EmigrantDirect Now at 4.25%
Jan 26, 2006 - 11:45 AM by Ken Tumin
EmigrantDirect just raised the rate of its AmericanDream Savings Account from 4.00% to 4.25% APY. The last rate change by EmigrantDirect was in September 20, 2005 when it made a 0.5% increase from 3.50% to 4.00%.
This move looks more like EmigrantDirect trying to keep up with the others rather than being the leader. It has been over a month since HSBC Direct raised its Online Savings Account to 4.25%. Since EmigrantDirect had fallen behind, there was hope that it would do another 0.5% increase, perhaps right after the Fed's next meeting on Tuesday.
As many have pointed out, EmigrantDirect probably doesn't have much of a need for new deposits since it has made a name for itself. However, ING Direct's 4.75% Winter Save Up Sale promotion might have had some effect. With online transfers, it's easy for people to be rate chasers. Emigrant's new credit card seems to be one attempt to discourage this. To get the 1.25% cash back on the credit card, you have to maintain $10K in deposits. I would be surprised if this is successful. I wonder what ING Direct has in mind to keep deposits after April 15th?
This move looks more like EmigrantDirect trying to keep up with the others rather than being the leader. It has been over a month since HSBC Direct raised its Online Savings Account to 4.25%. Since EmigrantDirect had fallen behind, there was hope that it would do another 0.5% increase, perhaps right after the Fed's next meeting on Tuesday.
As many have pointed out, EmigrantDirect probably doesn't have much of a need for new deposits since it has made a name for itself. However, ING Direct's 4.75% Winter Save Up Sale promotion might have had some effect. With online transfers, it's easy for people to be rate chasers. Emigrant's new credit card seems to be one attempt to discourage this. To get the 1.25% cash back on the credit card, you have to maintain $10K in deposits. I would be surprised if this is successful. I wonder what ING Direct has in mind to keep deposits after April 15th?
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Anonymous - #1, Thursday, January 26, 2006 - 12:06 PM
ED credit is a joke. You can get the Fidelity credit card requires you to maintain $0 in you Fidelity account and you earn 1.5% cash back.
ED has become another ING and is no longer the leader. They raised too little too late as keydirect.com now pays 4.55% with min $25K deposit and more than likely HSBC will raise rates to 4.50% after tuesday rate increase from the fed.
Anonymous - #2, Thursday, January 26, 2006 - 3:35 PM
Booring. They did not even match gmac or keydirect.
MoneyDummy (anonymous) - #3, Thursday, January 26, 2006 - 7:31 PM
I sometimes wonder who the target market for these kinds of half-way promotions are. It seems like most of the people I know fall into one of two camps when it comes to savings accounts: they either know nothing about them and are suspicious about keeping their money in a place with no offices, or they're online banking/credit-card gurus who won't spare an eye-blink for second-rate interest rate or a 1.25 cash back credit card which requires a 10K balance.
Emigrant's promotions seem to wildly miss either group. So are they just completely missing the market, or is there a market out there I'm not familiar with?
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