Online Bank Interest Rates Updates: Some Drops, Some Steady

In the past week or so, several online banks have responded to the Fed rate cuts with drops of their own, including:

  • Capital One 360 went from 0.80% to 0.75%. APY.
  • HSBC Direct went from 4.50% to 4.25% APY.
  • Emigrant Direct went from 4.75% to 4.65% APY.

Chasing Higher Yields?

  • Countrywide Bank has a Savingslink savings account that pays 5.30% APY for balances over $10,000 (4.0% for under $10,000). They also have a 3-month CD paying 5.50% APY.
  • Everbank has a promotional 5.51% APY for 3 months on their FreeNet checking account.
  • Use my Rate Chaser Calculator to estimate how much more money you’ll make.

My personal bank setup remains the same

current bank setup

I still use my Washington Mutual Free Checking / 4.75% APY Savings combo as my core account, and I’m happy the rate has not dropped since going staying at 5% for a long time. Read my WaMu review for details. I then supplement this with the occasional rate-chasing when it is worth it for my large cash balances. Currently, I am still getting 6.01% APY from the older Everbank 3-month promotional rate. It’s about to end, so I’ll have to start keeping track of these things more closely again.

Comments

  1. Cheapster Bob says:

    Eh?

    E-trade is still 5.05 % and hasn’t changed. Are you part of the E-trade hate brigade or something?

    Don’t let the panic media keep you away. They are FDIC insured like everyone else. :)

  2. Honest Dollar says:

    Your setup is almost exactly the same as mine. WaMu is incredibly convenient for me so I’m glad it has such competitive rates. Before it started offering online savings with 5% APY, I already had a checking and savings account with WaMu. It was a little inconvenient at the time, but switching to the online savings (tied to a new checking account) was a great decision.

  3. just because they are insured, doesn’t mean you want to have to go through the pain in the ass of getting your money back when they go under. Unless you have hundreds of thousands in your savings account, that .25-.30% difference isn’t worth the pain that is likely coming down the pipe right now.

  4. eTrade droped for a bit but recently increased back to 5.05%.

  5. I’ve been very happy with Countywide Bank. They have very fast transfers (next business day) and some of the best rates (5.30%). However, they don’t offer electronic statements, and a $10,000 balance is required for the highest rate. I don’t mind the paper statements, but e-copies would be nicer!

  6. Not a online bank but Vanguard has 4.63% money market account. Min $3000,checks 250 or more. Link to current bank. Plus easy to buy Vanguard funds when you are ready.

  7. FNBO Direct is also still at 5.05% – at least for now. Started using them a few months ago as HSBC’s rates began to decline and have been happy enough with them so far.

  8. Money-Making-Machine says:

    I think you dumped FNBO too soon a few months ago as they are still at 5.05% APY….This is 40 basis points higher than your current Wamu setup.
    My current high yield setup:
    Everbank Checking at 6.00% APY, after my 3-month pro rate runs out switch to Everbank money market currently yielding 5.51% for another 3 months
    Note: the non promo rate for Everbank Checking is 3.01, so this account is a keeper even after the promo runs out.
    I also use UFB Direct savings currently at 5.22%, not a promo rate

  9. Correction. Etrade is not “still” at 5.05%. They had gone to 4.70% after the first round of rate decreases but then went back up to 5.05% after their bad publicity, most likely to retain the funds they had and to draw in new.

    I still have all of my accounts with them. As the other poster pointed out, they are FDIC insured.

    I also have a Wamu checking and savings.

  10. Grad Student says:

    GMACBank – 4.5% ($500 min). I’ve found GMAC to have the fastest external transfers of any online bank. ‘Pulls’ into GMAC show up one day before they are deducted from the outgoing account, and ‘pushes’ out of GMAC show up one day after the funds are deducted. I use them as a kind of ‘hub’ to go into and out of other accounts like my EverBank checking. (No WaMu around me)

  11. JimmyDaGeek says:

    Search the Internet for “reward checking account” offered by small banks. Some offer accounts nationally. Last I looked, they were offering 6%, but check the restrictions, you may not want to join.

  12. YOu’re setup is similar to mine.

    HOw do you like WAMU’s Bill Pay feature? I just switched to BoA’s (from PNC) and loving it. I love the e-bill feature of BoA’s payees – no need to download copies if your statement manually; it’s all on BoA’s Bill Pay page!

