Washington Mutual Lowers Online Savings Rate To 4.75% APY
It had to happen eventually… WaMu appears to have lowered the interest rate on their online savings account from 5.0% to 4.75% APY:
This brings them back in line with other online savings accounts, but I still enjoy having a local bank as the core of my bank account setup and being able to do things like deposit my paper checks directly into my savings account (to a real human!). More details about the actual perks in my review of this WaMu Checking/Savings combo.
My cash savings are now earning less, but mortgage rates are still rising. Bah humbug!
November 8th, 2007 at 6:13 am
It is always nice that they lower the rate on your savings but don’t follow with the mortgage rates. That’s kicking some people twice.
November 8th, 2007 at 6:42 am
Ultimate Money Account at Citi is down to 4.5% with two online bill payments and 3.75% without bill payments.
November 8th, 2007 at 6:48 am
Like you,
I also love the idea of having an walk-in bank. I can’t say that I love WM’s customer service. On some occasions, I would get these letters asking for an email update, when they already had my email information. Next week it would be the same story. In all, you can’t be the free checks…
November 8th, 2007 at 6:49 am
Great, and I opened an account a couple weeks ago just for the 5%.
November 8th, 2007 at 7:01 am
At least they didn’t immediately drop the rate with the last rate cut like everyone else did.
November 8th, 2007 at 7:12 am
It’s time to investigate the tax-free money market.
November 8th, 2007 at 7:13 am
Hey look, VMMXX, currently at 4.96%, is still within about 2% of where it was a few months ago! ING, HSBC, WAMU have all dropped 20% - 30% in the same time frame. This is why rate chasing for a few more % is usually a waste of time and energy for the small change. Just go with something solid and be done with it.
November 8th, 2007 at 8:39 am
Vanguard is at 4.32% year to date. The 4.96 is not current
link
Also VMMXX have a 1000 minimum with $20 annual fee for accounts less than $10,000
November 8th, 2007 at 9:46 am
I am staying put at Emigrant Direct at 4.75% . I was thinking to go to some Florida Credit Union (whatever their exact name) for 6.01%, but Nah. It just too much work and they are not going to stay at 6% for a long time anyway.
One per cent difference for a few months not going to make me rich. I need to focus my energy in other areas, like designing my portfolio. THANK YOU, Jason on starting your portfolio thread! Good stuff, yammmy…. LOL
November 8th, 2007 at 10:06 am
I have most of my money at Emigrant Direct and was considering moving it to Wamu, but Capital One direct banking was offering 4.66% (lower than ED), but they have a rewards program. On another site some guy calculated that the rewards gives you .60%-.72% higher interest rate, which is not taxed
November 8th, 2007 at 10:07 am
FNBO Direct still has 5.05% Not sure how long that will last…
November 8th, 2007 at 11:44 am
Oh Man, SCRATCH THAT, I mean THANK YOU JONATHAN! Not Jason. Who is Jason???? LOL.. I have to get some sleep before I post.
November 8th, 2007 at 12:16 pm
Since MMFs have an average maturity of ~60 days, they will be slower to adjust to rate drops. But I suspect it will drop eventually.
November 8th, 2007 at 12:59 pm
well yeah… their stock tumbled 17% yesterday to a 7 year low…. not surprised.
November 8th, 2007 at 1:33 pm
Citibank Online Ultimate Money Account lowed APY from 5% to 4.5% two days earlier than Wamu.
November 8th, 2007 at 2:38 pm
that’s not a big drop compared to others and with the recent combined .75 point interest rate drop
November 8th, 2007 at 2:50 pm
Does WaMu allow ACH transfers from outside banks? If so, how long do the transfers take?
November 8th, 2007 at 2:53 pm
To Jim
WAMU does allow ACH transfers. ING is the fastest, about 2 days and etrade is the slowest, up to 4-5 days
November 8th, 2007 at 4:06 pm
I do partially agree with Ted that the money market funds seem to track the fed funds rate more favorably than banks do, but it’s fair to want FDIC insurance, especially now that we know various money market funds have been dabbling in (what we now know is) risky paper… and some are close to breaking the buck. Vanguard seems pretty clean however.
November 8th, 2007 at 4:54 pm
Etrade lowered their rates I think to 4.5% shortly after I got their promo in the mail for 5.05% APY + $25 signup bonus.
I’m keeping the WAMU setup you described. It’s still easier to move money between accounts quick and easy. And it’s safer to deposit 100+ rebate checks in person instead of the mail.
November 8th, 2007 at 5:38 pm
Can anyone shed some light on the interest formula that WaMu uses for this account?
I’ve used their online savings account as the core holder of my money for about the last four months. During that time I’ve never made any withdrawals, only deposits. However, my September interest payment was significantly larger than my October interest payment.
I called WaMu’s customer service twice to inquire and each time was assured that my interest payment was calculated correctly. That may very well be, but neither representative or a teller at my local branch could tell me how the interest was calculated.
I’m not a investment fiend. In fact, I’m quite a newbie. Any insight would be appreciated. Thank you!
-Heather
November 8th, 2007 at 9:06 pm
Hey Jonathan,
What’s your take on the various high-interest bearing checking accounts such as the Bank of Toledo? Do you think it’s also a matter of time before they pull the plug on the current rate of around 6%?
Of course the catch with these banks is all the hassle you have to put up with such as 10 debit transactions, direct deposit and so forth.
