Bank Deals Blog - March 2010


Comments (3)
Darby Direct: Add-On Feature Will Remain on Existing 36-Month Step-Up CDs
Wednesday, March 31, 2010 - 9:03 AM

Readers have received an email from Darby Direct informing them that they can continue to make additional deposits to their 36-month Step-Up CDs as allowed in the original terms of the account. Here's an excerpt of the email:

Please disregard the email message sent to you on February 19, 2010 regarding limitations on deposits to your Darby Direct 36 Month Step-Up CD. There are no changes to the original terms of your account at this time, and you may still make additional deposits to the 36 Month Step-Up CD. For full account disclosure information, please click here.

Our customers are our most valuable asset and your concerns are our highest priority. Please contact us with any questions regarding your account, and thank you for choosing Darby-Direct!

In February Darby Direct sent an email informing customers that they would no longer be able to make additional deposits to their 36-month Step Up CD after February. As I explained in that February post, this was an important issue regarding the right of a bank to change the terms of the account disclosure on an existing CD.

I know several readers had reported this to the FDIC. Perhaps that helped convince Darby Direct that they should honor the original terms of the account. The reader BestCashCow reported to have talked with a FDIC representative on this issue. Here is what he reported:

I have spoken to the FDIC about this type of issue. According to the FDIC, Darby can't change the terms of the initial disclosure unless they specify in the disclosure that it is subject to change. They also need to state that near the term they plan to change. So, they can't say the CD allows unlimited deposits on page 2 and then say this is subject to change on page 5.

Another reader described in the comments his interaction with the FDIC and the bank complaint process:

the way it works when you contact the FDIC about a bank is... the FDIC simply forwards the exact letter you wrote to the FDIC (along with any documents you sent) onto the bank in question itself, and simply asks the bank for a reply. So keep in mind that any letter you send to the FDIC about a bank will be forwarded to the bank itself. Then you're supposed to give them 60 calendar days for a reply.

It's nice to see Darby Direct will honor the initial account disclosure. However, I noticed they did include "at this time" in their email which seems to indicate that they don't believe this is an obligation on their part.

Let's hope this CD doesn't over stress them. This 3-year step-up CD was offered from August through November 2009. The rate starts off with a 3% APY for the first year. It then goes up to 4% for the second and 5% for the third. I'm sure many customers were planning to make substantial additional deposits to take advantage of those higher rates.

It should be noted that Darby Bank is not in the best financial health. It has been operating under this FDIC Consent Order (pdf) since December 18, 2009. In the order there are restrictions to brokered deposits and deposit yields. If regulators take over the bank and the FDIC is able to find a buyer, the acquiring bank is then free to change the original account disclosure of these existing CDs. If the FDIC can't find a buyer, it'll mail customers the checks of their deposits up to the FDIC limit. So it would be wise to avoid adding too much to these CDs that would cause your total balance at Darby to go over the FDIC limit.

Thanks to the readers who commented on this and emailed me news of this.

Comments (3)
3.75% 48-Month CD at Garden Savings FCU in New Jersey - Local Only
Wednesday, March 31, 2010 - 8:57 AM

Garden Savings FCU is listing a very competitive yield of 3.75% APY for its CD terms of 48 and 60 months. Minimum deposit is $500, and new money is required. This is listed in the credit union's rates page as of 3/31/2010.

Below the rate table it states that the early withdrawal penalty is 90 days dividends earned. This is a mild penalty. Most institutions charge at least 180 days of interest.

Membership is open to those who live, work, worship, or attend school in Newark, Elizabeth, or Jersey City. In addition, you can be eligible to join via Select Employer Groups and via family. Please refer to their membership page for more details. Membership requires a minimum deposit of $5 into the share savings account.

Branches are located in Parsippany, Newark, Whippany, Montville and Morristown, NJ.

The credit union's ratings for safety and soundness are above average: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 18710).

Comments (1)
2.50% 30-Month Add-On CD at SchoolsFirst FCU in California - Local Only
Wednesday, March 31, 2010 - 8:41 AM

SchoolsFirst Federal Credit Union continues to offer a promotional 30-month add-on CD with a 2.50% APY. Minimum deposit is $500, and it's also available in an IRA. The promotion is listed at the credit union's promotions page as of 3/31/2010. As stated below the table, "Multiple deposits allowed; Additional deposits will not affect the APY or maturity date." I had posted on this promotion in January, so it may not last much longer.

A reader who is a member of this credit union mentioned in an email that they allow unlimited deposits for this special CD. That's a very nice feature to have on a CD. If rates stay low or go lower, you can always fall back on the add-on CD. Typically, banks and credit unions which offer add-on CDs will limit the additional deposits to the amount of the initial deposit.

Membership eligibility is primarily employer based. Eligible employers include most schools in Southern California. Refer to the credit union's membership page for further details. There is a $15 one-time membership fee which seems expensive since it can be done online. A minimum $5 deposit in your share savings account is required for membership.

Branches are located throughout Southern California including the cities of Anaheim, Irvine, Cerritos, Fullerton, Cypress, San Bernardino and Santa Ana.

SchoolsFirst FCU's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 24212).

Comments (8)
Are Short-Term CDs Worthwhile Now?
Tuesday, March 30, 2010 - 7:32 AM

It's difficult to find short-term CDs with rates over 1.50%. In fact, even a 1.25% APY for a 6-month term is competitive these days. The highest 6-month CD APY currently listed at Bankrate is 1.31% at State Bank of India in New York. I listed a few 6-month CDs with yields ranging from 1.50% to 1.60% in my weekly rate summary. Even with these rates, is there any benefit with choosing these CDs over a high-yield savings account?

For some online banks, it doesn't seem to make much sense to go with the 6-month CD. ING Direct is an example. ING's current Orange Savings Account yield is low at 1.10%, but its 6-month CD yield is even lower at 0.75%. For the CD to be a better investment than the savings account, the savings account yield would have to fall to less than 0.40% in 6 months (The average of 1.10% and 0.40% is 0.75%). The savings account rate may fall, but I can't see it falling that much.

Ally Bank also has a 6-month CD rate that's lower than its savings account rate, but it's not nearly as bad as ING Direct. Currently, the 6-month CD yield is 1.25% APY, and the savings and money market account yield is 1.29% APY. Let's assume the rates continue to fall. If the savings account yield falls to half of its current yield (0.65%) in 6 months, the average 6 months yield would be about 0.97%. So the difference between the assumed savings account yield and the 6-month CD yield over the 6 months would be about 0.28% (1.25% - 0.97%). For a $10,000 deposit for 6 months, the difference in earnings would be about $14 (0.0028*10,000/2).

So with the current rates at Ally and assuming savings account rates continue to fall, the 6-month CD may return $14 more per $10,000 than the savings account. That's not a big enough spread to be worth it in my opinion. How much higher does a short-term CD rate have to be over your savings account rate to be worthwhile for you? Do you ever find short-term CDs worthwhile?

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High-Yield Reward Checking Account with Large Cap at First United Security Bank in AL - Local Only
Tuesday, March 30, 2010 - 7:29 AM

First United Security Bank is offering a high-yield reward checking account with the following rates and features if certain monthly requirements are met (as of 3/30/2010):

  • 3.29% APY on balances up to $100,000
  • 0.95% APY on portion of balance over $100,000
  • 0.15% base rate if requirements are not met
  • Unlimited ATM fee refunds

Monthly requirements include:

  • 12 check card purchases
  • 1 direct deposit or ACH auto debit
  • Access online banking at least once
  • Enroll and receive e-statements

Other features of the account include:

  • $100 minimum initial deposit
  • No minimum balance requirement
  • No monthly service charge

It appears that a branch visit is required to open an account. Branches are located in several cities in Alabama some of which include Brent, Butler, Columbiana, Fulton, Grove Hill, Jackson, Tuscaloosa and Woodstock.

The bank's ratings for safety and soundness are a little above average: 3½ stars (good) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1952 (FDIC Certificate # 17077).

Other High-Yield Reward Checking Accounts

It's not easy to find reward checking accounts with large balance caps. Most limit the balance that qualifies for the top rate to $25K. Those that had large balance caps have either cut the rates, lowered the balance cap or reduced availability (or all three). One example is City National Bank which had been offering a 3.28% APY reward checking account with no cap. The rate has fallen, and it now pays only 1.68% APY. On the plus side, it still has no cap, and it's still available nationwide (account review).

Refer to the reward checking section of DepositAccounts.com to find reward checking accounts in your state or that are available nationwide.

Comments (1)
Top 6-Month Jumbo CD at Mutual Federal Bank in Chicago - Local Only
Tuesday, March 30, 2010 - 7:27 AM

Update: This 6-month CD rates have fallen.

Mutual Federal Bank continues to offer very competitive 6-month CD rates. Its Jumbo 6-month CD has a 1.75% APY. This requires a $100,000 minimum deposit. Its 6-month CD rate for a $1,000 minimum is also competitive with a 1.50% APY. Other notable non-Jumbo rates include a 1.75% APY for 12 months, 1.65% APY for 9 months and 1.25% APY for 3 months. These rates are listed at the bank's CD rate tables as of 3/30/2010.

It appears that a branch visit is required to open an account. It's a small bank with one office located at 2212 West Cermak Road, Chicago, IL.

The bank's ratings for safety and soundness are average: 3 stars (performing) at Bankrate.com (based on 9/30/09 data) and 3½ stars (good) at BauerFinancial (based on 12/31/09 data). The bank has been a FDIC member since 1935 (FDIC Certificate # 28302).

Comments (5)
Comparing CDs with Different Early Withdrawal Penalties
Monday, March 29, 2010 - 9:32 AM

When comparing long-term CDs, it's also a good idea to compare early withdrawal penalties in addition to rates. This is especially true these days when interest rates are at record lows and there's the possibility we'll see much higher rates in a couple of years. If rates rise enough, it can become worthwhile to break the CD, take the penalty and reinvest into a higher interest rate account.

Early withdrawal penalties can vary substantially. I have provided three examples in this post. The bank with the smallest penalty is Ally Bank which currently has only a 60-day interest penalty. I chose Pentagon Federal Credit Union (PenFed) as the one with the average penalty. PenFed has a 6 month interest-penalty on most long-term CDs (if closed after 6 months). EverBank's early withdrawal penalty is the most severe of the three, and it's not quite as straightforward. Here's what is stated in EverBank's disclosure for its Yield Pledge CDs:

This penalty will be equal to one-fourth of the total interest that would have been earned on the principal balance of the account if funds had not been withdrawn prior to the maturity date.

So for a 60-month CD, the penalty would equal 15 months of interest.

I have more details on the early withdrawal penalties of the above institutions in my post, Survey of CD Early Withdrawal Penalties from Internet Banks.

Below are examples of the effective annual yields if these 5-year CDs were closed after 1 year, 2 years, 3 years and 4 years from when the CD was purchased. The yields take into consideration the penalty. As you can see below, the yields get closer to the full yield as you get closer to the end of the term. Also note that the yields are approximate. I just did a quick calculation that will likely be a little off, but it's close enough for comparison purposes.

PenFed's 5-year CD: 3.50% APY as of 3/29/2010. Approximate effective APY if closed after

  • 1 year: 1.75%
  • 2 years: 2.63%
  • 3 years: 2.92%
  • 4 years: 3.06%
  • 5 years: 3.50% (no penalty)

EverBank's 5-year CD: 3.39% APY as of 3/29/2010. Approximate effective APY if closed after:

  • 1 year: -0.85%
  • 2 years: 1.27%
  • 3 years: 1.98%
  • 4 years: 2.33%
  • 5 years: 3.39% (no penalty)

Ally Bank's 5-year CD: 3.09% APY as of 3/29/2010. Approximate effective rate if closed after:

  • 1 year, 2.58%
  • 2 years, 2.84%
  • 3 years, 2.92%
  • 4 years, 2.96%
  • 5 years, 3.09% (no penalty)

One interesting thing to note is that you can lose some of your principal if you close a CD within a period that's shorter than the number of months of the penalty. This is why the yield for EverBank for year one is negative. In addition to losing the first 12 months of interest, you would lose an additional 3 months of interest since the penalty is 15 months of interest (1/4 of 60 months).

Note, not all institutions will eat into your principal if you close a CD early. PenFed is one example. If you close a long-term PenFed CD before 6 months, you'll just lose all of the accrued interest, but none of the principal.

Another interesting thing to note above is the comparison between Ally Bank and PenFed. Even with a much lower rate, Ally has higher rates for year 1 and 2, but at year 3 both are equal, and then PenFed has higher rates for over 3 years. So if you think it's likely rates won't change much in 3 years, the PenFed 5-year CD would be a better choice.

Finally, it's important to note that some institutions include in their disclosures the right to refuse an early withdrawal request. Banks rarely make use of this right, but there have been cases where this has happened. I described some examples in this post on long-term CDs.

There have also been the concerns that banks could increase the early withdrawal penalty on existing CDs. Many had this concern for Ally Bank. I posted new information on this issue in this Friday post.

Comments (1)
High Yield Reward Checking Account at NARFE Premier FCU for Federal Employees - Limited Membership
Monday, March 29, 2010 - 9:29 AM

Update 3/1/11: The top rate has fallen to 2.02% APY.

NARFE Premier Federal Credit Union is offering a high-yield reward checking account with the following rates and features if certain monthly requirements are met. Rates are as of 3/2/2011:

  • 2.02% APY on balances up to $25,000
  • 0.75% APY on portion of balance over $25,000
  • 0.15% base rate if requirements are not met
  • Nationwide ATM fee refunds up to $10 per cycle

Monthly requirements include:

  • 12 Visa check card purchases
  • One direct deposit or auto debit/bill pay from your account
  • Enroll in E-statements

Other features of this account include:

  • No minimum balance requirement
  • No monthly fees

Membership is open to all active and retired federal employees. You can also be eligible via select employee groups and via family. Please refer to the credit union's membership eligibility page for the full details.

The credit union is located in Alexandria, Virginia. The credit union is also part of the Share Service Center Network.

The credit union's ratings for safety and soundness are a little above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 233).

Other High-Yield Reward Checking Accounts

There are a few nationwide reward checking accounts with a 4% APY. However, if you're eligible for one that's available locally or through a select employees group, you may have better luck with that one. The ones available nationwide will likely attract more rate chasers and fewer of the average Joes. The average Joes will make more purchases with their debit cards and will maintain smaller balances which help the institution pay the high interest rates.

Refer to the reward checking section of DepositAccounts.com to find reward checking accounts in your state or that are available nationwide.

Rate History:

  • 03/01/11: 2.02% APY up to $25K
  • 03/29/10: 4.01% APY up to $25K; 0.75% over; 0.15% base
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Top Rates for CDs, IRAs and Money Market Account at Geddes Federal Savings in NY - Local Only
Monday, March 29, 2010 - 9:26 AM

Geddes Federal Savings and Loan Association is offering some competitive CDs and IRA CDs. The best regular CD has a 2.25% APY for a 25-month term. Other competitive ones include a 2.15% APY 20-month CD and a 1.70% APY 13-month CD. Rates are much higher for IRA CDs. All terms from 12 months to 60 months have rates that are 50 basis points higher than the regular CD rates. These include a 2.20% APY for 13 months and 2.75% APY for 25 months. Minimum deposit is $500.

Another noteworthy deposit account is the money market account which has a 2.00% APY on balances of at least $50K. If you don't plan to put $50K into this account, it wouldn't be a good deal since it only pays 1.00% APY for balances from $1K to under $50K.

The above rates are listed in the bank's deposit rates page as of 3/29/2010.

On the bottom left side of the deposit rates page, it states:

Deposit accounts are only opened for consumers residing or businesses that are located within 150 miles of our Syracuse, New York location.

This seems a little too far for those in New York City, but it may include those in Albany.

The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1949 (FDIC Certificate # 30397).

Comments (5)
CD Rate Cuts After a Bank Fails
Sunday, March 28, 2010 - 6:03 PM

When the FDIC arranges for a bank to assume the deposits of a failed bank, the acquiring bank is allowed by law to reduce rates on existing CDs of the failed bank. If they do reduce the rates, they are required to allow the customers to make a penalty-free early withdrawal. This policy is based on a federal law that was enacted in 1989 after the savings and loan meltdown. It was intended to prevent potential acquiring banks from being scared off by the high rate promises of the failed banks.

At the time a bank is shut down, the FDIC typically includes the following in its FAQ if another bank has assumed the deposits:

Interest on all deposits accrued through [Failure Date], will be paid at your same rate. [Acquiring Bank] will review rates and notify you if interest rates will change. Your interest rate may be reduced.

I've never seen these FAQs updated. To learn about what the acquiring bank decided requires some searching or help from readers who had CDs at the closed bank. Sometimes the acquiring banks will have these details on their websites. Sometimes newspapers will publish articles on the aftermath of the closures.

Another complication is that the acquiring banks don't always treat all customers the same. I've seen cases where customers who had checking accounts with the failed bank didn't experience rate cuts. However, those with only CDs had their rates reduced.

In short, it's difficult to track how many acquiring banks have reduced rates on existing CDs. It does seem more common these days in this environment of record low interest rates. Below are a few banks that have failed in the last couple of months in which the rate adjustments by the acquiring banks have been publicized.

Old Southern Bank in Orlando, FL: Failed on 3/12/10 and acquired by Centennial Bank. According to Centennial Bank's FAQ:

The rates on your Certificates of Deposit have changed to the current competitive rates offered by Centennial Bank

Orlando Sentinel article describes how this is affecting customers. Article mentioned a customer with a 4.70% 2-year CD that was set to mature in September. The article stated she was offered 1.30% on a new CD.

LibertyPointe Bank and The Park Avenue Bank both in NY, NY: Failed on 3/11/10 and 3/12/10 and both acquired by Valley National Bank. According to Valley's FAQ the CD rates changed on 3/19 with rates that range from 0.20% (that mature before 6/16/10) to 1.75% (that mature 9/16/12 and beyond).

Bank of Illinois in Normal, IL: Failed on 3/5/10 and acquired by Heartland Bank. According to Heartland's FAQ:

Interest rates on most CDs and IRAs will remain in effect until maturity. We will notify you in advance if the rate will be changed prior to maturity.

La Jolla Bank in La Jolla, CA: Failed on 2/19/10 and acquired by OneWest Bank. The Desert Sun received the following quote from a OneWest spokeswoman:

For the vast majority of accounts, OneWest is honoring interest rates, terms and conditions of the accounts as customers had with La Jolla

However, the article includes examples of rate cuts including a 5-year CD that had a 4.9% rate being reduced to 2.9%.

American Marine Bank in Bainbridge Island, WA: Failed on 1/29/10 and acquired by Columbia State Bank. According to Columbia's FAQ

Your maturity date on your CD(s) will remain the same; however, your interest rate(s) have changed

For the new CD rates, the FAQ pointed to the bank's current rate sheet. For a $10K balance, rates range from 0.81% for a 12-month term to 1.94% for a 60-month term.

If you had CDs at a failed bank, please leave a comment on what the acquiring bank decided.

Bank Failure References:

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2.05% 12-Month Add-On CD at First Federal Available in SC, NC, GA & FL
Sunday, March 28, 2010 - 5:21 PM

First Federal is offering a special 12-month CD with a 2.05% APY. Minimum deposit is $1,000 if opened at a branch or $2,500 if opened online. Maximum deposit is $250,000. This special is called a Money Builder CD, and it has two liquid features: 1) allows additional deposits of at least $500, and 2) allows a one-time bump-up in interest rate. The rate and details are listed in the bank's Money Builder CD page as of 3/28/2010.

There's an online application at the bottom of the Money Builder CD page. The following note is next to the application link:

This account may be opened online by residents of SC, GA and FL. Please visit your local branch if you are outside these areas.

It's an Andera-based online application that allows funding by credit card, debit card or checking account (don't know if the credit card transaction would be considered a cash advance instead of a purchase).

The bank also offers a high-yield reward checking account called Moolah Checking, and like the CD, it can be opened online by residents of FL, GA and SC. It pays 2.51% APY for up to $25K as of 3/28/2010. It used to pay 6% back in 2007. Please refer to my account review for more details.

The bank has branches in several cities of South Carolina including the cities of Charleston, Hilton Head, Florence, and Myrtle Beach. There are also a few branches in Wilmington and a few other North Carolina cities.

The bank's ratings for safety and soundness are little above average: 3½ stars (good) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 28994).

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2.55% 18-Month CD at TEXAR FCU in NE Texas - Local Only
Sunday, March 28, 2010 - 5:18 PM

TEXAR Federal Credit Union is offering several very competitive online CD rates. The best one is a 2.55% APY 18-month CD. Some other good ones include a 2.25% APY 12-month CD and a 1.50% APY 6-month CD. Minimum deposit is $1,000. These rates are listed in the credit union's savings page as of 3/28/2010.

Membership is open to residents of the Texas counties of Cass, Bowie and Red River and the Arkansas county of Miller. The credit union's services page also lists the following groups as eligible for membership:

Members of school-related organizations such as PTA, PTO, VIPS, and booster clubs

Most retirees

I don't know if there are additional requirements for these groups. It's a small credit union, so they may not have intended to include new members outside their area.