  13. I have all you guys beat. My free power checking account with my Hometown bank MidWestOne gets me almost 6%.
    There are a couple stipulations, but they are all simple:
    1. Use online statements so they save money and trees.
    2. Get one direct deposit a month (I have two with my paychecks
    3. Use their credit/debit card 10 times a month.

    This works great for the bank and for me. The bank makes some money off merchants everytime I use my card, and I get 6% without having to move any money from account to account. I use this card for lunches and use my credit cards with points or miles for bigger purchases.

    If you have the chance to use a bank with powerchecking, I was heartily reccomend it!

  14. I’m not a huge E-Trade fan, due to personal experiences and being ignored by customer service. I definitely don’t plan on ever having another brokerage account with them.

    But even besides that, if you’re going to go with a questionable FDIC-insured account, I’d just go with Countrywide and their higher rate. I can get 5.05% at FNBO Direct.

    FNBO was always my “bank du jour”, and when it dropped, I left. 6.01% is still better than 5.05%. :)

  15. does the wamu savings account allow you to initiate the ACH transfers in and out, or must this be done from the ‘bank du jour’?

  16. I would not use Etrade either. There customer service was atrocious. I was on hold for 2.5 hours one time and 2 hours another time.

  17. Hmm…is E-trade really that bad in terms of customer support? I was thinking of signing up with them as my high interest yield online bank but might have second thoughts….probably will have to do more research first.

    BTW, Merry Christmas!
    -Raymond

  18. It seems weird to leave this post here, since the topic is interest rates and banking, but it’ll have to do:

    Thanks for sharing your money thoughts with all of us. I never post, but frequently read and benefit from your insights and tips. I really appreciate it. What I also appreciate is your clarity about what matters in life, including your family. So here’s to you and your family – wishing you a wonderful Christmas and fantastic New Year!

  19. Makes sense for the portion of your savings that you want to keep in low-risk investments. However don’t forget appropriate asset allocation, you need some equities. Keeping your money in these totally safe investments will barely earn you more than inflation.

  20. Cheapster Bob says:

    Firstly, WAMU’s headlines haven’t been so rosy lately either and their stock is in poor shape at the moment. They are almost as troubled as E-trade.

    Raymond, E-trades customer service has its up side and down side like most. Here is my most recent experience which I hope is informative.

    I went to E-trades site and noticed they were giving 25 dollars to sign up for their high yield savings account. This was three weeks after I had already signed up. I said what the heck and gave their customer service a call in an attempt to get that money!

    The line rings and yup, I get someone with a thick Indian accent on the other end reading from a script. They are completely ignorant and have never heard of the 25 dollar sign up deal. I tell them I am looking right at it and they tell me to wait they will check. Then they can’t bring their own website up.

    I’m not kidding they can’t bring E-trade up. Then I’m put on hold and they supposedly talk to their supervisor. She tells me that the 25 dollar deal is only for customers who already have an I.R.A. with them. This was either a cheap sales pitch or complete incompetence as that was faulty information.

    I thank them for their time, wait five minutes and call again as while cheap I am very persistent when it comes to money. I get another continent again and we go round and round about the deal. I give them the exact web address to the online ad and they still can’t find the page.

    FINALLY, she can hear I’m getting peeved and pushes a button. I’m instantly back in America talking to a field manager who sounds like he is sitting behind a nice oak desk. He is professional and very attentive, even though I’m a new customer with very little funds in their savings. After about 2 minutes he tells me no problem the 25 will be put into my account and I’m a happy camper.

    I guess the lesson from the story above is that you can move your funds to E-trade and use their excellent site. However, for customer service do not waste time with their minimum wage Indian script readers ask to speak to a manager directly and all will be well.

    Bob

  21. “Firstly, WAMU?s headlines haven?t been so rosy lately either and their stock is in poor shape at the moment. They are almost as troubled as E-trade.”

    lol

  22. My bank setup is a little kind of weird. I have an ING savings and chequing account for savings and my bills, and a PNC chequing account for every day expenses.

  23. Joby said:

    HOw do you like WAMU?s Bill Pay feature?

    OK, somebody please explain the purpose of BillPay to me. I have all of my recurring payments set up with the individual payees so that they automatically “pull” from either my checking account or credit card on the due date. Isn’t BillPay the same thing, except you’re asking your bank to “push” those payments to these recipients? Why would one choose one over the other? Am I missing something by not using BillPay?

