Update: Best Savings Account and CD Interest Rates, 4%+ APY

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It seems that one small silver lining of these ongoing bank troubles is that well, banks need more money in order to keep afloat. This means they are more willing to pay us more $$$ for the privilege of holding onto ours. 🙂 Even the big banks are starting to play along. Thanks to Brian and John for their respective updates.

Big Banks
If you have a decent balance and are willing to lock up your month for a while, below are some nice rates with terms of a year or less. Interest rates might be going back up soon to combat inflation, so locking in a CD longer than that might not be the best idea.

  • Bank of America has a 7-month CD paying 4.11% APY. $5,000 minimum.
  • Washington Mutual has a 8-month CD paying 4.25% APY. $1,000 minimum. They still offer their no-minimum liquid savings account at 3.30% APY.
  • Wachovia has a 12-month CD paying 4.25% APY, as well as a 7-month CD paying 4% APY. $5,000 minimum.

Online Banks
The online bank arena remains the place to be if you want high yields and minimal restrictions, including the ability to withdraw money at any time. All are still FDIC insured.

  • HSBC Direct is offering 3.50% APY with no fees and no minimum balance requirements, guaranteed until 9/15.
  • FNBO Direct is offering 0.85% APY with no fees and no minimum balance requirements, and has maintained a decent track record of consistently high rates.
  • Everbank also has a savings account that offers a nice 4.65% APY for the first 3 months, and then 3.51% APY afterwards. Not bad, considering even the non-special rate is very competitive. I guess that is why they call it the Yield Pledge Money Market account, since it “pledges” to stay amongst the top 5% of competitive banks. There is a minimum balance requirement of $1,500 to avoid fees.
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  1. Everbank has already dropped to 4.65% intro & 3.45% ongoing.

  2. If you are a Costco member you can get a Capital 1 online money market account with 3.75% with $10k in it. Plus if your are executive member you get $60 bonus after 2 months and $20 for regular and business members.

  3. I still have mine at Emigrant Direct(2.75%). Waiting for them to raise the rates. The account balance is only between $15k-$20k,not worth the hassle of switching. Last time I did my bank(Astoria Federal Savings Bank)carded me. They got suspicious of the amounts being taken out of my checking account.

  4. Thanks for the update, I’d been looking to shift some of our money around. For awhile it was just sitting in savings because I was too scared to put it anywhere.

  5. Super! Thank you, Jonathan. Thanks to your post today, my application form is now on its way to Everbank. I’ve been looking for an “escape” from Emigrant Direct’s paltry and unbudging 2.75% (after fleeing ING Direct a year ago for the same reason). The Everbank money market account should be the best of all worlds – very decent APR, check-writing privileges, and ability to link to other accounts. I’m almost having a “is this too good to be true?” moment. I’m fine with the limitations placed on the number of monthly account transactions, so….hello Everbank!

  6. Another Personal Finance Blog says

    I just set up an account at ING for our emergency fund. Rate is 3%. They have been consistently high, but most of all I heard only good things about their customer service and ease of use. So far I am very pleased. You have listed some other nice options in terms of rates.

  7. HSBC is crap. Their ACH is slow, so if you’re chasing rates make sure to factor in 6-10 days of lost interest.

  8. Thanks for the post. I wasn’t aware that WAMU had a 4.25% CD available for only a 8 month term.

  9. I don’t get it! I have a dual system going similar to that of the author of this blog – using Wamu (3.3%) and ING (3.0%), and frankly I am confused.

    Lets say I have $20K in cash to chase rates with…I do not understand why I would put anything into a CD at today’s rates. Lets use the lower of the two, ING, as an example as compared to Bank of America’s CD.

    Lets assume I have $20K in my ING (which I don’t, but I wish I did lol) that equal approximately $600 in a year or more appropriately around $120 for 7 months ($20K * 3% = $600 then divide that by 7 for the months). Lets compare that to the Bank of America CD (20K * 4.11% = $822 then divide that by 7) = $476.

    $476 – $ 120 = $350 BEFORE TAXES…we will multiply that by lets say .72 (28% tax bracket) $256 AFTER taxes.

    I know this was all simplified math, but for $256 I will keep my liquidity. I guess the difference would be if we are talking about $100K but how often do people actually have $100K outright, i.e. not already working for them in the market.

    Sorry for the long post, but I want somebody to tell if I am missing something!

  10. HSBC Direct’s rate falls to 3.45% from next month. 3.5% is only a promotion. Did a recent comparison of HSBC and ING and, HSBC has one of the best relative all up features and rates (their money transfer process is slow though). I would be wary of Everbank offering such a high promotional rate. Wonder what the regular rate is.

