WaMu/Chase Lowers Interest Rates, Time To Move Banks?

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Some eagle-eyed readers let me know late last night that WaMu/Chase quietly made a change to their offered interest rates. Their online savings account is now at 3% APY when attached to their free checking, down from 4%. Not too bad, but no longer the highest yield for a no-minimum-balance savings account.

They also lowered the rates on their online CDs, with the 8-month, 12-month, and 13-month CDs all at 3% APY. It looks like those that opened up one of their 5% APY CDs late last week just got in under the gun. My 12-month CD was successfully funded yesterday, and today I see my 5% APY rate shown online. All signs seem to suggest that Chase will honor these CD contracts. Hurray for small victories 🙂 , I hope everyone who wanted in on these got their application in on time.

Given these actions, it might be time to move banks soon… now to investigate other attractive all-in-one Checking/Savings combos. Here are some possibilities:

Everbank has their FreeNet checking account with a 1.10% bonus rate for the first 6 months, and then 0.70%-0.86% APY afterwards depending on balance. No minimum balance, but you need $1,500 for free billpay. $6 in free ATM fee rebates each month.

Combine this with Everbank’s Yield Pledge money market account, which also has a 1.10% bonus rate for the first 6 months, and then 0.86% APY afterwards. This account “pledges” to stay amongst the top 5% of competitive banks, and there is a minimum balance requirement of $1,500 to avoid fees.

Fidelity has their mySmart Cash account. It is kind of a checking account/brokerage account hybrid where you can basically use their money market funds (non-FDIC-insured) as the main holding place on your cash for higher yields. You can choose from taxable to tax-exempt money market funds with competitive yields. Their main checking account is FDIC-insured, and is currently earning 1.50% APY. No minimum balance, and you get unlimited ATM fee reimbursements.

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  1. If you’re willing to park some cash in one of their money market accounts, you can use the mySmart cash account and buy one of the municipal money market funds.

    All the funds have abnormally high yields due to LIBOR, and to top that off, the yield is at least federal tax free!

  2. I love WaMu’s website and free bill pay, and that’s why I’ll stay for now.

  3. I am in the same boat and am thinking about the possibilities for new banks. The ones that look most attractive to me are Fidelity, like you mentioned, and Schwab’s checking account. They seem really similar, except Schwab has a higher interest rate. Why aren’t you considering Schwab? Is there something in the fine print that I didn’t notice?

  4. Please keep us updated. I trust your research, and I’m curious about what move you will make…makes me sad a bit, I enjoyed wamu as a bank so much and the great rate was just icing on the cake…

  5. Apparently Ben Bernake today gave some grim news about the economy looking forward, and seemed to imply a rate cut was in the cards. Hyperinflation fears are mounting, and all the super-wealthy are parking their money in gold bullion right now. Are you sure a few percentage points annual interest for your CDs will make a huge difference to your long term wealth, given the circumstances?

  6. How does the Fidelity mySmart setup compare with Schwab’s investor checking? I don’t use the brokerage portion of my Schwab account for anything (although I’m sure they would like for me to eventually), but the investor checking is currently @ 3.0% APY (FDIC Insured).

    When I moved to a state without a Wamu presence, I went back to the standard brick & mortar bank for local access & deposits + a safety deposit box. Then I moved to have my paychecks direct deposited with Schwab when I heard about their investor checking account (requires a brokerage account though… no minimums!). The rates have been competitive and they cover pretty much all ATM fees nationwide, but Wamu’s 4% APY for part of this year was better. If both Schwab and Wamu/Chase are now @ 3% APY, I guess the Wamu account’s balance will start to look like my old ING one: $1.50~

  7. anyone know the required minimum to keep Wamu checking and savings accounts open? (will $0 in the checking work?)

  8. You need to have $1 minimum in your WaMu checking. I learned this the hard way when I noticed I wasn’t earning any interest on my savings after one month – they called up and told me I was below the minimum balance in my checking, and lo and behold, they had closed my checking account.

    So I opened up a new free checking account online and manually (over the phone) linked that to my savings to enable accrual of high yield interest again.

  9. @Andrew: The online checking account has a $0.00 minimum balance, but the online savings account has a minimum $300.00 balance to avoid the monthly fee.

