Is It Worth Keeping My Wealthfront High Yield Savings Account After Massive Interest Rates Cuts by the Fed?

I’m trying to stay away from talking directly about the coronavirus. However, it’s very difficult.

Every aspect of my life has been affected by the ripple effects of the coronavirus outbreak in the USA and the rest of the world. I’m working at home, my sales commission at work might be affected, my family members are having difficulties and I’m anxious about what the rest of 2020 will look like.

I’m usually the type of person to stay optimistic and I am. I’m trying very, very hard. Due to a couple of recent hardships from family members due to the ripple effects of the coronavirus, I am starting to feel a little stressed out. I’m thankful that my husband and I are financially secure (for the most part) but both my parents are retired and depend on disability benefits and social security. I have an aunt that works in the hospitality industry which has been hit especially hard. My brother is in college and is deciding whether it’s safe for him to stay on campus and keep his on-campus job or stay with an aunt where he may not have any employment and be unable to pay the small bills that he has.

If any of my family members come down on hard times I know that I am the only person that is able to help him out. There is nobody else that they can turn to. I don’t say this lightly. I’ve had to help out my brother and father before and I’ve been sending my mother money every month to help her with her daily living expenses. She will be moving back to her home country full-time soon when she is able to collect social security benefits.

I just decided to beef up my emergency fund from $1,000 to $6,000 to be able to keep up with any surprise expenses that might pop up. Having three months of money to pay for my basics will help me sleep at night and give me a cushion to help out my family members. You can imagine my dismay when I saw this in my inbox from Wealthfront…

Your Cash Account APY is now 0.26% due to the Fed’s rate cut

Noooooo!!! Not now!!!

This is literally the last thing I wanted to hear. The APY rate went down by 1.01% percent after a drop from only a few weeks prior.

I was counting on the interest rate from my Wealthfront high yield savings account to help me save the extra $5,000 even quicker. But now, that’s gone.

There isn’t too much of an advantage in using the account anymore compared to my regular Chase Savings account. I’m aware that 0.26% is still better than 0% APY. But, it’s not THAT much better. What originally drew me to opening the Wealthfront account is no longer available. The scariest part is that the interest rate can drop even further to 0% if the Federal Reserve thinks that it’s official in response to the economic downturn in response to the coronavirus pandemic in the US.

For now, I’ll take advantage of the 0.26% interest that’s offered by Wealthfront until it gets dropped to zero. I see it coming in the near future. We are only at the beginning of the pandemic and by the news, it looks like the worst is still yet to come. I honestly hope that I’m wrong, but I’m being realistic. Once the APY rate goes down to 0%, I’m going to save money in my Chase savings account and wait until Wealthfront’s interest rates go above 2% again (fingers crossed 🤞).

A lot of behaviors have to be changed and I can already see my mind shifting to being more fiscally conservative, not spending as much money on food and not shopping for any non-necessities. I know that this is a difficult time for everyone. Although this post is about my disappointment at the drop in the interest rate, I know that it was done for a good reason. People are anxious right now, some people are being laid off, service workers are suffering from reduced customers, and many children are out of school. Everyone stay safe out there and take care of your family, friends, and neighbors.