Branches are located in the Texas cities of Texarkana, Atlanta, New Boston, DeKalb and Hooks, and in Texarkana, Arkansas.

The credit union's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 24567).

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Bank Deals Weekly Summary for March 27, 2010
Saturday, March 27, 2010 - 5:59 PM

Hot Deals, Quick Link for Rates, Recap of this week's posts

When will interest rates rise? As I mentioned last week after the March Fed meeting, the Fed continues to say the same thing about future rates "exceptionally low levels of the federal funds rate for an extended period." This OC Register article provided the opinions from experts on this question. Bond fund manager, Bill Gross, thinks it could be December if job growth continues:

Typically the Fed raises rates 6 months after the year-over-year growth in jobs crosses into positive territory . If the next 3 months show job growth of 150,000 jobs on average, then June would be that point - and December would be the first hike

Others quoted in the article think we'll soon see a slow rise in long-term interest rates due to the Fed halting their purchases of mortgage and Treasury bonds. As this Seeking Alpha article described, this may already be happening as low demand for the 10-year Treasury was causing yields to rise.

Four small banks failed on Friday which puts the total bank failures for the year at 41. That should be the total for the first quarter as March ends next week. It's a sizable rise compared to the first quarter of last year when 21 banks failed.

Friday's bank failures were typical with the FDIC finding buyers for all four closed banks. We saw 3 banks fail in March in which the FDIC wasn't able to find buyers. That was a bit higher than it has been in the last couple of years. We'll see if this trend continues.

Savings Account Rates

The big rate cut this week actually hasn't happened yet. Several readers have been told by Alliant Credit Union reps that the savings account rate will be cut from 2.00% to 1.50% APY effective April 1st. Rate information for the next month typically leaks out after Alliant's board meets and approves next month's rates. This will end a streak of 9 months in which Alliant has kept its savings account rate at 2.00% APY. I'm sorry to see this rate cut, but keep in mind that 1.50% APY is competitive these days (unfortunately). On the plus side, Alliant is now easier to join as I described on Tuesday.

One bit of good news came from 1st Constitution Direct which started offering 1.50% APY on its savings account for new accounts only. Previously, it was offering a 1.25% APY guaranteed for 3 months. I no longer see this 3-month guarantee mentioned on its web page.

It's hard to get excited about a 1.50% APY. I still have a few banks and credit unions on my list below that are offering savings and non-reward checking accounts above 1.50% APY, and three banks continue to offer non-promo 2% savings account rates.

Rate Hikes:

  1. 1st Constitution Direct Savings - 1.50% for new customers (was 1.25%)

Rate Cuts:

  1. Alliant CU Savings - 1.50% starting Apr 1st (now 2.00%)
  2. Bank of Internet Savings - 1.40% (was 1.50%)
  3. Bank of Internet MMA - 1.35% (was 1.45%)
  4. Wings Financial CU MMA - 1.31% $5K (was 1.41%)
  5. Bank of Internet Advantage Savings - 1.30% (was 1.40%)
  6. Intervest MMA - 0.99% $2.5K (was 1.01%)
  7. Charles Schwab Savings - 0.50% (was 0.75%)

Certificate of Deposit Rates

There was also some bad news from Alliant Credit Union in regards to CD rates. Alliant Credit Union slashed its 1-year CD rate by 35 basis points. The new 1-year Jumbo CD yield is now 1.75% APY. Rates fell by 10 basis points for most of the longer terms. However, there was one exception. The 2-year CD rate actually went up. The Jumbo yield is now 2.25% APY which is 15 basis points higher than before.

One of the best deals for long-term CDs continues to be at Pentagon Federal Credit Union. Note that PenFed often changes rates at the start of new months, so these rates may not continue into April.

Another good long-term CD deal continues at Ally Bank. The 5-year CD rate is much lower than what PenFed offers, but Ally's early withdrawal penalty of only 60 days of interest is much lower than PenFed's 6-month penalty. This can help reduce the risk of being stuck in a low yielding CD if rates shoot up in the next couple of years. There have been many conflicting reports about the possibility that Ally could increase this penalty on existing CDs. I've been reassured once more from Ally's Director of Public Relations that this would not happen. You should be able to get confirmation on this from Ally CSRs (see post).

Below are some of the best nationwide and local CD deals that are still active.

Best Nationwide CD Deals as of 3/27/10: Also listed are savings account promos with rate guarantee periods. The full list of nationwide CD rates is farther down.

  1. 2.25% 3-mo money market/checking promo at EverBank (account review)
  2. 2.07% 12-mo CD at Melrose Credit Union (account review)
  3. 2.00% 12-mo CD at Southeast Financial FCU (account review)
  4. 2.50% 15-mo IRA-only CD at Dime Savings Bank (account review)
  5. 1.95% 15-mo CD at Franklin Synergy Bank (account review)
  6. 2.25% 24-mo CD at Alliant CU (account review)
  7. 3.00% 36-mo CD at Pentagon FCU (may change in April) account review)
  8. 3.00% 26/49-mo CD Package at SunTrust Bank (account review)
  9. 3.60% 60-mo CD at Apple FCU (account review)
  10. 3.55% 60-mo CD at Melrose CU (account review)
  11. 3.50% 60-mo CD at Pentagon FCU (may change in April) (account review)
  12. 3.09% 60-mo Small-Penalty CD at Ally Bank (account review)
  13. 4.25% 84-mo IRA CD/4.00% CD at Navy FCU - Limited Membership (account review)
  14. 4.06% 84-mo CD (min $175K) at USAA Bank (account review)

Best Local CD Deals as of 3/27/10: Some of the best CD deals are from banks and credit unions that don't offer accounts nationwide. Refer to the recap section and the state index section to find all the recent local deals. Here are some of the best deals to note.

  1. 2.30% Money Market Account (min $100K) at Georgia Primary Bank in Atlanta (account review)
  2. 2.02% Money Market Account at South Florida FCU (account review)
  3. 2.02% 11-mo CD at First Citizens Bank in South FL (account review)
  4. 2.00% 11-mo CD at First Citizens Bank in SoCal (account review)
  5. 2.06% 12-mo CD w/chk at Chartway FCU in VA, GA, RI, NC, TX, FL & NJ (account review)
  6. 2.01% 13-mo CD at Prudential Savings Bank in PA (account review)
  7. 2.50% 22-mo & 2.00% 13-mo CD at Fort Knox FCU in KY (account review)
  8. 3.20% 44-mo CD at Crescent Bank & Trust in Louisiana (account review)
  9. 4.00% 60-mo CD at PFFCU in Philadelphia (account review)
  10. 3.50% 60-mo CD at City National Bank in NY, NJ & PA (account review)
  11. 3.56% 72-mo CD at Broadway Federal Bank in Los Angeles (account review)
  12. 4.25% 10-year Flex-CD at First Choice CU in Florida (account review)

Reward Checking Accounts

This was a slow week for new reward checking accounts. I only reported on one new one. The bank is in Tennessee, and it offers a rate of 3.51% APY on balances up to $30K. I reviewed the issue of meeting the debit card usage requirements with small purchases on Monday. As I mentioned on Monday, if customers don't make enough big purchases, the banks won't get much revenue from merchant fees, and it'll make it harder for the banks to keep the rates high. However, as I mentioned on Thursday, the average household spent over $37K last year on non-mortgage/rent expenses. If reward checking accounts can attract people who spend like this and who switch completely from credit card to the debit card, this will be good news for us savers who know the tricks and take the time to maximize the rewards in reward checking.

To see all of the high yield reward checking accounts available throughout the nation, please refer to the reward checking section of DepositAccounts.com.

Recap for the Week - Links to This Week's Posts

Banking News

CD Deals - National

Savings/Checking Accounts - Nationwide

Checking/Savings Bonuses

Reward Checking Accounts

CD and Money Market Deals - Local

The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums under $100,000. Previous weekly summaries are available at this page. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs, CDs by state Comments: read and discuss

As of March 27, 2010

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

9-Month Certificates of Deposit:

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:



24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

84-Month Certificate of Deposit:

Various Deposit Account Deals



High Yield Reward Checking Accounts - Open to All



Recent CD Specials at Local Credit Unions and Banks

Bank Account Alternatives

Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)

Comments (9)
The Best Bank Ratings Services and Why You Should Care about the Financial Health of Your Bank
Saturday, March 27, 2010 - 8:33 AM

If you keep under the standard deposit insurance limit, you should not have to worry about losing your money if your federally insured bank or credit union fails. So why should depositors who keep under this limit care about the financial health of their banks? There are in fact several reasons, and I describe these reasons in this post.

The next question is how to determine the financial condition of your bank? There are a few resources on the web that can help you determine this. I've reviewed some of the best and provided their strengths and weaknesses.

Why You Should Care?

For those who keep under the standard deposit insurance limit (currently $250K until 12/31/2013), it might seem like the financial health of your bank is of no concern. It is true that you don't have to worry about losing any of your principal and accrued interest up to the day of the closure. For most of the recent bank closures, the FDIC has made the transition process very easy for depositors. Often a new bank assumes all deposits, and most everything will stay the same. However, there have been some issues that have caused problems for depositors.

I first described reasons why you should care about the financial health in a previous post, and readers contributed some additional ones. Below is a new list that includes readers' contributions:

  • If a bank fails and the FDIC can't find a buyer, it'll send depositors checks for the insured principal and accrued interest. This takes at least a week. You'll lose at least a week of interest during this time, and there's the worry of it being lost in the mail. One reader who had deposits at Community Bank of Nevada when it failed in 2009 waited several weeks before he received the money. The FDIC had the wrong address, and he had to spend quite a bit of time on the phone with the FDIC for this to be resolved. Another reader reported having a 10-day hold when he deposited the FDIC check at his bank.
  • If you have a checking account at a failed bank and there are no acquirers, and the FDIC does a pay-out of your insured deposit balance, your outstanding checks to vendors will all be returned. Most vendors will assume it's due to NSF, when in reality the checks will be stamped "Bank Closed". Many vendors will then attempt to charge you NSF fees due to their lack of knowledge or experience with this situation.
  • Brokered CDs of a failed bank can take three or more weeks before funds reach your brokerage account. No interest is earned during this period. In addition, it's common for brokered deposits not to be assumed by the acquiring bank so payouts by the FDIC are more likely.
  • When a bank fails, it's common that existing CDs will either be closed or the rate will be lowered (if another bank assumes the deposits). Principal and accrued interest may be safe, but a high interest rate is not safe. Depositors are free to make penalty-free early withdrawals, but they may have trouble finding CDs paying anywhere near the rates that the old CDs were paying. This has been very common in today's low-interest rate environment.
  • FDIC now has rate caps for less than well capitalized banks. This isn't an issue for fixed-rate CDs, but it has been an issue with high-yield reward checking accounts. There have been cases in which banks had to significantly lower their reward checking rates in order to meet the FDIC rate cap for interest checking.

Finding the Financial Health of Your Bank

The most accurate list that shows how close your bank is to failure isn't public. The FDIC maintains a secret "Problem List" of banks. They keep the list secret since disclosure would hurt the banks on the list. Each quarter the FDIC issues its report on the banking industry and provides general information about this list such as the total number of banks on the list and the total combined assets of these banks. In February 23, 2010 the list included 702 banks and $402.8 billion in total assets. The NCUA has a similar process and list for credit unions.

At the same time the FDIC publishes its quarterly reports, it also updates its database with the latest financial data from the banks. This process usually takes just under two months. For example, on February 23, 2010 the FDIC publicly released financial data that was dated December 31, 2009. Once this data is public, several private ratings services process this data and formulate ratings based on their own criteria. This process adds yet another delay with most services taking 1 to 2 months to update their ratings.

This delay is one important issue to consider when reviewing bank ratings. As you can see above, bank ratings may be based on financial data that is up to 7 months old.

Some of the services claim to also update their ratings based on current events. An important event that can give clues about the health of a bank is from enforcement actions issued by government regulators. These can be orders for the bank to correct unsafe and unsound banking practices. Like the financial data, there is some lag time between when an enforcement action is issued and when it's made public. In addition, some enforcement actions are not made public. Sometimes banks will be the first to disclose an enforcement action. This is typically done by banks that are part of a public company. Publicly traded companies are required to report certain material corporate events with the SEC, and these reports are made public.

Deciding which ratings service is the best based on the details of the analysis that they do is difficult. Thus, I did not attempt to make that determination. Each service provides some explanations on their ratings methodology. Feel free to leave a comment if you have opinions on this. The strengths and weaknesses that I list below involve more basic issues.

Financial Strength Ratings Databases

  • DepositAccounts.com Health Scores and Texas Ratios - Update 9/2/10 - Pros: 1) includes credit unions, 2) Fast to update on new FDIC data (days), 3) Free and detailed analysis reports
  • BauerFinanical Star Ratings - Pros: 1) Includes credit unions, 2) Fast to update on new FDIC data (under 1 month) / Cons: 1) analysis reports are not free
  • Bankrate.com's Safe & Sound Star Ratings - Pros: 1) Includes credit unions, 2) Free analysis reports 3) Detailed analysis reports / Cons: 1) Slow to update on new FDIC data (~2 months)
  • TheStreet.com Ratings - Pros: 1) Free analysis reports / Cons: 1) No credit unions, 2) Slow to update on new FDIC data (1-2 months), 3) Short analysis reports
  • BankFox HEALTH Report - Pros: 1) Free analysis reports, 2) Detailed analysis reports / Cons: 1) No credit unions, 2) Slow to update (over 1 month)
  • MSNBC BankTracker Troubled Asset Ratio - Pros: 1) Includes credit unions, 2) Fast to update on new FDIC data (under 1 month), 3) Free analysis reports / Cons: 1) Short analysis reports

Useful Unofficial Lists of Problem Banks

If you have other recommendations of ratings services or opinions on the criteria they use, please leave a comment.

References:

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Four Banks Failed Today: 2 in GA, 1 in FL & 1 in AZ
Friday, March 26, 2010 - 10:47 PM

Four small banks failed today: two in Georgia, one in Florida and one in Arizona. This brings the total number of bank failures for the year to 41. As a comparison, last year at this time there was a total of 21 bank failures.

The FDIC was able to find buyers for all four banks, and as is typical these days, the buyers agreed to assume all deposits (except brokered deposits) including deposits over the FDIC limit. The only depositors who may be concerned are CD holders. The buyers have the option to reduce rates on existing CDs. However, if they do lower the rates, they have to allow a penalty-free early withdrawal. Three of the four banks have stated that they'll be reviewing the rates. Bank of the Ozarks which acquired Unity National Bank in Georgia has stated that "rates on certain CD accounts and IRA accounts will be adjusted to current market rates (see bank's FAQs).

Two of today's buyers have been acquiring banks that have failed recently. Centennial Bank in Arkansas had acquired Old Southern Bank in Orlando, Florida on March 12th. Today Centennial acquired Key West Bank in Key West, Florida. New York Community Bank (NYCB) acquired AmTrust when it failed on December 4, 2009. This added 66 branches in Arizona, Florida, and Ohio. Today, NYCB acquired the 6 branches of Desert Hills Bank in Phoenix, AZ.

In Georgia, CharterBank acquired McIntosh Commercial Bank. One interesting thing to note regarding CharterBank is that it's one of the few banks in the nation that is still offering a 5% reward checking account (see review).

Earlier today the FDIC released February's Enforcement Actions. There were 36 cease and desist consent orders and five prompt corrective actions. Most banks that fail were operating under some enforcement action. However, this is not always the case. There was one bank that failed today that wasn't operating under a public enforcement action.

There were no credit union failures today so the total number of credit union liquidations for this year remains at four.

Below is a summary of today's bank failures:

38th Bank Failure of 2010 (6th in GA)

  • FDIC Press Release
  • Closed Bank: McIntosh Commercial Bank, Carrollton, GA
  • Size: 4 branches, $362.9 million in assets, $343.3 million in deposits
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. brokered deposits have been transferred
  • Acquiring Bank: CharterBank, West Point, GA
  • Rate Changes: CharterBank will review rates
  • Estimated Cost to Deposit Insurance Fund: $123.3 million
  • Enforcement Action: None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

39th Bank Failure of 2010 (6th in FL)

  • FDIC Press Release
  • Closed Bank: Key West Bank, Key West, FL
  • Size: 1 branch, $88.0 million in assets, $67.7 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Centennial Bank, Conway, AR
  • Rate Changes: Centennial Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $23.1 million
  • Enforcement Action: 11/12/09 OTS C&D, 2/22/10 PCA
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

40th Bank Failure of 2010 (7th in GA)

  • FDIC Press Release
  • Closed Bank: Unity National Bank, Cartersville, GA
  • Size: 5 branches, $292.2 million in assets, $264.3 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Bank of the Ozarks, Little Rock, AR
  • Rate Changes: Rates on certain CD accounts and IRA accounts will be adjusted to current market rates (see FAQ)
  • Estimated Cost to Deposit Insurance Fund: $67.2 million
  • Enforcement Action: 2/03/09 OCC Formal Agreement
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

41st Bank Failure of 2010 (1st in AZ)

  • FDIC Press Release
  • Closed Bank: Desert Hills Bank, Phoenix, AZ
  • Size: 6 branches, $496.6 million in assets, $426.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: New York Community Bank, Westbury, NY
  • Rate Changes: New York Community Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $106.7 million
  • Enforcement Action: 7/02/09 FDIC C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

References:

Comments (11)
No-Penalty CD Change at Ally Bank and an Update on the Early Withdrawal Penalty for Regular CDs
Friday, March 26, 2010 - 9:32 AM

Ally Bank increased the term of the no-penalty CD from 9 to 11 months, and it also increased the yield from 0.99% to 1.35% APY.

According to Ally's description of the no-penalty CD:

We'll hand over your full balance and interest any time after the first 6 days of funding your CD

Ally Bank first introduced the 9-month no-penalty CD in May 2009 when the yield was 2.50%. Since that time, the yield has gone down, and it finally bottomed at 0.99% APY. That was 30 basis points below the savings and money market rate, and this had me wondering why would anyone want this CD at that low rate. Now that the no-penalty CD rate is again higher than the savings account rate, there is a little incentive to lock in that rate to hedge against continued falling rates. If rates rise or you need the money, you can make the penalty-free withdrawal.

Ally's 60-Day Early Withdrawal Penalty on Its Regular CDs

Even though the no-penalty CD rate increased, it's still rather low at 1.35% APY. Another alternative is go with Ally's long-term CD. These have an early withdrawal penalty, but it's a very mild penalty, only 60 days of interest (see page 3 of Ally's disclosure).

If you opened Ally's 5-year CD which has a 3.09% APY (as of 3/25/2010) and did an early closure at 9 months, you would lose about 2 months of interest. So the effective APY would be about 7/9th of original APY which comes out to 2.40%. A closure at 4 months would essentially cut your CD interest in half resulting in an APY of about 1.55%. I have more details on doing this math in my review of Ally's early withdrawal penalty.

Could the Early Withdrawal Penalty Increase?

As I reported last Friday I received assurances from the Director of Public Relations at Ally Bank that this early withdrawal penalty would not be increased on your existing CDs. Readers had been receiving conflicting info on this from Ally CSRs. According to the director, they are in the process of communicating this info to the CSRs so you should be able to confirm this in your future correspondence with them. It appears this process isn't quick. A reader commented on Tuesday that he was told by the CSR that the penalty could be changed on existing CDs. So I emailed the director again. Here's an excerpt of his reply:

We should be complete with training soon. Regarding this issue, your readers can rest assured that the terms under which they purchased their CDs will be honored through maturity.

If you still don't get this assurance from Ally's CSRs, please leave a comment.

Increasing the early-withdrawal penalty on existing CDs is not a typical practice. This question was asked at Ask a Banker, and here is what they said:

In most cases the terms of an CD agreement can't be changed during the contract period unless you agree to the changes. Ongoing accounts such as checking or savings accounts include a provision whereby you may be given adequate notice (30 days) before a change occurs. If you don't agree to the change, such as a fee increase, you are free to close the account.

Increasing the penalty for closing a CD early is not a normal change. Call the bank and ask to speak to a bank officer about this. They shouldn't be able to do it any more than you could tell them you have reduced the penalty to 45 days. Again, an allowance to modify the CD contract unilaterally would be very unusual.

This Ask-a-Banker answer doesn't have any official standing, but it does point out that it's quite reasonable to expect the terms of the CD agreement to remain in effect until maturity. Any bank to make such a change would be the kind of bank that Ally mocks in its commercials.

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High-Yield Reward Checking Account at Commerce Union Bank in TN - Local Only
Friday, March 26, 2010 - 9:29 AM

Commerce Union Bank is offering a high-yield reward checking account called Max Rewards Checking. The account has the following rates and features if certain monthly requirements are met (as of 3/26/2010):

  • 3.51% APY on balances up to $30,000
  • 1.01% APY on portion of balance over $30,000
  • 0.05% base rate if requirements are not met
  • Unlimited ATM fee refunds nationwide

Monthly requirements include:

  • 10 MasterCard debit card purchases
  • 1 direct deposit or ACH debit
  • Access online banking
  • Receive electronic statements

Other features of the account include:

  • $100 minimum initial deposit
  • No monthly service fees
  • No minimum balance requirement

There's an online application at the Max Rewards Checking website, however, it implies that you must come in to a branch location to complete the application process.