    Too bad they cut the savings rate!

  10. Free checking has no minimum to avoid a monthly service charge, savings requires a $300 minimum to avoid a charge. I believe a cumulative $300 avoids charges all around since I have a free checking account that’s been at $5 for months, an Online Savings account that’s over $300 and a second Online Savings account that’s well under $300. I’ve never seen any “surprise” fees from WaMu. That said, I’d still leave a buck or two in your checking account.

  11. Citibank recently increased their Ultimate Savings Account to 3.5%. That’s a bummer about WAMU/Chase, I really liked their accounts but it looks like it’s time to move on.

  12. Another option is the Salem Five free online checking account with 3 – 3.5% interest, depending on how much money you have. They also give a $25 new account bonus and $10 in free ATM rebates, I’ve been very happy with their account.


  13. Dan Isaacs says

    I saw in the GRS forums that Coastal Federal Credit union is offering %5.01 APY on a checking account with the stipulation that you must use your debit card 12 times/mo.


    We have a few branches around here in NC. I think I may move the bulk of my cash over.

    I got a CC offer in the mail today from WaMu. Surprised to see that. 🙂

  14. Well, that did not take long. I parked some of my cash in E*Trade savings, 3.30%APY currently, (it’s been like this for a while actually) and I am too, looking for a second bank, where I can keep some other cash I have. I am ok with a small difference between the banks’ APY as long as I keep my cash in more than one bank at a time.

    John: It is possible that the gold will go a bit higher but I doubt that it will go by much higher and I have my doubts that super wealthy are buying large amounts of gold now. They would buy expensive and sell cheap.

    Of course the $ is fluctuating itself so I’m wondering what is the most stable in these times. I am too young to know how to ride this wave by myself. For one I know that diamonds are stable and appreciating most of the time due to inflation.

    However, the current goal is to find a good bank combo as Jonathan but mostly for savings accounts.

  15. FNBO is at 3.5% and it’s been like that for awhile. Why no mention ever? They have been great for the last 18 months.

  16. To John – How come you are worried so much about hyperinflation? Yes the economic prospect is bad…but the main driver of inflation for the last year or so – the price of oil – is actually nose diving (below $90 a barrel). Right now is the time to lock on to medium term CD’s before the Fed lower rate at its next meeting (or perhaps even before that).

  17. Dan Isaacs says

    No mention? I see a big ad for it right next to this post. 🙂

  18. DollarSavingsDirect.com (a division of Emigrant) is offering 3.75% APY with a min balance of $1000. i have not seen anything beat that (except for a fixed time-bonus rate that drops below that once the trial period is up like Everbank above).

  19. Not sure if you have hit on any of these yet or not…


    These are checking accounts with 6% + interest rates… There are a few small hoops to jump through, but they are things that I do already.

    The top bank on that site, each month you need to do 10 debit card transactions, one direct deposit or auto ACH, and get your statement electronically to get 6.10% APY. It comes with the other standard features: Free BillPay, reimburse ATM fees, no minimum balance.

    I signed up yesterday, so we will see how it works out. I love WaMu’s billpay, so if the BillPay at this new bank will make or break it for me.

    Using WaMu, I had this elaborate spreadsheet to ‘fund’ my checking account so I could keep the most cash in my savings (to earn the 4%), so this will eliminate the need for that.

    Anyone use any of these banks already? Anything good about them? Any horror stories?

  20. I recently closed my Online Savings at Wamu as I see the Chase savings is crap. I’m sticking with E*TRADE savings and checking right now but I need to know some good branches to deposit cash and checks.
    What are some banks with lots of branches in the Bay Area, CA?
    I want one just like Wamu free checking. No min. No stupid charges. Good online banking. The only one I can see right now is US Bank. All others require a minimum balance or stupid stuff like 2 bill pay per month.

  21. I think Schwab’s offer looks pretty. Not only is it FDIC-insured, but it has a good return at 3% APY for now and doesn’t have the transaction requirements that a lot of those reward checking accounts have.

  22. GMAC Bank recently added an online savings account to supplement its previous money market account. The online savings account is currently yielding 3.55%, while the money market is yielding 3.0% Why would anyone chose the money market account? Because you can write up to 3 checks a month from the account. I love that I can make interest on a check that I just wrote until the person cashes it. I pay my rent that way. It’s great because I never have to worry about funding/overdrafting my checking account.

