Dedicated to Deposits: Deals, Data, and Discussion

Bank Deals Weekly Summary for July 19, 2008

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

In the last couple of days a few major banks have started some nice CD specials. Bank of America started offering a 4.11% APY for a 7-month Online High Yield CD (see post) and Countrywide Bank (which is now part of BofA) started a similar 7-month CD special with a 4.10% APY (see post). I just reported today on WaMu's new Online CD special: 4.25% APY for 8 and 12-month terms (see post). There was also some good news regarding Wachovia. Its high yield Featured CDs have been extended. So you also have the option of several competitive rates at Wachovia with yields ranging from 4% APY for a 7-month term to 5.25% APY for a 60-month term (see post).

These high yield CDs from the major banks should put pressure on all the other banks and credit unions to make similar rate hikes. We saw some of that this week with CD rate increases at AmTrustDirect, Imperial Capital, Greystone and ISN Bank. All of these banks have some very competitive short-term CD rates. I would expect seeing more CD deals from banks like these next week.

Why are we seeing the higher CD rates? There continues to be expectations of higher rates in the future to combat inflation. With the shaky financial markets and the potential for a serious recession, there is some speculation that the Fed may delay hiking rates until next year. However, as this Bloomberg article reported, the Fed may place more importance on keeping inflation in check. So we may start to see Fed rate hikes by the end of the year. Another reason for the higher CD rates may be the need for capital. As this BestCashCow article described, the credit crisis has ruined securitization, and thus, this is forcing banks to bring in more deposits.

Savings Account Rates

Unfortunately, we're not seeing the banks raise their savings account rates like they have been with their CD rates. Several banks lowered their savings and money market account rates this week. Here's a summary of the rate cuts:
  • OneUnited: 3.60% to 3.26%
  • 1st Constitution Direct 3mo promo: 4% to 3.90%
  • Corus Bank: 3.62% to 3.56%
  • Amegy Bank: 3.55% to 3.50%
  • Zions Bank: 3.53% to 3.45%
  • AARP Financial Savings Center: 3.50% to 3.45%
  • E*TRADE MaxRate Checking: 3.25% to 3.01%
  • UFB Direct: 3.01% to 2.96%
There were a couple of banks that increased their savings account rates. However, the new rates just put them in the upper end of the middle of the pack:
  • AmTrustDirect: 2.50% to 3.50%
  • Nationwide: 3.35% to 3.50%
Note, the rate increase was on AmTrustDirect's e-Savings and not its e-Money Market Account which continues to have very low rates. Update 7/21/08: A reader was just informed by AmTrustDirect that the 3.50% only applies for newly opened e-Savings accounts and is only for the first 90 days. The details of this are in fact in AmTrustDirect's small print. I was told by AmTrustDirect that existing e-Savings account customers may be able to receive this 3.50% as a special retention offer if they call. Looks like we'll have to carefully review AmTrustDirect's website after future rate hikes.

Savings Accounts with Rate Guarantees

The downside to savings accounts is that they typically don't guarantee the rate will last. There continues to be a few promotions that do provide a short guarantee. The best national one continues to be EverBank with its 4.76% APY 3-month guarantee for new checking and money market accounts (see post).

I came across an even better one this week, but it's only a local deal. It's at the Bank of the Carolinas, and the bank is guaranteeing a yield of 4% APY on balances over $10K on its money market account until 6/30/09 (see post).

Highest Yield Reward Checking Account Available Nationwide

For those who want liquidity and a high yield bank account, at least there's the reward checking account. This week I added another reward checking account to my nationally available list. The one unique thing about this reward checking account is the yield: 7.01% APY for all balances up to $25,000. It's from the MidAmerica West Federal Credit Union. I first posted on this 7% reward checking account in February 2008. At that time eligibility to join the credit union seemed to be limited, but a reader recently found an association that anyone can join to qualify for credit union membership (see post). As is typical, there is no guarantee this rate will last (although it has lasted for most of this year).