Branches are located in Springfield and Gallatin, Tennessee.

The bank's ratings for safety and soundness are strong: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 2006 (FDIC Certificate # 58366).

Other High-Yield Reward Checking Accounts

Compared to other reward checking accounts this account has two nice features: 1) balance cap of $30K which is a little higher than the typical $25K, and 2) unlimited ATM fee refunds. Most reward checking accounts limit fee refunds to around $25. As someone who doesn't use ATMs much, I see this unlimited refunds of ATM fees more of a negative. If there are too many customers taking advantage of this feature, it could make it harder for the bank to keep the interest rate high.

Refer to the reward checking section of DepositAccounts.com to find reward checking accounts in your state or that are available nationwide.

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Competitive CD Specials at Waccamaw Bank in NC & SC - Local Only
Friday, March 26, 2010 - 9:27 AM

Waccamaw Bank is offering two competitive CD specials: 2.16% APY 14-month CD and 2.36% APY 24-month CD. Minimum deposit is $10,000, and an additional deposit relation is required at the time of the account opening. These specials are listed on the front page of the bank's website as of 3/26/2010.

It appears a branch visit is required to open an account. Branches are located in several North Carolina cities some of which include Wilmington, Holden Beach and Shallotte and in a few South Carolina cities some of which include Myrtle Beach and Conway.

The bank's ratings for safety and soundness are a little weak: 2 stars (problematic) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1997 (FDIC Certificate # 34515).

Comments (4)
New Alliant Credit Union CD Rates - One Bit of Good News
Thursday, March 25, 2010 - 7:15 PM

This has been a tough week for Alliant Credit Union members. Earlier this week we learned that the savings account rate will be falling from 2% to 1.50% APY starting in April, and today Alliant lowered many of its CD rates. The biggest cut was on the 12-17 month term. The yield fell from 2.10% to 1.75% APY for the Jumbo CD ($25K minimum). However, there was a bright spot. The 24-35 month CD rate actually went up from 2.10% to 2.25% APY. I hope this increase is not a mistake. After the incident at Melrose Credit Union, I'm a little suspicious now of any rate increase.

Below are the new Jumbo CD rates as listed at Alliant's rates page as of 3/25/2010 (old rates are in parenthesis):

  • 1.75% APY 12-17 months (was 2.10%)
  • 2.00% APY 18-23 months (was 2.10%)
  • 2.25% APY 24-35 months (was 2.10%)
  • 2.50% APY 36-47 months (was 2.60%)
  • 3.00% APY 48-60 months (was 3.10%)

These Jumbo rates have a $25K minimum deposit. CD rates with a $1K minimum are 10 basis points lower. These are also available in an IRA.

Please refer to my Tuesday Alliant post for more details About Alliant Credit Union and membership eligibility. As I mentioned in that post, Alliant now makes it easy for anyone to join. For more details on Alliant CDs, please refer to my Alliant CD review.

Comments (4)
Average Household Spending and Reward Checking Accounts
Thursday, March 25, 2010 - 2:03 PM

According to the Bundle Report 2010, the average US household spent $37,782 in 2009 on expenses other than mortgage or rent. One of the articles in the report shows how the top US cities compare in the average spending. Austin, TX is the highest with $67,076. The next two are Scottsdale, AZ at $64,687 and San Jose, CA at $59,022. The lowest spending city is Detroit, MI at $16,446.

There are also a lot of other interesting spending stats in the report, but I found the average household spending the most interesting since this is relevant to high-yield reward checking accounts. With the monthly debit card usage requirements, banks are hoping the average customer will use the debit card for the majority of their purchases. With each debit card purchase, the banks gets about 1.75% of the purchase through interchange fees. As I showed in my post on the math behind reward checking, debit card usage is one of the important features that allow reward checking to pay out the high interest.

Let's do the math again based on the average spending mentioned in the report. Let's assume half of the yearly purchases is made with the debit card. The bundle.com site does not currently have data on average savings (the site says they plan on having this soon). So for simplicity, let's assume the balance of an average reward checking customer is $10,000. And let's assume a 4.00% interest rate if monthly requirements are met.

  • Total yearly debit card purchases: 50% of $37,782 = $18,891
  • Interchange fees the banks receive: 1.75% of $18,891 = $331
  • Interest earned during the year: 4.00% of $10,000 = $400
  • Interest not offset by the interchange fees: $400 - $331 = $69
  • Effective interest rate after interchange fees: $69 / $10,000 = 0.69%

From the customer point of view, it looks like he's receiving a 4.00% interest rate. However, due to the debit card usage, it's only costing the bank 0.69% in interest.

There are other factors that come into play in addition to interchange fees. One is the case when the customer doesn't qualify for the reward checking rate. That helps reduce the interest the bank has to pay out. Overdraft fees are another source of revenue for the banks, and claims have been made that higher debit card usage leads to more of these fees for the banks.

Banks claim that offering only e-statements contributes to the high rate. In my opinion this isn't that significant. Internet banks have long done this, and it may help a little, but brick-and-mortar banks need a lot more than this to have rates higher the online savings account rates.

As you can see, the above result would change a lot if customers use their debit card for only a few small purchases. If the bank has too many of these customers, there's no way for them to keep paying the high interest rate. Fortunately, as the Bundle.com report shows, there are a lot of spenders in the US, and thanks to the reward checking accounts, we savers can profit from them.

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2.25% 24-Month CD & Other Promotions at Carver Federal Savings Bank in New York City - Local Only
Thursday, March 25, 2010 - 1:59 PM

Carver Federal Savings Bank is offering a competitive 24-month CD special for new customers with a 2.25% APY as of 3/25/2010. Minimum deposit is $10,000. This rate is 25 basis points above what is listed at the bank's CD rate table. A reader mentioned this special, and I emailed the bank yesterday. Note, this rate is only for new customers.

The CSR also mentioned two other promotions: 1) Relationship Savings Account at 1.75% APY, and 2) Business Money Market at 1.75% APY. These are also for new customers and require a $10,000 balance. Savings and money market promotions are always a little worrisome if there's no guarantee period for the rate. One thing to note, however, is that bank's top rate for the money market accounts is currently 1.50% APY for balances of at least $50,000. So they are keeping their regular rates fairly competitive.

It appears a branch visit is required to open an account. Branches are located in New York City boroughs of Manhattan, Queens and Brooklyn.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1949 (FDIC Certificate # 30304).

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2.05% 13-Month CD Special at Your Community Bank in IN & KY - Local Only
Thursday, March 25, 2010 - 8:50 AM

Your Community Bank is offering a 13-month CD special with a 2.05% APY. Minimum deposit is $500. This special is listed in the bank's rates page as of 3/25/2010. Unfortunately, I don't see any other competitive rates for the regular CDs and savings accounts.

The bank provides an online product inquiry form. However, the form states that you're required to visit a branch to open an account.

Branches are located in the Indiana cities of New Albany, Floyds Knobs, Jeffersonville and Clarksville and in the Kentucky cities of Louisville and Bardstown.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 28915).

Comments (1)
$125 Checking Account Promotion & High Interest Checking at Pacific Crest Bank in WA - Local Only
Thursday, March 25, 2010 - 8:48 AM

Pacific Crest Bank in Washington State is offering a $125 bonus for opening its free checking account, initiating direct deposit and making 5 debit card purchases. The offer is listed in the bank's promotions page as of 3/25/2010. It's scheduled to last until 6/30/2010. Some important details of the promotion include:

  • Open a new personal free checking account with a $100 minimum deposit
  • Initiate direct deposit (payroll, social security or pension)
  • $75 will be credited to your account within ten business days from date of first direct deposit
  • $50 will be credited to your account after five debit card transactions
  • Checking account must remain open (with direct deposit) for a minimum of six months, or the bonus will be debited
  • Bonus is considered interest and will be reported on IRS form 1099-INT

If you're also looking for a high-interest non-reward checking account, this bank offers 1.50% APY on its Interest Plus Checking (as of 3/25/2010). This does require a $10K minimum to avoid a $15/month fee. It's getting hard to find 1.50% APY these days on internet savings accounts.

Credit for this find goes to iBankDesign. A reader in that thread reported the following information from the bank when he inquired about this promotion:

"Our policy is that the direct deposit needs to be the full payroll amount, not just any amount. All our accounts are opened for customers who reside in Washington state. At this time, we do not offer online applications for our bank accounts. Washington state customers have to come in person to our Lynnwood, WA office to open their first account with us. Please let me know if you have any further questions."

Note, Lynnwood is in northern suburbs of Seattle.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1998 (FDIC Certificate # 34585).

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2.50% 22-Month CD & Other Top CD Rates at Fort Knox FCU in Kentucky
Thursday, March 25, 2010 - 8:46 AM

Fort Knox Federal Credit Union continues to offer competitive CD rates. The two best are its CD specials: 2.00% APY 13-month CD and 2.50% APY 22-month CD. Its long-term regular CDs are also quite competitive: 3.00% APY 36-month CD, 3.25% APY 48-month CD and 3.50% APY 60-month CD. An extra 0.25% is added for a Jumbo CD with a $100,000 minimum (excludes specials). These rates are listed in the credit union's CD rates page as of the morning of 3/25/2010.

The credit union has a history of competitive CD specials. In 2008 the 7-month CD rate was 5% (the good old days).

Membership is open to those who live, work or worship in any of the following Kentucky counties: Boyle, Breckinridge, Grayson, Hart, Larue, Meade, Nelson and Taylor. There's also a large list of select employer groups. Relatives of any person who can be a member may also join. There's a $10 membership fee, and a minimum $5 deposit into a share savings account is required. Please refer to the credit union's membership eligibility page for the full details. Note, I just noticed the following new addition to the eligibility page: "Or you can become a member of American Consumer Council for free."

Branches are located in several cities in Kentucky including Fort Knox, Radcliff, Elizabethtown and Campbellsville.

The credit union continues to have strong ratings for safety and soundness: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). Fort Knox FCU is federally insured by the NCUA (Charter # 7000).

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2.02% 11-Month CD Special at First Citizens Bank in South Florida - Local Only
Wednesday, March 24, 2010 - 6:35 PM

First Citizens Bank is offering a special 2.02% APY 11-month CD at the former branches of Sun American Bank. Minimum deposit is $2,000, and there appears to be no checking requirement. A reader mentioned this in the comments from last week, and I confirmed with the bank rep today (3/24/10) that this special rate is still available. It's not listed on the bank's websites.

A branch visit is required to open an account. Branches are located in several cities of South Florida including Boca Raton, Delray Beach, Boynton Beach, Palm Beach Gardens, Tequesta, Stuart, Hollywood, Miami, Miami Beach, Coral Gables.

Sun American Bank was seized by regulators on March 5th, and the FDIC arranged for First Citizens Bank to acquire Sun American. This is another case of an acquiring bank offering CD specials at the branches of the former failed bank to ensure they maintain the deposits. Last week I reported on a similar CD special offered by First Citizens' Southern California branches that used to be Temecula Bank. It has been a while since Temecula failed (July 2009), so perhaps we'll see CD specials at the Sun American branches for several months.

First Citizens Bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11063).

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Competitive Step-UP CDs and Money Market Account at Connexus Credit Union - Easy Membership
Wednesday, March 24, 2010 - 9:04 AM

Connexus Credit Union is offering two step-up certificates with a 24-month and 36-month term. As described in the credit union's CD page, the step-up CD "gives you the one-time option to step up your rate during the term of the certificate." These rates don't seem to be listed at the credit union's website. I emailed the credit union on Tuesday (3/23/10) and received the following rates:

  • 2.00% APY 24-month $10K minimum
  • 2.50% APY 36-month $10K minimum

These are also available in an IRA. As with any step-up CD, there's always the risk that the institution won't keep the CDs competitive so you may never get the chance to bump up the rate.

Connexus Credit Union continues to offer competitive rates on its Y.E.S Money Market Account. It's a tiered rate account, and the credit union only lists the top rate at its deposit rates page. As of 3/24/2010, the top rate is 1.75% APY. This requires a minimum balance of $100,000. In my contact with the credit union yesterday, I was informed of the following rate tiers as of 3/23/2010:

  • 1.15% APY $1K to $10K
  • 1.30% APY $10K to $20K
  • 1.40% APY $20K to $50K
  • 1.50% APY $50K to $100K
  • 1.75% APY $100K+

No interest is earned on balances under $1,000. It has the typical withdrawal restrictions of a money market account (no more than 6 withdrawals per month). Checks must be a minimum of $250, otherwise there's a $29.95 fee.

I first posted on this money market account in July 2009 so it has a history of high rates. I'm disappointed that they still only list the rate of the top tier. If you email them, they can send you the full rate tiers. They also have an online chat system.

In my July post a reader commented that the credit union does a hard credit inquiry when you open an account. However, additional accounts won't trigger a hard pull if opened within 90 days. A hard pull will temporarily ding your credit score.

Connexus Credit Union had been offering very competitive CD rates, but the rates have gone down. However, they haven't gone down as much as others. The current CD rates as listed in the rates page as of 3/24/2010 include:

  • 1.50% APY 6 months
  • 1.75% APY 12 months
  • 3.25% APY 60 months

Connexus also offers two reward checking accounts (see post) and a competitive health savings account (see post).

Membership is open to members of the Connexus Association. According to the credit union's About Us Page:

anyone can join Connexus Credit Union by first becoming a member of our Connexus Association.

I've been told that the Connexus Association requires a one-time $5 donation, and membership into Connexus Credit Union requires a $5 deposit in the savings account.

The credit union is headquartered in Wausau, Wisconsin. Branches are located in Wisconsin, Ohio and New Hampshire. It appears Connexus started out as an employees credit union for Liberty Mutual Insurance. Most of their branches are in Liberty Mutual offices.

Connexus Credit Union has some decent ratings for safety and soundness: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 66538).

Thanks to the reader who emailed news of these step-up CDs.

Comments (7)
CD Rate Increase at Melrose Credit Union - Now a Decrease!
Wednesday, March 24, 2010 - 8:57 AM

Update 4/09/10: CD Rates have fallen substantially.

Updated 1:00PM: It appears Melrose made a mistake. The 5-year CD rate is now listed as 3.55% APY which is 10 basis points lower than it has been. It wasn't just a typo mistake since both the rate and APY had been increased. I guess we'll have to be suspicious of any rate hikes these days.

Melrose Credit Union did something that's rare these days. It raised one of its CD rates. The 5-year CD yield increased from 3.65% to 3.80% APY. The 3.80% APY is an especially competitive 5-year rate. As a comparison, the best 5-year nationwide CD rate listed at Bankrate is 3.33% APY at EverBank. The 3.80% APY is shown at the Melrose's deposit rates page as of the morning of 3/24/2010. The other certificate rates remained the same, and they haven't changed since November. Below is a full list of the CD rates as shown in the credit union's rate table as of 3/24/2010:

CD Rates as of 3/24/2010:

Term     Rate       APY    APY Change
1 year   2.05%     2.07%
2 year   2.30%     2.32%
3 year   2.80%     2.83%
4 year   3.05%     3.09%
5 year   3.75%     3.80%   +0.15
5 year   3.50%     3.55%   -0.10

Minimum deposit is $5,000 ($4,000 for an IRA). Dividends accrue daily and are compounded quarterly. Members have the option to have their quarterly dividend transferred to another share account.

There are some issues to note regarding the CDs' early withdrawal penalty and the account application process. The early withdrawal penalty is more harsh than the usual CD which is an especially important issue to consider with long-term CDs. Refer to my September 2009 Melrose CU review for more details.

Anyone can join the credit union. According to Melrose's membership page:

Since Melrose Credit Union has an open New York State charter there are no geographic or group affiliation field of membership restrictions. So, regardless of where you live or how you earn a living, you may qualify for membership.

Melrose Credit Union's ratings for safety and soundness continue to be very strong: 4 stars (sound) Bankrate.com (based on 9/30/09 data) and 5 stars (superior) at BauerFinancial ( based on 12/31/09 data).

Melrose is located in Briarwood, New York which is in Queens. It's federally insured by the NCUA (Charter # 62005).

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Alliant Credit Union Makes It Easier To Join
Tuesday, March 23, 2010 - 9:33 AM

A reader recently commented about a new way you can qualify to join Alliant Credit Union. You can now qualify for credit union membership by becoming a member of Orphan Foundation of America (OFA). Alliant now has a special page that explains this:

Members of the OFA are eligible to join Alliant Credit Union and experience the Alliant Advantage [...] By making a $10 or greater donation to the Orphan Foundation of America, you will become a member of OFA, receive literature and other information from OFA, and qualify to join Alliant.

For the last several years, one could qualify for membership through the PTA (either national or local). The full list of qualifying organizations is available here.

Alliant Credit Union has been offering 2.00% APY on its savings account since July 2009. We should soon know if this 2.00% APY will continue through April. Alliant's board of directors typically approves next month's rates around this time of the month. Update: Readers have reported that Alliant will be reducing the savings account yield to 1.50% starting in April :-(

Please refer to my Alliant Credit Union review for more details about Alliant and the savings account. I also have the savings account rate history at the bottom of the review.

One thing to note about its rate history is that even though Alliant has a history of competitive rates, they weren't the best back in 2007 when many online banks were paying over 5%. So I don't know if they'll be able to maintain their current rate which is extremely competitive in today's rate environment. Nevertheless, I do expect them to keep the rate very competitive.

In addition to the best savings account rate, Alliant also offers great rates on its High Rate Checking Account (currently 1.75% APY). It's not a reward checking account that requires debit card usage. However, it does require direct deposit to receive this high rate.

Another useful service that complements the checking and savings account is Alliant's remote deposits through its eDepositPlus program which allows you to deposit checks electronically into your account using your home scanner. If you have used this feature, please leave a comment about how well it has worked.

Alliant's CD rates also have a long history of top rates. Its Jumbo certificates have the best rates, and unlike most Jumbos, these only require a $25K minimum deposit. The 1-year Jumbo CD continues to have a 2.10% APY as of 3/23/2010. Please refer to my Alliant CD review for more details. One thing to note about Alliant's CDs is that unlike the savings account rates, CD rates can change at anytime.

Alliant also offers top rates on many other deposit products including Health Savings Accounts, IRAs (Traditional, ROTH and SEP) and Coverdell ESA.

Alliant Credit Union Oveview

Branches are located in Chicago, Des Plaines, and Elk Grove Township, Illinois. There are also branches in Virginia, Colorado and California.

Alliant Credit Union continues to have the highest rating (5 stars) for safety and soundness at BauerFinancial based on 12/31/09 data. However, it continues to have only has a 3-star rating (performing) at Bankrate.com (based on 9/30/09 data). It's a large credit union with over $6.3 billion in assets.

The credit union is federally insured by the NCUA (Charter # 67955).

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Competitive CD Rates and Specials at Acacia Federal Savings Bank - Available Nationwide
Tuesday, March 23, 2010 - 9:31 AM

Acacia Federal Savings Bank is offering two competitive CD specials: a 3.50% APY 60-month IRA-only CD and a 2.15% APY 25-month CD. These rates are listed in the bank's promotions page as of 3/23/2010. The IRA CD has a $100 minimum deposit, and is scheduled to last until 4/15/2010. The regular CD has a $500 minimum, and is scheduled to last until 3/31/2010.

Acacia Federal also has some competitive standard CD rates as of 3/23/2010 which include a 3.00% APY 48-month CD and a 3.30% APY 60-month CD. Minimum deposit is $500.

Last Saturday I reviewed Acacia Federal's Top Choice Checking which offers a 1.50% APY on all balances without any reward checking requirements.

Details of the CDs are described in the bank's Truth-in-Savings document. One downside with the long-term CDs is a harsh early withdrawal penalty:

  • 3 months of interest for terms of up to 1 year
  • 6 months of interest for terms of over 1 year up to 2 years
  • 12 months of interest for terms of over 2 years up to 3 years
  • 18 months of interest for terms of over 3 years

One thing to note based on the disclosure is that the special 25-month CD would have a 1-year early withdrawal penalty. The standard 2-year CD has only a 6-month penalty. Since the standard 2-year CD rate is only 10 basis points lower (2.05% APY as of 3/23/10), it may actually be a better deal.

The bank has an online application and they allow people to open accounts from any state. Initial deposit can be done by check or wire transfer (incoming wires are free). I was told that at maturity, you can call to instruct them to close the CD. They can send you a check for free or do an outgoing wire transfer for $12. Unfortunately, they still don't have an ACH option to fund CDs.

According to the bank rep, if the CD application is being submitted online, the rate will be locked for seven days for Acacia Federal to receive the funds (wire or check). Anytime after that the funds will be placed in the CD at the new rate if the rate has changed.

