In the last few months we have seen several banks increase their long-term CD rates, but we haven’t seen many rate hikes of savings or money market accounts. That’s why I’m a little surprised at the recent rate hike at iGObanking.com. It increased the top tier rate of its money market account from 0.25% to 1.00% APY. Below are the new money market rates as of 10/04/2013:
- 1.00% APY on balances of $100,000+
- 0.75% APY on balances of $75,000+
- 0.25% APY on balances of $1+
Based on iGObanking.com’s history, these money market rates are probably not a good deal. The bank often offers top rates on certain products for a couple of months, and then it slashes the rates to some uncompetitive level. The latest example is its 5-year CD. For about two months it was offering a 5-year CD with a 2.05% APY. This week the 5-year CD rate was slashed to 0.35%. For a CD this isn’t too bad since if you opened the CD with the 2.05% APY, you’ll be locked into this rate for 5 years until the CD matures. You just have to make sure you don’t let the CD automatically renew at maturity. If you do, you could be stuck with a very low CD rate.
The lack of rate consistency is more of concern with a money market account that has variable rates. Will the rate fall back to 0.25% after a few months?
The iGObanking.com savings account used to have competitive rates before 2010. A big fall in rates started in 2011 and they continued into 2012 until the rate finally bottomed out at 0.25%. The money market account top-tier rate was also 0.25% since 2012. So I’m not optimistic that this 1% money market yield will last over the long run.
If you’re willing to take the chance of a short-lived 1%, please note that the money market account requires a minimum balance of $25,000 to open, to earn interest and to avoid a monthly fee. iGObanking.com does offer an ACH transfer service. The bank has a few details of this service in its FAQs page.
iGObanking.com is a division of Flushing Bank, a New York bank with $4.6 billion in assets. The bank's overall health score at DepositAccounts.com is a B+ with a Texas Ratio of 17.02% (average) based on June 2013 data. Please refer to our financial overview of Flushing Bank for more details. It has been a FDIC member since 2007 (FDIC Certificate # 58564).