  24. Personally I would rather use bill pay to “push” the payment because I get to see the bill first.

    It would only take a misplaced decimal point in a bill from a creditor “pulling” to cause an overdraft disaster. If they actually pulled the bill in error then you would have to fight them to get it back.

    I do have my cable bill charged to my credit card regularly. In that case (pulling from a credit card) the money is not gone and you have the ability to dispute a charge in error.

  25. As far as Etrade and Wamu go. I think you have to realize that originally when Etrade was paying 5.05% and Wamu 5% on savings they were paying less than the Fed Funds rate. Now with Wamu at 4.75% and Etrade at 5.05% they are paying more than the Fed Funds rate.

    The reason for this is that both are troubled. I would go so far as to say any bank paying over the Fed Funds rate for savings is troubled. Note that Ing doesn’t pay more because they don’t have to to attract funds.

    Savers will still loan (deposit) the money to Etrade and Wamu because of the FDIC insurance. Other banks don’t really want to loan money to them in the overnight market because these loans are not insured and they don’t want to get stuck holding the bag.

    By this metric, Countrywide is even more troubled, they have to pay 5.30% to attract funds.

  26. Fred:
    I prefer Bill Pay (aka push to payees) for the same reasons that Mark listed. So far, everything is manual, i.e., I review my monthly bills and then manually schedule payments (push) to payees. I do have a few bills that are automatically charged to my Credit Card (gym, cell phone, etc.) since I can easily dispute this later if need be.
    I rather push from one central location (my checking) to X number of Payees. This way, I feel like I’m in control. I’m tempted to go the automatic route (either push automatically or pull automatically), but I’m a bit afraid I’ll lose control of my finances. :)
    Also, with the “pull” method, if a payee takes more $$ than needed (for example, if there is a fraudulent charge to your credit card), it is harder to dispute it since the payee already has your money.

  27. Fred – Joby pretty much wrote my comment :) I feel that giving someone the right to yank money out of my checking account automatically should be given out carefully. I’m actually most afraid of the cell phone bill, as I’ve gotten one for $500 with crazy roaming charges before. No auto-pay on that one!

    Merry Christmas and Happy Holidays everyone! Be back tomorrow. Safe travels!

  28. Thanks, guys. Overcharging is something I should be aware of, but never thought about. I’ve been doing autopay (pulls) for…I can’t remember how long, but at least 7-8 years, and have added more bills to it as each creditor gained the capability. Never had an overcharge yet (knock on wood), but maybe I shouldn’t be so trusting of them either.

  29. The other issue with pulling payments is when you want to stop them. You have the control not someone else. There have been instances where people have still been charged a monthly fee after canceling a service (of course those people probably don’t pay that much attention to their bank statements). But just having to go back and get your money if this happens is a hassle. I’d rather have that control.

  30. sorry, but my q was never answered. does anyone have this acct?does the wamu savings account allow you to initiate the ACH transfers in and out, or must this be done from the ?bank du jour??

  31. Will Counrtywide asses any “service/maintenance” fees on their Savingslink account if you keep there just $1?

  32. Mark – Yes, you can initiate ACH transfers from WaMu’s interface. Very convenient.

  33. Mark – Yes, you can initiate transfers from the WaMu side. Very convenient.

  34. Any thoughts on Schwab’s interest checking accounts? They pay 4% APY and my big attraction is they’d reimburse me for using other banks ATMs (since Schwab doesn’t have any bricks-and-mortar branches or ATMs). Am already a Schwab One customer. Interested to hear readers’ feedback on Schwab’s offerings… makes me nervous no one’s mentioned them!! Should I take that as a warning sign?

  35. I’m trying Zions Directs CD auction for the first time but the modified dutch auction and FDIC insured coupled with short maturity dates for decent yields > 4.8% typical seems okay.

    Going with a 1 month CD which has a BUY TODAY rate of 4.75%.

    FYI

  36. I signed up for the 5% savings account and put a chunk of money in it. In December I noticed the rate changed to 0.25%, as my monthly payout decreased dramatically, around the time their advertised rate changed to 4.75%. Since then I have been trying to get them to resolve the problem, but they are insistent the rate change TO 0.25% is correct.

    To me, it seems awfully like a mistake. But the bottom line is I don’t have 4.75% or 5%, I have 0.25% and I guess I need to open another account with them. I think I have had about 6 in 3 years, all due to their continual mistakes through the website or at the local branch.

