Reader Question: Higher interest rates on cash without internet access or cell phones?

Here’s a reader question I found interesting regarding “low-tech retirees”:

Hello, my 82 year old stepfather does not own a cell phone or a computer. He has very little “visibility” on the internet because he has been an independent craftsman for the last 40 years. But he has money to invest, and he’s sitting on almost zero savings. For the reasons listed above, he cannot qualify for any of the high yield savings accounts that exist. Their methods of identifying customers require a cell phone and some sort of documented internet presence. He may be an extreme example, but I suspect there are others in similar situations. Any thoughts on how such a person can get a higher return? Thanks.

I am sensitive to this issue as I frequently help older parents navigate modern life without internet access. I’m also a fan of low-tech as a form of backup resilience and emergency preparedness. What would happen in the event of a prolonged power outage? What if you died suddenly and no one could find your passwords?

This question is specifically about low interest rates on cash. It’s no coincidence that NONE of the three largest banks by branch size (Bank of America, Chase, and Wells Fargo) offer a decent interest rate on their basic checking and savings accounts. (Even Citibank only offers its high-yield Accelerate Savings Account in states where it doesn’t have physical branches.) People offline would be happy to switch their deposits earning 0.01% APY. My 94-year-old great-aunt will water down her dish soap until it comes back on sale at the local grocery store. You can bet she would go straight to her local branch to open a savings account paying 3% APY instead of 0.02% APY!

My first thought is that I would open an account with Fidelity Investments as they have a solid history as a traditional broker with a fully staffed customer service phone line. Fidelity would still work just fine if it was just mail envelopes and rotary phones. This Fidelity Core Positions page is a handy bookmark to see current interest rates (screenshot below taken 11/18/2022) on the various options for your core position (default for uninvested cash) . As you can see, the rates are quite competitive with online banks. Money market funds aren’t FDIC-insured, but they’re pretty close (and even closer after recent regulations). I personally don’t lose a bit of sleep over my Fidelity money market funds and also mail them big checks every year for my Solo 401k plan.

Additionally, Fidelity has a decent branch network (“Investor Centers”) in major metropolitan areas of the country. Finally, Fidelity offers a solid inventory of traded CDs and access to Treasuries and bonds if you’re willing to lock in your money at a higher rate.

Why am I not including Vanguard? Although Vanguard money market funds are excellent and generally pay even higher interest rates than Fidelity money market funds, I’ve heard way too many customer complaints about hour-long wait times for customer service by phone. Vanguard also does not have a physical branch network. I do my best to only use Vanguard for simple index fund trading and nothing complicated. Meanwhile, TD Ameritrade and Schwab have money market options and physical branches, but you have to do every trade manually while the default is a dull cash sweep program paying less than 0.50% APY. That’s why I would choose Fidelity over the rest. (No, Fidelity didn’t pay me to say anything. Unfortunately…)

Another option would be a local credit union that seeks loan growth (which requires deposit growth) and therefore offers high interest rates. You would want to find one that has a physical branch in your area, and the best resource for that is DepositAccounts.com which lets you search by zip code. Make sure to uncheck the “Web only” box and check the “Local branches” box.

This will hopefully allow you to find a physical branch nearby that will offer a decent rate. Often good rates only appear on CDs (allowing them to match maturities), but you can simply ladder even 1-year CDs over time to maintain a solid rate with decent liquidity. Many military-affiliated credit unions have larger branch networks and competitive product histories, and some can be joined without military status. Good luck and thanks for helping others!