Weekly Bank Interest Rate Update: How Low Can They Go?
Another sad week for interest rates. I’m almost curious if we are still experiencing deflation. Most taxable money market mutual funds are yielding well below 1% right now. At least I got my $250 bonus from WT Direct as promised this week.
Liquid Savings Accounts
- The Everbank Yield Pledge Money Market Account is offering a rate of 3.51% for 3 months guaranteed for new accounts, and after that it goes down to the regular rate (currently 2.03% APY). Balances up to $50,000. See my review of the application process here.
3.51% APY for 3 months remains better than any other banks’ top 3-month CD rate, while still allowing withdrawals.
There is also a FreeNet Checking account you can open up at the same time, which offers a 2.51% rate for the first 3 months on another $50,000 in balances.
- The quirky Redneck Bank is offering a money market with 3.10% APY on balances up to $35,000. “Where bankin’s funner?” Seriously?
- DollarSavingsDirect is now down to 2.25% APY. If you are moving money out, remember that you need to maintain a minimum average daily balance of $1,000.00 during the entire month to keep the high rate for that period. For those with lower balances, it may be better to withdraw after you see your last month’s interest credited. See my quickie review here.
- FNBO Direct is now at 2.15% APY. See my account review here.
- The “Original” ING Direct is now down to 1.65% APY, but new savers can still get their $25 opening bonus. According to my data, this is the first time ING has ever dropped below 2%.
- E-Trade Savings (useful if you trade stocks there) is at 1.95% APY.
Rewards Checking Accounts
- With such low rates, it may be worth reconsidering opening a “rewards” checking account if you haven’t already. There are extra hoops to jump through, and if you get make a mistake you’ll forfeit virtually all your interest for that month. It can be a gamble. But for the very diligent, their rates are still as high as 6.01% on balances up to $25,000. See my review of rewards checking accounts here, and also a list of participating banks by state here.
Certificates of Deposit
It may not be worth locking in these low rates for a long time, but if you have a CD ladder going you might be interested:
- Pentagon Federal Credit Union has lowered their rates to a 3-year CD at 3.50%, 4-year CD at 3.75%, and 5-year CDs at 4.00% APY. If you aren’t a member and don’t otherwise qualify, you can join the NMFA for a one-time fee of $20.
March 13th, 2009 at 7:23 am
Man those rates just sound so terrible compared to just 18 months ago. The potential bright side is people will pay down some debt since cash isn’t paying much, or start investing again. We’ll see if this is bright or just dimly lit.
March 13th, 2009 at 7:27 am
I looked at the Everbank site, and there seems to be a conflict. Is the bonus rate for the first three months 3.51% or 2.51%?
March 13th, 2009 at 8:18 am
Rates are so low, even my HELOC is 3.75% after tax (5% pre-tax). So whenever I get spare cash, I put it there and effectively “earn” 3.75% (penny saved = penny earned, right?) And even that’s not a lot of percentage.
Weakonomist: You say rates are so low people might pay down their debt, or invest but I think the low rates favor debt. Sadly, I think the current economic conditions favor borrowing and investing (which is exactly what the Government and the Fed are trying to encourage with low interest rates on saving and borrowing).
March 13th, 2009 at 9:02 am
GMAC online savings just dropped to 2.50% APY from 2.75% but still seems competitive compared to what u just listed.
March 13th, 2009 at 9:29 am
United Heritage Credit Union in central Texas:
6.01% went away last year. March is the last month at 5.01%. I’ve gotten word that starting April the rate will drop to 4.01%. Still, there’s no where else to put my emergency fund at the moment.
It’s a bit of a pain to keep jumping through the hoops (10 debit transactions, 1 electronic payment or direct deposit a month). I’ve missed on a couple of months.
At the same time the credit union sent notice of the rate drop, they also restricted the number of rewards accounts any single holder can have to three. I can’t imagine keeping up with more than one!
March 13th, 2009 at 11:20 am
Alliant Credit Union is still paying 3% for savings and 2.75% for rewards checking. I’ve been using this for over a year now, and it has been consistenly one of the highest interest rates. Customer service at a credit union is also a lot better than a regular bank.
March 13th, 2009 at 11:48 am
Minor correction: The Everbank Freenet Checking’s APY promo (now down to 2.51% for three months) is good up to the first 100K, not 50K.
March 13th, 2009 at 12:23 pm
JC - I just looked this morning and GMAC was at 2.65%, but you are right it is at 2.5% now - yuck! Well, at least it seems to be well above the norm for the online savings accounts at the moment.
It looks like I might be buying some $1 coins through the Mint to augment my return!
March 13th, 2009 at 1:47 pm
@ chuck: but the credit market continues to tighten!! mart-to-book/market rule change FTW !!!
March 13th, 2009 at 4:37 pm
anyone use shorbank? i hear they are at 2.8
March 13th, 2009 at 7:38 pm
The Federal Reserve and US Treasury are out to punish all savers.
March 13th, 2009 at 7:40 pm
Zions Bank Internet Money Market is at 2.28%. The interest rate of this account has held up pretty well. They also get high marks for easy to use online banking–much better than FNBO though not as nice as ING. Also recently they have greatly simplified the process of adding external accounts.
March 13th, 2009 at 10:59 pm
Smartypig.com is at 3.25%. I’ve been using them for a few months and their rate has held up among the more popular sites. Right now I haven’t seen another savings account that comes near them.
March 14th, 2009 at 5:58 am
What do people think about I Bonds right now? I-Bonds bought today will earn 5.64% for the first 6 months before they reset. Inflation seems to be at bay so I fully expect that rate to plummet but in the meantime you will still earn 5.64% for 6 months.