  37. FNBO users,
    Have they updated their site to support downloads into Quicken yet?

    Quicken users,
    I’m looking for a good (high interest) online savings bank that supports quicken so I can easily track the account. Any suggestions?

  38. Hi Bob Cheapster

    I agreed with your expericence about Etrade.
    Could you please tell me how to get the $25.00 for new acct? ;-)

    I had never contacted them via phone.

    As soon as my Etrade savings acct hit 1K, then I would lock it into CD for whatever best APY offered at that time.
    Then when its due is up, I emailed them, either to get it renewed at diffrent terms and APY or asked them to deposit the whole amt. into the savings acct. so I get the amt. transfered back to my checking acct. (the primary bank acct).
    With this tactics, I have no problem so far.

    What I dislikes about Etrade:
    It always take 5 business days to get the fund availability, no matter what, even it was deducted and cleared at my primary checking acct. from day one.
    ————-
    To Jonathan:

    Update news:
    From the Smartmoney magazine in Jan 2008, it mentioned it seems the Fed would drop the rate again in 2008, sooner or later, until its 3.75 or lower.
    So should we expect a few more drops in 2008? and now, should I lock my $$ into CD rates?

  39. I currently use City National Bank of Taylor (checking). It pays 4% and has awesome customer service (you are talking to the actual branch in Texas). External transfers also post the next day which is really cool. They auto refund ATM fees too. I like the bank a lot, the only little problem is the 10 transactions per month required on the check card. I like to keep everything on one card so this is my only dislike, but it’s fairly minor.

    However, when I saw the offering from Schwab, it sounded like everything CNBT has minus the required 10 transactions. I did some checking into it, and found the major drawback there is they currently do not support ONLINE external transfers. You have to set up recurring transfers w/ a form or call them. They told me they plan to add that feature in 2008.

    There always seems to be that ONE little thing!

  40. Has anyone else seen the new Wamu deal? It is called the “Savings for Success Account”. You can add up to $500.00 per month to your savings account and if you leave the money in there for 12 months it earns 6.50apy. You choose the amount you want to save each month by automatically transferring from $25.00 and up to $500.00 to your “Save for Success Account”. After one year it’s yours to accept when we sweep the savings into any savings account you choose. They had a full page add in the Houston Chronicle this weeked. Said to check into it further on line at their website but I am not finding any details of it as yet.

    Wondered what Jonathon thinks of this and would appreciate his input.
    Also I am not good enough at math to figure out what the actual interest rate would settle at.

  41. Thanks for the heads-up, Margaret. Here’s WaMu’s site for it:
    http://www.wamu.com/personal/savings_account/savings_for_success_account/default.asp

    Just from a few minutes of clicking around, though, it looks like this deal is restricted to Texas only.

  42. When I called Wamu regarding this, the rep said it was an active offer in, I believe, four states but I can’t remember what they were.

  43. lynn ziglar says:

    My First Federal Moohlah account just dropped their advertised rate on line to 5.51%. There goes 6.01$%. BOA My Expressions MMA has been dropped into the 3′s. Too bad. It doesn’t take them long to drop rates does it?

  44. I have used WaMu for about 4 years since moving down South. I have had to recreate my primary accounts, business, checking, savings, three times at the branch. I have since re-created them all two more times online. I’ve been forced to do this due to mistakes they’ve made. Even now I put up with a business account which shows another business name when I login and a change in my savings rate to 0.25% for no good reason. They are unresponsive to support requests and quick to send a canned response. They are the only bank near me. They force you to recreate your accounts, and you lose benefits unique to the accounts you once held. I have created my final accounts with them, a simple personal checking and small savings account. I am looking for a good online savings account. I would not recommend WaMu.

  45. Emigrantdirect just drops another 10 points, from 4.65 to 4.55.

  46. Us.Hsbc.com drops savings rate to 3.80%, from 4.25%

    Even BOFA drops its fixed 4 mo term CD rate to 3.71, from 4.10%

  47. IS THIS POSSIBLE? If it sounds to good it usually is, but could you use credit card funds to deposit into an account then withdraw it after the bill comes in to pay off the bill. I always thought you do not pay any interest on a credit card if you pay it off in full? Essentially you could do this 6-times a year, correct? like I said there must be something I am missing. would this work with equity lines as well?

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