Bank Overview

From the bank's About page

Acacia Federal is a thrift institution which has been operating in the Washington DC Metro area since it opened in March 1985. It is a subsidiary of the Acacia Life Insurance Company.

Acacia Federal runs its nationwide deposit operation and conducts regional loan production from one location in Falls Church, Virginia.

Based on FDIC data from 12/31/09, the bank has $1.387 billion in assets and $962 million in deposits.

Acacia Federal's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1985 (FDIC Certificate 32266).

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BB&T's $100 Checking Account Bonus (DD Not Required) - Southeastern States Only
Tuesday, March 23, 2010 - 9:28 AM

Update 5/10/10: Bonus has been extended to 6/06/2010.

BB&T continues to offer a $100 cash bonus for opening its free checking account and for either setting up direct deposit OR making 3 online bill payments. The promotion page is at www.bbt.com/cashoffer, and the offer code is AFJAP. The promotion is scheduled to expire on 3/31/2010. I wouldn't be surprised is this gets extended. I first posted on this in September when it was originally set to expire on December.

Some important small print of the promotion includes:

  • Must be a new client (no BB&T checking in last 6 months)
  • Direct Deposit or 3 online bill payments must be completed within 60 days of account opening
  • $100 bonus will be deposited directly into your account within 4 weeks of meeting requirements
  • Bonus reported to IRS

It's an online promotion only. The online application allows ACH funding up to $1,500. You can also mail in a check or make a deposit at a branch. There's no credit card option.

The free checking account has a minimum opening deposit of $50. There are no minimum balance requirements or monthly fees. Online Bill Payment is free.

I used the bank's online chat system to ask about a hard credit inquiry. According to the CSR, "it would be a hard hit if you are primary on the application." The credit check is done through Equifax. They also use ChexSystem in the application process.

I was also told that this promotion is only for states with BB&T branches. However, they still have not completely integrated the former Colonial Bank branches, so residents of states like Texas still can't qualify (BB&T took over Colonial Bank when it failed in August 2009). According to the CSR, Colonial Bank branches will be completely merged into BB&T by the summer.

BB&T branches are located in Florida, Georgia, Alabama, North Carolina, South Carolina, Tennessee, Kentucky, Indiana, Virginia, West Virginia, Maryland and Washington DC.

BB&T is a member FDIC (FDIC Certificate # 9846).

Other Bank Bonuses

To find other bonus deals, please refer to my bank bonus page which has all of my recent bank bonus posts.

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Competitive CD and IRA CD Rates at InTouch Credit Union in Several States - Local Only
Tuesday, March 23, 2010 - 9:26 AM

InTouch Credit Union continues to offer some competitive CD and IRA CD rates. The most competitive is the 18-month IRA CD special which has a 2.25% APY. The standard certificate rates are also fairly competitive. The most competitive include a Jumbo 24-month CD with a 2.20% APY and a Jumbo 60-month CD with a 3.30% APY. These rates are listed in the credit union's rates page as of 3/23/2010.

InTouch Credit Union used to be EDS Credit Union. They just recently changed the name. It has been very common in the last several years for credit unions that were originally associated with a company to change to a more generic name.

In addition to EDS employees, membership is open to persons who live or work in Collin County, Texas. Also, eligible are persons who live, work, worship or attend school within a 10-mile radius of certain InTouch Credit Union locations. For more details on eligibility, please refer to the credit union's How to Join page.

Branches are located in Plano, Frisco and Carrollton, Texas; Santa Ana, California; Auburn Hills, Pontiac, Detroit and Troy, Michigan; Camp Hill, Pennsylvania; Herndon and Sterling, Virginia. Note, several branches are inside secure buildings (probably EDS facilities) and have limited access.

InTouch Credit Union's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 68505).

Other Competitive Certificate of Deposit Rates

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Competitive CD Specials at Carolina First and Mercantile Bank in SC, NC & FL - Local Only
Monday, March 22, 2010 - 7:50 PM

Carolina First Bank and its Florida division, Mercantile Bank, are offering several competitive CD specials. The best ones include:

  • 1.97% APY 13-month variable-rate CD (rate guaranteed never to drop below 1.95%)
  • 2.25% APY 24-month CD
  • 2.75% APY 38-month CD with add-on and penalty-free withdrawal features
  • 3.35% APY 60-month CD with add-on and penalty-free withdrawal features

Minimum deposit is $2,500, and the maximum is $250,000. The above rates are listed at the promo rates pages of Carolina First and Mercantile Bank as of 3/22/2010. Note, you have to enter your NC, SC or FL zip code to see the specials. I tried a few, and all rates were the same as shown above.

I was first disappointed when I noticed the variable-rate feature of the 13-month CD. However, when I read that it has a rate floor of 1.95%, I realized this is a good deal. Interest rate is 60% of the current Prime Rate. Another nice feature is that it allows additional deposits. According to the terms: One deposit (minimum of $500) allowed per month. There's also a 30-month variable-rate CD with a 2.31% APY that has the same features except the rate is 70% of the current Prime Rate.

The 38-month and 60-month fixed-rate CDs have this same add-on deposit feature (one deposit, minimum $500, allowed per month). In addition, there's a no-penalty early withdrawal feature. However, it has quite a few restrictions:

One withdrawal can be made without penalty during the CD term if the withdrawal does not exceed 50% of the initial CD balance and the withdrawal is made at least twelve months after the issue date.

It appears you have to live near a branch to open an account. Carolina First branches are located in several North and South Carolina cities some of which include Asheville, Hendersonville, Wilmington, Anderson, Hilton Head Island, Charleston, Greenville, Myrtle Beach and Columbia. Mercantile Bank has branches in several Florida cities some of which include Gainesville, Fort Lauderdale, Lake City, Jacksonville, Tampa, Ocala, Miami, Orlando, Kissimmee, Boca Raton and St. Petersburg.

Carolina First Bank's ratings for safety and soundness are a little weak: 2 stars (problematic) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1986 (FDIC Certificate # 26849).

Comments (5)
Insights into High-Yield Reward Checking Accounts
Monday, March 22, 2010 - 3:18 PM

Like all deposit rates, reward checking rates have fallen, but many banks still offer reward checking rates much higher than the best 5-year CD rates. Several banks have been offering reward checking for more than 3 years, so they have proven themselves to be more than just promo rates. Perhaps that's why Bankrate.com just published this article and survey on high-yield reward checking accounts.

A more interesting article is from November, and it provides some insights into reward checking from Gabriel Krajicek, CEO at BancVue, the company that invented reward checking. It also explains why reward checking rates have gone down. It's no different than why other deposit rates have fallen:

Consumer demand for these checking accounts has boomed as deposit yields elsewhere have evaporated. But loan demand has dropped off in some areas

In addition to Krajicek, two bank managers were interviewed including Larry Daniels of First Arkansas Bank & Trust (FABaT) and Bill Skow of State Bank of Toledo (SBoT). Both of these banks have long been offering reward checking accounts. Back in 2007 they were paying 6% APY with no balance cap and with nationwide availability. Both banks have cut rates and balance caps, and FABaT has also restricted availability to only Arkansas residents. Larry Daniels of FABaT describes why these changes were done:

"This product has exceeded our wildest expectations," says Daniel. "We're up to almost $141 million in (the accounts). It's a concentration issue, a rate issue and a loan issue -- almost a perfect storm from an economic standpoint. We have surplus funds that we're paying a very, very attractive rate on, but we're having difficulty finding people who want to borrow.

Bill Skow of SBoT provided some insights into how much debit card usage and e-statements help offset the high interest rates:

2.51 [percent] actually looks more like 1.5 percent or 1.75 percent to us

The article mentioned that SBoT is paying 2.51% APY on balances up to $70K. The balance cap has been cut to $25K according to the bank's website. As I mentioned in my post on the math behind reward checking, debit card usage has more impact with smaller balances. So that's why balance cap cuts have been almost as common as rate cuts.

The article does say that not all banks have made big rate cuts or restricted the nationwide availability. This is likely due to the banks being in areas with better loan demand. A few weeks ago I looked into five banks that have offered reward checking nationwide for over two years which still offer yields of at least 4.00% (see review).

We still have 100's of high-yield reward checking accounts in our reward checking tables. Most are local deals, but there are a few available nationwide. These are indicated with the US map to the left of the bank's name.

Edit: Added recent article that goes along with survey.

Comments (12)
Should You Satisfy Reward Checking Requirements with Small Debit Card Purchases?
Monday, March 22, 2010 - 8:48 AM

There are many ways you can make multiple small debit card purchases to meet the debit card usage requirements of reward checking accounts. Some of these are discussed in forums like this FW thread. These methods can allow you to meet the requirements from multiple reward checking accounts without spending a lot of money and time. Also, this will allow you to use cash-back credit cards on large purchases. This might sound appealing, but there are two important downsides to consider:

  1. Many banks want their reward checking customers to treat the account as their primary checking account. Some have even explicitly stated in their terms that debit card purchases should "not simply be 12 de minimis transactions designed to qualify for rewards requirements." If your average monthly purchases don't meet some threshold, the bank may threaten to close your account. This is what happened last year with a reader who had an account at City National Bank.
  2. If too many people limit their debit card purchases, banks won't be able to offer the high yields. As I described in my post on the math behind reward checking, debit card purchases help pay for the high yields. It takes a certain amount of debit card purchases to be able to offset the high yields that are paid. If one only makes $10 of debit card purchases, the bank may get back less than $1. If the customer has a $25K balance with 3% interest, he will receive about $62 in monthly interest. That $1 doesn't help the bank to offset the interest. If too many customers do this, the bank will be forced to lower the rates, reduce the balance caps or end the program.

How much do you spend per month with your reward checking debit card? Has your bank threatened to close your account due to too many small purchases?

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

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Competitive CD, Savings and Checking Account Rates at IC FCU in MA - Local Only
Sunday, March 21, 2010 - 1:11 PM

IC Federal Credit Union is offering competitive rates on several of its deposit products. For CD rates, the most competitive is a 2.45% APY 24-month CD. Other notable ones include a 3.25% APY 60-month CD and a 3.04% APY 48-month CD. Minimum deposit is $500.

The credit union also has competitive rates on its IC Direct Checking and Savings Accounts. The checking account yield is 1.26% APY and the savings' yield is 1.36% APY. The checking is not a reward checking account. The rate applies to all balance of at least $50. The checking does have potential monthly fees. These can be waived with a $1,000 minimum balance or direct deposit.

The above rates are listed at the credit union's deposit rates page as of 3/21/2010.

You can apply for membership and open accounts online. Membership eligibility is described in the online application. Those who live or work in the following Massachusetts counties are eligible: Franklin, Hampden, Hampshire, Middlesex, Norfolk and Worcester. You can also be eligible via select employer groups or via family. Please refer to the credit union application for the full details.

Branches are located in the Massachusetts cities of Fitchburg, Leominster, Westminster and Ayer.

The credit union's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 24250).

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PNC Bank Checking Account Bonuses Available in Some States
Sunday, March 21, 2010 - 1:07 PM

PNC Bank is offering another $100 bonus for opening a personal checking account, setting up direct deposit and making 10 check card purchases. The offer is available online at this PNC promotions page. It's scheduled to expire on 4/30/2010. Both the Free Checking and the Virtual Wallet qualifies. Below is the small print. I've highlighted the important details:

The payout of $100 will be credited to the Eligible Account within 60 days after the first Qualifying Direct Deposit and at least 10 purchases made with your PNC Visa Check Card have posted to the eligible checking account, all of which must occur by 06/30/10 The payout will be identified as "Promo Reward Cash Trans" on your monthly statement. A "Qualifying Direct Deposit" is defined as a recurring direct deposit of a paycheck, pension, social security or other regular monthly payment electronically deposited into a Free, Performance, Performance Select Checking account, or the Spend account for Virtual Wallet (each an "Eligible Account") on a recurring month-to-month basis. The amount of each recurring Direct Deposit must be at least $400. The recurring Direct Deposits must be made by an employer or an outside agency. Credit card cash advance transfers, transfers from one account to another or deposits made at a branch or ATM do not qualify as Qualifying Direct Deposits. Offer only available to new PNC Bank checking account customers who open the Eligible Account using the on-line application. Offer only available to residents of DC, DE, FL, IN, KY, MD, NJ, OH, PA and VA. Offer may be extended, modified or discontinued at any time and may vary by market. This is an online offer that is not available through a PNC Bank branch. While PNC Bank from time to time may promote similar offers that are available through the branch, they are not related to this web offer.

Limit of one premium payment per new account legal equity ownership. For this offer legal equity ownership will be defined by the customer name(s) and social security number(s) on the account. PNC Bank and National City Bank customers with an existing checking account are not eligible for this offer.

In the event that we determine in our sole discretion that your account does not meet the eligibility criteria or the activity on your account does not qualify as a Qualifying Direct Deposit, we will not be obligated to credit your account with the payout.

Note, it's only available in states where PNC Bank has branches.

Credit for this find goes to iBankDesign.

To learn more about Virtual Wallet, please refer to my review of PNC's Virtual Wallet. Virtual Wallet consists of 3 accounts: the Spend Account (checking), the Reserve Account (for short-term savings and overdraft protection) and the Growth Account (the high yield savings account). The Growth account pays 1.10% APY for balances up to $25K (0.35% for above) as of 3/21/2010.

$150 Checking Account Bonus at National City in St. Louis

National City Bank (now part of PNC) is advertising a $150 checking account bonus in St. Louis. The ad is available online here. It's scheduled to expire on 4/03/2010.

National City Conversions

I reviewed the status of National City conversions earlier this month. It appears the last conversions should be completed by June 14, 2010.

PNC Bank has been a FDIC member since 1934 (FDIC Certificate # 6384).

Other Bank Bonuses

To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts.

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Savings Account and Short-Term CD Deals at Hopkins Federal Savings Bank in MD - Local Only
Sunday, March 21, 2010 - 1:04 PM

Hopkins Federal Savings Bank is offering competitive rates on its short-term CDs. These include a 1.76% APY 6-month CD and a 1.79% APY 12-month CD. Minimum deposit is $5,000. The 12-month CD is also available in an IRA. There's also a Statement Saving Account with a 1.76% APY on balances of $10,000 and above. These rates are listed at the bank's rates page as of 3/21/2010.

At the bottom of the rate table, it states that "all applicants must physically come into one of our locations to open an account," and at the top of the table, it states that new accounts are available for Maryland residents only.

The bank has 2 offices located in Baltimore, Maryland.

Hopkins Federal's ratings for safety and soundness are above average: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1985 (FDIC Certificate # 32372).

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2.00% Savings Account Promotion at Community State Bank Austin - Local Only
Sunday, March 21, 2010 - 1:00 PM

Community State Bank has a promotion on its Gold Savings Account with a 2.00% APY guaranteed through 5/31/2010. Minimum deposit is $1,000. This doesn't appear to be listed at the bank's website. It was advertised in today's (3/21/10) Austin Statesman. A scan of this offer is available here.

The small print of the offer doesn't have many details. One downside that is listed is the quarterly payment of interest. Of course it would be better if the guaranteed period was longer. There's always the concern with these promotions that the rate will plummet soon after the guarantee period. At least this is a community bank rather than one of the megabanks.

A branch visit appears to be required to open an account. The bank has two branches in Austin, Texas.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11561).

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Bank Deals Weekly Summary for March 20, 2010
Saturday, March 20, 2010 - 6:07 PM

Hot Deals, Quick Link for Rates, Recap of this week's posts

The Fed completed its second scheduled meeting of 2010 on Tuesday, and it continues to say the same old thing about future rates "exceptionally low levels of the federal funds rate for an extended period". I've seen some analysts predict we'll see a change in this rate commitment language in the next few meetings. Once this language changes, it'll likely take around 6 more months before the Fed finally hikes the target funds rate. Keep an eye on the economy and unemployment. The faster these improve, the sooner the Fed will move us out of this historically low interest rate environment.

Friday was especially busy for the FDIC with 7 bank failures (see review). The largest bank to fail was Advanta Bank Corp. which had $1.5 billion in deposits. The bank had long been offering CDs over the web, and I had reported on its competitive long-term CD rates back in 2008. Unfortunately, those CDs that haven't yet matured have been closed and checks are being mailed. The FDIC wasn't able to find a buyer, so the bank is being shut down and accounts are being closed.

The other six banks that failed all had buyers which assumed all deposits. One thing I've noticed in the last few weeks is that banks that have acquired much of their deposits through the web have been shut down rather than taken over by another bank. Advanta was the latest example. Other two recent examples include Centennial Bank which operated the internet bank CBDirect.com and Waterfield Bank which held deposits for several affiliate groups including UFB Direct and AARP Financial Savings Center. It appears these banks are not being seen as attractive acquisitions.

One reader suggested that I discuss other investment options rather than just bank products. This is one reason why we created the Notices section of DepositAccounts.com. In addition to posts on bank related news, I've been including short posts on bank alternatives like bonds and stocks. I don't have the time for detailed posts on these topics, but with Notices I'm able to point readers to articles at other sites that provide conservative investment options. If you come across this type of article or resource, please leave a comment or send me an email, and I'll try to write a quick Notice with a link to the article.

Savings Account Rates

The number of rate cuts was much lower this week than the previous week. I'm hoping we will soon be seeing the end of these weekly rate cuts.

I added one account to my list this week. Acacia Federal Savings Bank is offering a checking account with a 1.50% APY on balances of $5K and up. Unfortunately, 1.50% is competitive for a liquid account these days.

I reviewed this week the 5 institutions on my savings account list with rates of at least 2% APY. As I described in the review, three of these five accounts have considerable limitations. The two without these limitations are Alliant Credit Union and Ready Saver. We should find out next week if Alliant Credit Union will be keeping the 2% APY through April.

Rate Hikes:

  1. Acacia Federal Checking - 1.50% (newly listed)

Rate Cuts:

  1. Newtown Savings Bank Sweep Account - 1.40% (was 1.60%)
  2. Hudson City Savings Account - 1.15% (was 1.25%)
  3. State Farm Checking Account - 1.10% (was 1.15%)
  4. Intervest National MMA - 1.01% $2.5K (was 1.05%)

Certificate of Deposit Rates

There were actually more rate cuts on CDs this week than on savings accounts. Some of the banks that cut rates include Hudson City, BankUnited and Colorado Federal Savings Bank.

One bit of good news this week is the confirmation I received from the Ally Bank director of public relations that Ally would not increase the early withdrawal penalty on existing CDs. Ally's 60-day early withdrawal penalty on all terms takes out a lot of risk of being locked into a long-term CD when rates are shooting up.

Many readers reported receiving conflicting information from Ally CSRs. The confusion is that Ally can raise the penalty, but it's only for new CDs or CDs that have matured and are being renewed. Ally CSRs are being updated on this issue so you should be able to receive confirmation on this policy in your future communications with Ally.

Below are some of the best nationwide and local CD deals that are still active.

Best Nationwide CD Deals as of 3/20/10: Also listed are savings account promos with rate guarantee periods. The full list of nationwide CD rates is farther down.

  1. 2.25% 3-mo money market/checking promo at EverBank (account review)
  2. 2.10% 12-mo CD at Alliant CU (account review)
  3. 2.07% 12-mo CD at Melrose Credit Union (account review)
  4. 2.50% 15-mo IRA-only CD at Dime Savings Bank (account review)
  5. 2.30% 24-mo CD at Atlantic Coast Bank (account review)
  6. 3.00% 36-mo CD at Pentagon FCU (may change in March) account review)
  7. 3.00% 26/49-mo CD Package at SunTrust Bank (account review)
  8. 3.65% 60-mo CD at Melrose CU (account review)
  9. 3.60% 60-mo CD at Apple FCU (account review)
  10. 3.50% 60-mo CD at Pentagon FCU (account review
  11. 3.09% 60-mo Small-Penalty CD at Ally Bank (account review)
  12. 4.25% 84-mo IRA CD/4.00% CD at Navy FCU - Limited Membership (account review)
  13. 4.06% 84-mo CD (min $175K) at USAA Bank (account review)

Best Local CD Deals as of 3/20/10: Some of the best CD deals are from banks and credit unions that don't offer accounts nationwide. Refer to the recap section and the state index section to find all the recent local deals. Here are some of the best deals to note.

