Interest Rate Chaser Discussion: Where To Go After FNBO Direct’s 6% APY Promotional Period?

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Many people who are with FNBO Direct right now earning 0.65% APY are asking – What is FNBO Direct’s rate going to be after September 28th? After a few phone calls, the official answer is apparently “We’re not going to tell you until we have to… on 9/28.”

This is actually pretty smart on their part. If they announced that the rate is going to drop now, then people may already start moving their money out. It’s better to keep us in suspense, playing off our hope that it will somehow stay high. I personally feel like it’s going to go back to 5.25% at the highest, otherwise they would have told us to kept us from preemptively moving. But that’s just my guess.

If this turns out to be the case, then the rates for no-minimum balance, no-monthly fee, liquid savings accounts will be again clustered closely around (a respectable) 5% APY. For those that want to keep chasing, I also tried to find the best combination of highest rate, FDIC-insured, lower minimums, and high liquidity:

6.01% APY for up to 6 months from EverBank, $1,500 minimum
Although this is technically a promotional rate for their FreeNet Checking Account, since it’s guaranteed you could simply treat it like a 3-month, 100% liquid CD paying 6.01% APY. Here are the details:

  • 6.01% APY guarantee for first 3 months, after it goes to 3.35-4.89% APY based on balance.
  • $1,500 minimum to open, no monthly minimum or fees, no direct deposit requirement
  • Online Billpay costs $4.95/month if you have less than $1,500 in there, $25 fee if closed within 30 days of opening
  • Free ACH in/out funds transfer system
  • Checkwriting (1st 50 free), ATM rebates (up to $6/month), Postage-paid deposit envelopes
  • FDIC-insured (certificate #34775), 3 star “Performing” Safe & Sound rating

After the first 3 months (assuming it’s still available), you can then open a Yield Pledge Money Market that also has 6.01% APY for 3 months. Also $1,500 minimum to open. It has more restrictions since it’s a savings account as well as a monthly minimum balance, so go with the Checking first. In total, this offers up to 6 months more of 6% goodness.

5.70-5.75% APY from IndyMac Bank
Indymac Bank has seen some troubles from the subprime loan mess, even though it specialized more in “Alt-A” loans, which are between prime and sub-prime in quality. However, it does offer some of the current top FDIC-insured rates. Here are two options:

$5,000 Mininum – Internet CD

  • 5.70% APY for 5-month or 6-month Certificate of Deposit.
  • Minimum to open is $5,000.
  • It’s important to note that these are certificates of deposit, and so you can’t transfer money in and out as with checking/savings accounts. In addition, there is a early withdrawal penalty of 1 month of interest.

$25,000 Mininum – Internet First Rate Money Market

  • 5.75% APY for balances above $25,000. No guaranteed term for this rate.
  • Minimum to open is $1,000. Monthly fee of $7 if your balance falls below $1,000.
  • Limited checkwriting is available.

Indymac’s FDIC certificate number is 29730, and it has a 2 star “Below peer group” Safe & Sound rating. Worried about their financial health? Check out my post exploring What happens if my bank goes bankrupt or fails? There may be ways to expand your $100,000 FDIC coverage.

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  1. Great post. I was already thinking of moving my money to EverBank, but I didn’t realize I had the 6 month option if I opened two accounts.

    On a related note, something I’m trying to figure out if it’s better to hold my money in online banks instead of Vanguard’s Prime MMMF. I still haven’t figured out how their fee figures in… if I take my money out before the end of the year, will they hit me with the ~.05 management fee, or will they take it out before I transfer it out? Anyone have any expertise with this?

  2. Money market fund rates are always quoted net of expenses, so management fees are already taken into account.

    More info: How to compare rates between MMF’s and banks

  3. I thought it would be fun to also guess where the rate will go with FNBO Direct. My guess is 5.50%

  4. How does one close an FNBO account totally?

  5. Hmmm… an FNBO Direct rate-guessing contest would be fun! Unfortunately, I know at least a couple of FNBO employees read this blog, so we might get some insider action.

    5.50% would be great by me. In light of the current rate environment and upcoming probably Fed rate cut, I’m sticking with my guess of 5.25% 🙂

  6. Emprise Bank (small bank with about 20-30 branches around Wichita, KS) has an online site with 6% online checking account. Negatives: You have to use your debit card 12 times each month and have at least one scheduled deposit monthly. Otherwise, no minimum balance. Rate only applies to first 25,000 dollars. Too many restrictions for me, but a few of you might like it.

