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WaMu Increases Online Savings Account Yield to 3.75%

POSTED ON BY

Update 9/26/08: WaMu closed. JPMorgan Chase acquires WaMu's banking operations. Please refer to this post for more details.

Washington Mutual increased the yield of its Online Savings Account from 3.30% to 3.75% APY today. To receive this high rate requires that you also have WaMu's Free Checking Account which is not too bad since the checking has many perks such as free checks and free outgoing wire transfers worldwide. With the free checking link, you'll receive this 3.75% on all balances and the account will be free of monthly maintanence fees.

WaMu is still offering some very high Online CD rates with a 4.25% APY for terms of 8, 12 and 13 months. I've also seen a 4.25% APY 13-month CD at WaMu's financial centers advertised in some newspapers recently. Please refer to this post for more details about WaMu's CDs.

Update: WaMu is also advertising in some states a money market promotion that's available at their financial centers or by phone. The current yield of that is also 3.75% APY (for San Francisco), and there's a bonus rate guarantee for 12 months. However, there are many features of this money market account that make it less appealing than the online savings account. Refer to this previous WaMu post for more details.

With this big savings account rate increase and the high CD rates, it does make you wonder how desperate for deposits WaMu might be. It has been hit hard by the mortgage mess. As reported by this CNN article, WaMu announced a $3.3 billion quarterly loss last week which was far worse than what Wall Street had expected. An analysis of WaMu by Martin Weiss shows the troubles facing WaMu:
Here's the big problem: As of the latest reckoning, Washington Mutual has $214.6 billion in residential mortgages on its books. And among those, more than three-quarters are in non-traditional categories - option ARMs, subprime loans, home equity loans and multi-family mortgages. Less than one-quarter is of the traditional, single-family prime variety.

As I recommend with any bank, make sure you stay under the FDIC limits. WaMu is FDIC insured under two banks (Washington Mutual Bank FSB and Washington Mutual Bank). This WaMu page provides more details of FDIC insurance and WaMu's two FDIC-insured banks. There's no mention about the ability to have deposits under both banks to double your FDIC insurance. It appears Washington Mutual Bank is WaMu's main bank which is headquartered in Nevada and operates financial centers in over a dozen states. I think this is the one which holds the online deposits, and not Washington Mutual Bank FSB which is headquartered in UT and operates financial centers in just Idaho and Utah. There was a discussion of this issue in this post. I haven't followed up with WaMu on this issue. Please leave a comment if you have more info.

Thanks to the readers who commented and sent me email on this rate change.

  Tags: savings account

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Comments
38 Comments.
Comment #1 by scott (anonymous) posted on
scott
If you are a new customer they will do a hard pull on opening, Not sure about existing. I never had any accounts with them and application got denied because of my credit freeze.

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Comment #2 by Anonymous posted on
Anonymous
WaMU is going bust my dear friends.

I would rather 3.50% linked to 2.25% for billpayment at HSBC.

HSBC is the World's largest bank and is not in negative territory financially speaking.

With WaMU, the 3.75% with checking seems high but there will be a run on the bank and it will fail. Takeover is likely by government as it will fail like Indymac.

Countrywide would have failed had Bank Of America not bailed them out. With WaMU I don't see any customers lining up to buy.

Next bank failures are likely: WaMU following by Wachovia.

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Comment #3 by Anonymous posted on
Anonymous
3.75% sounds really tempting. But it comes with a bank with serious financial problems. .20% less without financial problems or .15% less on a CD with 1 month less term limit to boot.

Go the safe way and don't be sorry! WaMU is bad news.

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Comment #4 by Anonymous posted on
Anonymous
Rememeber the WaMU account requires the free checking account.

HSBC does not require anything. But the Online Bill payment is something you will want to add.

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Comment #5 by Anonymous posted on
Anonymous
When WaMU does go bust it is unlikely the receiving bank will keep the 3.75% APY.

Indymac did the same thing right before it went bust. Offered a super high rate online for CDs as well then lowered them.

1
Comment #6 by Anonymous posted on
Anonymous
No matter what, this 3.75% APY is a teaser rate and won't save WaMU.

Don't switch from 3.55 or 3.50% to 3.75% for a teaser rate which won't last long.

1
Comment #7 by scott (anonymous) posted on
scott
"When WaMU does go bust it is unlikely the receiving bank will keep the 3.75% APY.