  1. 2.30% Money Market Account (min $100K) at Georgia Primary Bank in Atlanta (account review)
  2. 2.21% Checking Guaranteed to 12/31 at First National Bank of the Gulf Coast in SW FL (account review)
  3. 2.02% Money Market Account at South Florida FCU (account review)
  4. 2.00% 11-mo CD at First Citizens Bank in SoCal (account review)
  5. 2.00% 11-mo CD at Quorum FCU in NY (account review)
  6. 2.06% 12-mo CD w/chk at Chartway FCU in VA, GA, RI, NC, TX, FL & NJ (account review)
  7. 2.00% 12-mo CD at Vision Bank in Dallas (account review)
  8. 2.00% 12-mo CD at Premier American Bank, NA in Miami, FL (account review)
  9. 2.01% 13-mo CD at Prudential Savings Bank in PA (account review)
  10. 2.30% 20-mo CD at Chevron FCU in CA (account review)
  11. 3.20% 44-mo CD at Crescent Bank & Trust in Louisiana (account review)
  12. 3.25% 48-mo CD at Fidelity Bank of FL (account review)
  13. 4.00% 60-mo CD at PFFCU in Philadelphia (account review)
  14. 3.50% 60-mo CD at City National Bank in NY, NJ & PA (account review)
  15. 3.56% 72-mo CD at Broadway Federal Bank in Los Angeles (account review)
  16. 4.25% 10-year Flex-CD at First Choice CU in Florida (account review)

Reward Checking Accounts

I reported on three new reward checking accounts this week with yields ranging from 3.01% to 4.10% APY. I also did a post which compared the rewards that one gets from a reward checking account to the rewards from a cash-back credit card. Those who don't mind spending the time, can do both. They can make large purchases with their cash-back credit cards and make small purchases with their debit cards to qualify for the high yields of their reward checking accounts. However, if you don't want this extra work, the question then becomes which is better? As I showed in the post, it depends on how much you spend, the size of your liquid savings and the spread between the yields of your reward checking account and a top savings account.

To see all of the high yield reward checking accounts available throughout the nation, please refer to the reward checking section of DepositAccounts.com.

Recap for the Week - Links to This Week's Posts

Banking News

CD Deals - National

Savings/Checking Accounts - Nationwide

Checking/Savings Bonuses

Reward Checking Accounts

CD and Money Market Deals - Local

The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums under $100,000. Previous weekly summaries are available at this page. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs, CDs by state Comments: read and discuss

As of March 20, 2010

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

9-Month Certificates of Deposit:

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:



24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

84-Month Certificate of Deposit:

Various Deposit Account Deals



High Yield Reward Checking Accounts - Open to All



Recent CD Specials at Local Credit Unions and Banks

Bank Account Alternatives

Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)

Comments (1)
High-Yield Checking Account at Acacia Federal Savings Bank - Available Nationwide
Saturday, March 20, 2010 - 11:09 AM

Acacia Federal Savings Bank is offering a very competitive yield on its Top Choice Checking Account. The yield is 1.50% APY with a minimum balance of $5,000. This is listed in the rates page as of 3/20/2010. For under $5,000, no interest is paid and there's a $15 monthly fee. This is not a reward checking account, so there are no debit card usage requirements or balance caps.

Some other nice features of the account include:

  • Refund any ATM fees that are charged to you by the ATM's owner
  • First order of 50 printed checks free of charge
  • Free Bill Pay Service

Acacia Federal offers a bank-to-bank funds transfer service, but it has several limitations:

  • $2,000 daily limit, $5,000 monthly limit between your Acacia Federal account and accounts at other banks
  • Only one free online Bank-to-Bank transfer per month for outgoing transfers (8 free for incoming)

Initiating ACH transfers from another bank would probably be a better option.

I was worried that this might be a teaser rate since Acacia Federal's rate sheet shows lower rates for the savings account and money market account. According to an Acacia representative, it's not a special promo rate and he sees no current plans to reduce it. So hopefully it'll hold up for a while.

Competitive CD and IRA CD Rates

Acacia Federal is currently offering a special 5-year IRA CD with a 3.50% APY. This is listed at the bottom of the rates page as of 3/20/2010. The regular CD rates are fairly competitive. Some of the better ones include a 3.30% 60-month CD and a 2.05% APY 24-month CD.

Details of the CDs are described in the bank's Truth-in-Savings document. Some of the early withdrawal penalties are larger than average: 18 months of interest for terms over 3 years.

I'll have more details on Acacia Federal's CDs in a future post.

Account Opening

The bank has an online application, and I confirmed with the bank that they allow people to open accounts from any state. The checking account application allows you to specify joint and POD ownerships. Initial deposit options provided by the checking account application include ACH, wire transfer (incoming is free) and check.

Bank Overview

From the bank's About page:

Acacia Federal is a thrift institution which has been operating in the Washington DC Metro area since it opened in March 1985. It is a subsidiary of the Acacia Life Insurance Company.

Acacia Federal runs its nationwide deposit operation and conducts regional loan production from one location in Falls Church, Virginia.

Based on FDIC data from 12/31/09, the bank has $1.387 billion in assets and $962 million in deposits.

Acacia Federal's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1985 (FDIC Certificate 32266).

Other High-Yield Checking Accounts

It's important to note that "high yield" is relative. A few years ago, it would take at least 4% to be in the high-yield ball park. In today's low-rate environment, I'm afraid anything over 1.25% is competitive for a liquid account.

For other high-yield checking accounts, please refer to the checking account section of DepositAccounts.com. Two other good regular checking options include accounts from Alliant Credit Union and Incredible Bank.

If you want higher rates on a liquid account, reward checking is still an option with rates over 4.00% at some banks. Of course you'll have to worry about debit card usage requirements. Also, the top rates are limited to some cap, typically $25K. To find high-yield reward checking accounts in your area or that are available nationwide, please refer to the reward checking section of DepositAccounts.com.

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$200 Bonus for Opening Checking and Savings Accounts at First Tennessee Bank - Local Only
Saturday, March 20, 2010 - 10:56 AM

First Tennessee Bank has a new-account promotion in which you can earn $200. Here's the promotions page link. The offer is scheduled to expire 3/30/2010. Below is the important section of the small print:

Offer expires March 30, 2010. Present a copy of this page to receive the bonus. You must open your accounts at a First Tennessee financial center and reside in Tennessee, Virginia, or North Carolina. Minimum opening deposit is $300 in checking and $10,000 in Money Market Savings. Offer is available to new First Tennessee checking and savings customers only. Opening deposits cannot be transferred from existing First Tennessee accounts. If you meet the stated requirements of this promotional offer, the bonus will be credited to your account within 6 weeks and will be reported as income on Form 1099-INT. Limit one bonus per household. Cannot be combined with other checking or savings offers. Customer agrees to maintain accounts in good standing for a minimum of six months. No minor accounts.

Credit for this find goes to iBankDesign.

It looks like the Free Checking would qualify. However, the Money Market Savings requires a $5K balance to avoid a $9/month fee. You can also avoid the fee with a qualifying checking account, but that probably doesn't include the Free Checking. The Money Market interest rate isn't bad, but at 0.75% for a $10K balance, it's about 0.50% lower than what you can easily get online.

Branch Locations

According to the small print: You must open your accounts at a First Tennessee financial center and reside in Tennessee, Virginia, or North Carolina. The vast majority of the branches are located in Tennessee. Branches are located in several Tennessee cities including Cleveland, Nashville, Greeneville, Morristown, Chattanooga, Jackson and Knoxville.

First Tennessee Bank has been a FDIC member since 1934 (FDIC Certificate # 4977).

Other Bank Bonuses

To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts.

Comments (1)
Advanta Bank Corp. and 6 Other Banks Failed Today
Friday, March 19, 2010 - 10:47 PM

This was a busy day for the FDIC with 7 bank failures which brings the total for the year to 37. This was the most closures on one day since December 18, 2009 when 7 banks were closed. The most notable bank failure today was Advanta Bank Corp. which was the subsidiary of Advanta Corp., the bankrupt credit-card issuer.

A couple of years ago Advanta Bank Corp. had offered some very competitive CDs. My last Advanta post was in September 2008 when it was offering a 5.25% 60-month CD. I'm afraid customers who had those CDs will be losing that interest rate. The FDIC wasn't able to find a buyer, and thus the Advanta is being closed and checks of insured deposits will be mailed on Monday.

One interesting thing to note regarding my September 2008 post on Advanta is that it had 4-star ratings at both BauerFinancial and Bankrate.com. At today's closure, the rating at BauerFinancial had fallen to zero, the lowest rating. For some reason, Bankrate.com listed Advanta with a NR label (not rated). This is a good example of why it's important to stay under the FDIC limit regardless of the ratings. It appears the vast majority of Advanta depositors did stay below the FDIC limit. Out of $1.5 billion in deposits, there were only $247,000 of deposits that potentially were over the FDIC limit. That's less than 0.02% of the deposits.

Another sizable closure today was at Appalachian Community Bank in Georgia. It had just over $1 billion in assets. Advanta and Appalachian closures resulted in a cost of more than $1 billion to the FDIC's Deposit Insurance Fund. The other five bank failures only cost the DIF about $227 million.

Advanta's closure was the only one in which the FDIC wasn't able to find a buyer. For the other six closures, the FDIC was able to find buyers who agreed to assume all deposits even those above the FDIC limit.

Credit Union Placed into Conservatorship

There weren't any credit union liquidations this week. However, the NCUA reported late today that it had placed Tracy Federal Credit Union (located in CA) into conservatorship. Here's how the NCUA press release describes the conservatorship:

The decision to conserve a credit union enables the institution to continue normal operations with expert management in place correcting previous service and operational weaknesses

Below is a summary of today's bank failures:

31st Bank Failure of 2010 (1st in OH)

  • FDIC Press Release
  • Closed Bank: American National Bank, Parma, OH
  • Size: 1 branch, $70.3 million in assets, $66.8 million in deposits
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. brokered deposits have been transferred
  • Acquiring Bank: The National Bank and Trust Company, Wilmington, OH
  • Rate Changes: The National Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $17.1 million
  • Enforcement Action: OCC 9/22/09 Consent Order
  • Financial Ratings: NR (not rated) at Bankrate.com, 0 star (lowest) at BauerFinancial

32nd Bank Failure of 2010 (3rd in GA)

  • FDIC Press Release
  • Closed Bank: Century Security Bank, Duluth, GA
  • Size: 2 branches, $96.5 million in assets, $94.0 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Bank of Upson, Thomaston, GA
  • Rate Changes: Bank of Upson will review rates
  • Estimated Cost to Deposit Insurance Fund: $29.9 million
  • Enforcement Action:None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

33rd Bank Failure of 2010 (3rd in UT)

  • FDIC Press Release
  • Closed Bank: Advanta Bank Corp., Draper, UT
  • Size: 1 branch, $1.6 billion in assets, $1.5 billion in deposits
  • Possible Uninsured Deposits: $247,000
  • Acquiring Bank: None
  • Rate Changes: N/A
  • Estimated Cost to Deposit Insurance Fund: $635.6 million
  • Enforcement Action: 11/24/09 FDIC Consent Order
  • Financial Ratings: NR (Not Rated) at Bankrate.com, 0 star (lowest) at BauerFinancial

34th Bank Failure of 2010 (4th in GA)

  • FDIC Press Release
  • Closed Bank: Appalachian Community Bank, Ellijay, GA
  • Size: 10 branches, $1.01 billion in assets, $917.6 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Community & Southern Bank, Carrollton, GA
  • Rate Changes: Community & Southern Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $419.3 million
  • Enforcement Action: FDIC 4/21/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

35th Bank Failure of 2010 (5th in GA)

  • FDIC Press Release
  • Closed Bank: Bank of Hiawassee, Hiawassee, GA
  • Size: 5 branches, $377.8 million in assets, $339.6 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Citizens South Bank, Gastonia, NC
  • Rate Changes: Citizens South Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $137.7 million
  • Enforcement Action: None
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

36th Bank Failure of 2010 (1st in AL)

  • FDIC Press Release
  • Closed Bank: First Lowndes Bank, Fort Deposit, AL
  • Size: 4 branches, $137.2 million in assets, $131.1 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: First Citizens Bank, Luverne, AL
  • Rate Changes: First Citizens Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $38.3 million
  • Enforcement Action: 3/3/08 FDIC C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

37th Bank Failure of 2010 (4th in MN)

  • FDIC Press Release
  • Closed Bank: State Bank of Aurora, Aurora, MN
  • Size: 1 branch, $28.2 million in assets, $27.8 million in deposits
  • Possible Uninsured Deposits: All deposits transferred
  • Acquiring Bank: Northern State Bank, Ashland, WI
  • Rate Changes: Northern State Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $4.2 million
  • Enforcement Action: FDIC 3/19/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

References:

Comments (14)
Update on Ally Bank's CD Early Withdrawal Penalty
Friday, March 19, 2010 - 2:00 PM

Since my first post on Ally Bank's 60-day early withdrawal penalty, many readers have received conflicting information from Ally's CSRs. The issue is whether there's a possibility that the 60-day early withdrawal penalty can be increased on existing CDs. I decided it was time to seek someone higher up at Ally. I found Travis Parman, Director, Public Relations listed at GMAC's media contacts page, and I sent him an email explaining the conflicting information that we have received. He looked into this issue and replied with the following email. I've highlighted the important sections.

Hi, Ken. Thanks so much for giving us the opportunity to respond to your readers' inquiries about our early withdrawal policy. We did set the 60-day interest penalty to be customer-friendly and to be competitive with other banks. I think the customer representatives your readers spoke to were offering a friendly tip in the spirit of being straightforward. While it's true that at some point the terms could change, customers who had invested in a CD under the 60-day terms would continue to enjoy that benefit until the CD matures. We do not anticipate changing the 60-day terms but that always is dependent on the competitive environment and market conditions. If the terms were to change, customers still would get a 30-day notice of the change to make appropriate decisions regarding future CD purchases. Please let us know if we can follow up with any further questions. We look forward to the dialogue.

Travis Parman
Director, Public Relations
GMAC Financial Services | Ally Bank

In summary, the early withdrawal penalty on an existing CD should not increase during the CD term. An increase in the penalty should only affect new CDs or CDs that have matured and are renewed.

Travis also informed me that they're updating their CSRs on this policy so your future correspondence with the CSRs should confirm this.

With the recent news about GMAC and Ally, readers have asked what would happen if Ally Bank fails. I don't think this is likely, but a failure is possible with any bank. I did not ask Travis this question since once a bank fails, the failed bank no longer has any say. Federal regulations allow a bank that assumes the deposits of the failed bank to make any change to existing CDs. As we've seen many times, this includes rate cuts, and it likely also includes changes to early withdrawal penalties. However, if the assuming bank makes changes, the bank is required to allow a penalty-free early withdrawal.

To see how the small early withdrawal penalty impacts your effective CD rates if you should close the CD early, please refer to my review of Ally Bank's CD and early withdrawal penalty. Please note that the 5-year CD rate has gone down a bit since January.

You can see how this penalty compares with the penalties of other banks in my Survey of CD Early Withdrawal Penalties from Internet Banks.

Ally also offers a 2-year CD that allows a bump-up in the interest rate. I reviewed this CD and compared it with the 5-year CD in this post.

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High-Yield Reward Checking Account at MinnCO Credit Union in MN - Local Only
Friday, March 19, 2010 - 9:09 AM

MinnCO Credit Union is offering a high-yield reward checking account called eVantage Checking. The account has the following rates and features if certain monthly requirements are met (as of 3/19/2010):

  • 4.10% APY on balances up to $30,000
  • 1.10% APY on portion of balance over $30,000
  • 0.10% base rate if requirements are not met
  • Unlimited nationwide ATM fee refunds

Monthly requirements include:

  • 12 Visa check card purchases
  • One direct deposit
  • Enroll and receive electronic statements

Other account features include:

  • No minimum initial deposit
  • No minimum balance requirement
  • No monthly service fees

Credit union membership is open to those who live, work, worship, volunteer, or attend school in the Minnesota counties of Isanti, Chisago, Anoka, Sherburne, Benton and Mille Lacs. Please refer to the credit union's membership page for more details.

Branches are located in the Minnesota cities of Andover, Cambridge, Isanti and North Branch.

The credit union's ratings for safety and soundness are fair: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 63639).

Other Reward Checking Accounts

This account at MinnCO Credit Union has three features that make it better than the average reward checking account: a higher maximum than typical ($30,000), higher yields (for both above and below the cap), and unlimited nationwide ATM refunds.

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

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Checking, Money Market and CD Deals at First National Bank of the Gulf Coast in SW FL - Local Only
Friday, March 19, 2010 - 9:06 AM

First National Bank of the Gulf Coast is offering three attractive promotions:

  1. 2.21% APY checking account with rate guaranteed through 12/31/2010
  2. 2.03% APY money market account with rate guaranteed through 12/31/2010
  3. 2.16% APY 14-month certificate of deposit

These rates are shown in the main banner on the bank's front page as of 3/19/2010. These are limited time promotions so they could end at anytime. Each banner links to a separate promotions page which has more details.

Checking Account

The checking account is called the Gold T-Bill Checking. There's no monthly service charge and it offers free unlimited ATM withdrawals from any ATM Worldwide. Minimum balance is $5,000. If the balance falls below $5,000, the rate falls to 0.19%.

This checking account looks like it'll be a good deal even after the promotional period. According to the small print of the offer:

As of January 1, 2011, the interest rate will be equal to 1% over the 6 month T-Bill rate. These rates will be fixed for the quarter based on the rate of the 6 month T-Bill as published on the U.S. Treasury website as of the last business day of the prior quarter.

Note, this isn't a reward checking account that requires debit card usage and has a balance cap.

Money Market Account

The Premier Money Market has a 2.02% APY on balances of at least $10,000. Like the checking account, this rate is also guaranteed to 12/31/2010. The rate falls to 0.25% if the balance drops below $10,000. Like the checking, there's no monthly service charge and it offers free unlimited ATM withdrawals from any ATM Worldwide. Like any money market account, it has a limit of 6 withdrawals per month.

I'm not sure why someone would pick the money market account over the checking account. Since the checking has a higher rate with the same 12/31/10 guarantee, I'm not sure if there are any advantages of going with the money market account rather than the checking.

Certificate of Deposit

The third promotion is a 2.16% APY 14-month CD. Minimum deposit is $5,000.

Local Residents Only

The promotion pages state that these are only for residents of Lee and Collier Counties. These counties are in Southwest Florida. Branches are located in Naples and Lehigh Acres.

The bank's ratings for safety and soundness are average: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). Note, this bank used to operate with the name Panther Community Bank. The bank has been a FDIC member since 2007 (FDIC Certificate # 58532).

Thanks to the reader who sent me an email on this promotion.

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Review of Person-to-Person Payment Services from ING Direct, FNBO Direct & UnivestDirect
Thursday, March 18, 2010 - 2:57 PM

More banks are starting to offer person-to-person (P2P) payment services which allow you to send money to anyone with a US-based bank account using just an email address. These services are similar to PayPal but they have an advantage in that you don't need to use PayPal as the middle man to transfer money. You can send money directly from your bank account. Also, these services don't require the recipient to have an account at the money transfer service.

ING Direct

ING Direct has offered its Person2Person Payment service starting when it launched the Electric Orange Account in November 2006. As you would expect from ING Direct, it's a free service. You can send payment to a person who has a checking or savings account from another US-based bank.

One major issue I have with ING Direct's service is that the sender must have the bank account number of the recipient. The account number, routing number, name and email address must be entered into ING Direct's service by the sender. I suspect many people would not feel comfortable in providing their account number unless the person is a close friend or family member. Here is what ING Direct says about this concern in its Person2Person Payment FAQ

Remind your friends and family every time they wrote a check in the past, they were disclosing their account number, even if they didn't realize it. It's at the bottom of the check. Plus, unlike a paper check that touches many hands before being deposited, a Person2Person Payment is a secure, direct transfer between you and your friend.

This seems reasonable, but it may not convince the recipient.

Summary of ING Direct's Person2Person Payment service:

  • No fees to send or receive
  • Requires recipient's bank account number
  • Payment is limited to $5,000 per transaction and per day
  • Payment to an account outside of ING Direct takes up to 2 bank business days to post after the recipient confirms his/her account information
  • Payment will expire after 45 days

Update 5/11/2011: ING Direct added a new feature to make it easier for checking account customers with iPhones to pay each other. According to its press release, "Bump Person2Person Payment technology that allows Electric Orange Checking account Customers with iPhones to instantly and securely send money to one another."

FNBO Direct

FNBO Direct started offering its P2P payment service, called POPmoney, in January of this year. POPmoney is a service provided by CashEdge. If you do a lot of online banking, you're probably familiar with CashEdge. Many online banks use their transfer service that allows customers to initiate ACH transfers to and from their other bank accounts. The nice thing about POPmoney is that it's being adopted by other banks. One major bank is PNC. If the recipient's bank offers POPmoney, they'll be able to receive the payment just by logging into their bank account. Otherwise, they'll need to accept the payment through POPmoney.com where they need to provide POPmoney their bank account and routing numbers. This leads to the other nice aspect of POPmoney that differentiates it from ING Direct's service. The sender does not need the recipient's bank account number.

Update 5/11/2011: The standard 3-day ACH delivery is now free. The one downside to FNBODirect's POPmoney is that it's not free. There is a $2.00 standard fee for 3 day ACH delivery There is a $10.00 express delivery fee for next day transfers. I noticed that it wasn't free when I received FNBO Direct's email today notifying me that the use of POPmoney will be free in March.

