Dollar Bank offers a high-interest savings account that is a unique variation to a high-yield reward checking concept. The savings account is called FreeMoney Savings and it continues to pays 2.00% APY on balances up to $20,000 (as of 7/21/2011). It has no monthly fees and no minimum balance requirement. It does require that you maintain a FreeMONEY Checking or Reward Checking account. When I last reviewed this account in December only the FreeMONEY Checking was an option.
The Reward checking account isn't a high-yield reward checking. In fact, it doesn't pay any interest. The rewards are based on using your debit card or online bill pay. You earn 10 cents for each debit card purchase and 5 cents for each online bill pay for up to $150 per year. The FreeMoney Checking has the same rewards and features. The only difference between the two is that the FreeMoney Checking requires that you make 6 electronic payment transactions (including Online Banking or Telephone Banking bill payments, ACH Debit or Point of Sale transactions) per month. The Reward Checking doesn't have this requirement, but you need a minimum average monthly balance of $2,500 to avoid a monthly fee. The FreeMONEY Checking has no monthly fees or minimum balance requirement.
Like a high-yield reward checking account, the savings account has a high yield up to a small maximum balance. Also, it requires that you perform certain account activity (unless you have the Reward Checking). Compared to a high-yield reward checking account, the savings account rate is a little low. On the plus side, you can meet the requirements without debit card usage. For those who hate using debit cards, this account may be appealing.
Using the bank's online chat service, I was able to find out from the CSR about who is eligible to apply. I was told they only accept new customers who reside within 100 miles of one of their branches which are located in the Pittsburgh and Cleveland metro areas.
Dollar Bank Overview
It's a sizable bank with $6.18 billion in assets, however, this is well under $10 billion which should allow them to be exempt from the debit card fee cap regulation.
The bank continues to have solid financial ratings. Its overall health score at DepositAccounts.com is 5 stars (out of 5) with a Texas Ratio of 7.97% (excellent) based on March 2011 data. Please refer to our financial overview of Dollar Bank for more details. The bank has been a FDIC member since 1984 (FDIC Certificate # 32245).
How This Savings Account Compares
When I reported on this savings account in December, there were internet savings accounts with balance caps that allowed you to earn interest rates higher than the typical online savings accounts. These were at banks like AmericaNet Bank and SmartyPig. Unfortunately, these are no longer options. AmericaNet Bank and its two sister banks no longer offer the savings account to new customers. SmartyPig still offers its special savings account to new customers, but the rate has fallen to 1.10% APY for up to $50K (as of 7/21/2011). This is no better than several other online savings account rates that don't have balance caps.
In short, if you want a savings account with rates higher than 1.25% APY, it's not easy to find even for small balances. The only other option is a high-yield reward checking account. Some of these also offer a companion savings account, but to qualify for the high rate on the savings account, you still must meet the reward checking monthly requirements which always include debit card usage.
To find the highest interest rates on liquid accounts, please refer to our comparing accounts page which allows you to search checking, savings and money market accounts in one table to find the best rates for a certain balance.