This article from Bloomberg reported that GMAC has hired Citigroup and Goldman Sachs to help it repay its TARP debt. According to the article:
The oversight panel said in a report this month that GMAC may not be able to fully repay its TARP debt and the rescue may cost taxpayers $6.3 billion. GMAC is 56.3 percent owned by the government
This was from the Congressional Oversight Panel. It released the following report on March 10th, March Oversight Report - The Unique Treatment of GMAC Under the TARP (pdf).
More details about this report and GMAC's future were described in this post from the WSJ blog Deal Journal, What Will Happen to GMAC?. It reviewed "three issues GMAC needs to resolve if it's going to be a profitable stand-alone and publicly traded company." One of those three issues was Ally Bank, and the post cited several concerns mentioned in the oversight panel report. That had me worried so I searched the report. I did find some disconcerting notes regarding Ally Bank.
The following is an excerpt that starts on page 105 of the oversight panel report. Much of the excerpt is history of Ally Bank that I've covered over the last year such as the ABA letter to the FDIC and the FDIC rate restrictions. I've highlighted some new details that I have not seen before.
Although GMAC is cutting costs across the organization, its investment in Ally Bank is staying largely stable. GMAC has been engaged in an aggressive marketing campaign for Ally Bank. Among other things, Ally Bank has been attempting to interest depositors by offering CD rates that are nationally among the highest available. This strategy has been politically contentious regulators view unusually high rates as an indication of instability. In the summer of 2009, when Ally Bank’s rates were more than double the national average, the rates prompted a letter of complaint from the American Bankers Association (ABA) to the FDIC. The ABA letter stated that the Ally Bank strategy – aggressive courting of deposits and extremely rapid growth in assets – was risky and required regulatory supervision. The ABA was particularly incensed by Ally Bank’s strategy in light of the government bailout, arguing that Ally Bank was shielded from investor and market influences, and was therefore free to follow risky strategies. Citing the high interest rates paid by troubled financial institutions during the banking crisis of the 1980s, the ABA observed that such high rates and risky behavior can create a race to the bottom, in which other banks are also forced to raise their rates above the market rate. In response, Ally Bank vigorously contested the ABA’s characterization of Ally Bank as troubled, citing its capitalization ratio and protesting that its rates were supported by its relationship with the GM and Chrysler dealership network. Ally Bank’s arguments, however, did not persuade the FDIC, which sent a letter conditioning Ally Bank’s access to the TLGP on FDIC review of Ally Bank’s CD rates and later adopted new regulations setting a variety of standards for the interest rates permissible for insured depository institutions that are not well capitalized. At present, Ally Bank still offers rates that are among the highest available, although Mr. Carpenter has said that Ally Bank hopes to move away from aggressive rates and toward a more traditional banking model, albeit an online one. According to one analyst, however, internet banks do not have a history of success. Among other things, overhead is high because in the absence of branches the banks depend on expensive advertising. In addition, at present Ally Bank has approximately 10 percent of its deposits in brokered deposits. Bank’s proportion of brokered deposits and lack of restrictions on deposit withdrawals to be a warning sign of bank instability. Finally, as the Federal Reserve discontinues the extraordinary measures it has been using to keep interest rates low, interest rates are likely to rise and with them Ally Bank’s cost of funds. Although these shifts will affect the industry as a whole, Ally Bank already has high deposit costs and a high proportion of brokered deposits. Some commentators note Ally Bank’s high costs for acquiring and retaining depositors and low core deposits and liken Ally Bank to the unstable S&Ls of the 1980s. Given that Ally Bank’s deposits serve the same purpose for GMAC as commercial paper, GMAC instability affects not only GMAC and Ally Bank and, downstream, GM but also - and this brings to the fore the moral hazard of using government-insured deposits as the basis for monoline financing - Ally Bank’s depositors. Ultimately, Ally Bank appears to be both critical to GMAC and very much a work in progress, and whether it will be a success remains to be seen.
Note, Mr. Carpenter is the CEO of GMAC. I'm a little worried when he was reported to have said that:
Ally Bank hopes to move away from aggressive rates and toward a more traditional banking model, albeit an online one
I wonder what he considers as a "more traditional banking model"? Perhaps more like ING Direct?