Summary of FNBO Direct's POPmoney Payment service:

  • Free for standard 3-day ACH delivery or a $10.00 express delivery fee for next day transfers (3-day delivery used to cost $2)
  • Does not require recipient's bank account number
  • minimum amount that you may transfer in any one transaction is $10.00. In addition, you may not transfer more than: (i) $1,000 from your account in any one transaction; (ii) 10 transactions on any one business day; or, (iii) $5,000 from your account in any one month.
  • FNBO Direct will return any unclaimed, refunded or denied payment within 30 days of the date you initiate payment

UnivestDirect

The internet bank, UnivestDirect, may not be as popular as ING Direct, but it provides many of the same services with similar rates. Like ING Direct, UnivestDirect offers an online savings and checking accounts that have no monthly fees or minimum balance requirements. Also, like ING Direct, UnivestDirect offers a free ACH bank-to-bank transfer service. The one advantage UnivestDirect has over ING Direct is that they allow paper checks.

UnivestDirect's Person-to-Person Payment service has two of the best features of the other two: 1) like ING Direct the service is free, and 2) like FNBO Direct the recipient does not need to give the sender his/her bank account number. When you send payment through UnivestDirect, the recipient will receive an email with a link that points to the website where they will enter their bank account info. I was a little worried about this since phishing attempts are so prevalent. However, I was told that the email will include the sender's name, email address and phone number. In addition, the recipient should be expecting a payment from the sender, so that should put the recipient's mind at ease.

Summary of UnivestDirect's P2P Payment service:

  • Free to all personal Univest deposit account holders
  • Does not require recipient's bank account number
  • Maximum of $2,500 per transfer
  • Transaction Completed On Next Business Day
  • All P2P transfer requests expire after 15 calendar days following the date of the original request (money never leaves sender's account)

Value of Person-to-Person Payment Services?

Have you used a person-to-person payment service from your bank? Do you find it a valuable service? Or do you prefer using PayPal, online bill pay or just a plain old paper check?

One thing to note about paper checks is that your account number is on the check.  As mentioned in ING Direct's FAQ, the check can touch many hands before it's deposited.

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High-Yield Reward Checking & Savings Accounts at Security Bank in Illinois - Local Only
Thursday, March 18, 2010 - 9:53 AM

Security Bank is offering a reward checking along with a companion savings account. The checking is called the Kasasa Cash and the savings is called Kasasa Saver. Kasasa Cash has the following rates and features if certain monthly requirements are met (as of 3/18/2010):

  • 3.51% APY on balances up to $25,000
  • 1.00% APY on portion of balance over $25,000
  • 0.01% base rate if requirements are not met
  • Nationwide ATM fee refunds

The monthly requirements include:

  • 10 check card purchases
  • 1 direct deposit or ACH debit
  • Access online banking
  • Receive e-statements

Other features of the account include:

  • No minimum initial deposit
  • No minimum balance
  • No monthly service charge

The companion savings account, Kasasa Saver, has the following rates when the above monthly Kasasa Cash requirements are met (as of 3/18/2010):

  • 1.50% APY up to $50,000
  • 0.50% APY on portion of balance over $50,000
  • 0.01% base rate if requirements are not met

There are online application links at the bank's website that takes you to the Kasasa.com website. To advance in the application, you have to enter your zip code. The application appears to only accept zip codes that are near the branches. Branches are located in Springfield, Illinois.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1935 (FDIC Certificate # 27723).

Other Reward Checking and Savings Accounts

These companion savings accounts can be a nice feature for those with large balances. In the case of Security Bank, the savings account has a rate that's competitive compared to internet savings accounts. The only potential issue is if you don't meet the reward checking requirements, you'll also lose the interest in this savings account.

I reviewed other reward checking accounts that have these companions savings accounts in this March post. There are some that have savings account rates as high as 3.01%.

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

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Top Checking Account and CD Rates at East River Bank in Philadelphia - Local Only
Thursday, March 18, 2010 - 9:48 AM

East River Bank continues to offer a very competitive rate on its Ultimate Checking Account. The rate is down a bit since my January post, but it remains competitive with a 2.01% APY for balances of at least $100. This is listed in the bank's rate table as of 3/18/10. When I last called the bank about this account, I was told that it's not a reward checking account. There are no other requirements to receive this top rate, and there is no balance cap. It has a fairly long history of top rates. A year ago the rate was 2.95%.

The bank also continues to offer some competitive CD specials. The most competitive is a 2.00% APY 14-month CD. Minimum deposit is $2,000. This rate is listed in the bank's rates table as of 3/18/2010.

A reader reported in my 2009 post that the bank now requires a branch visit to open an account. The bank has two offices located in Philadelphia, PA.

East River Bank's ratings for safety and soundness are mixed: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). East River has been a FDIC member since 2006 (FDIC Certificate # 58171).

Other Competitive Checking and Certificate of Deposit Rates

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Competitive CD and IRA Rates Continue at Atlas Savings and Loan Association in New York City - Local Only
Thursday, March 18, 2010 - 9:45 AM

Atlas Savings and Loan Association continues to offer competitive CD and IRA CD rates. Short-term CD rates have fallen a bit since my January post, but they remain attractive compared to what other banks are offering. The most competitive CDs and IRA CDs as listed in the bank's rates page as of 3/18/2010 include:

  • 1.82% APY 12 months (2.02% IRA)
  • 2.02% APY 18 months
  • 2.38% APY 24 months (2.53% IRA)
  • 2.63% APY 36 months (3.25% IRA)

Note the very competitive 3-year IRA CD. Minimum deposit is $2,500 for both the regular and IRA CDs.

It's a small bank with one office in located in Brooklyn, New York. It appears that a branch visit is required to open accounts.

The bank continues to have strong ratings for safety and soundness: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1955 (FDIC Certificate # 30783).

Other Competitive Certificate of Deposit Rates

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Competitive Long-Term CD Rates at City National Bank in NJ, NY & PA - Local Only
Thursday, March 18, 2010 - 9:42 AM

City National Bank continues to offer competitive long-term CD rates. The following rates are listed at the bank's rates page as of 3/18/2010:

  • 3.50% APY 5 years and over
  • 3.00% APY 4 years to under 5 years
  • 2.50% APY 3 years to under 4 years
  • 2.00% APY 2 years to under 3 years

All the above rates except the 2-year CD rate are the same as what I reported in my December review of this bank. The 2-year rate fell by 25 basis points.

Minimum deposit is $500. It appears these rates also apply to IRA CDs.

A branch visit appears to be required to open an account. Branches are located in the New Jersey cities of Newark, Hackensack and Paterson; in the New York cities of New York City, Hempstead and Roosevelt; and in Philadelphia, Pennsylvania.

The bank's rating for safety and soundness went down by one star level at Bankrate.com since my December post. The new rating is 2 stars (below peer group) based on 9/30/09 data. The bank continues to have 3 stars (adequate) at BauerFinancial (based on 12/31/09 data). The bank has been a FDIC member since 1973 (FDIC Certificate # 21111).

Other Competitive Certificate of Deposit Rates

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Future of Ally Bank as GMAC Tries to Repay Its TARP Debt?
Wednesday, March 17, 2010 - 1:50 PM

This article from Bloomberg reported that GMAC has hired Citigroup and Goldman Sachs to help it repay its TARP debt. According to the article:

The oversight panel said in a report this month that GMAC may not be able to fully repay its TARP debt and the rescue may cost taxpayers $6.3 billion. GMAC is 56.3 percent owned by the government

This was from the Congressional Oversight Panel. It released the following report on March 10th, March Oversight Report - The Unique Treatment of GMAC Under the TARP (pdf).

More details about this report and GMAC's future were described in this post from the WSJ blog Deal Journal, What Will Happen to GMAC?. It reviewed "three issues GMAC needs to resolve if it's going to be a profitable stand-alone and publicly traded company." One of those three issues was Ally Bank, and the post cited several concerns mentioned in the oversight panel report. That had me worried so I searched the report. I did find some disconcerting notes regarding Ally Bank.

The following is an excerpt that starts on page 105 of the oversight panel report. Much of the excerpt is history of Ally Bank that I've covered over the last year such as the ABA letter to the FDIC and the FDIC rate restrictions. I've highlighted some new details that I have not seen before.

Although GMAC is cutting costs across the organization, its investment in Ally Bank is staying largely stable. GMAC has been engaged in an aggressive marketing campaign for Ally Bank. Among other things, Ally Bank has been attempting to interest depositors by offering CD rates that are nationally among the highest available. This strategy has been politically contentious regulators view unusually high rates as an indication of instability. In the summer of 2009, when Ally Bank’s rates were more than double the national average, the rates prompted a letter of complaint from the American Bankers Association (ABA) to the FDIC. The ABA letter stated that the Ally Bank strategy – aggressive courting of deposits and extremely rapid growth in assets – was risky and required regulatory supervision. The ABA was particularly incensed by Ally Bank’s strategy in light of the government bailout, arguing that Ally Bank was shielded from investor and market influences, and was therefore free to follow risky strategies. Citing the high interest rates paid by troubled financial institutions during the banking crisis of the 1980s, the ABA observed that such high rates and risky behavior can create a race to the bottom, in which other banks are also forced to raise their rates above the market rate. In response, Ally Bank vigorously contested the ABA’s characterization of Ally Bank as troubled, citing its capitalization ratio and protesting that its rates were supported by its relationship with the GM and Chrysler dealership network. Ally Bank’s arguments, however, did not persuade the FDIC, which sent a letter conditioning Ally Bank’s access to the TLGP on FDIC review of Ally Bank’s CD rates and later adopted new regulations setting a variety of standards for the interest rates permissible for insured depository institutions that are not well capitalized. At present, Ally Bank still offers rates that are among the highest available, although Mr. Carpenter has said that Ally Bank hopes to move away from aggressive rates and toward a more traditional banking model, albeit an online one. According to one analyst, however, internet banks do not have a history of success. Among other things, overhead is high because in the absence of branches the banks depend on expensive advertising. In addition, at present Ally Bank has approximately 10 percent of its deposits in brokered deposits. Bank’s proportion of brokered deposits and lack of restrictions on deposit withdrawals to be a warning sign of bank instability. Finally, as the Federal Reserve discontinues the extraordinary measures it has been using to keep interest rates low, interest rates are likely to rise and with them Ally Bank’s cost of funds. Although these shifts will affect the industry as a whole, Ally Bank already has high deposit costs and a high proportion of brokered deposits. Some commentators note Ally Bank’s high costs for acquiring and retaining depositors and low core deposits and liken Ally Bank to the unstable S&Ls of the 1980s. Given that Ally Bank’s deposits serve the same purpose for GMAC as commercial paper, GMAC instability affects not only GMAC and Ally Bank and, downstream, GM but also - and this brings to the fore the moral hazard of using government-insured deposits as the basis for monoline financing - Ally Bank’s depositors. Ultimately, Ally Bank appears to be both critical to GMAC and very much a work in progress, and whether it will be a success remains to be seen.

Note, Mr. Carpenter is the CEO of GMAC. I'm a little worried when he was reported to have said that:

Ally Bank hopes to move away from aggressive rates and toward a more traditional banking model, albeit an online one

I wonder what he considers as a "more traditional banking model"? Perhaps more like ING Direct?

The other interesting thing to note is the opinion of the analyst. I have a feeling the analyst must be from the ABA or from one of the giant banks. I don't understand the following:

According to one analyst, however, internet banks do not have a history of success. Among other things, overhead is high because in the absence of branches the banks depend on expensive advertising.

Of course internet banks don't have a history of success. The internet is only about two decades old. And I don't understand how not having branches creates more overhead. Is advertising really more expensive than running a huge brick-and-mortar branch network?

Another thing to note was the mention of the "lack of restrictions on deposit withdrawals." Was this referring to the small CD early withdrawal penalty? Or perhaps it's just referring to Ally's no-minimum requirements on its savings accounts?

I hope GMAC can quickly repay its TARP debt. It's not only for the sake of the taxpayers, but also to remove the regulatory oversight and restrictions on Ally Bank. We don't need any more downward pressures on our deposit rates.

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Five Banks That Continue to Offer 2.00% Savings Accounts
Wednesday, March 17, 2010 - 9:36 AM

I remember when I opened my first online savings account back in 2004. It was at ING Direct, and at that time it was paying a 2.00% APY. When rates finally started to climb in 2005, I thought 2% savings accounts would be history. At the start of 2005, EmigrantDirect was launched with its 3% online savings account. Rates climbed for the next two years. Those were the good old days.

In today's record low interest rate environment, most online savings accounts are paying rates under 1.50%. ING Direct's Orange Savings Account rate is now at 1.10% APY, about half of what it was back in 2004. However, there are a few online savings accounts with nationwide availability that are still paying 2% APY. There are not many, and I don't know how these rates will last, but as of 3/17/2010, they still exist. Below is a short summary of five banks that still have these 2% savings accounts.

EverBank's 3-Month Intro Rate

Some may argue if this should qualify for the list. I'm going to include it since it may be a good deal for some. EverBank continues to offer 2.25% as part of its 3-month intro rate for its Yield Pledge Money Market Account and its FreeNet Checking. It's important to note that the standard money market APY is 1.26% APY. EverBank shows that the first-year APY is 1.51%. This is a blended APY that combines a guaranteed 3-month 2.25% rate with an assumed 9-month rate of 1.25%. Also, it's important to note that the 2.25% only applies to the first $50K for the money market and the first $100K for the checking. Even with these limitations, 2.25% for 3 months is much better than any 3-month CD than you can get these days. Refer to my account review for more details.

The Little Known Ready Saver Account

The 2.00% APY Ready Saver has only been on my weekly summary list for about a month. It's an internet product of the North Carolina bank Southern Community Bank and Trust. It's available nationwide except for North Carolina residents. Even though I have just recently been reporting on this, it's not a newcomer. According to a bank rep, they've been offering this 2.00% APY on this Ready Saver account for 18 months. It has some nice features such as no minimum balance requirements and no rate tiers. The account does have some downsides: hard credit pull, withdrawal limitations more severe than typical and an ACH bank-to-bank transfer service that's a little behind for online banks. Refer to my account review for more details.

RedneckBank and its Two Sister Banks

RedneckBank.com and its sister banks, EvantageBank.com and AmericaNetBank.com, are internet divisions of three Oklahoma banks which are all owned by one family (the Huckabay family). They have been offering an online savings account called Mega Money Market that has been paying 2.00% APY on balances up to $35K (1% for above) since April 2009. These banks also offer a reward checking account that pays 4% APY on balances up to $10K. More banks which offer reward checking accounts have added a companion savings account. The nice thing about these Oklahoma banks is that they don't require you to have the reward checking account and meet its monthly requirements to earn the top rate on the savings account. Also, the savings account doesn't have minimum balance requirements. The downside is their ACH bank-to-bank transfer service which has limitations and other issues. For more details, refer to my review of these banks that I did earlier this month.

SmartyPig Savings Account

SmartyPig's savings account has always been a rate leader since it was launched in the spring of 2008. Its current yield of 2.01% APY has held since August 2009. The SmartyPig savings account is not the typical online savings account. It's designed to help people to save for specific purchases. For those with large savings, it has some features that may irritate you such as a monthly auto transfer requirement and the requirement of creating goals. One important note regarding SmartyPig is that the bank that holds its deposits, West Bank, has announced that SmartyPig has grown too big, and it's in the process of finding a larger bank to hold SmartyPig deposits. SmartyPig's rates have been set by West Bank, so a new bank could have a major impact on future rates. Refer to my SmartyPig review for more account details and rate history.

Alliant Credit Union

The last bank offering a nationwide 2% savings account isn't a bank. It's a credit union. Alliant Credit Union has a long history of offering a very competitive savings account. The current 2.00% APY has held since July 2009. The minimum balance to earn this rate is only $100. Anyone can qualify to join Alliant Credit Union by being a member of the national or local PTA. In addition to top savings accounts, Alliant also has top rates for checking accounts, CDs, HSAs and IRAs. Near the end of each month, Alliant's board of directors decides on the rates for next month. So we should know in the next week if this 2% will continue through April. I hope this post doesn't jinx it ;-) For more info on Alliant, please refer to my Allaint Credit Union review.

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High-Yield Reward Checking Account at First Community Credit Union of Houston - Local Only
Wednesday, March 17, 2010 - 9:33 AM

First Community Credit Union of Houston is offering a high-yield reward checking account called First Rewards Checking. The account has the following rates and features if certain monthly requirements are met:

  • 3.01% APY on balances up to $10,000
  • 0.65% APY on portion of balances over $10,000
  • 0.01% base rate if requirements are not met
  • Nationwide ATM fee refunds

Monthly requirements include:

  • 12 debit card purchases
  • 1 direct deposit
  • Receive e-statements

Other features of the account include:

  • $25 minimum opening deposit
  • No minimum balance required
  • Free bill pay requires using bill pay at least once a month

Credit union membership is open to those who live or work in Harris or Fort Bend County, Texas. Please refer to the credit union's eligibility page for the full details. Membership requires a $5 minimum balance in the primary savings account.

Most of the credit union's branches are located on the west side of Houston.

The credit union's ratings for safety and soundness are average: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 66818).

Other Reward Checking Accounts

This rate and balance cap at this Houston credit union are a little below average for reward checking. It seems like institutions in large cities tend to have reward checking rates lower than average.

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

Rate History:

  • 02/23/11: 3.01% APY up to $10K; 0.65% over (not sure about date)
  • 03/17/10: 3.01% APY up to $20K; 1.01% over; 0.01% base
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2.01% 12-Month CD at Jax Metro Credit Union in North Florida - Local Only
Wednesday, March 17, 2010 - 9:31 AM

Jax Metro Credit Union is offering some competitive regular and IRA certificate rates. The most competitive is a 2.01% APY 12-month CD. Other notable ones include a 2.22% APY 24-month CD and a 3.30% APY 60-month CD. These rates are listed in the credit union's rates page as of 3/17/2010.

Credit union membership is open to those who live in parts of Jacksonville, Florida. Please refer to the credit union's membership page for the full details.

The credit union's ratings for safety and soundness are above average: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 67294).

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Fed Still Saying Exceptionally Low Rates for Extended Period - Update 3
Tuesday, March 16, 2010 - 1:31 PM

The second scheduled FOMC meeting of 2010 ended this afternoon, and the press release looks very similar to January's press release. The Fed continues to say the same thing about keeping the federal funds rate exceptionally low for an extended period:

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The first sign of future rate changes will be when the Fed replaces the "extended period" to something like "low for some time". Thomas Hoenig, one of the inflation hawks in the FOMC, is pushing for this change and voted against today's policy action. Here's what the press release included regarding Hoenig's vote:

Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.

According to this RTTNews article, "some say a change in the language of the Fed's commitment to keeping rates low for an 'extended period' could come during the next few meetings." We'll see what happens. The next three FOMC meetings are scheduled for April 27-28, June 22-23 and August 10.

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2.00% 2-Year No-Penalty CD at Virginia Heritage Bank - Local Only
Tuesday, March 16, 2010 - 9:15 AM

Virginia Heritage Bank is offering a 2-year no-penalty CD with a 2.00% APY. It allows a one-time penalty-free withdrawal. Minimum deposit is $5,000. This special is listed on the bank's front page and in the bank's rate table as of the morning of 3/16/2010. There are also other competitive standard CD and IRA CD rates listed. These include a 1.75% APY 12-month CD and a 2.00% APY 18-month CD. IRA CD rates are 5 basis points higher.

It appears that a branch visit is required to open an account. Branches are located in the northern Virginia cities of Fairfax, Gainesville, Chantilly and Vienna.

The bank's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 2005 (FDIC Certificate # 58174).

Thanks to the reader who mentioned this special in the comments

Other No-Penalty Certificates of Deposit

No-Penalty feature in a CD is nice to have these days when there's the possibility that interest rates will go much higher in the next year. Ally Bank offers a 9-month no-penalty CD, but the rate has gone way down. It's currently below 1.00% APY. Wilshire State Bank also offers a liquid CD called the Flex CD which allows both penalty-free withdrawals and add-on deposits. Like Ally, it's available nationwide. Also like Ally, the rate has fallen quite a bit over the last year. It's now at 1.40% APY for a 12-month term (see my old review).

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Competitive CD Specials at United Heritage Credit Union in Texas - Local Only
Tuesday, March 16, 2010 - 8:47 AM

Update 3/18/2010: These CD specials no longer appear to be listed at the credit union's website.

United Heritage Credit Union is offering three competitive CD specials:

  • 2.30% APY 15-month CD
  • 2.60% APY 30-month CD
  • 3.25% APY 54-month CD

Minimum deposit is $1,000. These specials are listed in the credit union's promotions page as of 3/16/2010.

These specials used to be limited to IRAs, but the special was recently changed to regular CDs.

United Heritage used to offer a reward checking account called Heritage Checking. They stopped offering new accounts about a year ago, but those who had signed up for it continue to earn 3.01% APY on balances up to $25K. According to a credit union rep, they're in the process of a new design and rollout for the Heritage Checking account, and it should be relaunched in May 2010.