  7. My understanding is that FNBO rate is not an intro rate in the sense that it goes down for all your money on deposit. Any money you have in there deposited between May and 9/28 will continue to earn 6%. It’s just new deposits that will earn the lower rate.

  8. alf – Hmm… that’s not how I understand it. FNBO only shows one rate for all money, no matter when it was deposited. All money, regardless of deposit date, will earn 6.0% APY until 9/28. All money will earn their new rate starting on 9/29.

    If you have something that says otherwise, that would be helpful. Earning 6% forever on current deposits would be sweet!

  9. Hustlermoneyblog has upoladed a just post about a 5.71% APY MM Savings account at Bank Of America. Given their wide breath of brick and morter branches I think I’ll opt to put my cash here once out of FNBO. If not here than Rate Edge Credit Union or my existing account with AmTrust Direct.

  10. Are you sure that customers can do the two EverBank 6% promotions back-to-back?

    When I last checked with EverBank in May I was told that these were only for new customers so you wouldn’t be able to do the 6% MMA promo after the 6% checking promo. However, I was told that you could do both at the same time, but this would only be useful for those who want to get 6% on balances from $100k to $150k ($100k max in checking and $50k max in MMA).

  11. Jonathan,
    This is cut and pasted from FNBO’s FAQ section on the 6.01 interest category:

    Is this an introductory rate?

    No, this rate is applied to all balances held in your account from 5/01/2007 through 9/28/2007.

    However, I’m assuming that they use First-in-first-out accounting, so for those of us who deposited there after 5/1/08, any withdrawals will come from the higher rate funds. Also, any interest that accrues after 9/28 will likely earn a lower rate.
    I’m betting that after the promo, FNBO statements will show a two-tiered interest.

  12. I’m on vacation in England (almost ready to come back to the U.S.) and you wouldn’t believe the interest rate deals out here. While the U.S. Fed is contemplating the slashing of interest rates, the Central Bank in England is talking about increasing them. There’s a bank here called Alliance-Leicester that is offering 12.1% interest for 1 year to new account holders who have a checking and savings account at their bank. While there are some strings attached (minimum balances, etc.), that’s still DOUBLE DIGIT savings…not to mention the fact that the pound is currently clobbering the dollar. The average minimum savings rate around here seems to be 6.7%. Even HSBC is offering about 8%. I don’t know how the taxes affect the return, but Jonathan, maybe this is something to look into?

    Offshore accounts anyone? 🙂

  13. I’m willing to hang with FNBO for 5.25%. I like their interface and everything works smoothly. That’s good enuf for me. now, if they start going down to ING levels, well….

  14. Juelz: I’m in the UK as well, and the problem (other than the horrendously NON-customer-friendly financial regs over here) is converting $ to ?. That right there costs you a few %, even if you’re not paying a fee….

  15. Ken and Juelz: I can hear you on losing a few % in transit, though with the right investment accounts, it can be like 2%. You’d have to jump through a few hoops, but there’s something else to consider here.

    As Juelz has indicated, the American dollar is dropping quite significantly. This isn’t just random, this trend is likely to continue. The US has tons of foreign-held debts and the debts aren’t going to be paid off until the foreigners feel that they can “get their money’s worth”. So the USD will continue to slide as we globalize.

    The USD basically out-priced itself, so it’s coming back down internationally. Right now, most of the blogs readers here just care about having USD. Well, if you can invest in 12% pounds and watch the pound go up, then you’ll likely “kill” the transfer fee and make 12%+ when you convert back to USD.

    The other benefit here is international diversification. But man, that’s a blog post in and of itself.

  16. I also will stick with FNBO at 5.25% or better. I see e-loan is still offering 5.25%..don’t want to go back to them…..but will for the better rate

  17. hey jonathan,
    To echo a previous post, can you confirm that you can do the 6% Everbank checking and MMA back-to-back for a total of 6 months? I too was under the impression that the 3 month 6% teaser rates are only available to new customers.

  18. Jonathan – Can you evaluate Zions Direct’s CD Auctions? It looks interesting but I don’t know if there are risks that I am not aware of.

  19. To back up Jonathan’s EverBank idea… I have the freenet checking currently as well as the Money Market account from EverBank. I opened them at seperate times (last winter and the MMA in June). I received the 6.01% for both. The way around the “new customers only” is if you use another bank’s check to fund your MMA after the checking promo has run out. Meaning, as long as the intial funds are not from accounts they already hold, you are entitled to the promotion all over again. I funded my MMA with a comerica check from an old account, i never closed. So i transfered from the EB checking to the Comerica checking the 1500 minimimum to open and then wrote the check from there. I then transferred more directly from EB checking to EB MMA and the entire amount earns 6.01%. Its pretty solid. PS. I believe they do a hard credit pull for each account.

