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Bank Deals Weekly Summary for May 31, 2008

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Quick Link for Rates, Recap of this week's posts

There were several signs this week that this low-rate environment may not last too much longer. Of course inflation is being felt by everyone, and there's no sign of it improving. This was noted by the FOMC member, Richard Fisher, in a Wednesday speech who said the Fed is likely to change its monetary policy "sooner rather than later" if inflation expectations worsen. On Thursday the U.S. Commerce Department revised upward its earlier projections for first-quarter growth in the country's GDP. As this MarketWatch article describes, future traders are now expecting the Fed to start raising rates in October.

The expectations for higher rates later this year can be seen in the CD rate changes in recent weeks. Long term CD rates continue to go up. So you might want to resist some of those high long term rates and stick with short term CDs. If you still want some long term CDs, be sure to check on the early withdrawal penalties and avoid those with penalties more than 6 months of interest.

Savings Account Rates Recap

With rates expected to increase, savings accounts become more attractive. Unfortunately, you are going to have to live for awhile with some low rates. We saw more online banks this week cut their savings account rates.

There were hopes that the 4.75% and 4.50% yields at AARP Financial Savings Center would last for awhile, but that ended for new customers last week. It appeared that existing members would continue to receive the original yields for several weeks. Unfortunately, that turned into one week. The new yields for existing members went down by 35 basis points yesterday. They're now 4.35% APY for the Jumbo money market and 4.15% APY for the savings account. The yield for new customers remains at 4.05% APY for both accounts (see post).

Alliant Credit Union's savings account is now back near the top of my list with a yield of 4.00% APY. At the start of each month, Alliant updates the savings account rate. Some readers have mentioned being told that it's scheduled to remain at 4% APY. I tried to confirm that with my Alliant contact yesterday and with a CSR today, but I wasn't able to confirm it. The CSR said that the new rate (hopefully not a lower rate) will be posted on Monday. Please see my Alliant CU post for more details about Alliant Credit Union and its savings account.

Some of the other online savings accounts with rate cuts this week included:
  • Capital One's Online Savings Account (3.50% APY, was 3.75%)
  • Indymac's E-Money Market Account (3.85% APY, was 4.00%)
  • Corus Bank's money market account (3.80% APY, was 4.00%)
  • Flagstar's money market account (3.50% APY, was 3.65%)
  • AmTrustDirect's e-Savings account (2.50% APY, was 2.75%)
I'm disappointed in seeing yet another cut at AmTrustDirect. It had maintained a 3.25% APY for awhile, and I had hoped it would continue to be a rate leader. It looks like AmTrustDirect is now changing its focus to CDs. Like many banks, they're probably betting on higher rates in the near future.

Long-term CD Rates and Early Withdrawal Penalties

Another bank started offering a 5% CD this week. It's US Bank with a 5% APY 59-month CD. The main problem with US Bank is its severe early withdrawal penalty which is equal to at least the interest for half of the term. Instead of the typical 6-month interest penalty, this 59-month CD penalty would be at least 29.5 months of interest (see post).

Like US Bank, KeyDirect is also offering a 5% APY 5-year CD. Its early withdrawal penalty is better, but it's still larger than the average with a penalty of 12 months of interest (see post).

The long term CD rates are under 5%, but these banks have an early withdrawal penalty of only 6 months of interest:Discover Bank with yields up to 4.86% APY for AAA members (see post), Wachovia with a 4.75% APY 60-month CD (see post) and E-LOAN with a 4.75% APY 60-month CD (see post).

Short Term CD Rates

Some short term CD rates have also gone up although there are still very few at or above 4% APY. The highest yield continues to be at Christian Community Credit Union with a 4% APY 7-month new-member CD special. Note, it's only privately insured by ASI, and is not NCUA insured (see post). If you want good CD rates from a FDIC-insured bank and a bank that's financially strong, Metropolitan Bank is an option. It has a 3.50% APY on its 3, 6 and 12-month CDs (see post). The 3.50% APY is the highest on my list for 3-month terms.

Indymac changed its internet CD special this week from a 12-month to a 10-month 4.05% APY CD. AmTrustDirect raised its short term CDs this week as it lowered its e-Savings Account rate. It has the highest 9-month CD yield on my list with a yield of 3.76% APY. For a 12-month term, Alliant Credit Union continues to offer the best deal with a 4.15% APY yield for deposits of at least $25K (see post). Note, with June starting tomorrow, there might be a rate change on Monday.

I posted on a few local deals this week with short term CD rates around 4% (see below). Local banks and credit unions often have special CDs with rates higher than the online banks. I try to post on as many of these as I can. If you see any advertised in your local area, please leave a comment in my finding-the-best rates post. I upgraded this post last week so that summaries of the latest comments are shown on top. Click on the link, and it'll take you to the full comments.

Reward Checking Account Recap

I added 4 more reward checking accounts this week (see recap below). Only one has a six percent yield. First New England FCU, one of the institutions with a reward checking account available nationwide, lowered its rate this week from 6.01% to 5.15% APY. Even though there are fewer 6% accounts, these reward checking accounts continue to have considerably higher rates than the rates from online savings accounts. This has continued now for over a year at many banks and credit unions. So perhaps this can be maintained for the long term.

For a list of all reward checking accounts (including ones available nationwide), please see my new High Yield Checking website.

Recap for the Week - Links to This Week's Posts

Banking News
CD Deals - National

Checking/Savings Account Bonuses

Reward Checking Accounts

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 around $10K or less. Previous weekly summaries are available for May 24th, May 17th, May 10th, May 3rd, Apr 26th, Apr 19th, Apr 12th, Apr 5th and Mar 29th.

Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Local checking/savings, 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 May 31, 2008

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

Checking and Saving Accounts at Local Banks/Credit Unions

CD Specials at Local Credit Unions/Banks Over the Last Month


Terms of 60 Months and Over

Terms of 24 Months to Under 60 Months

Terms of 12 Months to Under 24 Months

Terms of Under 12 Months

Bank Account Alternatives


Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)


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