4-Week T-Bill Rate Tumbled

Where should I put my money?

I was hoping that when the FNBO Direct 6.0% APY promotion ends in 10 days, I could go back to 4-week T-bills for short term investment.

Well, it looks like that’s not going to happen any time soon as the investment rate of 4-week T-bill tumbled to 4.079% APR in last week’s auction. That’s equivalent to 4.15% APY, a yield that even ING Direct can beat easily after the state income tax rate is factored in.

Looking at currently available bank rates, EverBank’s 6.01% introductory APY offers the highest return with an acceptable minimum balance requirement ($1,500). However, the biggest problem is the deal only lasts three months after the account is opened. I don’t know if I want to go through the hassle of getting an account for only three months. Besides, the rate could change soon if the Fed indeed cuts the federal funds rate today. In fact, for most of the online banks, the current interest rates have been in place for more than a year and a Fed cut will trigger online banks to roll back their interest rates as well. If that’s the case, the whole situation will have to be re-evaluated as banks may not reduce their rates at the same scale as the Fed funds rate.

What other options do I have to get the most out of my money while maintaining the flexibilities I have been enjoying so far with online banks and T-bills?

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