The other interesting thing to note is the opinion of the analyst. I have a feeling the analyst must be from the ABA or from one of the giant banks. I don't understand the following:
According to one analyst, however, internet banks do not have a history of success. Among other things, overhead is high because in the absence of branches the banks depend on expensive advertising.
Of course internet banks don't have a history of success. The internet is only about two decades old. And I don't understand how not having branches creates more overhead. Is advertising really more expensive than running a huge brick-and-mortar branch network?
Another thing to note was the mention of the "lack of restrictions on deposit withdrawals." Was this referring to the small CD early withdrawal penalty? Or perhaps it's just referring to Ally's no-minimum requirements on its savings accounts?
I hope GMAC can quickly repay its TARP debt. It's not only for the sake of the taxpayers, but also to remove the regulatory oversight and restrictions on Ally Bank. We don't need any more downward pressures on our deposit rates.
I remember when I opened my first online savings account back in 2004. It was at ING Direct, and at that time it ways paying a 2.00% APY. When rates finally started to climb in 2005, I thought 2% savings accounts would be history. At the start of 2005, EmigrantDirect was launched with its 3% online savings account. Rates climbed for the next two years. Those were the good old days.
In today's record low interest rate environment, most online savings accounts are paying rates under 1.50%. ING Direct's Orange Savings Account rate is now at 1.10% APY, about half of what it was back in 2004. However, there are a few online savings accounts with nationwide availability that are still paying 2% APY. There are not many, and I don't know how these rates will last, but as of 3/17/2010, they still exist. Below is a short summary of five banks that still have these 2% savings accounts.
EverBank's 3-Month Intro Rate
Some may argue if this should qualify for the list. I'm going to include it since it may be a good deal for some. EverBank continues to offer 2.25% as part of its 3-month intro rate for its Yield Pledge Money Market Account and its FreeNet Checking. It's important to note that the standard money market APY is 1.26% APY. EverBank shows that the first-year APY is 1.51%. This is a blended APY that combines a guaranteed 3-month 2.25% rate with an assumed 9-month rate of 1.25%. Also, it's important to note that the 2.25% only applies to the first $50K for the money market and the first $100K for the checking. Even with these limitations, 2.25% for 3 months is much better than any 3-month CD than you can get these days. Refer to my account review for more details.
The Little Known Ready Saver Account
The 2.00% APY Ready Saver has only been on my weekly summary list for about a month. It's an internet product of the North Carolina bank Southern Community Bank and Trust. It's available nationwide except for North Carolina residents. Even though I have just recently been reporting on this, it's not a newcomer. According to a bank rep, they've been offering this 2.00% APY on this Ready Saver account for 18 months. It has some nice features such as no minimum balance requirements and no rate tiers. The account does have some downsides: hard credit pull, withdrawal limitations more severe than typical and an ACH bank-to-bank transfer service that's a little behind for online banks. Refer to my account review for more details.
RedneckBank and its Two Sister Banks
RedneckBank.com and its sister banks, EvantageBank.com and AmericaNetBank.com, are internet divisions of three Oklahoma banks which are all owned by one family (the Huckabay family). They have been offering an online savings account called Mega Money Market that has been paying 2.00% APY on balances up to $35K (1% for above) since April 2009. These banks also offer a reward checking account that pays 4% APY on balances up to $10K. More banks which offer reward checking accounts have added a companion savings account. The nice thing about these Oklahoma banks is that they don't require you to have the reward checking account and meet its monthly requirements to earn the top rate on the savings account. Also, the savings account doesn't have minimum balance requirements. The downside is their ACH bank-to-bank transfer service which has limitations and other issues. For more details, refer to my review of these banks that I did earlier this month.
SmartyPig Savings Account
SmartyPig's savings account has always been a rate leader since it was launched in the spring of 2008. Its current yield of 2.01% APY has held since August 2009. The SmartyPig savings account is not the typical online savings account. It's designed to help people to save for specific purchases. For those with large savings, it has some features that may irritate you such as a monthly auto transfer requirement and the requirement of creating goals. One important note regarding SmartyPig is that the bank that holds its deposits, West Bank, has announced that SmartyPig has grown too big, and it's in the process of finding a larger bank to hold SmartyPig deposits. SmartyPig's rates have been set by West Bank, so a new bank could have a major impact on future rates. Refer to my SmartyPig review for more account details and rate history.
