Friday, August 11, 2006

More T-Bill Purchases

Now I buy $3000 of 4-week Treasury bills every week.

I have been purchasing $2000 of 4-week T-bills weekly since since April after reading a discussion on Morningstar.com about the rate of 4-week T-bill and the rate of online savings account. At that time the two were every close, but since T-bill is exempted from state income taxes, the actual rate of T-bill came out slightly higher.

I set up an automatic purchase every Tuesday when the bill is auctioned and the transactions (withdraw and deposit) are made through my HSBC savings account. Since I started purchasing the bill, I only checked the rates on the TreasuryDirect web site a couple of times, and didn't make any change to my plan. Though banks now are in a heated competition for customers' deposit by raising their savings rates, T-bill never fell behind.

The highest rate for my online savings accounts is from EmigrantDirect, which now pays 5.15% APY after the latest wave of raising interest rates at banks. Tonight when I went to the TreasuryDirect site for the latest rate, I was surprised to find that the rate of 4-week T-bill auctioned on August 10th was 5.227%, higher than what I earn from EmigrantDirect. After the Fed decision on interest rate early this week, it seems that it will be a while before banks start to offer higher interest rates to their customers again. Maybe now it's time to get a little more of the bills.


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