Higher interest rates on cash without internet or cell phone access? — My money blog

Here’s a reader question I found interesting about “low-tech” retirees:

Hi, my 82 year old father in law doesn’t own a cellphone or a computer. He has very little “visibility” on the internet because he has been a self-employed craftsman for the past 40 years. But he has money to invest, and it’s in a near-zero savings account. For the reasons listed above, he may not qualify for any of the available high-yield savings accounts. Their methods of identifying customers require a cell phone and some sort of documentable internet presence. Maybe that’s an extreme example, but I imagine there are others in similar situations. Any idea how such a person could get a higher return? Thank you.

I empathize with this issue as I often help older relatives navigate modern life without internet access. I’m also a fan of low tech as a form of resilience backup and emergency preparedness. What would happen if the power went out for a long time? What if you suddenly died and no one could figure out your passwords?

This question is specifically about low interest rates on cash. It is no coincidence that NONE of the three largest banks by branch size (Bank of America, Chase and Wells Fargo) offer a decent rate of interest on their basic checking and savings accounts. (Citibank also offers its Accelerate High-Yield Savings Account only in states where it has no physical branches.) If they made it easy to register for a “High-Yield Savings Account,” they would lose many millions in profits as all the people offline they would happily swap their deposits earning 0.01% APY. My 94-year-old great aunt will dilute her dish soap until it’s back on sale at the local supermarket. You can bet he would walk straight into his local branch to sign up for a savings account paying 3% APY instead of 0.02% APY!

My first thought is that I would open an account with Fidelity Investments, as they have a strong history as a traditional broker with a full customer helpline. Loyalty would still work just fine if there were only snail mail envelopes and rotary phones. This Fidelity Core Positions page it’s a useful bookmark to see the current interest rates (screenshot below taken on 11/18/2022) on the various options for your primary position (defaults to uninvested money). As you can see, the rates are quite competitive with online banks. Money market funds are not FDIC insured, but they are very close (and even closer after recent regulations). I personally don’t lose any sleep with my Fidelity money market funds, and I also mail large checks every year for my Solo 401k plan.

Also, Fidelity has a discrete network of branches (“Investor Centers”) in major metropolitan areas nationwide. Finally, Fidelity offers robust inventory for brokered CDs and access to Treasuries and bonds should you be willing to lock up your money for a higher rate.

Why am I not including Vanguard? While Vanguard money market funds are excellent and usually pay even higher interest rates than Fidelity money market funds, I have heard too many customer complaints waiting times of about an hour for telephone customer service. Vanguard also does not have a physical branch network. I try my best to only use Vanguard for simple index fund transactions and nothing complicated. Meanwhile, TD Ameritrade and Schwab have a few money market options and physical branches, but you have to make each transaction manually while defaulting to a dismal cash sweep program that pays out less than 0.50% APY. This is why I would choose Fidelity over the others. (No, Fidelity didn’t pay me to say any of this. Sadly…)

Another option would be a local credit union that seeks loan growth (which requires deposit growth) and then offers high interest rates. You would like to find one that has a physical branch in your area, and the best resource for this is DepositAccount.com which allows you to search by postcode. Make sure you uncheck the “Web Only” box and check the “Local Branches” box.

Hopefully this will allow you to find a physical branch nearby that offers a decent rate. Often, good rates only show up in certificates of deposit (which allow them to match maturities), but you might just scale even 1-year CDs over time to maintain a solid rate with decent liquidity. Many of the military-affiliated credit unions have a larger branch network and a history of competitive products, and some of them can be merged without military status. Good luck and thanks for helping others!