Indymac did the same thing right before it went bust. Offered a super high rate online for CDs as well then lowered them."
Are you sure about that? People who got those good CD rates still have them. When Indy went bust I had a little over $99K in the savings getting 3.70%, Still there, same rate and no problems. Rate chasers need to understand banks in trouble are good for us to get high rates. Just stay fully insured and stop worrying about what might or might not happen

1
Comment #8 by Anonymous posted on
Anonymous
Wow, the WaMu hayter sure's been busy. Wonder if it's the same person who slammed BoA when they came out with the 4.11% CD.

Look, pal, why should the potential new customer care if WaMu goes under as long as the deposites are below the FDIC limits?

1
Comment #9 by Anonymous posted on
Anonymous
I agree with Scott and with Anonymous 7:38. IndyMac is still paying me 5.55% on my CD. the only reason I'll not put more into WaMu right now is that I'm too close to the FDIC limit.

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Comment #10 by Anonymous posted on
Anonymous
Does anyone know if they have POD accounts? And/or can these accounts be opened in branch?

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Comment #11 by Anonymous posted on
Anonymous
"Look, pal, why should the potential new customer care if WaMu goes under as long as the deposites are below the FDIC limits?"

Because WaMU is the largest savings and loan in America and will drasticly shake up the banking system when it fails. Why worry about the safety of funds when you can get almost as good with no worries or hassles.

WaMU could be acquired by Chase which means that the 3.75% rate will be drastically reduced. Firms when they are in trouble offer higher rates but they are often short term.

The WaMU CD is 8 months at 4.25% while Bank of America has 4.11% and Countrywide has 4.10% for 7 months. The 7 month CD is with a rock stable bank. .15% with a non stable bank does not justify putting in funds at all. CD Rates can be called in due to bank failure where you get full funds back or the account moves to another bank which also means a further hassle to get back your funds as well.

I will be frank: My money was at Countrywide during the crisis because I was under FDIC limits. Countrywide was a local bank and when they had the bank run with lots of people taking funds out I was actively putting funds in. Yes I was concerned but there was no other bank offering top tier rates at the time who was stable and had a local branch.

But with WaMU there is no takeover deal announced and its a very large S+L and the rate differential is much lower at .15% to .25% than banks in excellent shape.

If you take the online savings linked to free checking it comes to 3.75% linked to 0% checking. With HSBC it comes to 3.50% till Sept linked to 2.25% checking and you can link to Countrywide for next day transfers for 3.55%.

My own accounts right now are at Countrywide AND HSBC for banking.

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Comment #12 by Anonymous posted on
Anonymous
I can't believe that someone just put "Countrywide" and "rock stable" together.

If folks would stop belly-aching about the possibility of WaMu failing, and just take the great rates, it wouldn't fail. And, if it does fail, all you have to do is stay under the FDIC limits to make sure that your money is safe. If an acquiring bank comes along and poops on your rate, take your money elsewhere. It's that easy.

1
Comment #13 by Anonymous posted on
Anonymous
For what it's worth...

I am currently unemployed and applied at WaMu for one of 3 open positions at one of their branch offices. After being interviewed twice for the position (by recruiter and branch manager) I was told yesterday, after two weeks of waiting, that the position had been canceled.

I have had the online savings account with free checking for over a year and have taken advantage of their online CD rates repeatedly - including the current 8month one.

The hike in rates and the sudden open position cancellation do make me wonder though.

1
Comment #14 by O-Qua Tangin Wann (anonymous) posted on
O-Qua Tangin Wann
If one wants an online savings account, of course one should consider Alliant Credit Union at 3.75% over WaMu. (Anyone can join Alliant. Just say you are a PTA member.)

But...if you already have an Alliant account and are at the insurance maximum, and you are looking for another savings account at 3.75%, I say go ahead and put your money into WaMu and don't worry about it as long as you are below the insured limit.

If the bank gets taken over, the transition will go smoothly and you won't feel a thing. Should the rate drop, of course find another bank.

If the bank goes under, the FDIC will assume your account just like it did with IndyMac and you will be absolutely safe. The FDIC moves in very quickly, and you should have access to all of your money immediately.

And finally, for those that are bothered by potential failures, of course just take a little less interest and go with a more stable bank and be done with it.

