Bank Deals Weekly Summary for September 27, 2008

Comments (7)
Sep 30, 2008 - 7:41 AM by Ken Tumin

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

We had the largest US bank failure in history this week. The Feds closed Washington Mutual on Thursday, and the banking operations were transfered to JPMorgan Chase. The good news is that all deposits were transfered even those above the FDIC limits (see post).

Before the closure WaMu had brought back its 5% 12-month Online CDs, and it increased the yield of its online savings account to 4.00% APY. These rates and accounts are still available online. So this is a rare opportunity in which you can receive top rates with the security of JP Morgan Chase. When Bank of America took over Countrywide Bank, rates slowly fell on both the savings accounts and CDs. I expect we'll see similar rate reductions at WaMu.

FDIC announced yesterday that it has simplified coverage rules for POD accounts. This should make it easier to extend coverage over $100K (see post)

Incredible Yields on Tax-Exempt Money Market Funds

There has been an unusual occurence in money market funds this week. The yields of tax-exempt money market funds have shot way up recently. Examples of current yields include 5.33% at Fidelity Municipal MMF and 5.18% at Vanguard Tax-Exempt MMF. I've added these two to my bank account alternatives at the bottom of this post. Since the Treasury has stated that tax-exempt MMFs will be included in its guaranty program, the issue of higher risk shouldn't be the cause. Below is an excerpt from a Vanguard article that looks into this issue:
Many firms that help create and market short-term municipal securities for state and local governments are finding they need to boost yields to create greater demand for these securities.

There's also a NY Times article which describes this issue. Expectations are that these high yields won't last long especially if Washington reaches agreement on the financial bailout. It's important to note that money market funds are different than money market accounts. Money market account is basically the same as a savings account which is FDIC-insured and offered by banks. Money market fund is a mutual fund holding a collection of short-term debt investments, and it is not FDIC insured.

Savings Account Rates

The problem with both money market funds and savings accounts is that yields are not guaranteed to last. However, banks often come out with promotions in which they'll guarantee a high rate on their savings account for a certain amount of time. A new internet bank, CNBBankDirect, came out with such a deal this week. It's offering 4.00% APY on all balances for 6 months (see post).

GMAC Bank is now listing its new Online Savings Account on its website. It's just like GMAC Bank's money market account except that there are no checks or debit card. The yield is 3.55% APY which makes it a better deal than Capital One's savings account which has a higher balance requirement and slower ACH transfers (see post).

Below is the list of rate changes for this week:

Rate Hikes:
  • CNBBankDirect - 4.00% APY for 6 mo (was 3.50%)
  • WaMu/Chase - 4.00% APY (was 3.75%)
  • Citibank Ultimate MM - 3.00% APY (was 2.65%)
  • Bank of American DoW MMS - 2.93% (was 2.53%)

Certificate of Deposit Rates

There continues to be some rate hikes on CDs with terms of one year and under. However, longer term CD rates seem to be dropping slightly. Some new short-term CD deals include a 4.35% APY 6-month CD at AmTrustDirect, a 4.30% APY 6-month CD at Crestmark and a 4.61% APY 12-month CD at Geauga Savings Bank. For long-term CD deals, Melrose Credit Union is now offering a 5.25% APY 5-year CD. This is also available in an IRA (see post).

The best CD deals this week were local deals which are generally not available nationwide. These include a 5.25% 11-month CD in Florida, a 5.06% APY 6-month CD in Michigan and a 5.05% 24-month CD in Ohio. Refer below for links to these posts. To find more local deals, refer to the CD specials by state section. Please note that these specials often don't last long. Be sure to verify the rate and your eligibility with the institution.

Reward Checking Accounts

I reported on 4 new reward checking accounts this week (see below). One of the new ones is being offered by a bank in California which doesn't have too many of these accounts. Unfortunately, the yield is only 3.50%. For my full list of reward checking accounts around the nation, 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 Sep 20th, Sep 13th, Sep 6th, Aug 30th, Aug 23rd, Aug 16th, Aug 9th, Aug 2nd and Jul 26th.

    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 September 27, 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:

    Various Deposit Account Deals


    High Yield Reward Checking Accounts - Open to All


    Checking and Saving Accounts at Local Banks/Credit Unions

    Recent CD Specials at Local Credit Unions and Banks


    Bank Account Alternatives


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

    Post a CommentComments
    In order of date posted. - Sort by votes
    Anonymous

    Anonymous - #1, Sunday, September 28, 2008 - 3:49 AM

    Banking Guy wrote:
    > Since the Treasury has stated that tax-exempt
    > MMFs will be included in its guaranty program,
    > the issue of higher risk shouldn't be the cause.

    I think this is WRONG! My understanding is that the government will insure only the MMF money that was on deposit at the time of the announcement. No new money! This was done so as not to cause massive transfer of money from banks to MMF.

    --M.B.


    1
    Anonymous

    Anonymous - #2, Sunday, September 28, 2008 - 8:55 AM

    The poster at 1:49 could easily be correct. But certainly the interest rates on these funds fluctuate daily, or can. Rates are VERY high now. But they could fall within a short period of time.


    1
    Anonymous

    Anonymous - #3, Sunday, September 28, 2008 - 12:53 PM

    Both of the previous commentators are correct. If you are adding funds to a money market fund now they are NOT covered by the treasury's guarantee program.

    See #3: http://www.ustreas.gov/press/releases/hp1151.htm


    1
    Anonymous

    Anonymous - #4, Monday, September 29, 2008 - 2:17 AM

    OnBank is 3.75% APY


    1
    Slick

    Slick (anonymous) - #5, Monday, September 29, 2008 - 11:51 AM

    QUESTION!! (Banking Guy)

    Have you ever considered adding information for Stock Trading sites on your blog? Since savings account rates are still on the lower side, I have been thinking a lot about buying stocks and trying my luck. My problem is that I do not know much at all about stock trading (what is an option, contract etc. Why cant you buy and sell at the prices listed in the news paper. etc). I also do not know which site to use. I dont know that i would be doing much to start out, and so I would prefer a site that does not cost me much (if anything) and does not charge me any other fees (like inactivity which will most likely happen.) I was looking at a company named "ZECCO" because from what i can understand, they allow you 10 free trades (i guess that means either buying OR selling a stock and each would be considered a seperate trade. I also assume that you can buy any number of stocks at the same time like 1-10000 and it is still considered 1 trade). I think the ONLY catch is that you have to keep $2,500 in your account with them to be eligible for the free trades.

    Anyway, if you wanted to consider adding stock sites to your blog or even creating a new blog for them that would be great. If not, then I am certianly open to ANY and ALL information about trading in general and the benefits of one site to another from anyone willing the share.

    THANKS in advance.

    -Slick


    1
    Banking Guy

    Banking Guy (anonymous) - #6, Monday, September 29, 2008 - 6:53 PM

    Slick, Thanks for the suggestion, but I'm afraid I don't have the resources to include brokerages. You may want to review my blogroll listings. Some of those may have info on brokerages.


    1
    slick

    slick (anonymous) - #7, Tuesday, September 30, 2008 - 11:53 AM

    thanks anyway Banking Guy


    1

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