Another interesting account that I just noticed is the Independence Account which looks like a 30-month add-on CD. However, it's in the savings account category. I've emailed the credit union asking about the withdrawal limitations and if it's a fixed-rate account. The rate table lists a yield of 1.99% APY on balances over $10K as of 3/16/2010. Update 3/17/2010: I received the following info from United Heritage about the Independence Account:

The Independence Account is a 30 month term with a variable rate. The funds will be locked in for the term period and any withdrawals before the maturity date will result in a penalty fee. The penalty we may impose will be the forfeiture of 6 months of dividends calculated using the dividend rate in effect at the time you request the withdrawal.

Credit union membership is open to those who live, work or attend school in Travis, Williamson, Bastrop, Caldwell, Hays, Smith or Wood County, Texas. You can also be eligible via family or select employer groups. Refer to the credit union's Eligibility Page for more details. Membership requires a minimum balance of $1 into the savings account.

Branches are located in Austin, Cedar Park, Georgetown and Round Rock in Central Texas and in Tyler in Northeast Texas.

The credit union's ratings for safety and soundness are strong: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 68251).

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FDIC's Winter 2010 Consumer News - Safe Online Banking, Overdrafts, Business Accounts
Monday, March 15, 2010 - 1:49 PM

The FDIC just released its Winter 2009/2010 Consumer News. Some excerpts that I thought would be useful to highlight include:

  • Online Banking, Bill Paying and Shopping: 10 Ways to Protect Your Money.
    Nelson suggested checking your accounts online about once or twice a week, but he also noted that "more and more banks are making it easier for their customers to keep an eye on their accounts electronically. For example, many banks offer e-mail or text message alerts when your balance falls below a certain level or when there is a transaction over a certain amount."
    Consider using a separate computer solely for online banking or shopping.
    Using a credit card generally offers more purchase protection than a debit card or other electronic forms of online payment.
  • New Federal Rules Highlight Overdraft Costs, Limit Fees
    when an institution provides a consumer with account balance information through an automated system - including an ATM, Web site or telephone - it must provide the actual balance, without additional amounts that could be used to cover overdrafts.
    And, under another new rule from the Federal Reserve Board, beginning on July 1, 2010, financial institutions will be prohibited from charging fees for overdrafts on ATM withdrawals and one-time debit card transactions at "point of sale" (POS) terminals in stores unless the individual agrees up front ("opts in") to pay those fees.
  • Ideas for Growing a Small Business
    Money that your business has on deposit with a bank is insured separately from your personal accounts at the same institution if the funds are in an account opened in the name of a corporation, partnership or other legal entity. But if you operate your business as a sole proprietorship, your business' funds are insured together with your personal deposits at that same institution in the "single account" category (those in your name alone and not including certain Individual Retirement Accounts), rather than being insured separately.

Refer to my November post for highlights of the FDIC's Fall 2009 Consumer News.

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Reward Checking Yields vs Cash Back from Credit Cards - Which is Better?
Monday, March 15, 2010 - 9:20 AM

The main downside to reward checking accounts is the debit card usage requirement. The typical requirement is 10 debit card purchases per month to qualify for the high interest rate. For those who have cash back credit cards like those from Charles Schwab, Fidelity or PenFed, every time you use a debit card, you lose out on some cash back. One common strategy is to make big purchases using the cash back credit card, and then use the debit card for smaller purchases. For those who want to keep things simple without switching back and forth, the question becomes which will give you the most rewards: the reward checking account or the cash back credit card?

The best rewards will depend on how much you spend and how much savings you have that you want to keep liquid and safe. I thought it would be interesting to compare some different spending and balance scenarios.

In the comparison I list the credit card cash back rewards from spending a certain amount per month. I'll assume a 2% cash back rewards. You can sometimes do better than this with certain cards in certain categories, but it's rare to go above this for all categories.

For reward checking accounts, I'll assume that you are receiving a reward checking rate that's 2% higher than what you could have received if you just had used a high-yield savings account. This rate spread could be higher if you're comparing the 4.09% reward checking account at Bank of the Sierra vs. ING Direct's 1.10% savings account. But for simplicity, I'll just use 2% which is a reasonable estimate based on my experience.

One thing that helps credit card cash back rewards is that it's generally believed that credit card rewards are not taxable income. However, the higher interest from reward checking accounts are fully taxable. In the comparison, I assume a 25% tax bracket.

Yearly Earnings from a 2% Cash Back Credit Card

Monthly Purchases Yearly Cash Back
$500 $120
$1,000 $240
$2,000 $480
$4,000 $960


Extra Yearly Earnings from a High-Yield Reward Checking Account

Checking Balance Extra Yearly Interest After Taxes (25% rate)
$10,000 $200 $150
$25,000 $500 $375
$50,000 $1,000 $750
$100,000 $2,000 $1,500


So if you spend $2,000 a month, you'll earn $480 cash back assuming a 2% cash back credit card. If you have $25,000 in liquid savings and replaced all of your credit card purchases with debit card purchases, you'll make an extra $375 from the reward checking account over a high-yield savings account. So you'll be better off keeping your $25K in a high-yield savings account and using the cash back credit card rather than switching to the reward checking account.

However, if you only spend $1,000 a month, you'll earn $240 cash back. The $25,000 balance in the reward checking account will allow you to earn an extra $375. So for this case, the reward checking account is the better option.

As I mentioned above, those who are willing to spend the time will want to use the cash back credit cards for big purchases and the reward checking debit cards for the smaller purchases. One thing to keep in mind is that some banks have threatened to close accounts for those who were not making enough purchases per month. So it's best not to reduce your debit card purchases by too much.

Are the benefits from reward checking accounts big enough for you? How much rate spread do you require over the best high-yield savings accounts? How do you optimize using cash back credit cards and reward checking debit cards? Please share your experience in the comments.

High-Yield Reward Checking Account Resources

Comments (5)
2.00% 11-Month CD at First Citizens Bank in SoCal - Local Only
Sunday, March 14, 2010 - 1:26 PM

Update 3/16/2010: This special is only available at the branches of the former Temucula Valley Bank. The special and the branch locations are listed at this Temecula Valley webpage.

First Citizens Bank is offering a special 2.00% APY 11-month CD. Minimum deposit is $1,000, and the maximum is $1 million. A checking account is required. This special doesn't appear to be listed at the bank's website. It was advertised in today's (3/14/2010) Riverside Press-Enterprise newspaper. The ad is available online here.

First Citizens Bank has branches in several states. However, CD rates appear to vary based on the region. I had called First Citizens last Monday regarding another CD special (2.15% 18-mo CD), and that was available at First Citizen's North Carolina branches but not at its California branches (see review). This 11-month CD special may only be available in Southern California. The ad only lists the branches in the cities of Temecula (951-694-9940), Murrieta (951-461-0411) and Corona (951-270-3233). For other cities, check with your local First Citizens branch to confirm the availability of the CD special. Branches are located in North Carolina, Florida, Arizona, Maryland, Tennessee, Washington, California, Virginia and West Virginia.

First Citizens Bank has been expanding in the last few years with much of the expansion coming from the acquisition of failed banks. The latest acquisition was on March 5th when it acquired Sun American Bank in South Florida. For those in South Florida, keep an eye on these former Sun American branches. Banks that acquire failed banks often will offer competitive CD specials at the branches of the failed bank.

First Citizens Bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11063).

Last Sunday I reviewed First Citizen Bank's FreeMoney debit card reward program.

Other Competitive Certificate of Deposit Rates

Comments (2)
Free FICO Credit Scores at Digital Credit Union - Easy Membership
Sunday, March 14, 2010 - 1:18 PM

Digital Credit Union is offering a free FICO credit score service to its members. Details are described in this credit union page. It states that "through DCU you can receive your Equifax FICO Credit Score via Message Center once a month FREE." Additional details are listed in the credit union's FAQ page.

Free credit scores from one of the major credit bureaus are not easy to find. Free trial periods are common, but these require you to sign up for a monthly subscription. You'll have to cancel before the trial period to avoid being charged the monthly fee. Other sites that offer free credit monitoring services may not be offering FICO scores.

You can get a free copy of your credit report once a year from each of the bureaus from AnnualCreditReport.com, the website setup by the government. However, this does not provide your credit score.

Another reason to join DCU is their CD specials. Every now and then DCU comes out with a nice CD special. The last one was in February when DCU was offering 2% for a 14-month term.

Anyone can join DCU via membership in an association. Refer to this credit union page for the list of associations. The least expensive membership is $10 for joining Reach Out for Schools. You can be immediately eligible to join DCU if you live, work, worship or attend school in parts of Georgia and Massachusetts. Refer to the Join DCU page for the full details.

In the instructions for joining DCU there are links to an online membership application and a PDF application. A reader who commented on his experience with the online application in my DCU post from 2008 provided the instructions he received from DCU after he applied:

In order to continue processing your application, please mail a $5 check or money order payable to DCU to fund your membership.

If you have joined through a sponsoring organization, then please make sure to also include funds to cover that organization's membership fee.

Also, please mail a copy of your driver's license or passport. If sending a passport, or if your license does not show your current address, please also send either a utility bill in your name (electric, gas, home telephone) or a copy of your apartment lease agreement. If you have listed a Joint Owner on your application, that person must also send the required ID and address proof.

Please note, we do not accept cell phone bills, bank statements, credit card statements or pay statements as address verification.

Make sure to check with the credit union for the latest instructions. One downside to joining is a potential hard credit inquiry (which can temporarily ding your credit score). Here's what a commenter mentioned in my August 2008 DCU post:

I also have been a five-year DCU member, holding several jumbo CDs with them. Yet, when I added checking to my account this past January, they ran a check on me through Equifax!

Branches are located throughout Massachusetts, in Hudson, Merrimack and Nashua in New Hampshire, in Colorado Springs, Colorado and in Alpharetta, Georgia.

DCU is federally insured by the NCUA (Charter # 23521). It's a large credit union with $4.2 billion in assets and 376,824 members.

Credit for this find goes to FW member jackcrawfish who mentioned it on this FW thread.

Comments (1)
2.00% 24-Month Add-On CD at NexBank in Dallas - Local Only
Sunday, March 14, 2010 - 1:16 PM

NexBank continues to offer its Triple Advantage CD. However, the rate has fallen 40 basis points since February. The rate is now 2.00% APY for a 2-year term as of 3/14/2010. Nevertheless, this is a competitive rate for an add-on CD. Additional deposits of $10,000 or more are allowed anytime. There's also a bump feature which is typically less useful. It allows customers to bump-up the rate once per a 12-month period to the rate of NexBank's current 24-month CD offering. Minimum initial deposit is $10,000.

The 2.00% APY is not the best for 2-year terms. But the add-on feature is nice to hedge against the risk that rates will stay low or go lower in the next year. When your CDs mature, you can always rely on the add-on CD.

The bank used to have an online application, but I no longer see the application link. The application used to allow anyone from Texas to apply. If you're interested in this CD, you should call the bank's toll-free number (1-800-827-4818). Branches are located in Dallas and Plano, Texas.

NexBank's ratings for safety and soundness continue to be a little weak: 2 stars (problematic) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 29209). Another thing to note about this bank is that it's operating under a FDIC Cease and Desist Order.

Other Competitive Certificate of Deposit Rates

Comments (6)
Chase Checking Account Bonuses
Sunday, March 14, 2010 - 1:10 PM

There's another $125 bonus for a Chase checking account with direct deposit. The promo page allows you to apply online or at a branch. Like the last one, you have to be logged into your Chase account (credit card or bank account) to see it. Also be aware that these promo pages often expire before the expiration date.

$125 Chase promotion page - 5/15/2010 expiration - Must be logged in to see

Here are the steps listed to receive the bonus:

1. Print this page and take it to your local Chase Branch or apply online by May 15, 2010.
2. Open a Chase Checking account and set up direct deposit.
3. We'll deposit $125 into your new Chase CheckingSM account within 10 days of your initial direct deposit posting.

And here is the small print listed in the promo page:

Bonus/Account Information - To qualify for the reward you must open a new Chase Checking account with a $100 minimum opening deposit of new money (money not currently held by Chase or its affiliates). Also, within 60 calendar days of account opening, you must initiate a monthly direct deposit which includes payroll, pension or Social Security, or other government benefits. The reward will be deposited into your new account within 10 days after the initial direct deposit has posted to your account. Limit one personal checking account-related reward/premium per customer, per calendar year. Offer not available on account conversions or in combination with any other offer. Reward is not considered part of the minimum opening balance. Checking account must remain open for a minimum of six months or the reward will be debited from the account at closing. Account is subject to approval. Reward is considered interest and will be reported on IRS Form 1099-INT.

Hat tip to reader ekat who mentioned this new $125 promo in the comments.

Note, the $125 bonus requires direct deposit. However, there have been reports that ACH transfers from banks may qualify.

You may also be able to find hard copies of the $125 promotion in address change packets at your post office. The $100 promo ads seem to be very common.

Beware of Fees

Readers in my May 2009 Chase post mentioned some fees to watch out for. One is a $3 fee for initiating an ACH transfer from Chase to an external account. Transfers initiated from outside Chase are not subject to a Chase fee. This is how I transfer out of my Chase account. This $3 fee and other fees are described in Chase's account disclosures which are available at this page. According to the disclosure, this $3 fee may be waived with certain account types.

Other potential Chase Checking fees include a $6 monthly service fee. To have this waived, you must have direct deposit or if you have 5 or more debit card purchases. There's also a $2 fee for using non-Chase ATMs ($3 for outside the U.S.) This Chase Checking page has more details on these fees.

Chase Branches

It appears Chase has finished the conversion of all WaMu branches. According to this Wikipedia article, the last branches that were converted were the ones in AZ, CA, CO and NV in October 2009.

States with Chase branches include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Kentucky, Louisiana, Michigan, New Jersey, Nevada, New York, Ohio, Oklahoma, Oregon, Texas, Utah, Washington, West Virginia and Wisconsin.

Chase is FDIC insured under JPMorgan Chase Bank, N.A. (FDIC Certificate # 628).

Other Bank Bonuses

Chase often has bonuses for business checking accounts. Occasionally this is $200, but the best one that appears to be available now is $100. Here's the Chase promotions page. It's scheduled to last through 4/15/2010.

For those with Chase checking accounts, there's a $15 bonus for using its online bill pay. Here's the bill pay promo page. It's scheduled to last through 3/31/2010.

To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts.

Comments (1)
$100 Checking Account Bonus at First National Bank of St. Louis - Local Only
Sunday, March 14, 2010 - 1:05 PM

First National Bank of St. Louis is offering up to $100 for opening a checking account and a savings account. Earn $50 when you open a free checking account. Earn another $50 when you open a SaveUp Savings account at the same time. The promotion doesn't appear to be listed at the bank's website. It was advertised in today's (3/14/2010) St. Louis Post-Dispatch. The ad is available online here.

The Free Checking has a $50 minimum opening deposit, and it offers free Online Bill Pay when you choose eStatements. The SaveUp Savings Account has a $250 minimum initial deposit. A $2 monthly fee is waived when you maintain a minimum balance of $50. You can get double the interest when you set up a monthly transfer from any of our checking accounts to your SaveUp Savings Account (double interest ends 8/31/2010). I don't see the interest rates listed, so this double-interest feature may not amount to much.

It appears that a branch visit is required to open an account. Branches are located throughout the St. Louis metro area.

The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 4534)

Other Bank Bonuses

To find other bonus deals at other banks, please refer to my bank bonus page which has all of my recent bank bonus posts.

Comments (2)
Bank Deals Weekly Summary for March 13, 2010
Saturday, March 13, 2010 - 6:33 PM

Hot Deals, Quick Link for Rates, Recap of this week's posts

The Fed will be having its second regularly scheduled meeting of 2010 on Tuesday March 16. According to this MarketWatch article, there's growing debate in the FOMC over near-zero interest rates. The inflation hawk, Thomas Hoenig, who's now a voting member in the FOMC this year has hinted that he is likely to dissent on holding policy steady at the meeting. He was the lone dissenter in the last meeting concerning the language of "exceptionally low levels of the federal funds rate for an extended period." However, according to the article, he's not getting much support by the other members at the FOMC. We'll see what happens on Tuesday.

Four banks failed this week. The brings the total number of bank failures for 2010 to 30 (see review). No credit unions failed. The last credit union liquidation was on March 5th which was the fourth closure of 2010 (see review).

The bank failures this week were typical with the FDIC finding buyers who agreed to assume all deposits even those above the FDIC limit. The FDIC wasn't able to find buyers of two of the four banks that failed on March 5th. Centennial Bank of Ogden, Utah was one of these two banks. Hopefully, depositors should have received their checks from the FDIC by now. A few of this blog readers had accounts at this bank through its internet division, CBDirect.com, which had offered a no-cap reward checking account. If you are one of those depositors, please leave a comment if you have or haven't received your check.

The other bank that failed on March 5th without a buyer was Waterfield Bank. Unlike Centennial Bank, the FDIC is temporarily operating Waterfield to give depositors time to transfer their liquid accounts to other banks. The complicating issue with Waterfield is that it held deposits at several affinity groups. Two popular affinity groups included UFB Direct and AARP Financial Savings Center. As I reported on Monday, both UFB Direct and AARP Financial Savings Centers appear to be shutting down.

To stay on top of the latest banking news, be sure to keep an eye on our Notices Section. Notices are very short posts that are intended to alert you to rate changes or point you to some interesting banking news or deals on the web. I'll continue to write full blog posts on the most relevant news and the best deals. Please refer to my Notices section overview to learn more about these and how you can subscribe.

Savings Account Rates

I'm afraid this was another week of widespread rate cuts. Some notable ones occurred at Capital One Direct, iGObanking and Apple Bank for Savings' Grand Yield Direct.

I still have 5 institutions on my savings account list with rates of at least 2% APY. One of these five is actually three separate banks that are all owned by the same family, and each has its own internet division. The most famous one is RedneckBank. These banks offer the Mega Money Market account that has been paying 2.00% APY since April 2009. However, the rate applies only to the first $35K. The APY for the portion of balances above this is 1.00% APY. I did another review of this Mega Money Market account and these banks on Thursday.

Rate Hikes:

  1. None

Rate Cuts:

  1. Colorado Federal Savings Bank - 1.35% (was 1.40%)
  2. Capital One/Costco InterestPlus - 1.30% (was 1.50%)
  3. Ally Bank Savings & MMA - 1.29% (was 1.30%)
  4. Capital One InterestPlus - 1.25% (was 1.45%)
  5. Grand Yield Direct Savings - 1.25% (was 1.40%)
  6. Capital One/Costco MMA - 1.25% (was 1.35%)
  7. Sallie Mae Bank Savings - 1.25% (was 1.35%)
  8. iGObanking Savings - 1.21% (was 1.31%)
  9. WTDirect Savings - 1.16% (was 1.26%)
  10. Bank Provident Online Savings - 1.10% (was 1.25%)
  11. UnivestDirect Savings - 1.05% (was 1.15%)
  12. Capital One MMA - 1.05% (was 1.15%)
  13. Intervest National Bank MMA - 1.05% $2.5K (was 1.10%)
  14. ProvidentNJ Direct Savings - 1.00% $10K (was 1.50%)
  15. E-LOAN Savings Plus - 1.00% $10K (was 1.05%)

Certificate of Deposit Rates

One bit of good news is that CD rates are holding up. There were some rate cuts this week, but they were not nearly as bad as the savings account rate cuts. The best deals continue to be at credit unions for almost all terms. The only exception is BankUnited's 4-year 3.25% APY CD which ties Pentagon FCU's 4-year CD rate.

One new CD that I came across today is at Geauga Savings Bank which is offering a liquid 2-year CD with a 2.00% APY. It's called a Freedom CD, and it allows additional deposits and penalty-free early withdrawals. Details are described in the bank's disclosure. It does have one significant downside: a minimum initial deposit of $50K. The liquid features give it an edge over Ally Bank's 2-year Raise Your Rate CD, but the nice thing about Ally is that its CDs don't have minimum deposit requirements. I reviewed Ally Bank's Raise Your Rate CD and Ally's low-penalty CD features in this Tuesday post.

Below are some of the best nationwide and local CD deals that are still active.

Best Nationwide CD Deals as of 3/13/10: Also listed are savings account promos with rate guarantee periods. The full list of nationwide CD rates is farther down.

  1. 2.25% 3-mo money market/checking promo at EverBank (account review)
  2. 1.76% 9-mo CD at Velocity Credit Union (account review)
  3. 2.10% 12-mo CD at Alliant CU (account review)
  4. 2.07% 12-mo CD at Melrose Credit Union (account review)
  5. 2.50% 15-mo IRA-only CD at Dime Savings Bank (account review)
  6. 2.30% 24-mo CD at Atlantic Coast Bank (account review)
  7. 3.00% 36-mo CD at Pentagon FCU (may change in March) account review)
  8. 3.00% 26/49-mo CD Package at SunTrust Bank (account review)
  9. 3.25% 48-mo CD at BankUnited (account review)
  10. 3.15% 48-mo CD at Hudson City Savings Bank (account review)
  11. 3.65% 60-mo CD at Melrose CU (account review)
  12. 3.60% 60-mo CD at Apple FCU (account review)
  13. 3.50% 60-mo CD at BankUnited (account review)
  14. 3.40% 60-mo CD at Hudson City Savings Bank (account review)
  15. 3.09% 60-mo Small-Penalty CD at Ally Bank (account review)
  16. 4.25% 84-mo IRA CD/4.00% CD at Navy FCU - Limited Membership (account review)
  17. 4.06% 84-mo CD (min $175K) at USAA Bank (account review)

Best Local CD Deals as of 3/13/10: Some of the best CD deals are from banks and credit unions that don't offer accounts nationwide. Refer to the recap section and the state index section to find all the recent local deals. Here are some of the best deals to note.