Alliant Credit Union
The last bank offering a nationwide 2% savings account isn't a bank. It's a credit union. Alliant Credit Union has a long history of offering a very competitive savings account. The current 2.00% APY has held since July 2009. The minimum balance to earn this rate is only $100. Anyone can qualify to join Alliant Credit Union by being a member of the national or local PTA. In addition to top savings accounts, Alliant also has top rates for checking accounts, CDs, HSAs and IRAs. Near the end of each month, Alliant's board of directors decides on the rates for next month. So we should know in the next week if this 2% will continue through April. I hope this post doesn't jinx it ;-) For more info on Alliant, please refer to my Allaint Credit Union review.
First Community Credit Union of Houston is offering a high-yield reward checking account called First Rewards Checking. The account has the following rates and features if certain monthly requirements are met:
Monthly requirements include:
Other features of the account include:
Credit union membership is open to those who live or work in Harris or Fort Bend County, Texas. Please refer to the credit union's eligibility page for the full details. Membership requires a $5 minimum balance in the primary savings account.
Most of the credit union's branches are located on the west side of Houston.
The credit union's ratings for safety and soundness are average: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 66818).
Other Reward Checking Accounts
This rate and balance cap at this Houston credit union are a little below average for reward checking. It seems like institutions in large cities tend to have reward checking rates lower than average.
To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.
Jax Metro Credit Union is offering some competitive regular and IRA certificate rates. The most competitive is a 2.01% APY 12-month CD. Other notable ones include a 2.22% APY 24-month CD and a 3.30% APY 60-month CD. These rates are listed in the credit union's rates page as of 3/17/2010.
Credit union membership is open to those who live in parts of Jacksonville, Florida. Please refer to the credit union's membership page for the full details.
The credit union's ratings for safety and soundness are above average: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 67294).
The second scheduled FOMC meeting of 2010 ended this afternoon, and the press release looks very similar to January's press release. The Fed continues to say the same thing about keeping the federal funds rate exceptionally low for an extended period:
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
The first sign of future rate changes will be when the Fed replaces the "extended period" to something like "low for some time". Thomas Hoenig, one of the inflation hawks in the FOMC, is pushing for this change and voted against today's policy action. Here's what the press release included regarding Hoenig's vote:
Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.
According to this RTTNews article, "some say a change in the language of the Fed's commitment to keeping rates low for an 'extended period' could come during the next few meetings." We'll see what happens. The next three FOMC meetings are scheduled for April 27-28, June 22-23 and August 10.
Virginia Heritage Bank is offering a 2-year no-penalty CD with a 2.00% APY. It allows a one-time penalty-free withdrawal. Minimum deposit is $5,000. This special is listed on the bank's front page and in the bank's rate table as of the morning of 3/16/2010. There are also other competitive standard CD and IRA CD rates listed. These include a 1.75% APY 12-month CD and a 2.00% APY 18-month CD. IRA CD rates are 5 basis points higher.
It appears that a branch visit is required to open an account. Branches are located in the northern Virginia cities of Fairfax, Gainesville, Chantilly and Vienna.
The bank's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 2005 (FDIC Certificate # 58174).
Thanks to the reader who mentioned this special in the comments
Other No-Penalty Certificates of Deposit
No-Penalty feature in a CD is nice to have these days when there's the possibility that interest rates will go much higher in the next year. Ally Bank offers a 9-month no-penalty CD, but the rate has gone way down. It's currently below 1.00% APY. Wilshire State Bank also offers a liquid CD called the Flex CD which allows both penalty-free withdrawals and add-on deposits. Like Ally, it's available nationwide. Also like Ally, the rate has fallen quite a bit over the last year. It's now at 1.40% APY for a 12-month term (see my old review).
United Heritage Credit Union is offering three competitive CD specials:
Minimum deposit is $1,000. These specials are listed in the credit union's promotions page as of 3/16/2010.
