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My Hedge Against Bernanke’s Fed

businessman holding onto a cliff with a piggy bank in his hand.I figure to be the last saver standing after the Federal Reserve has driven everyone else into the stock market via oppressively low interest rates.

But, to help out, I’ve hedged against further rate declines by establishing savings and money market accounts with guaranteed minimum rates.

The latest is a PacTrust One account at Pacific Trust Bank.

And, unlike the subject of my last post — Union Bank’s guaranteed-rate MoneyMarket Extra account — here I was actually entitled, by the terms of the promotion, to participate.

PacTrust is a federal savings bank that operates 14 branches in Southern California. As of Sept. 30, 2012, it had about $1.1 billion in deposits.

The bank carries a 3-star Bankrate Safe & Sound rating.

Requiring a minimum $25,000 opening deposit of new money, the PacTrust One account guarantees, until Dec. 31, 2013, the following rates:

  • 0.50% APY on balances of $25,000-$99,999
  • 1.00% APY on balances of $100,000-$249,999
  • 1.25% APY on balances of $250,000 and above

Balances under $25,000 earn no interest, and an average daily balance below that level during a month subjects the account to a $35 monthly service fee.

PacTrust has no online application procedure, and a branch visit has generally been required to establish an account.

However, the bank apparently has allowed some savers (including non-residents of California), on a “case-by-basis” basis, to open PacTrust One accounts by telephone/fax/mail and/or email.

(Being a frequent visitor to Santa Monica, 150 miles from my desert home, I opened my PacTrust One account in person at the branch there.)

The promotion has no stated expiration date.

The combination of my PacTrust One and Union Bank MoneyMarket Extra accounts should, until year’s end, protect a portion of my funds from CDs maturing this year against further Fed efforts to drive rates even lower.

At the same time, because they’re liquid, account balances above the minimums will remain available for rapid deployment into new CDs should rates rise significantly or attractive CD promotions surface during the rest of 2013.

(I’m not counting on any of this to happen, however.)

After Dec. 31, I have additional hedges available in the form of three CIT Bank Achiever CDs opened last year, maturing in May, June and August of 2014 and carrying 1.25% APYs (with a right to bump up once).

Each of these CDs permits me to add at least $250,000 to its balance until maturity. I may utilize this right if PacTrust and Union Bank aren’t offering attractive rates after year’s end and other favorable deals aren’t then available.

I may not exactly be sitting pretty (what saver is?), but I feel as prepared as possible to handle the worst the Fed can throw at me — for now.

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