But even with all these hassles, it seems having one of these accounts is looking more & more appealing as other interest-bearing accounts and money-market/e-savings accounts are becoming less and less attractive.
Curious to know what you think of all this. Thanks!
November 8th, 2007 at 10:23 pm
Thanks to Steven H. Do you know how long the WaMu ACH transfers take?
November 8th, 2007 at 10:39 pm
I used to transfer $5K through Wamu ACH transfer. It took 10 days. Wamu also needs 10 days for large check deposit of $5K or above.
Citibank Online and HSBCdirect take exactly 3 days regardless of the transfer amount. Citibank takes 1 or 2 days for large check deposit if it is a local bank’s checking account.
November 9th, 2007 at 4:29 am
I don’t know what you are talking about Steve, my E*Trade is fast as hell for ACH in and out. You might be talking about the funds availability.
ACH in from WAMU to ETRADE, same day. ACH out to Grand Yield Direct from ETRADE 1 bus day.
November 9th, 2007 at 7:17 am
Jen — You need to go back and look again. YTD is for 10 months, and is not an APY. The compound yield today (APY equivalent after all fees) is 4.95%.
The $20 fee is waived for signing up for electronic statements. If we’re talking about
November 9th, 2007 at 9:42 am
Oh, you’re right. Thanks, Ted. Definitely seems worth it now! I think I’ll buy their money market fund for my long term (down payment) savings then.
Good point, Jonathan about the local bank. It it weren’t for the benefit of physically going to a branch, I wouldn’t have been able to get my stone-age parents to take their .2% apy savings to an online savings account.
November 9th, 2007 at 11:26 am
I live in California and use WaMu for checking and online savings accounts.
Most of my emergency reserve, though is in VCTXX. Compound yield is 3.24%, but in my bracket it works out to 4.79% taxable-equivalent. It was paying siginificantly better during the last month, but since the average maturity is 32 days it’s fallen hard in the past week.
November 9th, 2007 at 12:16 pm
FNBO Direct is still at 5.05%.
November 9th, 2007 at 12:20 pm
Heather, I asked WaMu the same question: How could I have earned less interest in October than in September when I had more than $1,000 in my account during October?
It’s not like they can claim that there were fewer business days in October than September for the money to earn interest — because there weren’t. There were 23 business days in October compared to only 20 in September.
November 9th, 2007 at 12:51 pm
Davide interest compounds everyday, even on weekends. If the amount was the same for Sept and Oct, you should have made more in Oct for the 1day + interest earned from end of Sept.
November 9th, 2007 at 1:14 pm
Countrywide Savingslink is still at 5.35% They need strong deposits to make up for their poor portfolio of defaulting mortgages.
November 9th, 2007 at 4:20 pm
Wamu has a 5% APY 6month online CD.
November 9th, 2007 at 11:42 pm
The rates at Amtrust Direct still haven’t dropped… is there a reason they’re mentioned so much less than the others?
They seem reputable and FDIC insured, but are still at 5.36% and have been consistently on top of the lists for a while. Their site’s not great, but I’ve been slowly shifting money from HSBC to Amtrust as HSBC’s rates have fallen…
http://www.amtrustdirect.com/pages/default.aspx
November 10th, 2007 at 12:52 am
Davide, was WaMu able to offer you any reasoning?
As I said, my September interest payment was a good deal larger than my October interest payment. I’ve never deducted any money from my savings account and I also deposited about $1500 between the September and October interest payments.
I don’t get it. :/
-Heather
November 10th, 2007 at 6:54 pm
Just wanted to let you know that WAMU is currently offering 5.00% APY online CD’s for 6 month terms.
Might be a good option if you want to keep that rate.
November 10th, 2007 at 8:00 pm
I see the same thing re: interest calculation. I have had a CD with Wamu since July. The interest paid has gone DOWN each month. It should be going up due to compounding. I am going to pull out my calculator (or maybe Excel) and check it.
Does anyone know whether Wamu uses a 360 day year or a 365 day year?
November 10th, 2007 at 8:22 pm
I just tried to calculate using the following formula: APY=(1+r/365)^365
rate=0.0522 and APY=0.0535 , which is what was advertised.
I could not get each of the first three interest payments to work out correctly. Interestingly, when I calculated for the current balance in the account, using 92 days for the first three months it did come within 10 cents of what my balance said. Balance=initial_deposit*(1+r/365)^92
November 12th, 2007 at 8:24 am
Heather, when I called WaMu customer service this weekend I got the call center in the Phillippines, and one agent came close to explaining how the interest is calculated — although her reasoning about how they take one’s average daily balance and divide that by some other number didn’t make sense to me. She told me to call back today (Monday) and talk to another department (one that is based in the United States) that would go over the process with me step by step.
November 15th, 2007 at 4:23 am
Wamu does not pay interest until your deposit clears. If you deposit a check with a ten day hold, you lose ten days of interest. I asked a superintendant “how long is the hold on an ach transfer”. He said to me he could not tell me. I said to him you just lost my business.
November 15th, 2007 at 4:50 am
As long as you have or build up a history of depositing checks (without them bouncing I suppose), your limits get upped and you’ll get virtually no holds if you deposit at a teller. Your receipt will tell you each time how much is being held and for how long.
November 15th, 2007 at 8:21 am
Shraz: I, too, thought interest on this account was compounded daily, but a customer service rep and his supervisor both told me on Tuesday that deposits earn interest only on business days and not on weekends or holidays. I was shocked to learn that.