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WaMu Drops Rates on its Online CDs and Savings Account

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The days of high rates at WaMu may be over. At least it lasted a little while after JPMorgan Chase took over. All the competitive short-term Online CD yields have dropped to 3.00% APY. The 5% 12- and 13-month CDs are over and so is the 4.25% 8-month CD. Also the 4.00% Online Savings Account yield has also dropped to 3.00% APY. I was expecting the 5% CD to end soon, but I'm surprised by the big drop of the savings account yield. Countrywide's Savingslink yield only dropped slowly after the Bank of America acquisition and it still remains fairly competitive. At least the savings account has no minimum balance requirements. There are many places where it's easy to get at least 3.50% APY.

This NY Times DealBook article describes the JPMorgan Chase executive, Charles Scharf, who was put in charge of WaMu. His main focus will be to deal with a huge portfolio of troubled loans, but I guess he must have decided that they can reduce expenses by slashing deposit rates.

  Tags: CD rates, savings account

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Comments
19 Comments.
Comment #1 by Anonymous posted on
Anonymous
Thank you, Banking Guy. Am I the only one out here worrying interest rates, in general, are about to tank. Just am having trouble shaking that feeling. There is talk the Fed in effect did a stealth reduction yesterday, setting that floor below their nominal rate. Now we have this meeting coming up Friday so the big shots can coordinate our demise, the demise of savers I mean. Boy! I can't recall times like this.

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Comment #2 by Anonymous posted on
Anonymous
Thanks Bank guy again. Yes I had a feeling about WAMU saving account. Luckily I opened a CD with Park Avenue Bank yesterday. I have a feeling they (Fed) stupidly lower the rates like last time. My thoughts would to lock up some up rates since a down trend appears to be happening.

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Comment #3 by Anonymous posted on
Anonymous
My thought is that even should the fed lower rates, there's still enough banks in trouble that these ones won't drop theirs too much, if at all. So there still should be good deals to be had, just not as many.

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Comment #4 by Anonymous posted on
Anonymous
Quote: "Am I the only one out here worrying interest rates, in general, are about to tank. Just am having trouble shaking that feeling. There is talk the Fed in effect did a stealth reduction yesterday, setting that floor below their nominal rate. Now we have this meeting coming up Friday so the big shots can coordinate our demise, the demise of savers I mean. Boy! I can't recall times like this."

No, you are not alone worrying about the lower interest rates that are obviouly coming down the pike.

I had always believed it is a ploy to force our money out of save and secure FDIC insured accounts and into the stock market to help prop it up and then watch it disappear as the big investment banks destroy us little people and everything we worked for all our lives.

Greed and selfishness has replaced God and country!

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Comment #5 by Anonymous posted on
Anonymous
It's possible WaMu got a flood of applications following the increase in the FDIC insurance from $100G to $250G, and that might have spurred the sudden end to the CD deal. But it could come back, who knows?

I don't think that lower rates are a foregone conclusion. The Fed knows that lower rates might trigger stagflation. The issuance of commercial paper by the Fed, as announced today, is an example of the kind of aggressive step that can be taken to ease tightness in the credit markets short of lowering the Federal Funds rate. The lower oil prices we're seeing should have a stimulatory effect on the economy as well.

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Comment #6 by Anonymous posted on
Anonymous
I should have said "buying" of commercial paper in the previous post, not "issuance."

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Comment #7 by Doug (anonymous) posted on
Doug
hew! Got in just under the wire. I applied for the CD a week ago, but wasn't able to verify the microdeposits until last night. Now I just have to wait for the CD to be funded.

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Comment #8 by Anonymous posted on
Anonymous
Banking Guy, thanks for this update on WaMu. I opened an online CD with them last week but still haven't funded it (was planning to do it tomorrow). Will they still honor the 5% APY, considering the account has been already opened?

Thanks.

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Comment #9 by Anonymous posted on
Anonymous
I applied for a CD yesterday, so I'm still waiting for my microdeposits to be credited to my external account. Hopefully I should still be able to get the 5% APY, as long as I fund the account this week.

From the WAMU website:
To obtain the APY for the effective date on the day you apply, the Online CD account must be funded within seven (7) calendar days. If received on or after the eighth calendar day, the then effective date APY will be applied.

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Comment #10 by Doug (anonymous) posted on
Doug
To see if you qualify for the 5% rate, look in your WaMu inbox for an important notice you received when you applied. Mine said:
"If you are funding your account through a transfer from a non-Washington Mutual account, you must verify your micro-deposit within seven (7) days of the date you submitted your application to guarantee the Interest Rate, APY and Term shown above. If you verify your micro-deposit after that date, the Interest Rate, APY and Term are subject to change."

So that implies it's key to verify the microdeposits during the 7 days---the actual funding can occur later.

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Comment #11 by Anonymous posted on
Anonymous
The WaMu website was very slow today when I logged in to check my online savings account interest which posted today.

I'm still debating where to move most of my WaMu money.

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Comment #12 by Anonymous posted on
Anonymous
WAMU has the world's slowest ACH service - takes up to 7 days for a transfer to complete and limited to $10k. Now with this interest rate drop they are off my books.

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Comment #13 by Anonymous posted on
Anonymous
Note to Charles Scharf: Adios. Savings account money is off to Alliant C.U.

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Comment #14 by Anonymous posted on
Anonymous
its time to run away from wamu. bye bye wamu

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Comment #15 by Anonymous posted on
Anonymous
(Andrew Says:

October 7th, 2008 at 4:15 pm
anyone know the required minimum to keep Wamu checking and savings accounts open? (will $0 in the checking work?))

Washington Mutual Online Savings:

Maintain a minimum balance of $300.00 each day of the monthly statement cycle to avoid the monthly service charge amount of $4.00.

No monthly service charge when you open Online Savings account with WaMu Free Checking account online, or link a new Online Savings to an existing active WaMu checking account, as long as checking relationship maintained.

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Comment #16 by Anonymous posted on
Anonymous
I am pleased to report that my 5% CD was funded last night.
I had been on pins and needles all day, worrying that it would be funded on the dreaded "eighth day", since I had applied on a Tuesday morning and was funded the following Tuesday evening.

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Comment #17 by tresho (anonymous) posted on
tresho
I applied for a combined WaMu Free Checking & Online Savings 10/2. I finished everything & got to the web page saying "We will send you the decision of your application by email or mail within 2-5 business days." Now it's 10/10 and I've heard nothing from WaMu. I called their 800 # & after 3-4 links got to a rep. She told me my application was denied & that a letter had been sent to me on 10/5. Something about my attempting to open a joint account online. She said I would have to apply all over again as a sole account holder, then I could modify the account's ownership later.
Having wasted all that time in applying last week and the interest rate having been slashed, I'm not going to bother with WaMu anymore.

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Comment #18 by tresho (anonymous) posted on
tresho
Re: tanking interest rates at FDIC institutions
I am not worried about this. Interest rates at competitive banks have been higher than the Fed's basic rate for some months now. Banks still need our deposits to stay in business, and they have been running short of other assets. The current credit crisis will tend to raise interest rates above the Fed's levels, at least at those banks who want the business, the devil can take the others.
I am keeping my cash assets in very short term instruments, as I expect interest rates to go up further in the next 12 months. This can happen at banks or at Treasury Direct. I use both, and switch funds depending on the interest rates.

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Comment #19 by Anonymous posted on
Anonymous
i got same latter as treso and don't understand why they are doing this. Looks like to me they are denying purposly. I will not be opening any account with them anymore. Thanks

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