For my full list of reward checking accounts, please refer to my High Yield Checking website.

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

Banking News

Savings and Money Market Deals - National

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 Jul 12th, Jul 5th, Jun 28th, Jun 21st, Jun 14th, Jun 7th, May 31st, May 24th and May 17th.

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 July 19, 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)

Related Posts

Comments
9 comments.
Comment #1 by Slick (anonymous) posted on
Slick
I regularly check this site for the best savings account deals. I currently use EmigrantDirect which I have had since they were offering 5%APY. Lately the rate disgusts me and I think about switching banks. Since rates change so frequently I dont know which bank would be a good choice.

--** QUESTION?? **--

I know that it looks bad on your credit history/rating when you open or close too many credit cards, but is the same thing true for bank accounts??????

My idea was to open several online savings accounts and then ACH transfer my money back and forth depending on which bank has the highest rate that month. There MUST be a downside to this besides the time needed to do so.

PLEASE ADVISE!!

Thanks

-Slick

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Comment #2 by Banking Guy (anonymous) posted on
Banking Guy
Not only has EmigrantDirect lagged with rates for the last year, it makes it hard to transfer money to other banks. To establish a new link to another external account, you have to mail in a voided check. And the number of these links are limited (2 or 3 I think).

Your plan of opening a few online bank accounts and then establish links between the them does make sense. It's important that they make it easy to do ACH transfers. This includes making it easy to set up links to other savings accounts, allowing many links, not limiting the amount of the transfers, and performing fast transfers in which you don't lose interest during the transfers.

I'll look into online banks that have both high rates and the above transfer features. E*TRADE's Complete Savings is one. GMAC Bank is another although their rates have lagged in the last few months. Countrywide's SavingsLink is another, but its future of a rate leader is in question with BofA's acquisition.

About the downside, when you transfer money, there is often a few days in which you don't earn interest. So if you move the money too often this can affect your overall yield. However, if you stick with banks like ETRADE with fast ACH transfers, this will be less of an issue.

Another potential problem of opening too many new accounts too fast is the potential of being denied in the application due to having too many ChexSystem inquiries. Most banks use ChexSystem to make sure you've been responsible with your past accounts. However, some will not only deny your application due to past account abuses, but also if you had too many recent inquiries (which occurs when you open a new account). I don't think this will be an issue if you open less than 4 accounts per quarter.

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Comment #3 by O-Qua Tangin Wann (anonymous) posted on
O-Qua Tangin Wann
Dear Slick,

Just to expound in more detail your specific question:

When one closes a standard checking, savings, or CD account, this closure is not reflected on one's credit report. (The exception is if one is given an overdraft line of credit and said line of credit is listed in one's credit report. I had one such overdraft line of credit at Union Bank of California, with $500 of protection. This account was listed on my credit report, and so was the closure.)

Additionally, if a bank runs a hard report for the purposes of opening up a savings, MMA, checking, etc., online or otherwise, the only thing reflected on your credit file is the inquiry from that bank. There is nothing else reported.

For example: You apply for an online account at XYZ Bank. XYZ runs a hard credit inquiry. XYZ will not report the opening of the account if it is just a standard bank account. Just like they won't report to your credit file your balance or that you close the account.

Too many credit file inquiries can lower one's FICO score, etc. That is the only drawback of the credit inquiry.

~O-Qua Tangin Wann

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Comment #4 by Slick (anonymous) posted on
Slick
Thanks Banking Guy! So you don't think it will have any negative effect on my credit history or rating expect for the fact that several credit checks will show up? So it can't count against you like credit cards do right?

Also thanks to o-qua tangin wann. So how negatively does a HARD credit check effect your credit rating? How long do HARD and SOFT checks remain on your account and count against you? I have worked hard to get a great credit history, and my fico score is 834 out of 850. I don't want to mess that up.

