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Comment by tony101 | Hacker News Reader

There are banks & credit unions that pay interest close to the fed funds rate. Unfortunately just not the mainstream consumer banks.

Some examples:

Goldman Sachs (1.90%): https://www.marcus.com/us/en/savings/high-yield-savings

Ally Bank (1.85%): https://www.ally.com/bank/view-rates/

Alliant Credit Union (1.80%): https://www.alliantcreditunion.org/rates

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Buying Money Market funds also have similar yields and are frequently backed by treasury bonds. Vanguard's MM fund currently has a yield of 1.96.

Plus you get a tax benefit by buying Treasuries.

Money market funds aren’t FDIC insured.

In the crash of 2008, they were temporarily insured. It's not unreasonable to expect they will similarly be insured in any major financial crash.

I can't trust my emergency fund to the whims of backroom deals between central bankers, Wall Street, and whatever administration is in power when the economy is grinding to a halt, most especially for almost no additional benefit (comparing interest rates, the spread is only single digit basis points) over an FDIC insured account.

I can see your point, but I really want to stress for others out there reading this thread that it isn't responsible to hope for insurance that doesn't exist when you need it the most.

Yeah and I heard a friend who said redemptions from his money market fund was suspended for a brief period during 2008.

Dunno how long the suspension lasted, or if he was merely confused, but it would suck to not be able to withdraw money when you need it most.

How much does the transaction cost eat into the coupon though?

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