EmigrantDirect Down to 5.05%, Suffering from ING-itis?
Sep 30, 2006 - 12:48 PM by Ken Tumin
EmigrantDirect just dropped the rate on its AmericanDream Savings Account from 5.15% to 5.05% APY. The rate had been at 5.15% APY since July 28th.
Could this be a sign of things to come for savings account rates? Or maybe it's just an issue with Emigrant? Since the Fed stopped raising interest rates, other banks have pulled back some on savings account rates. CapitalOne's money market account rate fell from 5.00% to 4.80% in August. GMAC Bank's money market account was as high as 5.10% in late July. In early August it fell to 5.00% APY and has remained there. Corus Bank's money market account rate had been as high as 5.10% APY. It's now at 4.88% APY. It's indexed to the 91-Day US Treasury Bill discount rate. So the rate drop at Corus is indicative of the general short-term rate environment.
There are banks that have been keeping their savings account rates at 5.25% APY and higher. The problem could be with Emigrant. As I reported in August, Emigrant isn't having an easy time putting the internet deposits to work. Much of the deposits at EmigrantDirect aren't being used on loans but are sitting in low-yield short-term investments. Also, Emigrant hasn't been doing great with its financials. Its rating at Bankrate.com had fallen to 2 out of 5 stars around July (below industry average). It has improved in the last month. Currently, the Bankrate.com safe and sound rating is 3 out of 5 stars (performing).
Emigrant may also be suffering from ING-itis. That's an ailment that had happened to ING Direct when it had attracted so many customers and deposits that it could keep its rates low and hope that its fancy website would be enough maintain adequate deposits.
This may be a good time to consider opening a savings account at E-LOAN which just started a new savings account this week paying 5.50% APY for deposits over $5k. E-LOAN requires an initial deposit of $5k, but there are no fees if your balance falls below that (see post). If you can't do a large initial deposit, there's AmboyDirect, Apple Bank and UFB Direct with no-minimum online savings accounts at 5.25% APY.
Could this be a sign of things to come for savings account rates? Or maybe it's just an issue with Emigrant? Since the Fed stopped raising interest rates, other banks have pulled back some on savings account rates. CapitalOne's money market account rate fell from 5.00% to 4.80% in August. GMAC Bank's money market account was as high as 5.10% in late July. In early August it fell to 5.00% APY and has remained there. Corus Bank's money market account rate had been as high as 5.10% APY. It's now at 4.88% APY. It's indexed to the 91-Day US Treasury Bill discount rate. So the rate drop at Corus is indicative of the general short-term rate environment.
There are banks that have been keeping their savings account rates at 5.25% APY and higher. The problem could be with Emigrant. As I reported in August, Emigrant isn't having an easy time putting the internet deposits to work. Much of the deposits at EmigrantDirect aren't being used on loans but are sitting in low-yield short-term investments. Also, Emigrant hasn't been doing great with its financials. Its rating at Bankrate.com had fallen to 2 out of 5 stars around July (below industry average). It has improved in the last month. Currently, the Bankrate.com safe and sound rating is 3 out of 5 stars (performing).
Emigrant may also be suffering from ING-itis. That's an ailment that had happened to ING Direct when it had attracted so many customers and deposits that it could keep its rates low and hope that its fancy website would be enough maintain adequate deposits.
This may be a good time to consider opening a savings account at E-LOAN which just started a new savings account this week paying 5.50% APY for deposits over $5k. E-LOAN requires an initial deposit of $5k, but there are no fees if your balance falls below that (see post). If you can't do a large initial deposit, there's AmboyDirect, Apple Bank and UFB Direct with no-minimum online savings accounts at 5.25% APY.
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Anonymous - #1, Saturday, September 30, 2006 - 1:34 PM
The FDIC numbers indeed look horrible and the ride for Emigrant looks over.
The good online banks now are Banco Popular which has nice and steady financials which is who e-loan's parent is as well as AmtrustDirect.
If one has a 5% or higher local bank, the Emigrant Direct is essentially useless. Therefore I see this as very bad indeed.
Dollar Wise Guy (anonymous) - #2, Saturday, September 30, 2006 - 2:55 PM
they have yet to change the account summary page which, as of now, still list 5.15% APY & 5.02% rate but, when i was automatically logged out and went to log back in ...there it was ...a great big 5.05% staring me in the face ...
the summary still states 5.15% but I still cancelled the extra deposit I was making and went straight to BankDeals to see what was Up!
Anonymous - #3, Saturday, September 30, 2006 - 3:42 PM
Regarding the E-LOAN online savings account: Looks like the 5.50% APY applies even for balances below $5K. I don't see any mention of 5.25% APY for balances below $5K on the website today.
Banking Guy (anonymous) - #4, Saturday, September 30, 2006 - 3:54 PM
Yes, I see this now also. 5.50% is now for all balances at E-LOAN. That's a nice change. Perhaps they didn't want that special note next to their 5.50% rate.
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