Dedicated to Deposits: Deals, Data, and Discussion

WSJ Article: Banks Wage Rate War For Deposits

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This WSJ article looks into the condition that we've seen this year in which banks are fighting for our deposit dollars. Interest rates on CDs and savings accounts have stayed reasonably high this year when you consider how much the fed funds rate has declined. Banks are in need of deposits to make new loans. The article also mentions another reason banks are so interested in attracting deposits:
Banks covet deposits because of this year's failures of IndyMac Bank, Washington Mutual Inc.'s banking operations and other institutions. Bank executives have been rattled by those seizures and the woes of beleaguered banks such as Wachovia Corp. and National City Corp., from which panicky customers yanked their money. Many lenders are now ratcheting up rates to shore up their deposits.

However, we may not see too many great deals from weak banks:
In recent weeks, federal regulators have intensified their scrutiny of bank deposits. Among other things, they are examining the rates banks are paying, according to people familiar with the matter. Regulators often consider rising rates as an indication that a bank might be in peril.

Perhaps that's the reason Downey Savings Bank and BankUnited are no longer offering great CD deals like they were in previous months.

Note, if you have trouble accessing the article, try accessing it via Goolge News. Thanks to the reader who emailed me the link to this article.

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Comments
14 comments.
Comment #1 by Max (anonymous) posted on
Max
Unfortunately as soon as bank gets bought/merged with another bank rates get slashed to the bone, as banks really seem to be interested in deposits while in "panic" state. Otherwise how would you explain puny savings rates at regular big banks?

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Comment #2 by Anonymous posted on
Anonymous
countrywide cut Saving-Link rate to 2.90 from I think 3.15.I have been moving money out of CW this month and will finish by the end of the month. Had 100K there when BAC bought them out. Looks like we can color that bank gome when it comes good rates

1
Comment #3 by Anonymous posted on
Anonymous
Venture Bank Direct has a 3.8% APY with no minimum balance. Quick and easy set up for an online savings account.

1
Comment #4 by Jason Kilborn (anonymous) posted on
Jason Kilborn
Thanks to this blog keeping me up-to-date, I moved out of Emigrant to Countrywide a few months ago, and now that I see that CWB-****-BofA has cut its rates again this morning, I'm back into Emigrant (that is, DollarSavingsDirect) at 4.0%. Easy set-up and familiar and user-friendly administration. This blog is absolutely invaluable--thanks to everyone!

1
Comment #5 by Jim (anonymous) posted on
Jim
E-Loan and GMAC Bank both lowered their 1-year CD rates a little. E-Loan also lowered its savings plus rate. I'm sure other stuff is falling that I wasn't paying attention to.

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Comment #6 by Anonymous posted on
Anonymous
I have this month opened 2 free checking accounts not because oh int but bonus $50 & $100 without any stringent conditions. I wonder why these banks are still offering free money as bonus.
All my cash is still in Rewards checking @ 5-6.3%.
Alliant is still paying 3.5%.

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Comment #7 by Bozo (anonymous) posted on
Bozo
To: All
Re: Grip firmly on the obvious

If banks (or any other financial institutions) want your money dearly, they will pay dearly for it. If banks do not give a rat's patootie for your money, they will tend to pay less.

Such is capital, and the flow thereof.

Thus spake Tharathustra or Bozo, as the case might be.

Bozo

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Comment #8 by Bozo (anonymous) posted on
Bozo
PS: As a good example

I have a modest amount of money in a Wells Fargo savings account. I use it only for the convenience of the ATM withdrawals. Above $350 balance, there is no service charge. The interest I earned last month was, like, seventeen cents or something.

Well, I'm exaggerating, but you get my drift.

The point is: I use Wells Fargo as a convenient ATM. They don't pay me, I don't pay them. Seems fair.

Bozo

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Comment #9 by Anonymous posted on
Anonymous
Wells Fargo stinks, PLAIN & SIMPLE.

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Comment #10 by Anonymous posted on
Anonymous
I shift my savings from bank to bank. In the past couple of months I have been using GMAC because they are the best investment around. And, for CDs, I usally go for the short term and best rates, 3m, 6m,. Thats my system.

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Comment #11 by Anonymous posted on
Anonymous
Alliant is currently paying 3.75%, not 3.5%

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Comment #12 by Anonymous posted on
Anonymous
Alliant is still paying 3.75%, not 3.5%

1
Comment #13 by Anonymous posted on
Anonymous
Yes, it was a misprint. Alliant still pays 3.75% and is my favorite place to park my funds since it allows free ACH to meet requirments of my Reward accounts.

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Comment #14 by Anonymous posted on
Anonymous
I checked out venturebankdirect.com. They are in the process of launching their online checking account. Savings accounts are currently earning 3.6% APY.

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