    The 0.55% differential, however, may dissuade me from my current strategy.

    The only bad thing about GMAC bank is that they pull your credit upon opening your account. I’ve been with them for years and have been pleased with their service.

  23. Sean Hills says

    I haven’t seen this mentioned before, but Charles Schwab is offering a great checking account & broker account hybrid with a great rate at 3% APY.
    The link was very long so I made a tiny url. Anyway just thought I’d let people know about this.


  24. SavingEverything says

    IF you are gonna state Fidelity, then you gotta give credit to several other banks with neat combos of checking/savings: SCHWAB BANK (currently has its high yield investor checking account yield at 3.00%APY, with a Schwab One broker account). CITIBANK (even though CSR is poor, India-outsourced; they have comparable 2.65-3.5% APY savings and CD’s ~3.5-4.0% for 6mo CD; but must have ~1500 in combined balanced to avoid maintenance fees, and may vary in select markets). SALEMDIRECT (avail nationwide, e-statements,). E-TRADE BANK (combo with their checking and savings account; but $5k min check to get unlimited ATM surcharges fees refunded). WACHOVIA (or WellsFargo or Citi?) has free checking and other checking products (and competitive 4.0%,7mo or 4.1%,12mo CD; though need high balance to avoid monthly fees). How about your old favorite, PRESIDENTIAL BANK?

  25. E-Loan is paying 3.85% on their new ‘Savings Plus’ account. Aside from that, for those of us looking for liquidity, it’s hard to beat the yields on municipal money market accounts right now. JP Morgan’s Municipal Money Market Fund (offered as one of the E*TRADE sweep options) has a raw yield of 3.93% and tax a tax equivalent yield of 6.05% for the highest tax bracket.

  26. Jonathan,

    How about CD rates? Personally, I’d like to lock more cash up in a CD as the rate may go down, and I don’t want to keep chasing the rate. I saw Citibank CD let me use my debit or credit card to fund it and is interested – would this be considered a purchase rather than a cash advance?

  27. high yield checking a/cs are the best deal in town. fdic insured and 6 % interest. people on other online forums complain about losing credit reward points because of the mandated debit card usage to get higher interest rate. well, if one cannot find 10 small transactions in everyday spending to purchase using debit card then their spending is out of control. lol

  28. Schwab is an option. At 3%, we’ll have to see. Everbank has a higher yield, and I already have so many accounts at Fidelity plus they have great customer service. Schwab is kind of stuck somewhere in the middle for me.

    I have posted about Rewards Checking accounts. The catch is you need to make those 10-15 transactions every single month. You miss a month, and you lose that month’s interest. Also, you have to fight with your local bank if they “forget” to credit you the proper interest, or track the transactions wrong. Also the rates are so high that they drop so often. I’ve already counted 10 banks with big drops. Still, they do offer the highest rates.

    E-Loan is only 3.85% for $100k+ (“as high as”). For $5-10k it is only 3%, and there is a $5k minimum.

    I didn’t see anything about ATM rebates on the SalemFive website, only that they don’t charge fees on their end?

  29. There is still HSBC at 3.25%. For 3.00% I think I’ll just go back to ING Direct, I really like their electronic check features.

  30. Anyone tried E-Loan yet.
    E-loan offers 3.85% for new customer of saving plus. and existing customer can transfer to the new plan.

  31. Hm… I think maybe I need to get myself an ATM and set some REALLY high fees on it. Then I can get that Fidelity checking account and put that unlimited atm rebates to good use.

    Ok, I’m kidding… but it was the first thing that came to mind.

  32. Roger–I’ve had a savings account at E-Loan for years (among many others), and have recently converted to the new ‘Savings Plus’ account. I’ve never had any issues with them; and they’ve got a very simple online interface. Their bank to bank transfers are faster than others, such as HSBC.

