Good bank with low interest rate, or bad bank with higher interest rate?

I have about $200,000, and I am wondering about which bank I should save the money with. Discover bank saving account offers 1.9% annual yield, and its  customer service has been always very responsive to me and well-organized.  Vio bank saving account offers 2.5%, but the bank has bad reputation and they didn’t respond to my inquiries. Though Vio bank has bad reputation, I have never heard that clients money have disappeared, etc. The difference in the rate is 0.6%, totaling $1,200 difference in annual yield. Which way should I go?

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    • Superbone
    • YNAB convert since 2008
    • Superbone
    • 1 yr ago
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    How about something in between? I've only just heard of Vio bank recently. I currently use Betterment which is currently paying an introductory rate of 2.44%. I've used them off and on through the years and they have been solid with good customer service.

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  • Never had issues with Ally, Capital One 360, Discover Bank. You might even consider a Money Market Fund at a brokerage like Vanguard. Depending on your state, the after-tax yield on some money market funds may be better than most banks.  There are a couple robo advisors starting to add  cash management accounts with good yields. I wouldn't bother with a bad bank.

    I also wouldn't consider anything hovering around the 2% mark low interest. Most banks are still at the ridiculous  0.1%.

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    • I have heard really good things about Vanguard as well, though I've never had enough cash to find out.
      I don't think I would go with 'just' a bank with that much money, though.

  • What About Marcus? - Its at 1.3%

  • Just make sure the bank is insured so your investment is safe. Maybe divide the money up into different vehicles: GICs, money market, HISA, index funds (bonds/equities in a split that you feel comfortable with. Any tax-free savings options? Also depends upon your age if you want the money to grow. :)

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