I have not thought Emigrant Direct's transfers were TOO bad. Although, it is the only ONLINE savings account that I have ever used. I understand what you mean about needing fast transfers or losing interest though. That is important.

I have always been most interested in banks that only require $1 to open and maintain an account while not charging ANY fees of any kind or anything. Emigrant, ING, HSBC etc all offer this type of account. The only problem is that those type of accounts don't always offer the best rates.

I have been waiting to see what HSBC was going to do after its promo ends next month, but your most recent post notes a few better choices. EVERBANK seems to lead the pack with the best rate. Unfortunately, it is only a 3 month promo and then the rates drop back down. The capitalone/costo account also looks good (since i am a costco member). It is a whole 1% less tham everbank but the good thing is it is not a promo (although it can still change at any time).

I hear that rates MAY hit 5% again after summer ends, although who really knows for sure. I wonder if I should wait or open something new now. I have about $60K to play around with in online bank accounts and I feel like I am losing a lot of money in interest by just leaving it in Emigrant. I feel like I should be taking some action now.

Considering that you appear to have some expertise in this field, I would certainly appreachiete your input and or advise. While the decision is ultimately up to me, I still find feedback from persons such as yourself to be VERY helpfull.

Thanks again for all your help. I really enjoy this blog and think it is excellently maintained and run. I also enjoy feedback from others who have experienced similar situations firsthand. All feedback is always welcome.

I check back soon for your response.

Thanks

-Slick

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Comment #5 by Banking Guy (anonymous) posted on
Banking Guy
Yes, what o-qua tangin wann mentioned is correct that some banks also do a hard credit inquiry when you open savings accounts, and hard credit inquiry does temporarily ding your credit score. There's a discussion about hard credit pulls along with a list of banks that do a hard pull at this FW thread (note, some of banks may have changed their policies since the date of this thread)

Both Capital One and HSBC Direct have been competitive (Capital One/Costco has been even better). The only downside to these is a slow ACH transfer system. You lose at least 2 days of interest when you initiate transfers.

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Comment #6 by Michael (anonymous) posted on
Michael
Don't you just love Banking Guy with all your heart and soul?

I know I do.

How many other bloggers do you know of who answer your posts so quickly?

Banking Guy, if there was an Oscar for Best Blog, you would win hands down.

I urge everyone to donate using the Tip Jar link on the Home Page.

I know that Banking Guy never directly asks for $$, so I am doing it for him.

Every amount helps, of course.

And yes, I have sent in a little.

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Comment #7 by O-Qua Tangin Wann (anonymous) posted on
O-Qua Tangin Wann
You are welcome, Slick.

You know, the whole FICO scoring system is an inexact science. And you can even get different answers from different sources.

Plus, nothing is written in stone whereas some lenders and/or issuers of credit might be more desperate than others, which means they will react differently when it comes to a FICO score or what is or isn't listed in one's credit report.

Your score is great, as you know.

I really don't know how long multiple credit inquiries might potentially be held against someone, assuming that it would be held against someone at all.

Luckily, most banks do not do a hard pull.

Hard inquiries can stay on for years, but FICO does not use inquires that are over two years old for their scoring.

And finally, I doubt your FICO score will decline based on a couple of hard inquiries from online banks.

~O-Qua Tangin Wann

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Comment #8 by PlinytheElder (anonymous) posted on
PlinytheElder
BankUnited in Florida offering 4.35% APY 12-month.

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Comment #9 by Anonymous posted on
Anonymous
I would just like to thank Ken the banking guy who keeps this website. Because of your list of rewards checking accounts, I was able to create a safe way to earn some interest on money I took out of a refinance for my daughter's college education. I had been very concerned because interest rates on refinancing were climbing and interest rates on savings were crashing, which left me the consumer in a real squeeze. I have had a very good experience (about 4 months' worth, so far) with all the banks I used, all found on your website.

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