  20. Thanks for this post!

    Does anyone know if there are any restrictions or warnings if I transfer a large amount of money in and out of accounts?

    I want to open an EverBank account with the largest amount possible so that I can start earning interest on it right way.

    So if I transfer $40K out of Emigrant to one of my linked checking accounts and then write a check for $40K to fund my EverBank account is there going to be any kind of long waiting period?

    Would I be safer off to open the EverBank account first, then link it with my Emigrant account and do the transfer that way?

    Thanks for any input!

  21. I can see sticking with FNBO thru the 6% (although I got out following the “due diligence” debacle) but why would anyone stick with them if their new rate puts them back with the rest of the pack?

  22. Yep, avoid Indybank they’re quite shaky at this point what with the mortgage mess and all… Also avoid CountryFried… err… CountryWide bank – they’re also offering some nice rates right now, but again, they’re very shaky due to the mortgage mess.

    yes, you will get your money back eventually from the FDIC (up to $100K) but that can take a while…

  23. If FNBO drops to 5%, I will go back to Ing, I like their interface enough to take 4.5%. If FNBO stays at 5.25 or higher, there the money will stay.
    Of course, I am getting close to the 12 month mark on my 0% CC monies 😉

  24. another thing to consider is the fed meeting on sept 18th where they will most likely cut the rate between .25 and .5 is what analysts are predicting. If that is the case, then FNBO’s new rate would actually be lower than you think. All bank’s rates would eventually shift down due to the new lower fed rate.

    So, it might be in your best interest to possibly get into new rates this next week before the fed meeting on the 18th if you can get a bank to “lock in” a rate of above 5% before the rates drop. just a suggestion.

  25. I’m preparing for the 9/18 Fed Reserve Board FOMC (Federal Open Market Committee) meeting and the possible decrease in interest rates by moving some money into a CD.

    For money you want access to, then you could try a Rewards Checking Account, typically around 6% APY. Be aware that you have to meet minmum requirements to get that rate, such as a minimum number of check card transactions, direct deposit or ACH auto-debit, e-statements, etc.; otherwise you will get a ridiculously low interest rate. Often the balances that get the high interest rate are capped at 25,000; anthing above gets a much lower APY, such as 1% or less.

    Check out Bank Deals ( for an exhaustive list of Rewards Checking Accounts and other savings products. There is one nationally available Rewards Checking Account, State Bank of Toledo ( Hometown Reward Checking, that offers a 6.01% APY that’s uncapped, if you met the minimum number of check card transactions and other requirements. SBoT is a small bank, but very service oriented. As long as you keep under FDIC limits in the account ($100K for single, $200K for joint, you should be OK.

  26. Randy,
    Good tip. Thank you.

  27. Steve Austin says

    Report back about EverBank. I am a current FreeNet Checking customer, having last year availed myself of their 6% promo. I e-mailed them to ask if I can be considered a new customer for the purposes of the promo rate on the Yield Pledge Money Market Account. They e-mailed back saying “No, you have to open the accounts together to get the promo rate on both of them.”

    In the meanwhile, I’ve opened up the BoA affinity money market account, yielding 5.69% for now. I thought a commenter here gave the tip, but I don’t see the comment now to thank that person.

  28. Juelz,
    There is some info about Alliance & Leicester:
    Merrill Lynch analysts cut 2008 earnings-per-share estimates by 12 percent for Alliance & Leicester Plc, by 9 percent for Bradford & Bingley Plc and by 4 percent for HBOS Plc. The rating on Alliance & Leicester was cut to “sell,” while the other two lenders were maintained at “neutral.”
    Citigroup analysts also cut ratings on Bradford & Bingley and Alliance & Leicester to “sell” from “hold,” along with German lenders Hypo Real Estate Holding AG and Depfa Bank Plc. Next year’s estimated earnings per share for Frankfurt-based Deutsche Bank and Zurich-based Credit Suisse and UBS AG were cut by 28 percent, 23 percent and 17 percent, respectively. link

  29. PuzzleBoyDave says

    FNBO Direct rates will be at 5.05% APR after Sept 28. Just got their email response today.