These specials used to be limited to IRAs, but the special was recently changed to regular CDs.
United Heritage used to offer a reward checking account called Heritage Checking. They stopped offering new accounts about a year ago, but those who had signed up for it continue to earn 3.01% APY on balances up to $25K. According to a credit union rep, they're in the process of a new design and rollout for the Heritage Checking account, and it should be relaunched in May 2010.
Another interesting account that I just noticed is the Independence Account which looks like a 30-month add-on CD. However, it's in the savings account category. I've emailed the credit union asking about the withdrawal limitations and if it's a fixed-rate account. The rate table lists a yield of 1.99% APY on balances over $10K as of 3/16/2010. Update 3/17/2010: I received the following info from United Heritage about the Independence Account:
The Independence Account is a 30 month term with a variable rate. The funds will be locked in for the term period and any withdrawals before the maturity date will result in a penalty fee. The penalty we may impose will be the forfeiture of 6 months of dividends calculated using the dividend rate in effect at the time you request the withdrawal.
Credit union membership is open to those who live, work or attend school in Travis, Williamson, Bastrop, Caldwell, Hays, Smith or Wood County, Texas. You can also be eligible via family or select employer groups. Refer to the credit union's Eligibility Page for more details. Membership requires a minimum balance of $1 into the savings account.
Branches are located in Austin, Cedar Park, Georgetown and Round Rock in Central Texas and in Tyler in Northeast Texas.
The credit union's ratings for safety and soundness are strong: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 68251).
The FDIC just released its Winter 2009/2010 Consumer News. Some excerpts that I thought would be useful to highlight include:
Nelson suggested checking your accounts online about once or twice a week, but he also noted that "more and more banks are making it easier for their customers to keep an eye on their accounts electronically. For example, many banks offer e-mail or text message alerts when your balance falls below a certain level or when there is a transaction over a certain amount."
Consider using a separate computer solely for online banking or shopping.
Using a credit card generally offers more purchase protection than a debit card or other electronic forms of online payment.
when an institution provides a consumer with account balance information through an automated system - including an ATM, Web site or telephone - it must provide the actual balance, without additional amounts that could be used to cover overdrafts.
And, under another new rule from the Federal Reserve Board, beginning on July 1, 2010, financial institutions will be prohibited from charging fees for overdrafts on ATM withdrawals and one-time debit card transactions at "point of sale" (POS) terminals in stores unless the individual agrees up front ("opts in") to pay those fees.
Money that your business has on deposit with a bank is insured separately from your personal accounts at the same institution if the funds are in an account opened in the name of a corporation, partnership or other legal entity. But if you operate your business as a sole proprietorship, your business' funds are insured together with your personal deposits at that same institution in the "single account" category (those in your name alone and not including certain Individual Retirement Accounts), rather than being insured separately.
Refer to my November post for highlights of the FDIC's Fall 2009 Consumer News.
The main downside to reward checking accounts is the debit card usage requirement. The typical requirement is 10 debit card purchases per month to qualify for the high interest rate. For those who have cash back credit cards like those from Charles Schwab, Fidelity or PenFed, every time you use a debit card, you lose out on some cash back. One common strategy is to make big purchases using the cash back credit card, and then use the debit card for smaller purchases. For those who want to keep things simple without switching back and forth, the question becomes which will give you the most rewards: the reward checking account or the cash back credit card?
The best rewards will depend on how much you spend and how much savings you have that you want to keep liquid and safe. I thought it would be interesting to compare some different spending and balance scenarios.
In the comparison I list the credit card cash back rewards from spending a certain amount per month. I'll assume a 2% cash back rewards. You can sometimes do better than this with certain cards in certain categories, but it's rare to go above this for all categories.
For reward checking accounts, I'll assume that you are receiving a reward checking rate that's 2% higher than what you could have received if you just had used a high-yield savings account. This rate spread could be higher if you're comparing the 4.09% reward checking account at Bank of the Sierra vs. ING Direct's 1.10% savings account. But for simplicity, I'll just use 2% which is a reasonable estimate based on my experience.
