About Ken Tumin - Founder and Editor
Best Bank Account Interest Rates - Summary for July 22, 2014
What Motivates People to Save?
Survey of the Best CD Rates for July 28, 2014
One Small Illinois Bank Closed by the OCCWilshire State Bank's Installment Savings Account
It has been a while since my last report on Wilshire State Bank's Rainbow Savings Account. A reader just mentioned the account in the discussion forum, and I thought it would be a good time for another review. For those trying to squeeze as much interest from deposit accounts as possible, the installment savings account is something to consider. It's not a common account. Most are offered by banks that serve the Korean American communities.
In an installment savings account you make equal monthly deposits during the term rather than one initial deposit like a CD. However, like a CD the rate is fixed during the term. You often get a higher rate if you also have a checking or savings account with the bank and set up automatic monthly transfers from that account into the installment savings account.
Wilshire State Bank is one of the largest banks that offer installment savings accounts. It's called the Rainbow Savings Account, and as of 1/4/2011, it has the following rates (assumes you have automatic transfer from a Wilshire State Bank deposit account).
- 2.53% APY 36 months
- 2.02% APY 30 months
- 2.02% APY 24 months
- 1.77% APY 18 months
- 1.77% APY 12 months
Maximum contract amount is $100,000 per customer. There's an online application for this Rainbow account, and in the past I've been told by the CSR that it's available nationwide. I have more details about opening this account in my April 2009 review of Wilshire State Bank.
If you want to compare the above rates to CDs with comparable maturities, it requires that you consider the rate you receive on the savings or checking account that holds the initial lump sum. The monthly deposits would come from this account. By the time the installment savings account matures, all of the principal of the savings or checking account has been transferred to the installment savings account. So about half of the money earns the savings/checking account rate for the term, and about half earns the installment savings rate. So you can estimate the equivalent CD yield by averaging the two rates. You can get higher rates if you can keep the money in a higher interest account before it is moved into the installment account.
You can also open the Rainbow Savings account at a Wilshire State Branch. Branches are located in Southern California, New York, New Jersey, and Dallas and Forth Worth, Texas.
Wilshire State Bank has an overall health score of 4 out of 5 with a Texas Ratio of 17.63% (excellent) based on September 2010 data. It's a sizable bank with $3.23 billion in assets. Please refer to our financial overview of Wilshire State Bank for more details. The bank has been a FDIC member since 1980 (FDIC Certificate # 23301).
Other Installment Savings Accounts
As I mentioned above, installment savings accounts are typically only offered at Korean American banks. Some other banks that offer these accounts include:
An advantage with their installment savings is unlike a cd, there wasn't any penalty per se to close the account. Just do it right after interests posts, or you'll lose that month's interest. As with CDs, you might consider doing multiple accounts, so if you only need part of the money, you don't have to withdraw all of it.
With WSB, I suggest you ask and get clarity on all details. Plus afterwards, regularly review, since they are not without occasional glitches.
In-person customer service has been excellent, especially at their main branch. In person discussions are MUCH more productive than telephone, especially if you have difficulty understanding or communicating with their bilingual reps. If you're not local, then just be prepared for possibly a bit more effort, if you're not used to dealing with bilingual banks (tho' not because their reps are not trying to be helpful). Dealing with them in a more traditional way has been more satisfying.