Even if you cash out after a year and pay the 3 month interest penalty they will likely be a better deal than what you get from ING’s or Emigrant Direct.
March 14th, 2009 at 6:37 am
tjs198,
I just signed up for Shorebank a few days ago. It is 2.8%. Seems ok so far.
March 14th, 2009 at 7:23 am
This weeks BARRON’S. other picks see story.
I actually do have Buy recommendations on several names, just based on where spreads are. Bank of America paper due in 2013 is yielding around 8%. In addition to whatever core strength there might still be buried in its franchise, Bank of America is benefiting from this government program where, after they go through a stress test and it’s determined they need more capital, they will get it.
Bank of America (BAC) bonds yield about 8%.
March 14th, 2009 at 4:06 pm
I went from Etrade to DollarSavings and now this week to ShoreBank Direct. SBD is straightforward in the applications process, online process only.
With their 2.8%, I’m gonna stick and stay — I’m tired of moving funds around.
I’ve linked them to Etrade, and moving money using the Etrade external transfer process (verified initially from the Etrade end) is faster (1 day) than using SBD to request funds from Etrade (3 days)
March 15th, 2009 at 4:44 pm
HSBC is not even on the radar anymore?
March 15th, 2009 at 6:04 pm
Don’t you think it now makes sense to do gold or dividend paying stocks?
March 16th, 2009 at 4:38 am
WOW, Etrade now down to 1.70% — another .25% drop
March 16th, 2009 at 9:16 am
I doubled my GE stock in the mid $6’s. Even with a cut dividend, I feel like it was a good move… sort of wish I had bought more.
March 16th, 2009 at 10:09 am
02/28/09 INTEREST RATE CHANGE to 1.9313%
02/14/09 INTEREST RATE CHANGE to 2.1273%
02/03/09 INTEREST RATE CHANGE to 2.4693%
STOP THE PAIN ETrade
March 16th, 2009 at 10:49 am
Now down to 1.70%, Bill, if you didn’t look this AM
March 16th, 2009 at 12:31 pm
Hey,
Did you check the GMAC bank website? A CD of 2.85% APY and the savings account @ 2.5%APY. Anything wrong with that?
March 16th, 2009 at 4:27 pm
I’ve been trying to open an account with redneck bank. I’ve learned a few things they check your credit using Equifax (I had to lift a security freeze). I don’t know if its a hard pull or not. Even after I removed the security alert, I got a decline e-mail. I called them to find out why and they looked me up on the ChexSystem and said all I need to do was mail a copy of a recent bill and my drivers license.
Also, I plan to meet my 10 debit card transactions through monthly recurring charitable donations. I was looking to donate more regularly, and now I can and get a great rate(for now!).
March 16th, 2009 at 5:45 pm
I happen to be one of the lucky few to still be receiving 6.01%APY on a rewards checking at Ariz Bank & Trust (going down to 5% in April). I have two of these accounts, and consider the 15 debit card transactions on each account VERY worth the interest I receive…especially after reading about all the rate-chasing going on over much lower interest rates.
I’m currently debating whether to open another rewards account at a different bank in AZ, since I reached the limit at my current one. That would put me at 15 + 15 + 10 = 40 debit transactions a month. Is it worth it to have all my money at 5.0%???
Also, FYI to other AZans - My current bank (Ariz Bank & Trust) has a high yields savings account at 2.89-3.04% (depending on your balance), which is pretty good…it also has 7-month CDs at 2.70%-2.90%, depending on the amount of your deposit. It would be prudent to max out the rewards checking account first, though.
March 16th, 2009 at 10:21 pm
Yeah it does seem like a lot of work. But I bet there are ways to get around it. I will max out my 5.25% interest rate soon and need to open another account. Besides the monthly recurring donations to charity, I figure I can split purchases. If hubby and I go grab coffee…ring the purchases separately. I also thought of using the self checkout at the grocery store. As long as its not busy, I could knock out the required purchases then. Same at the gas station. I noticed that you have to read the account terms pretty closesly, some only count signature based debit card purchases others will count all non-ATM debit transactions (PIN & signature).
March 17th, 2009 at 5:08 am
I thought Etrade is good for external transfer process too, until they placed security hold on my fund when I arranged a transfer. They couldn’t even give me a valid reason why they held my fund. I spent 3 months to get back my fund but the experience with their disrespectful service is horrible. I know my case is not unique after looking up etrade complaint in google.
I’m using WaMu online service to transfer my fund and am happy with it.
March 17th, 2009 at 9:55 am
Everbank - pretty good for a trial bank but don’t stay for long because part of their website goes down often preventing access and fund transfers.
March 22nd, 2009 at 2:20 pm
The Redneck Bank is offering 5.25% APY checking with 10 debit transactions, does anybody have this or any experience to share?
March 25th, 2009 at 6:29 am
[...] Weekly Bank Interest Rate Update: How Low Can They Go? [...]
March 26th, 2009 at 2:34 pm
Redneck Bank also has a great Rewards Checking account currently at 5.25% APY. And you get a nice horsey Visa check card.
September 10th, 2009 at 1:40 pm
Hi Heather, your comments particularly interested me, as I live in AZ also!
I checked the bank you mentioned, it didn’t offer over 4.01%. I am looking to invest about 25K. Most banks I checked offered kinda low interest, and the ones that did offer 6%, were outside AZ and needed physical presence to open a checking ac.
Any advice on banks where the rates on checking ac are close to 6%? Again, I live in AZ.
Thanks for the great blog folks, lots of very useful info!
G’luck with investing!!
Pri