One thing that helps credit card cash back rewards is that it's generally believed that credit card rewards are not taxable income. However, the higher interest from reward checking accounts are fully taxable. In the comparison, I assume a 25% tax bracket.
Yearly Earnings from a 2% Cash Back Credit Card
| Monthly Purchases | Yearly Cash Back |
| $500 | $120 |
| $1,000 | $240 |
| $2,000 | $480 |
| $4,000 | $960 |
Extra Yearly Earnings from a High-Yield Reward Checking Account
| Checking Balance | Extra Yearly Interest | After Taxes (25% rate) |
| $10,000 | $200 | $150 |
| $25,000 | $500 | $375 |
| $50,000 | $1,000 | $750 |
| $100,000 | $2,000 | $1,500 |
So if you spend $2,000 a month, you'll earn $480 cash back assuming a 2% cash back credit card. If you have $25,000 in liquid savings and replaced all of your credit card purchases with debit card purchases, you'll make an extra $375 from the reward checking account over a high-yield savings account. So you'll be better off keeping your $25K in a high-yield savings account and using the cash back credit card rather than switching to the reward checking account.
However, if you only spend $1,000 a month, you'll earn $240 cash back. The $25,000 balance in the reward checking account will allow you to earn an extra $375. So for this case, the reward checking account is the better option.
As I mentioned above, those who are willing to spend the time will want to use the cash back credit cards for big purchases and the reward checking debit cards for the smaller purchases. One thing to keep in mind is that some banks have threatened to close accounts for those who were not making enough purchases per month. So it's best not to reduce your debit card purchases by too much.
Are the benefits from reward checking accounts big enough for you? How much rate spread do you require over the best high-yield savings accounts? How do you optimize using cash back credit cards and reward checking debit cards? Please share your experience in the comments.
High-Yield Reward Checking Account Resources
Update 3/16/2010: This special is only available at the branches of the former Temucula Valley Bank. The special and the branch locations are listed at this Temecula Valley webpage.
First Citizens Bank is offering a special 2.00% APY 11-month CD. Minimum deposit is $1,000, and the maximum is $1 million. A checking account is required. This special doesn't appear to be listed at the bank's website. It was advertised in today's (3/14/2010) Riverside Press-Enterprise newspaper. The ad is available online here.
First Citizens Bank has branches in several states. However, CD rates appear to vary based on the region. I had called First Citizens last Monday regarding another CD special (2.15% 18-mo CD), and that was available at First Citizen's North Carolina branches but not at its California branches (see review). This 11-month CD special may only be available in Southern California. The ad only lists the branches in the cities of Temecula (951-694-9940), Murrieta (951-461-0411) and Corona (951-270-3233). For other cities, check with your local First Citizens branch to confirm the availability of the CD special. Branches are located in North Carolina, Florida, Arizona, Maryland, Tennessee, Washington, California, Virginia and West Virginia.
First Citizens Bank has been expanding in the last few years with much of the expansion coming from the acquisition of failed banks. The latest acquisition was on March 5th when it acquired Sun American Bank in South Florida. For those in South Florida, keep an eye on these former Sun American branches. Banks that acquire failed banks often will offer competitive CD specials at the branches of the failed bank.
First Citizens Bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11063).
Last Sunday I reviewed First Citizen Bank's FreeMoney debit card reward program.
Other Competitive Certificate of Deposit Rates
Digital Credit Union is offering a free FICO credit score service to its members. Details are described in this credit union page. It states that "through DCU you can receive your Equifax FICO Credit Score via Message Center once a month FREE." Additional details are listed in the credit union's FAQ page.
Free credit scores from one of the major credit bureaus are not easy to find. Free trial periods are common, but these require you to sign up for a monthly subscription. You'll have to cancel before the trial period to avoid being charged the monthly fee. Other sites that offer free credit monitoring services may not be offering FICO scores.
You can get a free copy of your credit report once a year from each of the bureaus from AnnualCreditReport.com, the website setup by the government. However, this does not provide your credit score.
Another reason to join DCU is their CD specials. Every now and then DCU comes out with a nice CD special. The last one was in February when DCU was offering 2% for a 14-month term.
