geo123 said:I only briefly glanced at the prospectus and did not check to see whether these are low floaters or not (I am assuming that they are). If they are, these very low risk notes offer more liquidity than CD's or Tbills at very competitive yields for large deposits.

P.S. I just double checked the prospectus and these are indeed 7-day variable rate notes that mature on demand. GECC allows unlimited check writing and ACH deposits. Very nice!

All the same my friend, I would probably stick with a bank MM than a junk bond.

hoffjm00 said:

All the same my friend, I would probably stick with a bank MM than a junk bond.
I agree, The only rate that beats what you can find at a number of FDIC Banks is the $50k+ 5.17%. Even at that you can find accounts at 5% for a far less min

scott1961 said:The only rate that beats what you can find at a number of FDIC Banks is the $50k+ 5.17%. Even at that you can find accounts at 5% for a far less minIf you have less than $50K, the yield differential between banks is probably too small to make a meaningful difference anyway. As for the yield offered here, I don't see too many bank accounts with lower minimums, similar yields and unlimited checkwriting privileges.

geo123 said:hoffjm00 said:All the same my friend, I would probably stick with a bank MM than a junk bond.How's this a junk bond? Without reviewing the indenture, the only risk that I can see here is the credit risk, which is quite minimal with AAA rated paper. The yield premium that these notes offer is 0.37% over FDIC insured liquid investments such as HSBC -- not too shabby. Frankly, right now I don't see too many disadvantages to owning these notes.

Geo, you are right, and I rescind. I was in error thinking that all corp bonds are junk bonds, the classic square / rectangle snafu.

However, it is nice that you can get 4.8 from HSBC without a 15K investment. That's why I prefer a MM.

scott1961 said:I guess if you were looking for unlimited check writing and were willing to keep at least $50k this would be okay. I agree that these are not junk status but the whole reason I am into banks is to have zero risk. I think something like MBNA's 5.04% $15k min with limiting check writing is worth losing the .13% to have it insured. I guess I am getting spoiled with my unlimited check writing/ATM full insured account now at 5.22%, should be over 5.40% come 7/1Scott, to each is own. I see absolutely nothing wrong with not rate chasing relatively small yield differentials and using your time doing other things.

As for the "junk" comment or the risk assessment -- this is AAA rated paper, the highest rating possible. Frankly, I don't see a meaningful difference in credit risk between that and any other insured investment.

hoffjm00 said:Geo, you are right, and I rescind. I was in error thinking that all corp bonds are junk bonds, the classic square / rectangle snafu.No probs. The fact that something is a corporate bond or a corporate note just means that it is a debt obligation of a company. The credit risk is evaluated by rating agencies such as Standard & Poor and Moody's. As such, the credit risk of any particular note depends on the financial stability of the issuer and not on its identity (you can theoretically have a junk municipal bond, for instance).

A high yield, or "junk", bond is a bond issued by a company or another type of debtor that is considered to be a higher credit risk. The credit rating of a high yield bond is considered "speculative" grade or below "investment grade". By contrast, the notes in question have the highest credit rating possible, which is the reason that I do not see meaningful credit risk differences between them and FDIC insured investments.

Related to the junk discussion, see GMAC Demand Notes at 6%, $1000 min.

I've had a GE Interest Plus account for about a month now. It's working quite well. Getting close to $10/day in interest.

And in case it wasn't mentioned earlier, it's not quite Unlimited Check Writing. Checks must be at least $250 to avoid a fee.

For now it's a good place to keep the money above $100K that I can't put in EverBank (their 5.51% APY promotional rate is only good for the first $100K).

Thanks for the interesting article, OP! The yield information in the article is somewhat dated (looks like 6-8 weeks old). Here is a comparison at what they are now ...

1 month T-bill ... 4.78% APY (article denies their existence)
3 month T-bill ... 5.05% APY (article says 4.8)
6 month T-bill ... 5.33% APY (article says 4.93)
12 month T-bill ... does not exist (contrary to article's claims)

Similarly, CDs are around 0.2-0.3% higher than the article claims, but there are so many of them that the comparison is left as an exercise to the attentive reader.

As stated above, the article contains some errors in claiming that T-bills have a minimum maturity period of 3 months (minimum open to the individual investor is 1 month) and the 52 week T-bill that the author refers to does not exist. Furthermore, the notion that T-bills "tie up your money" is not true. A secondary market exists for Treasury bills and the Treasury will sell them for you for a $45 fee (which may or may not be a significant portion of your proceeds, depending on the size of the bill)