  11. I have been an Everbank customer for about 5 years now, and it is definitely the way to go. Love the fact that they adjust to rates to remain within the top 5% – means I really don’t worry about shopping around for a bank anymore! Combine that with consistently excellent customer service (via phone) and reimbursements for ATM charges (up to $6 per month, if you send in the receipts via postage-paid envelopes they provide), and you have the best bank out there.

  12. alliant CU has also been consistently offering high APY on savings – currently at 3.75% ($100 min bal required, iirc). their ACH usually takes 2 biz days (request on Mon, receive on Wed). but what makes it awesome is that it pulls from the other FI on the same day that the transfer gets posted, so no lost in interest!

  13. Rate Chaser Calculator

    I personally wouldn’t scoff at $250-$300 over 7 months, as long as I didn’t need the money, or there was a very low chance of needing the money.

    Keep in mind, some people have $20k sitting in BofA earning hardly anything because they don’t want to switch banks. That is one of the main draws of these “name brand” bank promotions.

  14. @ John,

    I’m glad to hear someone has had a good experience with Everbank. I tried to open a foreign currency CD with them and got treated like a terrorist. No other bank has ever demanded so much information to open an account — work address? What if you are self-employed? For heaven’s sake, I have lots of other bank accounts with other institutions with no problem, none of them asked for nearly so much information. After some really aggravating conversations with the account manager, I got fed up and told them to return my check. Too bad for them; I have a lot more assets I would have considered having them manage for me if they treated me right while we were dating; but I’m glad I didn’t marry them!

  15. “Everbank has already dropped to 4.65% intro & 3.45% ongoing.”

    You are quoting the interest rate (APR), not APY which adjusts for compounding and is usually how online banks compare themselves. The APY rates are still 4.76% and 3.51% APY.

    I opened an Everbank Freenet Checking account back when they were offering a fat 6.01% APY for an intro rate, and they were pretty good. I don’t remember anything special about their application, and when I called they actually had competent phone rep’ on 24 hours a day with no hold time.

    Currency CD applications are probably different because they are an investment and not a savings account. When you open any brokerage account at Fidelity or Zecco, they must ask you your income and employment history. It’s not being nosy, it’s required.

  16. I got an email from costco saying that they are paying 3.75% with a citi partnership. Executive members get $60 sign up bonus. Balances higher than 10,000 required.

  17. Addison Avenue Credit Union has a cool checking account right now 5.25% if you have direct deposit or 1 auto bill pay and do at least 12 debit card transactions!! max 25k

  18. IndyMac offers me 5% APY for a 13-month CD. Their 1 year CD is 4.25% (special manager rate, not promoted online).

  19. Mark Nelson says

    It will be interesting to watch what is going to happen in the banking industry. With IndyMac being shut down. I think everything will calm down but there is going to be a shake up in the industry.

  20. I will second the vote for Alliant Credit Union – 3.75 for savings and 5.15 for HSA. Anyone can join. No bs minimums, restrictions, or debit transaction requirements. You do need to have $100 balance, but if you don’t have that, you probably should not be reading this post in the first place.

  21. bankrate.com is one good source for rates. however how many bank accounts should one maintain esp. with the pain of maintaining all these.
    Is 3 year or 5 year CD a risk-free investment ? I saw some emails from capital one bank. Given the current turmoil in banking industry is it safe to invest in such long term even if the banks are FDIC insured?

  22. “If you have a decent balance and are willing to lock up your month for a while…”

    I think that “month” should be money 😉

  23. There are credit unions around that will do high rates with the restrictions (including 10 debit card transactions . . .) Gesa CU in WA is paying 6%. The problem is usually you have to live local or come into the branch to sign up.

  24. United Heritage Credit Union: 6.01% APY free checking w/ ATM charge reimbursement – 10 debit card transactions plus 1 Direct Deposit or 1 ACH transaction per month to qualify for the high rate, $25k max. Not bad if you are willing to jump through a few hoops. Central Texas residents. Not sure if they are in other locations.

  25. For those of you in the Midwest, National City has a 4% promo on their money market savings account. 5k min, requires checking account.

  26. AmtrustDirect.com offers 4.3% APY on 12 month CD. Min $1,000

  27. Movingonup! says

    Good to know. Thanks! I don’t think I could join Bank of America for personal reasons alone, but the rest look interesting.

  28. Comptonwoods says

    CapitalOne Online is currently offering 3.75% to Costco members, with up to a $60 interest credit. To get the 3.75% you need a $10,000 balance, under $10,000 the rate plummets to 2.75%.

  29. Little Confused, I’ve got an ING that started at like 4% and is now down to 2.75%, whats up with that

  30. Your interest rate quotes are way behind in reality! I spent alot of time to find out your info is out dated, thanks!

  31. Can anyone update this material to be current? Rates for 2009 seem to be either very depressed or moving rapidly in all directions. Thanks.

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