Anyone can join DCU via membership in an association. Refer to this credit union page for the list of associations. The least expensive membership is $10 for joining Reach Out for Schools. You can be immediately eligible to join DCU if you live, work, worship or attend school in parts of Georgia and Massachusetts. Refer to the Join DCU page for the full details.
In the instructions for joining DCU there are links to an online membership application and a PDF application. A reader who commented on his experience with the online application in my DCU post from 2008 provided the instructions he received from DCU after he applied:
In order to continue processing your application, please mail a $5 check or money order payable to DCU to fund your membership.
If you have joined through a sponsoring organization, then please make sure to also include funds to cover that organization's membership fee.
Also, please mail a copy of your driver's license or passport. If sending a passport, or if your license does not show your current address, please also send either a utility bill in your name (electric, gas, home telephone) or a copy of your apartment lease agreement. If you have listed a Joint Owner on your application, that person must also send the required ID and address proof.
Please note, we do not accept cell phone bills, bank statements, credit card statements or pay statements as address verification.
Make sure to check with the credit union for the latest instructions. One downside to joining is a potential hard credit inquiry (which can temporarily ding your credit score). Here's what a commenter mentioned in my August 2008 DCU post:
I also have been a five-year DCU member, holding several jumbo CDs with them. Yet, when I added checking to my account this past January, they ran a check on me through Equifax!
Branches are located throughout Massachusetts, in Hudson, Merrimack and Nashua in New Hampshire, in Colorado Springs, Colorado and in Alpharetta, Georgia.
DCU is federally insured by the NCUA (Charter # 23521). It's a large credit union with $4.2 billion in assets and 376,824 members.
Credit for this find goes to FW member jackcrawfish who mentioned it on this FW thread.
NexBank continues to offer its Triple Advantage CD. However, the rate has fallen 40 basis points since February. The rate is now 2.00% APY for a 2-year term as of 3/14/2010. Nevertheless, this is a competitive rate for an add-on CD. Additional deposits of $10,000 or more are allowed anytime. There's also a bump feature which is typically less useful. It allows customers to bump-up the rate once per a 12-month period to the rate of NexBank's current 24-month CD offering. Minimum initial deposit is $10,000.
The 2.00% APY is not the best for 2-year terms. But the add-on feature is nice to hedge against the risk that rates will stay low or go lower in the next year. When your CDs mature, you can always rely on the add-on CD.
The bank used to have an online application, but I no longer see the application link. The application used to allow anyone from Texas to apply. If you're interested in this CD, you should call the bank's toll-free number (1-800-827-4818). Branches are located in Dallas and Plano, Texas.
NexBank's ratings for safety and soundness continue to be a little weak: 2 stars (problematic) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 29209). Another thing to note about this bank is that it's operating under a FDIC Cease and Desist Order.
Other Competitive Certificate of Deposit Rates
There's another $125 bonus for a Chase checking account with direct deposit. The promo page allows you to apply online or at a branch. Like the last one, you have to be logged into your Chase account (credit card or bank account) to see it. Also be aware that these promo pages often expire before the expiration date.
$125 Chase promotion page - 5/15/2010 expiration - Must be logged in to see
Here are the steps listed to receive the bonus:
1. Print this page and take it to your local Chase Branch or apply online by May 15, 2010.
2. Open a Chase Checking account and set up direct deposit.
3. We'll deposit $125 into your new Chase CheckingSM account within 10 days of your initial direct deposit posting.
And here is the small print listed in the promo page:
Bonus/Account Information - To qualify for the reward you must open a new Chase Checking account with a $100 minimum opening deposit of new money (money not currently held by Chase or its affiliates). Also, within 60 calendar days of account opening, you must initiate a monthly direct deposit which includes payroll, pension or Social Security, or other government benefits. The reward will be deposited into your new account within 10 days after the initial direct deposit has posted to your account. Limit one personal checking account-related reward/premium per customer, per calendar year. Offer not available on account conversions or in combination with any other offer. Reward is not considered part of the minimum opening balance. Checking account must remain open for a minimum of six months or the reward will be debited from the account at closing. Account is subject to approval. Reward is considered interest and will be reported on IRS Form 1099-INT.
