E-LOAN's Savings Account Drops Again - Other Alternatives?
Jan 17, 2007 - 7:34 AM by Ken Tumin
Late yesterday E-LOAN lowered the rate on its internet savings account from 5.38% to 5.25% APY. There continues to be no rate tiers. The CD rates remain the same. The last rate drop in the savings account was on December 6th when the rate went from 5.50% to 5.38% APY.
This rate drop is significant since it takes E-LOAN out of the top spot for savings account rates. A yield of 5.25% is nothing special. There are several other banks offering savings accounts with rates of 5.25% APY and above, and many of these have no minimum balance requirements. If you have a balance of $100K, you can even get a better return on a liquid account at ING Direct (see my ING Direct checking account post).
I hope this rate drop won't signal a new trend at E-LOAN. When E-LOAN launched in September, it had very competitive CD rates in addition to the savings account rates. The 3-year to 5-year rates had been as high as 5.75% APY before November. Now they're at 5.00% for balances under $50K. Although most all long-term CD rates have dropped in the last few months, the 5.00% APY is far below the leading rates.
Even though E-LOAN doesn't seem to want be a rate leader, it does seem intent to expand its online banking (see my E-LOAN checking post) and to improve its online accounts. One improvement is a change in its trial test deposits that are used to verify your external account. A reader had reported that E-LOAN has changed the trial deposit method so it no longer makes debits after the two trial deposits. This is important for those who link their E-LOAN account to another savings account which only allows 6 withdrawals per month. But this is a small feature. I hope E-LOAN has taken all necessary steps to prevent a repeat of ACH transfer errors that occurred for many customers last November. For more info on this savings account, please refer to my E-LOAN savings account review.
For those who have had enough of E-LOAN or those who are looking for the rate leaders, here are some alternatives.
Of course you can never know which bank will be able to remain a rate leader. There were hopes that E-LOAN would be such a bank since it seemed to have the size and the infrastructure.
Thanks to the reader who mentioned this rate update.
This rate drop is significant since it takes E-LOAN out of the top spot for savings account rates. A yield of 5.25% is nothing special. There are several other banks offering savings accounts with rates of 5.25% APY and above, and many of these have no minimum balance requirements. If you have a balance of $100K, you can even get a better return on a liquid account at ING Direct (see my ING Direct checking account post).
I hope this rate drop won't signal a new trend at E-LOAN. When E-LOAN launched in September, it had very competitive CD rates in addition to the savings account rates. The 3-year to 5-year rates had been as high as 5.75% APY before November. Now they're at 5.00% for balances under $50K. Although most all long-term CD rates have dropped in the last few months, the 5.00% APY is far below the leading rates.
Even though E-LOAN doesn't seem to want be a rate leader, it does seem intent to expand its online banking (see my E-LOAN checking post) and to improve its online accounts. One improvement is a change in its trial test deposits that are used to verify your external account. A reader had reported that E-LOAN has changed the trial deposit method so it no longer makes debits after the two trial deposits. This is important for those who link their E-LOAN account to another savings account which only allows 6 withdrawals per month. But this is a small feature. I hope E-LOAN has taken all necessary steps to prevent a repeat of ACH transfer errors that occurred for many customers last November. For more info on this savings account, please refer to my E-LOAN savings account review.
For those who have had enough of E-LOAN or those who are looking for the rate leaders, here are some alternatives.
- Small Balances - In my opinion, the best deal now is Apple Bank for Savings' Grand Yield Direct Account. This currently pays 5.27% APY with no minimum balance requirement. UFB Direct offers 5.32% and iGoBanking 5.30%, but Apple currently has a $25 signup bonus with no deposit requirements. See my latest Grand Yield Direct post for more info.
- Small to Large Balances - If you have at least $3K that you don't need for 3 months, you can also get a $25 bonus (refer-a-friend) with Amboy Direct's Premium Savings Account. It has a yield of 5.25% APY for all balances under $20K. For balances over $20K, you earn 5.35% APY. See my latest Amboy Direct post for more info.
- Balances over $10K - Superior Savings of New England has a money market account that pays 5.50% APY for balances over $10K. You have to open this account by mail and the account doesn't have ACH transfer features, but it does offer limited check writing. See my Superior Savings post for more info.
- Balances over $25K - Gloucester County Federal Savings Bank is offering an online savings account called the CyberSaver with a maximum rate of 5.61% APY for balances over $25K. I had first reported on this account in early December and the rate is still available today. See my CyberSaver Savings Account post for more info.
Of course you can never know which bank will be able to remain a rate leader. There were hopes that E-LOAN would be such a bank since it seemed to have the size and the infrastructure.
Thanks to the reader who mentioned this rate update.
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Anonymous - #1, Wednesday, January 17, 2007 - 9:30 AM
This bank is playing us. I am moving elsewhere. Too much nonsense in such a short time. This is the straw that broke the camels bank!
SVG (anonymous) - #2, Wednesday, January 17, 2007 - 10:48 AM
Yes, it is possible to get an impression as if the bank is 'playing'. But then again so are the savers who use these sort of accounts.
It is a never ending 'game' (for a lack of a better word) between the entities that have funds (savers) and the entities that are interested in getting hold of those funds (banks/CUs). The Banks/CUs will keep offering better rates/deals and the Savers will keep taking advantage of these rates/deals. Over time the players on the side of Banks/CUs will change and so will the players on the Savers side!