~O-Qua Tangin Wann

1
Comment #15 by Anonymous posted on
Anonymous
The idiocy with which many of the posters in this thread has posted allows me to understand why IndyBank went down. It's because of these stupid people flapping around like chickens with their heads cut off.

There's nothing wrong with WAMU if you stay under the FDIC insurance limits. We have all our non-CD funds in Countrywide right now but they keep on lowering rates--currently at 3.55%. With WAMU back to 3.75%, we'll be switching all our NON-CD funds back to WaMu.

Just opened 2 CDs at WAMU too. 8 months @ 4.25%. We're staying below the FDIC limits of course.

EVEN if Wamu fails, which I absolutely believe won't happen, we'll be fine because of the FDIC insurance.

Why will Wamu not fail? Because as so many have complained, WAMU is WAY too big. IndyMac was a tiny minnow compared to this whale. There's no way in hell the US government is going to let Wamu fail. It would be too catastrophic for the financial system. On this basis alone, I'm 100% sure WAMU will not fail. The FEDS will inject funds into WAMU.

1
Comment #16 by Anonymous posted on
Anonymous
wow, i am seeing someone is flapping away from countrywide to wamu like chickens with their heads cut off

1
Comment #17 by Anonymous posted on
Anonymous
Guys and Gals,

You are just making dust around. What is important is FDIC only.

If you are under $100K it does not matter if the Bank rating is 0 or 5 stars.

It does not matter if the Bank is ready to go belly up or is solid as a rock.

All those things are irrelevant. I just don't understand all the fuss around and people get upset about nothing.

1
Comment #18 by Anonymous posted on
Anonymous
For those inquiring about POD accounts at WaMu, they can definitely be done at branch locations. Search the site for comments. I, for one, have written about my experience.

1
Comment #19 by Anonymous posted on
Anonymous
In SF there's two options for 3.75%. The online savings, or the MM Savings account.

1
Comment #20 by Anonymous posted on
Anonymous
Good news. I'll move 95k fund to Wamu now.

1
Comment #21 by Banking Guy (anonymous) posted on
Banking Guy
@ anonymous 1:17 PM, July 31, 2008

Thanks for the info on the 3.75% money market promotion. I had forgotten about my post on that. I updated this post with this info and a link to my previous post on this promotion.

1
Comment #22 by Anonymous posted on
Anonymous
I just deposited (few $1000s less then my FDIC insurance level) in WaMu CDs, they are hungry for deposits, When I asked "how can I fund my online CD?", that branch offere me the online CD rate at that branch and I opened, each branch got a target of funds to be collected, it seems. So, if you want to go for CDs, go to a branch and they will match the rate with other banks too. Good luck.
I got 4.24% APY at this branch.

BTW, I am not scared about the busting of the banks as long as I got lesser FAT then FDIC in my body and brain :)

1
Comment #23 by Anonymous posted on
Anonymous
I had funds in WaMU when they had their 6% CD promo awhile back for 13 months! I tried to open a checking account with them and they were playing games with me when I tried to open it. They had the subprime mortgage scandal and a class action lawsuit and the AG lawsuit by Cuomo which hit at that time as well as other violations by them.

I will just say that I did a Countrywide CD at 4.10% and am happy with Countrywide and HSBC combo at this time. .20% and a cd with an extra month for .15% extra are not worthwhile for me to use the bank.

Do whatever floats your boat!

If WAMU does fail, it will be the largest s+l failure in american history.

1
Comment #24 by Michael (anonymous) posted on
Michael
I went into the WaMu branch in Newport Beach, California, today and changed my Online Savings Account from a solo account to a POD account (I added two beneficiaries). At first, the woman at the desk was unsure if she could do it. She succeeded and gave me a printout. My Online Savings Account title reflects the two beneficiaries.)

I then deposited my check. WaMu put a whopping 11-business-days hold on my money. So, my money will earn interest right away, but I cannot touch it until August 15th.

Also, please note that the Online Savings Account and MMA account at WaMu is paying the exact same rate. But the MMA requires $25K to get the rate. The Online Savings Account has no minimum balance to get the rate.

1
Comment #25 by Anonymous posted on
Anonymous
WaMu consists of 2600s branch, if this bank fails, the smaller banks faces trouble also. The rates they offer is spectacular. I had their savings for more than a year. Those that say this bank fails or will go down, is very insecure. As long as you follow under the FDIC limit you should be fine. Wonder how long this rate will last..