Hat tip to reader ekat who mentioned this new $125 promo in the comments.
Note, the $125 bonus requires direct deposit. However, there have been reports that ACH transfers from banks may qualify.
You may also be able to find hard copies of the $125 promotion in address change packets at your post office. The $100 promo ads seem to be very common.
Beware of Fees
Readers in my May 2009 Chase post mentioned some fees to watch out for. One is a $3 fee for initiating an ACH transfer from Chase to an external account. Transfers initiated from outside Chase are not subject to a Chase fee. This is how I transfer out of my Chase account. This $3 fee and other fees are described in Chase's account disclosures which are available at this page. According to the disclosure, this $3 fee may be waived with certain account types.
Other potential Chase Checking fees include a $6 monthly service fee. To have this waived, you must have direct deposit or if you have 5 or more debit card purchases. There's also a $2 fee for using non-Chase ATMs ($3 for outside the U.S.) This Chase Checking page has more details on these fees.
Chase Branches
It appears Chase has finished the conversion of all WaMu branches. According to this Wikipedia article, the last branches that were converted were the ones in AZ, CA, CO and NV in October 2009.
States with Chase branches include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Kentucky, Louisiana, Michigan, New Jersey, Nevada, New York, Ohio, Oklahoma, Oregon, Texas, Utah, Washington, West Virginia and Wisconsin.
Chase is FDIC insured under JPMorgan Chase Bank, N.A. (FDIC Certificate # 628).
Other Bank Bonuses
Chase often has bonuses for business checking accounts. Occasionally this is $200, but the best one that appears to be available now is $100. Here's the Chase promotions page. It's scheduled to last through 4/15/2010.
For those with Chase checking accounts, there's a $15 bonus for using its online bill pay. Here's the bill pay promo page. It's scheduled to last through 3/31/2010.
To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts.
First National Bank of St. Louis is offering up to $100 for opening a checking account and a savings account. Earn $50 when you open a free checking account. Earn another $50 when you open a SaveUp Savings account at the same time. The promotion doesn't appear to be listed at the bank's website. It was advertised in today's (3/14/2010) St. Louis Post-Dispatch. The ad is available online here.
The Free Checking has a $50 minimum opening deposit, and it offers free Online Bill Pay when you choose eStatements. The SaveUp Savings Account has a $250 minimum initial deposit. A $2 monthly fee is waived when you maintain a minimum balance of $50. You can get double the interest when you set up a monthly transfer from any of our checking accounts to your SaveUp Savings Account (double interest ends 8/31/2010). I don't see the interest rates listed, so this double-interest feature may not amount to much.
It appears that a branch visit is required to open an account. Branches are located throughout the St. Louis metro area.
The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 4534)
Other Bank Bonuses
To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts.
Hot Deals, Quick Link for Rates, Recap of this week's posts
The Fed will be having its second regularly scheduled meeting of 2010 on Tuesday March 16. According to this MarketWatch article, there's growing debate in the FOMC over near-zero interest rates. The inflation hawk, Thomas Hoenig, who's now a voting member in the FOMC this year has hinted that he is likely to dissent on holding policy steady at the meeting. He was the lone dissenter in the last meeting concerning the language of "exceptionally low levels of the federal funds rate for an extended period." However, according to the article, he's not getting much support by the other members at the FOMC. We'll see what happens on Tuesday.
Four banks failed this week. The brings the total number of bank failures for 2010 to 30 (see review). No credit unions failed. The last credit union liquidation was on March 5th which was the fourth closure of 2010 (see review).
The bank failures this week were typical with the FDIC finding buyers who agreed to assume all deposits even those above the FDIC limit. The FDIC wasn't able to find buyers of two of the four banks that failed on March 5th. Centennial Bank of Ogden, Utah was one of these two banks. Hopefully, depositors should have received their checks from the FDIC by now. A few of this blog readers had accounts at this bank through its internet division, CBDirect.com, which had offered a no-cap reward checking account. If you are one of those depositors, please leave a comment if you have or haven't received your check.
