Paypal money market/savings account

[schmidty]

anyone ever used their paypal account as a money market/savings account? I know your money isnt covered by the FDIC, but with a 5.02% interest rate you could transfer $1000 to your paypal account for a month and make $50.... or am I missing something?

...and save all the paypal is crap comments... I know paypal isn't the best for online buying/selling like on ebay (although I've never had any trouble with them other then the outrageous fees when you get money sent to you, which doesnt apply to balance transfers) but for a short term 'investment' what could go wrong (barring some huge financial disaster)???

[euroshark]

You aren't missing anything, thats how it works! I've had a few hundred sitting around in there for a while... Not sure if I'm willing to put in any more yet.

[SchnellerVert]

That more interest than you will make with a typical savings account. If it's not FDIC covered I would not honestly do it thou.

Banks offer money markets and CD's and they are FDIC covered. If you want to gamble with the money use the stock market or futures.

[s0urce]

I'd rather go with CD's. The fact that it's not FDIC insured is a big no-no if you want to put any significant amount of money in there.

[Digitalwave]

Bank of America has a high yield CD at 5.1% but you need need a $5,000 minimum. They have a money market savings with a $2,500 minimum at 4.x%.

[schmidty]

I'll prolly get a CD or conventional money market account in the near future (a year or so down the road.... when I graduate) I was just thinking of throwing $1k in for a month or two for a quick $50-100 turnaround. I don't want to invest in a CD right now cause I know I'll prolly need the money while I'm in school so I dont want to do a long term investment.

Paypal not being FDIC approved worries me a little but honestly unless we have an economical meltdown, or paypal goes under (doubtful) in the next year is there anything else to worry about? I mean, paypal can't 'steal' my money from me can they?

[rwh11385]

I mean, paypal can't 'steal' my money from me can they?

people would say otherwise

[erik325i]

anyone ever used their paypal account as a money market/savings account? I know your money isnt covered by the FDIC, but with a 5.02% interest rate you could transfer $1000 to your paypal account for a month and make $50.... or am I missing something?

Actually, you would not make $50 in a month, but rather a year. The 5.02% is an annual percentage rate, so each month, you are only getting 1/12th of that 5%.

I prefer using ingdirect.com for my savings account. It gets about 4.5% interest, and it's really easy to use. I have an automatic savings plan set up, so it takes out a set amount of money from my checking account each month and puts it into my savings.
*ps. If anyone wants to sign up for an account at ingdirect, send me a PM. If you sign up using me as a referral, you will get a free $25.

-Erik

[Rigmaster]

Erik summed up what I was gonna say about the interest rate- it's 5% annually, not monthly...

Anyway, I have been using the Paypal money market account for a while now, I try to keep close to a set amount in there- it fluctuates a little bit every month, but it's worked out fine so far.

I also have that account connected to a Paypal debit card- my wife calls it the "magical Paypal card".... :) I've found it easier to use the Paypal card to buy everyday things, gas, groceries, etc than it is to transfer the $$ out of Paypal into my regular checking acct- which pays 1% or so. I don't feel 100% comfortable with the fact that it's NOT FDIC insured, but I try to limit the amount I keep in there so if the shit hits the fan, it won't splatter too far....


Bret

[schmidty]

Actually, you would not make $50 in a month, but rather a year. The 5.02% is an annual percentage rate, so each month, you are only getting 1/12th of that 5%.

-Erik

duh... sometimes I amaze myself at some of the stupid stuff I do/overlook....

[RobertK]

Capitol One Money Market Account = 4.75% APR and only requires a $100 to open an account. You get one check book and a ATM card. You can write 3 checks and make three ATM withdrawals without penalty.

http://www.capitalone.com/directbanking/hymm/?linkid=WWW_1106_SAVG_09_HOME_C1_03_T_SP25&itc=CAPITALONE3111SZINTMKTGD4

Paypal does not offer enough interest to counter act the risk of having a lot of money tied into an account that is not FDIC insured. Especially with all the Paypal horror stories you hear about disappearing transactions / funds.

[nando]

all of those interest rates are crap. you guys are young, so you need to take on more risk - a 4-5% interest rate is barely above inflation. they call it going broke safely for a reason. buy bonds and CD's when you are close to retiring, not when you are young...

the stock market had a slow year and it still did 6%...

[SchnellerVert]

And since nobody has mentioned it Roth IRA and a conventional IRA. Pay yourself now and it will pay you back in the future.

Retirement accounts work.

[Jscotty]

I got into the paypal game early on and I sold a bunch of my unwanted stuff on ebay which caused me to rack up a little more than $2000 in my paypal account. And then I got an email from them saying, "Earn 3% to 4% on this balance" and I figured that it wasn't money that I was missing anyhow, so I gave it a try. And sure enough, I earned a few bucks on the money that otherwise would have been sitting there. I don't know if I could sleep at night if I put $100,000 of my own hard earned money into a paypal account but in spite of all of the terrible things that I have heard about that company, they have always done me right.

[nando]

And since nobody has mentioned it Roth IRA and a conventional IRA. Pay yourself now and it will pay you back in the future.

Retirement accounts work.

yeah, roth IRA all the way! don't even think about getting a regular IRA..