  33. SmartyPig savings goals are looking better and better as a place to park some money…

  34. I hear Iceland offers great rates!

  35. Schwab cut their Investor Checking rate too, to 2.2% APY. It’s a reasonable option still since the checking piece (Schwab Bank) is FDIC insured. Within the brokerage account, you can buy CDs from across the country (these are FDIC insured), so you can spread your risk … I’m sure can do this with other firms’s (Fidelity, for example) brokerage accounts.

  36. I missed the WAMU 5% CDs by one day. However, I got a Wachovia CD at 4.3%. Not too bad.

  37. J, when did you get it. I got it on Monday and it’s being funded right now. I have 7 days to get it funded. Since, it was initiated on Monday, the rate will be set for 7 days.

  38. E*trade Checking and Savings combo has always worked out the best – currently 2.90% checking and 3.3% savings – combined with EmigrantDirect as a backup…in case their rate ever goes up higher.

    I also use Wachovia as my local branch to deposit checks and move the money over easily into Etrade..

    I haven’t seen any banks offering a high rate that is worth the trouble yet…the one for 6% is interesting – but I have everything integrated with E*trade with IRA’s and Brokerage Accounts – that it makes it more difficult to move.

  39. The ATM rebates for SalemFive is mentioned near the bottom of the http://www.salemfivedirect.com webpage, it says they give $15 instead of $10 now. It says, “Salem Five will never charge a fee for ATM transactions conducted at non-Salem Five ATMs, and we will reimburse the fees other banks charge up to $15 per statement cycle.”

    There is also no transaction requirement. I’ve used it for 2 years as a regular checking account and online bill pay and have experienced no problems.

  40. HSBC Direct is now offering a 6-month term, high rate Online CD at 4.00% APY*** for new money

  41. Fed lowers rates by .5% yesterday and dollarsavingsdirect.com goes up to 4% the next day! I was already shifting my money over to them at 3.75%, now they’ve really got my attention. They are being very aggressive about attracting funds, I hope it goes well.

  42. Provident Direct has a no minimum, no monthly fee, savings account with 3.75% APY. It also has very fast (next day) ACH transfers. I recently opened an account online and the process was very smooth. One minor caution, they take back the 2 trial deposits that they send to your linked account. So, if that linked account is a savings account, it uses 2 of your 6 allowed withdrawls for the month. http://www.provident-direct.com

  43. Ben, I got mine on Tuesday and it should be funded today. According to the little print out I got, the rate was locked-in as long as it was funded within ten days of it being opened.

  44. Thanks Pedro;

    >Pedro Says:

    >October 8th, 2008 at 3:20 pm
    >Roger–I’ve had a savings account at E-Loan for years (among many >others), and have recently converted to the new ‘Savings Plus’ >account. I’ve never had any issues with them; and they’ve got a >very simple online interface. Their bank to bank transfers are faster >than others, such as HSBC.

  45. # shraz Says:
    October 7th, 2008 at 8:50 pm

    I recently closed my Online Savings at Wamu as I see the Chase savings is crap. I’m sticking with E*TRADE savings and checking right now but I need to know some good branches to deposit cash and checks.
    What are some banks with lots of branches in the Bay Area, CA?
    I want one just like Wamu free checking. No min. No stupid charges. Good online banking. The only one I can see right now is US Bank. All others require a minimum balance or stupid stuff like 2 bill pay per month.

    shraz, try provident CU(4% APY) which is apart of a greater network of sister credit unions like Patelco where you can make deposits/withdrawals from numerous banks. You also can make free atm withdrals/deposits @ these sister CU, bank of the west, and 7-eleven. The bank of the west is Patelco exclusive though it might apply to other CU, not sure…

  46. I second FNBO for savings, don’t think they have a checking/savings combo but I’m not going to deal with the hassle of changing checking accounts anyway. I went over to FNBO last year for the 6% promo and never looked back, their rates have always been competitive.

  47. My WaMu account (started with > 3% interest rate, ended up at 1%) was just moved to a Chase account… and now the interest rate is 0.01%. Yes, that’s ONE HUNDREDTH of one percent.

    I’ll be moving my money elsewhere. My sofa could give me that much interest rate.

  48. Chase is charging $10-$12 monthly for the luxury of having a checking account with them unless you meet certain criteria each month.

    That along with the massive amounts of money I make off their interest rate *roll eyes* has convinced me to leave. I’ll put my money into a local credit union.

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