1
Comment #27 by Anonymous posted on
Anonymous
I actually pulled $90K out of WM and back into HSBC last week. Felt a little kick in the head seeing the new Wamu rate, but that's the way it goes. WaMu definitely has a liquidity asset/debt monster issue looming sooner than later, but HSBC is little better overall. Both banks rate as a D+ on thestreet.com bank screener. Everyone's been playing with nasty CDO's, even if they didn't play heavily at the original point of subprime and alt-A junk. My question is who's going to bail out the FDIC? Talk about not having enough assets to cover liability. The FDIC takes the cake.

1
Comment #28 by JAC (anonymous) posted on
JAC
I'm now seeing 4.5% APY for 12 month CD's at WAMU for zip 75007. I don't know if they offer the "add-on feature" for the online version but if they do, you can add funds up to the original amount on CD's less than 12 months and keep the same rate for the remainder of the term.

1
Comment #29 by Anonymous posted on
Anonymous
Something I have not seen mentioned. In case you were considering WaMu ... I just went through 90% of theor online application. I did not submit it. There was a "gotcha" in my opinion. If at any time the balance in your online savings is less than 300 bucks at the end of the month they charge you 4 bucks. I leave these kinds of accounts "fallow" all the time and it's just the kind of thing I would forget. The fact that they waited until step 9 of 10 to tell me that ****ed me off sufficiently that I dropped out of the process. At least countrywide and my credit unions are up front on requirements (few and straightforward) and fees (non existent). Anyway I thought I would save you the time.

Let the ****s go out of business with that sort of sneaky stuff.

1
Comment #30 by Anonymous posted on
Anonymous
Beware of WaMu....you can't transfer funds of more than $10K per day...didn't see that anywhere until I called their CSR. To get all of your money ver $10K you wither have to stagger withdrawals over the course of days or get a bank check which has to be held a few days when it's cashed....VERY ANNOYED....haven't run into other online banks with that restriction.

1
Comment #31 by Anonymous posted on
Anonymous
To the best of my knowledge, if you get the online savings (linked to the free checking), account fees are waived. The regular savings has the fees... and the crappy rate.

1
Comment #32 by Tool (anonymous) posted on
Tool
WaMu's obviously taking a grab at new savings money, and chances are it'll work. I highly doubt the rate'll last forever. I've been with FlagStar for a while...they're at 3.65% APY right now, just shy of what WaMu is offering, and have been near the top of rates for a couple of years now.

1
Comment #33 by JMays (anonymous) posted on
JMays
"If at any time the balance in your online savings is less than 300 bucks at the end of the month they charge you 4 bucks."

From WaMu's Statement of Fees:

"The Monthly Service Charge waived if Online Savings is opened with a WaMu Free Checking™ account online or opened and linked to an existing WaMu checking account online. If the linked checking account closes, standard monthly service charge and minimum daily ending balance requirements apply."

1
Comment #34 by Anonymous posted on
Anonymous
For those with more than $10,000 in their online savings account, don't forget that you qualify to convert your free checking to platinum checking (monthly fees are waived). Benefits are minimal ($5 trades with wamu brokerage, platinum debit card, >= .1% APY interest) but better than nothing.

1
Comment #35 by Anonymous posted on
Anonymous
wamu is going bust! i just spoke to my manager because I want to clean my account out of a 5 figure sum and he came up with a bunch of excuses to not let me. now their customer service number for the branch is not responding anymore. run for your money!

1
Comment #36 by Anonymous posted on
Anonymous
wamu/chase online savings account 1.15% apy. ouch! quite a ways from 3.75%... a nice memory that was.

1
Comment #38 by Anonymous posted on
Anonymous
WaMu is offering a 2.5% promotion (90 days) on their Money Market Savings Account, by invitation only. Received a certificate by US mail; terms say the offer is non-transferable.

Other terms and conditions:
- $25K min, $1M max
- new money only
- requires a checking account
- not available online (only in person or by phone)
- one promotional rate per person per calendar year
- offer valid only until end of February 2009

After the 90 days, the rate drops back down to their standard anemic rate, giving an effective APY for a year (if you leave the money in for a full year) of 1.38%.

Doesn't seem worth the effort.

1
Comment #39 by Anonymous posted on
Anonymous
0.85% APY now...

1
Comment #40 by Anonymous posted on
Anonymous
down to 0.75%...

1