Wilshire State Bank continues to offer an installment savings account that it calls Rainbow Savings. I last reviewed this account in November, and I almost forgot about it until a reader commented about the good deal he's getting with this account. The best Rainbow Savings account rates require an automatic transfer from a Wilshire State Bank deposit account. The yields range from 1.51% APY for a 1-year term to 2.28% APY for a 3-year term. These rates are listed in the Rainbow Savings page as of 8/14/2012.
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.
One nice thing about the Rainbow Savings account is that there is no early withdrawal penalty. However, if you close before interest is credited, you lose the accrued interest. That can be up to 3 months of interest.
Maximum contract amount is $100,000 per customer. The contract is the total value of the account at maturity. For the 3-year account, this would require monthly installments of $2,684.
There's an online application for this Rainbow account, and in the past I've been told by a bank representative that it's available nationwide. I have more details about opening this account in my 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.
Wilshire State Bank does offer an online savings account. It's called eLink Savings, and it requires a checking account. The interest rate is a little low. It's 0.60% APY as for all balances as of 8/14/2012. Minimum balance to avoid a $5 monthly fee is $500.
In addition to opening the Rainbow Savings account online, you can open the account at a Wilshire State Branch. Wilshire State Bank 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 stars (out of 5) with a Texas Ratio of 8.81% (above average) based on March 2012 data. 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
For those in Los Angeles area, you can get higher rates in an installment savings account at Pacific City Bank. As of 8/14/2012, it's offering a 5-year installment savings account with a 3.05% APY with auto-transfer from a Pacific City Bank account. Some other banks that offer installment accounts include United Central Bank, NewBank and Woori American Bank