- SVG
Anonymous - #3, Wednesday, January 17, 2007 - 11:46 AM
My eloan account still says:
APY* 5.38%
Rate 5.24%
I wonder if it hasn't updated yet...
Anonymous - #4, Wednesday, January 17, 2007 - 2:44 PM
DIME and EverBank offer 6% for three months. There are no reasons to assume that Amboy, Superior Savings or Gloucester will remain rate leaders for longer than that.
EV
Anonymous - #5, Wednesday, January 17, 2007 - 3:27 PM
Don't forget BoA NEA account which for the first 60 days pay 6.23% interest on the whole balance with no maximum for 50K+ then 5.36% APY afterward which is not too bad either. I noticed that in the post on this deal previously, it was the AAA not the NEA association. The NEA account has a MFR+1.50% which is pretty great for a liquid account.
Marc Schoenfeld (anonymous) - #6, Wednesday, January 17, 2007 - 3:59 PM
I second the BofA comment. I have one of these accounts through my AAA afiliation (found out about from this blog) and it's a good rate (though I didn't get the 60 day bonus) and VERY convenient for current BofA checking account customers as you can get same day transfers credited and available for use immediately up to 10:45PM local time (9:45 CT, just like television). Even when dipping below 50k, the rate is still ok for the convenience it offers with the instant transfers, oftentimes allows you to squeeze and extra day or two of interest out when having to move funds for whatever reason.
Banking Guy (anonymous) - #7, Wednesday, January 17, 2007 - 6:38 PM
Here's my Bank of America AAA money market account post. Looks like the only two affiliations are AAA and NEA now.
Anonymous - #8, Thursday, January 18, 2007 - 7:05 AM
Just finished the Gloucester Banks signup process. Very painless. You do have to mail in a signature statement.
Banking Guy (anonymous) - #9, Thursday, January 18, 2007 - 7:30 AM
Thanks for the info on Gloucester Bank. Please keep us updated on how it goes.
Anonymous - #10, Thursday, January 18, 2007 - 8:53 AM
I just withdrew almost my entire balance from E-Loan. This bank seems a bit shady.
It looks like they now have a tired structure.
I opened a BoA NEA account with no problems, and I am not a member of NEA, and it worked!
Anonymous - #11, Thursday, January 18, 2007 - 9:24 AM
the 4.65 APY on Gloucester's CyberSaver is only available on deposits over $100,000 -- here's the rate link as of Jan. 10 http://www.gcfbank.com/rates.asp#cyber
Anonymous - #12, Thursday, January 18, 2007 - 9:34 AM
SORRY I'M WRONG. GLOUCESTER'S CYBERSAVER APY IS 5.61% ON AMOUNTS OVER $25,000. I WAS LOOKING AT THE MONEY MAKER RATE
Weiwen Ng (anonymous) - #13, Thursday, January 18, 2007 - 3:09 PM
Banco Popular, which owns E-Loan, is having a bad year. I think they are in good shape and should be able to get through this, but they also can't afford to pay out more than the federal funds rate.
Banking Guy (anonymous) - #14, Thursday, January 18, 2007 - 6:21 PM
Weiwen Ng, that's a good point. Add to that the fact that this account has been very successful in attracting deposits, and there's not much reason for E-LOAN to keep the rate that high.
Anonymous - #15, Friday, January 19, 2007 - 1:30 AM
LOL only 1 problem before they lowered there rates again they were paying below the feds fund rate.
E-loan was a rate of 5.24% with an APY of 5.38%.
Last time I checked Fed Funds rate was 5.25%. You cant really look at the APY because that is a compounded number.
Honest truth is at 5.24% they could just buy short term bonds and turn a profit on all deposits except that profit margin is very thing as most short term bonds are currently paying a rate between 5.40-5.75% and on small balances I am sure they could not cover the cost to service the account.
I think the smart move for them would have been for them to start to tier there rates except I guess they thought to many people would get offended by the tiers.
Anonymous - #16, Friday, January 19, 2007 - 8:25 AM
FOLKS THE BOA AAA MM SAVINGS 60-DAY 6.23 APY IS NO LONGER AVAILABLE. SEE ONLINE CHAT BELOW.
Please wait for a site operator to respond.
You are now chatting with 'Kanitra '
Kanitra : Hello. I'm a specialist who helps customers apply for AAA-sponsored CD, Money Market & IRA accounts.
you: I don't see the promotional 60-days APY
Kanitra : I'd be glad to assist you with that!
Kanitra : One moment please...
you: it's for the MM savings account
Kanitra : Okay.
Kanitra : I'm sorry. The promotion is no longer offered.
you: 6.23% for deposits of $50,000
Kanitra : I'm sorry. That offer is no longer valid.
Kanitra : I do apologize for any inconvenience.
you: so what's the rate for $50,000?
Kanitra : The rate is 5.23%/5.36 annual percentage yield.
you: ok. thanks.
Anonymous - #17, Friday, January 19, 2007 - 11:49 AM
BoA MM promo is for NEA not AAA. If you reread the post you would see that. According to the website the rate is still effective as of 1/19/07.
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