Marcus vs Vanguard Cash Plus?

The Coffee Shop
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Question for @windywave and other financially oriented types:

Any clear preference between a Marcus high yield account and a Vanguard Cash Plus account?

I have a Marcus account already where I keep my rainy day fund (set up before Vanguard Cash Plus was a thing). And I have retirement accounts at Vanguard.

I have some new cash that I want to be in a separate account. For now, I just want it in a HYSA.

Bogleheads folks seem to have very mixed-to-not-great reviews of Vanguard’s Cash Plus…though the gripes are more about difficulties with autopay and day-to-day use cases, which are utilities I’m not interested in. I’ve generally been happy with Vanguard on the retirement side.

Marcus has been fine for what I need it for.

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I’ll take a look at the Vanguard Product later today. I’m a fan of Marcus but open to new things

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Cool - thanks. I think you were the one who made me aware of Marcus as an option back when, and it was a good suggestion, so interested in your perspective.

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Another possibility if a HYSA is what you’re looking for is Synchrony. I’ve had a couple for a few years now. Seen the rate over 4% until he who shall not be named was sworn in, since then it’s hovered +/- a few tenths of a percent below.

Full disclosure, I am far from financially oriented. My advisor turned me on to Synchrony.

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Thanks! I have seen Synchrony mentioned on financial forums as an option. Seems solid, from what I’ve read.

As best I can, I’m trying to keep assets under as few financial roofs as is reasonably possible.

I keep my Vanguard retirement accounts because my old employer negotiated a good deal on the 401k package, and my IRAs have been there for long time.

My current employer uses a different 401k provider, so I already have retirement split across two different institutions.

Marcus for my rainy day fund. BofA for day to day stuff.

It’s already too many cooks in the kitchen. I could consider adding another institution, but there’d have to be a compelling reason. I see that Synchrony is currently offering 15 basis points more than Marcus and Vanguard, but I’m not sure that’s enough to compensate for the additional complexity.

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One thing about Synchrony, and I don’t know how this compares to your other options, deposits and withdrawals take 3 business days. Just something to be mindful of a sa rainy day or emergency fund.

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I had to move some money, so my guy put it into a JP Morgan money market fund which was yielding 4.40% (mid-June).

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Easier access to money market funds is one of the advantages I see to the Vanguard offering. Vanguard has its own MMFs. From what I can discern from Bogleheads, there were some issues with being able to invest in them directly from the Cash Plus account earlier on during beta - like, you had to move money out of the Cash Plus account, into a standard Vanguard brokerage account, and then buy into the MMF. But as best I can tell, MMFs are available directly from the Cash Plus account now.

I’m old enough to remember when some of my cash was hard to get back for a while when MMFs froze up in 2008, so I have some residual apprehension from that. But even my paranoid lawyer, ‘what’s the worst that can happen’ viewpoint has to admit money market investments are pretty darn safe.

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So I would go with Marcus if the amount is under 250K.

Traditional banking laws etc. Vanguard is doing aome financial alchemy to get you to 1.25MM in FDIC but you’re responsible for ensuring you don’t go over the individual limit per bank. I didn’t see who the banks are but I doubt all five (guessing it’s five due to 1.25 MM) are name brand banks.

I also believe in diversification so that if Vanguard went down not all eggs are there.

This isn’t hot money i.e. if you’re going to invest you can wait a day or two so the simplicity and known factors of Marcus versus the Vanguard is why I say Marcus.

I have some other thoughts on what to do with the cash if you want to PM me and are comfortable buying treasuries on Vanguard’s platform (or Fidelity which has a cool feature I just discovered this week) and don’t need all of it for a bit. If you don’t want to have to think though go with Marcus.

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Which is not FDIC insured

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If you already have a Vanguard account, the Vanguard money market account is currently at 4.21%, pegged to a 7 day SEC yield. It is rather easy to move money in and out of their Brokerage accounts if you don’t need the money right away.

And yes, before Windy complains that is not FDIC insured.

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Appreciate it. Will send a DM.

More than 5 participating banks - list is below. Per mck414’s post, looks like Synchrony is one of them. Vanguard is offering 3.65%. Synchrony is offering 3.8%. I assume (probably wrongly/over-simplistically) that Vanguard is making its money on that spread (?), at least with respect to that particular relationship.

I don’t know if I would have visibility into which bank my assets got sorted into. And it seems weird that it would be on me to ensure no one bank would hold more than the $250k FDIC limit, when Vanguard is holding itself out with the 1.25M limit. How did you come to that conclusion?

Participating banks:
American Express
Bank of Baroda
CIBC Bank USA
Citibank, N.A.
First Foundation
HSBC Bank USA, N.A.
The Huntington National Bank
NexBank
Synchrony Bank
Synovus Bank
Truist Bank
UBS Bank USA
Valley National Bank
Wells Fargo Bank, National Association

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Footnote 4

I skimmed it earlier (and sure as hell not reading it at this hour) but that was my takeaway

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Ah, I see. They even helpfully bolded it.

I read it more in the lines of, if you have separate accounts at a participating bank, that were not established through the Vanguard relationship - then it’s on you to monitor the insured limits when you add the Vanguard-sourced funds into the aggregate that you hold at the participating institution. But could be wrong on that.