The other bank that failed on March 5th without a buyer was Waterfield Bank. Unlike Centennial Bank, the FDIC is temporarily operating Waterfield to give depositors time to transfer their liquid accounts to other banks. The complicating issue with Waterfield is that it held deposits at several affinity groups. Two popular affinity groups included UFB Direct and AARP Financial Savings Center. As I reported on Monday, both UFB Direct and AARP Financial Savings Centers appear to be shutting down.
To stay on top of the latest banking news, be sure to keep an eye on our Notices Section. Notices are very short posts that are intended to alert you to rate changes or point you to some interesting banking news or deals on the web. I'll continue to write full blog posts on the most relevant news and the best deals. Please refer to my Notices section overview to learn more about these and how you can subscribe.
Savings Account Rates
I'm afraid this was another week of widespread rate cuts. Some notable ones occurred at Capital One Direct, iGObanking and Apple Bank for Savings' Grand Yield Direct.
I still have 5 institutions on my savings account list with rates of at least 2% APY. One of these five is actually three separate banks that are all owned by the same family, and each has its own internet division. The most famous one is RedneckBank. These banks offer the Mega Money Market account that has been paying 2.00% APY since April 2009. However, the rate applies only to the first $35K. The APY for the portion of balances above this is 1.00% APY. I did another review of this Mega Money Market account and these banks on Thursday.
Rate Hikes:
Rate Cuts:
Certificate of Deposit Rates
One bit of good news is that CD rates are holding up. There were some rate cuts this week, but they were not nearly as bad as the savings account rate cuts. The best deals continue to be at credit unions for almost all terms. The only exception is BankUnited's 4-year 3.25% APY CD which ties Pentagon FCU's 4-year CD rate.
One new CD that I came across today is at Geauga Savings Bank which is offering a liquid 2-year CD with a 2.00% APY. It's called a Freedom CD, and it allows additional deposits and penalty-free early withdrawals. Details are described in the bank's disclosure. It does have one significant downside: a minimum initial deposit of $50K. The liquid features give it an edge over Ally Bank's 2-year Raise Your Rate CD, but the nice thing about Ally is that its CDs don't have minimum deposit requirements. I reviewed Ally Bank's Raise Your Rate CD and Ally's low-penalty CD features in this Tuesday post.
Below are some of the best nationwide and local CD deals that are still active.
Best Nationwide CD Deals as of 3/13/10: Also listed are savings account promos with rate guarantee periods. The full list of nationwide CD rates is farther down.
Best Local CD Deals as of 3/13/10: Some of the best CD deals are from banks and credit unions that don't offer accounts nationwide. Refer to the recap section and the state index section to find all the recent local deals. Here are some of the best deals to note.
Reward Checking Accounts
I reported on two new reward checking accounts this week with yields of 3.50% and 4.11% APY. I also revisited two reward checking accounts that I first reported on in the past. One is the Texas bank HCSB which is offering a 3.51% APY for balances up to $25K. It was a local deal when I first reported on it in February. It's now nationally available, and you can open it online (see review). The other reward checking account is offered by BancorpSouth. I think this might be the largest bank that's offering a reward checking account. The account is not a nationwide deal, but the bank has 289 branches throughout the Southeast (see review).
To see all of the high yield reward checking accounts available throughout the nation, please refer to the reward checking section of DepositAccounts.com.
Recap for the Week - Links to This Week's Posts
Banking News
CD Deals - National
Savings/Checking Accounts - Nationwide
CD and Money Market Deals - Local
The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums under $100,000. Previous weekly summaries are available at this page. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs, CDs by state Comments: read and discuss
As of March 13, 2010
Checking/Savings/Money Market Accounts:
3-Month Certificates of Deposit:
6-Month Certificates of Deposit:
9-Month Certificates of Deposit:
12-Month Certificates of Deposit:
18-Month Certificates of Deposit:
24-Month Certificates of Deposit:
36-Month Certificate of Deposit:
48-Month Certificate of Deposit:
60-Month Certificate of Deposit:
84-Month Certificate of Deposit:
High Yield Reward Checking Accounts - Open to All
Recent CD Specials at Local Credit Unions and Banks
Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)
| March 2010 |