  30. PuzzleBoyDave says

    Dear Puzzleboydave:

    Thank you for your recent inquiry concerning FNBO Direct. Please be
    advised that our 6.00% Annual Percentage Yield is applied to all FNBO
    Direct balances present in your account between May 1, 2007, and September 28, 2007. After September 28, 2007, our Annual Percentage Yield will be 5.05%.


    Jeff Getzfred
    FNBO Direct Representative

  31. Dear FNBO customers

    Has anyone addressed interest loss when doing FNBO transfers. I recently tested it by Internet transfers between my MetLife MM acct. and my WAMU checking acct. There was only one day when the money was in limbo and no interest earned. When I transferred 250K from MetLife to FNBO, the money was in a transfer process and earning no interest for 6 days, costing me $247. in lost int. When I asked FNBO about this in the past, they said there is a 3rd party involved in those transactions and that FNBO doesn’t earn any money during this delay period. Why is that the case for FNBO transfers, but not the case for other banks? I have had several transfers, so my interest loss would be well over 1K. Other banks may have a hold on transferred funds for a few days, but those funds are earning interest during the hold period. So have we really been earning 6%? I think not.

  32. Hello all, I could never thank you all enough for the education I am gaining from this site. seriously. I really appreciate it a LOT!

    In my ignorance I need to ask, is there any credit report hit for jumping around from one online bank to another to capitalize (if advantageously possible without fees and such) on higher interest rates?

    Thank you again,

  33. With reference to Steve Austin comment above ” ………. In the meanwhile, I?ve opened up the BoA affinity money market account, yielding 5.69% for now. ………… ” questions: Is this rate available to anyone? I am already a BOA customer, and I havn’t heard of this. Is there a web address to sign up or do I go to one of their offices? And do you think the fact I’ve borrowed a bunch on my BOA credit card at 0% which I would then deposit that into their account, would that raise any eyebrows? Perhaps I should go for EVERBANK so as to be more subtle, but of course there’s convenience in keeping it all in one place. Any comments?

  34. Ed Says:

    September 26th, 2007 at 7:46 am
    Dear FNBO customers

    Has anyone addressed interest loss when doing FNBO transfers?

    My answer, Yes I’ve addressed it by minimizing my transfers. Most of the money I put in FNBO I transferred in at the beginning. now I’m transferring it out to go elsewhere since the % is now lower, not sure exactly where yet. So no I didn’t make 6% becuase of the time in and the time out. But I only did those things once. Because I knew of the delay from this blog (thank you thank you) I arranged my transactions to come from other accounts where there weren’t such delays. Also they other accounts paid lower % so they’d be the ones I’d want to transfer first anyway, leaving the money in the higher rate account to sit undisturbed.

  35. Not much activity here since the turn of the month. hmm.

    I would like to hear from anyone like myself who put their money in fnbo very late in the game and if you are going to stay with them or not. I put 8k in there and am wondering if it is worth moving it to everbank as discussed here. if so, how would I find out how much exactly is in my account? logging on shows me no interest has gained yet as they only update their interest earned page is updated monthly – i.e., 30 days after deposit is accepted. well, my deposit hasn’t hit 30 days yet.

    I know I’m in a position of wondering “oh, what should I do?”, so any advice will be very appreciated. Obviously if you haven’t already gathered, I’m completely new to the whole concept of rate-jumping.

    one critical question I have though is about credit hits. do these banks negatively impact your credit report/score by gaining and losing your business? how does this process, in credit terms, differ from moving a credit card balance from one 0% intro rate to another? (no, I don’t do this because I heard it is a real bad idea a long time ago).


  36. Hi Jonathan,

    I just called EverBank and they said Yield Pledge Money Market account’s 6.01% APY will only be applicable for first-time account holders. They say you will not get ield Pledge Money Market account’s 6.01% APY if you already opened a freenet checking. Can you also confirm with them?


  37. Just FYI – Countrywide is offering 5.5% and it does not seems to be a teaser rate.

  38. Hey, I finally got my Everbank account open. After doing the other accounts by the WEB snail mail is very slow. Even FNBO, with all the whining about the time for transfers was faster than Everbank.

    However, now I have 3 more months of 5.84 (6.01) to look forward to.

    I found out that 11/05 they dropped the interest rate to 5.54 %, I don’t know if that’s the APR or the other rate, but it is now on the home page of the website. And since my 0 percent loan is due back at the credit card company in April, I’ll be left with February and March to evaluate what’s the best place for it after the 3 month intro rate ends.

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