank and ride their high rates while they last.

quote:

---

What does "keep the overhead on your account low" even mean?

---

They all see to require electronic bank statements instead of paper bank statements. I'm not sure if this makes a big difference on overhead, but it must help.