  1. 2.30% Money Market Account (min $100K) at Georgia Primary Bank in Atlanta (account review)
  2. 2.02% Money Market Account at South Florida FCU (account review)
  3. 2.02% 11-mo CD at Service CU in NM & MA (account review)
  4. 2.00% 11-mo CD at Quorum FCU in NY (account review)
  5. 2.06% 12-mo CD w/chk at Chartway FCU in VA, GA, RI, NC, TX, FL & NJ (account review)
  6. 2.00% 12-mo CD at Vision Bank in Dallas (account review)
  7. 2.00% 12-mo CD at Premier American Bank, NA in Miami, FL (account review)
  8. 2.01% 13-mo CD at Prudential Savings Bank in PA (account review)
  9. 2.01% 15-mo CD at Aspire FCU in NY, NJ, NH & VA (account review)
  10. 2.15% 18-mo CD at First Citizens Bank in NC (account review)
  11. 2.30% 20-mo CD at Chevron FCU in CA (account review)
  12. 3.20% 44-mo CD at Crescent Bank & Trust in Louisiana (account review)
  13. 3.35% 48-mo CD at Fidelity Bank of FL (account review)
  14. 4.00% 60-mo CD at PFFCU in Philadelphia (account review)
  15. 3.56% 72-mo CD at Broadway Federal Bank in Los Angeles (account review)
  16. 4.25% 10-year Flex-CD at First Choice CU in Florida (account review)

Reward Checking Accounts

I reported on two new reward checking accounts this week with yields of 3.50% and 4.11% APY. I also revisited two reward checking accounts that I first reported on in the past. One is the Texas bank HCSB which is offering a 3.51% APY for balances up to $25K. It was a local deal when I first reported on it in February. It's now nationally available, and you can open it online (see review). The other reward checking account is offered by BancorpSouth. I think this might be the largest bank that's offering a reward checking account. The account is not a nationwide deal, but the bank has 289 branches throughout the Southeast (see review).

To see all of the high yield reward checking accounts available throughout the nation, please refer to the reward checking section of DepositAccounts.com.

Recap for the Week - Links to This Week's Posts

Banking News

CD Deals - National

Savings/Checking Accounts - Nationwide

Checking/Savings Bonuses

Reward Checking Accounts

CD and Money Market Deals - Local

The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums under $100,000. Previous weekly summaries are available at this page. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs, CDs by state Comments: read and discuss

As of March 13, 2010

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

9-Month Certificates of Deposit:

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:



24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

84-Month Certificate of Deposit:

Various Deposit Account Deals



High Yield Reward Checking Accounts - Open to All



Recent CD Specials at Local Credit Unions and Banks

Bank Account Alternatives

Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)

Comments (2)
Credit Card Information Possibly Compromised at Internet Retailer Monoprice - How to Protect Yourself Against Fraud
Saturday, March 13, 2010 - 7:42 AM

The internet retailer Monoprice recently disclosed on its website that some customers had reported their credit card information had been misused. Monoprice is currently investigating this, and in the mean time they have suspended taking credit card payments. Monoprice is a popular internet retailer of cables, components and accessories for computer and consumer electronics.

Several Fatwallet members who have shopped at Monoprice have reported suspicious credit card charges in this FW thread. There were also several recommendations in this thread about how you can protect yourself from these incidents. I've reviewed several of them below. Each has some pros and cons to consider.

Use credit cards instead of debit cards on the web

The main issue with debit cards is that money is debited from your checking account, and then you have to work to get it back if it's a fraudulent purchase. There are protections for fraudulent debit card use, but they are typically not as good as compared to credit cards. According to the FDIC Consumer News

[Debit cards] are considered less beneficial than credit cards for major purchases or buying items online because of the more limited protections in cases of unauthorized transactions or disputes.

I have more discussion about debit card protections in this post.

Use a credit card that offers virtual credit card numbers

This PC World article has a good review of virtual credit cards. According to the article:

If you have a credit card (not a debit card) from Bank of America, Citibank, or Discover, or if you use PayPal, you already have free access to the feature. A new online service called Shop Shield also provides various levels of protection.

Use PayPal or Google Checkout for internet purchases

These services allow you to make purchases at websites without disclosing your credit card info to the online retailers. However, it should be noted that many people have reported issues with PayPal such as accounts being frozen.

Sign up for credit monitoring services

I'm not sure how this will help with unauthorized credit card purchases. If more than just your credit card info is stolen, these services may help a little. However, according to Clark Howard, a credit card freeze is much more effective and less costly. Some banks such as MetLife Bank offer free services to help protect you against identity theft.

Regularly review your credit card accounts

Credit cards already have many fraud protections in place. You just have to regularly review your accounts for unauthorized purchases. If you find any, you can then begin the dispute process. If you have trouble regularly reviewing your accounts, you may want to consider services like Mint.com (see my review).

Do you have any tips to protect against credit card or debit card fraud? Please leave a comment if you have any suggestions or insights.

Comments (4)
Four Banks Failures This Week - Total for Year Reaches 30
Friday, March 12, 2010 - 10:03 PM

Three banks failed today, with one rare closure on Thursday. LibertyPointe Bank in New York City was seized by regulators on Thursday. Another NYC bank, The Park Avenue Bank, failed today. It's not unusual to have multiple banks closed by regulators in the same city on the same day, so that's probably not the reason for the Thursday closure. One of my readers suggested another reason:

they closed it on Thursday because many of its employees/principals are Orthodox Jewish who do not work after sundown on Fridays through sundown Saturday

Besides the Thursday failure, all four bank closures were typical. The FDIC was able to find buyers for all four of the failed banks, and the acquiring banks assumed all deposits even those above the FDIC limit. This is different than last week when two of the four failed banks didn't have buyers.

Also typical but unfortunate, the assuming banks have not decided if they will keep the rates unchanged on existing CDs. It's likely that they will cut the rates. CD holders will have the option to make a penalty free early withdrawal, but that doesn't help much in today's low-rate environment.

I've done several posts over the last few years of three of these four banks. Both of the New York banks had offered high CD rates. The other bank, Old Southern Bank, was based in Orlando, Florida, and it had been offering a high-yield checking account. It wasn't a reward checking account, but just a regular interest checking account which maintained a very competitive rate. My last report on it was in April 2009 when the checking account was paying 2.50%.

One final note, there were no credit union failures this week. Four banks and one credit union failed last Friday (March 5th).

Below is a summary of this week's bank failures:

27th Bank Failure of 2010 (1st in NY)

  • FDIC Press Release
  • Closed Bank: LibertyPointe Bank, New York, NY
  • Size: 3 branches, $209.7 in assets, $209.5 million in deposits
  • Possible Uninsured Deposits: All deposit accounts have been transferred
  • Acquiring Bank: Valley National Bank, Wayne, NJ
  • Rate Changes: Valley National Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $24.8 million
  • Enforcement Action: FDIC 7/16/09 C&D Order, 10/20/09 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

28th Bank Failure of 2010 (2nd in NY)

  • FDIC Press Release
  • Closed Bank: The Park Avenue Bank, New York, NY
  • Size: 4 branches, $520.1 million in assets, $494.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Valley National Bank, Wayne, NJ
  • Rate Changes: Valley National Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $50.7 million
  • Enforcement Action: 2/11/09 FDIC C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

29th Bank Failure of 2010 (4th in FL)

  • FDIC Press Release
  • Closed Bank: Old Southern Bank, Orlando, FL
  • Size: 7 branches, $315.6 million in assets, $319.7 million in deposits
  • Possible Uninsured Deposits: All deposit accounts have been transferred
  • Acquiring Bank: Centennial Bank, Conway, AR
  • Rate Changes: Centennial Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $94.6 million
  • Enforcement Action: 9/17/09 Federal Reserve Written Agreement, 1/13/10 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

30th Bank Failure of 2010 (1st in LA)

  • FDIC Press Release
  • Closed Bank: Statewide Bank, Covington, LA
  • Size: 6 branches, $243.2 million in assets, $208.8 million in deposits
  • Possible Uninsured Deposits: All deposit accounts have been transferred
  • Acquiring Bank: Home Bank, Lafayette, LA
  • Rate Changes: Home Bank will review rates
  • Estimated Cost to Deposit Insurance Fund: $38.1 million
  • Enforcement Action: FDIC 3/25/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

No Credit Union Liquidations This Week

The above BauerFinancial ratings are based on 12/31/09 data. Bankrate.com ratings are based on 9/30/09 data.

References:

Comments (4)
3.00% 26/49-Month CD Package and $150 Checking Bonus at SunTrust - Available Nationwide
Friday, March 12, 2010 - 1:39 PM

SunTrust Bank continues to offer a special CD package with a 3.00% APY. It's a bit unusual in that it requires that you open two CDs: one with a 26-month term and the other with a 49-month term. An equal amount must be deposited in each. Minimum deposit is $2,000 per CD. A checking account is required. I was told that the free checking qualifies. You can also open these special CDs in an IRA. This CD special is listed at the SunTrust CD page as of 3/12/2010.

I first reported on this CD special in February when it was only available in the Tampa metro area. I called SunTrust today (800.279.4824), and the CSR said it could be opened by phone from any state. The CSR said he could open it by phone and use ACH debits from your bank's checking or money market account to fund the CDs and checking account. Note, it would take 3 debits to fund the accounts which could cause you to go over your 6-per-month limit on savings and money market accounts. According to the CSR, the CD rate would lock on the day you apply by phone. The CD rate is subject to change on any day. The CSR didn't know how much longer it would last. I also asked the CSR about the early withdrawal penalty, but I didn't get a simple answer. It appears to be based on how close you are to maturity. If you have more details about this, please leave a comment.

$150 Checking Account Bonus

SunTrust's $150 checking account promotion is still available. I first mentioned this in my February bonus review. According to the CSR, one could open the checking account for this promotion and then open these CD specials at the same time by phone. Or if you don't want the CDs, you could just do this checking promotion. Make sure you register your SunTrust checking account in the promotion via suntrust.com/solid by April 30, 2010. Refer to my February bonus review for more promotion detailss.

No Hard Credit Pull

According to the CSR, there's no hard credit inquiry. It's only a soft pull. This is the same info that I received in 2008 and many have confirmed there's no hard pull in this FW thread. So you shouldn't have to worry about having this ding your credit score.

Bank Overview

SunTrust is a large regional bank with $125 billion in deposits. It has branches throughout the southeast in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and Washington DC.

Dow Jones reported on SunTrust's downgrading by Standard & Poor's Ratings Services on February 1st:

SunTrust, which serves areas of the southeast U.S. hit hard by the real estate crash, including Florida, has suffered from exposure to local construction and commercial real estate, as well as effects of high unemployment. The lender posted a string of losses last year.

As you may expect, SunTrust's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). SunTrust is a FDIC member (FDIC Certificate # 867).

Comments (1)
High-Yield Reward Checking Account at PriorityOne Bank in MS - Local Only
Friday, March 12, 2010 - 1:36 PM

PriorityOne Bank is offering a high-yield rewards checking account with the following rates and features if certain monthly requirements are met:

  • 3.50% APY on balances up to $25,000
  • 0.50% APY on portion of balance over $25,000
  • 0.10% base rate if requirements are not met
  • Nationwide ATM fee refunds

Monthly requirements include:

  • 10 debit card purchases
  • 1 direct deposit, automatic payment or bill pay post to your account
  • Access online banking
  • Receive electronic statements

Additional account features include:

  • $50 minimum initial deposit
  • No minimum balance requirement
  • No monthly service charge
  • Free online bill pay
  • Up to a $25 new-account bonus when you turn over checks and debit cards from your old bank

It appears that a branch visit is required to open an account. Branches are located in the Mississippi cities of Collins, Seminary, Hattiesburg, Brandon, Pearl, Richland, Pelahatchie, Magee, Mendenhall and Morton.

The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1975 (FDIC Certificate # 21906).

Thanks to the reader who emailed me news of this reward checking account.

Other Reward Checking Accounts

If you live in the Southeast US, but you don't live near one of the above Mississippi cities, check out BancorpSouth Bank and its reward checking account (see my account review). It has branches throughout MS and in several other southern states.

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

Comments (3)
New $150 Checking Account Promotion at BBVA Compass in Several States - Local Only
Friday, March 12, 2010 - 1:32 PM

BBVA Compass Bank is offering another bonus of up to $150 for opening a new checking account, using online bill pay and direct deposit. Here's the promotion page link. It's not as good as the January promotion since the $150 is not all cash. $50 of the bonus is a hotel gift card. Here are the important details of this new promotion:

  • Open a new Build-to-Order checking account online by 4/30/2010
  • $100 cash when you establish a recurring payroll direct deposit by 04/30/2010
  • $50 hotel gift card when you pay at least one bill for at least $25 to an unrelated third party via online bill pay by 04/01/2010

Note, according to the small print, the $50 hotel gift card is also available for existing BBVA Compass checking customers who haven't used online bill pay in the last 90 days. I don't know the "true" value of the hotel gift card. It can only be used for hotels booked at www.myhotelgiftcard.com and requires a two night minimum stay.

Requirements for Opening Compass Bank Accounts:

  • Must be a U.S. Citizen
  • Have a permanent residence within a state where BBVA Compass has a banking center (Alabama, Arizona, California, Colorado, Florida, New Mexico, or Texas) and your permanent residence must be located in close proximity to a BBVA Compass banking center.

BBVA Compass now has branches in California after its acquisition of the failed Guaranty Bank last August. However, these branches may not be transitioned over yet to allow people to qualify for these Compass promotions. If you're in California and interested in this promo, it may be worth a call to Compass.

BBVA Compass Checking Accounts

I completed a Compass checking promotion in 2006 and received the promised $50 gift card without any problems. One downside is that I did received two hard credit inquiries by Transunion.

The Build-to-Order Free Checking comes with some basic features. Two additional premium features are allowed without cost. The notable basic feature is no minimum balance or direct deposit requirement. Also, bill pay is free. The notable premium feature for those who want to make extra money is a $25 anniversary cash bonus. One feature that is lacking is free checks. A reader in a previous Compass post mentioned that the first order of checks is free.

The disclosure has some of the details of $25 anniversary cash bonus feature. I switched my Compass checking account to this Build-to-Order Free Checking in December 2007 and chose the $25 anniversary cash bonus as one of my premium features. Then I set up small monthly ACH debits from my online bank account to keep the checking active. I received the $25 bonus for both 2008 and 2009.

BBVA Compass Bank is a member FDIC (FDIC Certificate # 19048).

Credit for this find goes to this iBankDesign thread.

Other Bank Bonuses

To find other bonus deals, please refer to my best bank bonuses page which has all of my recent bank bonus posts.

Edit 4/18/2010: The small print now says the offer will continue to 4/30/2010.

Comments (4)
2.50% 15-Month IRA CD at Dime Savings Bank - Available Nationwide
Friday, March 12, 2010 - 8:34 AM

Dime Savings Bank is offering a special 15-month IRA CD with a 2.50% APY. Minimum deposit is $500, and the maximum is $250,000. New money is required. The special is listed at this Dime promotions page as of 3/12/2010.

In the small print of the promotion, it states:

Additional deposits have the same maturity date as the initial deposit and become part of the principal. Additional deposits are also subject to IRS contribution limits.

So it appears add-on deposits are allowed. The Dime IRA CD special that I reported on last November also had this add-on deposit feature. This feature is not as beneficial for IRA CDs as it is for a regular CDs due to the IRS contribution limits.

Dime Savings continues to offer fairly competitive long-term regular CD rates. These include a 2.75% APY 4-year CD and a 3.25% APY 5-year CD. These rates are listed at the rates page as of 3/12/2010. I have more details about Dime Savings' CDs in this previous post.

When I last checked with a Dime CSR last November, the IRA CD was able to be opened without a branch visit. If you call (800.321.3463), they should be able to mail you the application documentation. You can also open the IRA CD at a branch. Dime Savings' branches are located throughout the Greater New York metro area.

Dime Savings Bank has some solid financial ratings for soundness: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1943 (FDIC Certificate # 16012).

Credit for this find goes to this BestCashCow post.

Best IRA Rates

For other IRA CD rates and terms that are available locally and nationwide, please refer to the IRA rates section of DepositAccounts.com.

Leave a comment
2.02% 11-Month CD Special at Service Credit Union - Limited Membership
Friday, March 12, 2010 - 8:32 AM

Service Credit Union is offering a competitive CD special: 2.02% APY for 11 months. Minimum deposit is $1,000. It's only available online (not by phone or at branches), and it's scheduled to last to 3/19/2010. The special is shown on the front page of the website as of 3/12/2010.

The credit union continues to offer two other competitive CD specials. The rates have gone down a bit, but the CDs are still very competitive: 1.77% APY for 7 months and 2.15% APY for 19 months. These rates are listed in the credit union's rates page as of 3/12/2010. Unlike the 11-month CD special, these are also available at the credit union branches.

The online application uses the Andera account opening system. Transfers are done via ACH or by debit/credit card.

Service Credit Union membership is available to anyone living or working in New Hampshire (except Coos County which is way north in NH) and in the Falmouth MA area, as well as anyone related to an existing member (by family), or anyone who has served in the US Military. Please refer to the credit union's membership eligibility page for the full details. Membership requires a $5 minimum balance in the share savings account.

Branches are located in the New Hampshire cities of Bedford, Epping, Lebanon, Keene, Manchester, Newington, Portsmouth, Rochester, Salem and Somersworth and in Falmouth, Massachusetts. There are also branches in Germany to service military members.

The credit union's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 68375). It's a large credit union with $1.4 billion in assets and 124,270 members.

Leave a comment
2.30% 20-Month CD Special at Chevron FCU in California - Limited Membership
Friday, March 12, 2010 - 8:30 AM

Chevron Federal Credit Union is offering two competitive CD specials: a 1.90% APY 15-month CD and a 2.30% APY 20-month CD. Minimum deposit is $500. These specials are listed in the credit union's promotions page as of 3/12/2010. According to the credit union, these are scheduled to last until 3/19/2010 or until the promotional limit is reached.

As you might expect, Chevron employees and employees of related companies can be eligible to join. In addition to employee groups, you can also be eligible to join if you live, work, attend school or worship in San Francisco. Please refer to the credit union's membership page for the full details.

Branches are located in the California cities of Bakersfield, Brea, Concord, El Segundo, Richmond, San Ramon and San Francisco.

The credit union's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 24326).

Comments (1)
1.75% 11-Month CD at First Entertainment Credit Union in CA - Local Only
Friday, March 12, 2010 - 8:27 AM

First Entertainment Credit Union is offering a fairly competitive CD special: 1.75% APY 11-month CD. Minimum deposit is $1,000, and new money is required. This special is listed in the credit union's rates page as of 3/12/2010.

First Entertainment Credit Union also has a savings account called Firt500 Savings in which you can earn 7% APY on your first $500. To qualify for this yield, you're required to have a checking account with eStatements and either Online Billpayer or Direct Deposit. The low cap prevents this from being a great deal. You only can make about $30/year more than what you would make in a 1.00% savings account. You won't want to join the credit union for this, but it's an extra bonus if you join for the CD.

This credit union regularly comes out with some attractive CD deals. Last November they were offering a 2.09% 18-month special CD and in 2007 they were offering a 6% CD. A reader commented about opening these certificates in 2007 and thought "they were easy to deal with and pleasant."

Membership is open to most individuals who live, work, attend school or worship in the Greater Los Angeles Area. You can also be eligible via select employee groups and via family members (and not just immediate family). Please refer to the credit union's Becoming a Member Page for more details. Membership requires a one-time fee of $5 and a minimum deposit of $5 into the First500 Savings Account.

Branches are located in the California cities of Burbank, Hollywood, Culver City, Los Angeles, Santa Monica, Studio City and Valencia.

First Entertainment Credit Union's ratings for safety and soundness are mixed: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). Both ratings are based on 6/30/09 financial data. The credit union is federally insured by the NCUA (Charter # 68373).

Comments (14)
Savings Accounts Remain Competitive at Redneck Bank and its Two Sister Banks
Thursday, March 11, 2010 - 2:16 PM

RedneckBank.com and its sister banks, EvantageBank.com and AmericaNetBank.com, are internet divisions of three Oklahoma banks which are all owned by one family (the Huckabay family). About a year ago I reported on an Oklahoma news article about Wade Huckabay and how he came up with the name Redneck Bank. He wanted it to stand out from the other internet banks, and it worked. I was worried that the publicity would attract so many new customers that they would be forced to lower rates. That did happen in April 2009, but since April, the rates and balance caps have remained the same. With so many other internet banks cutting rates, the accounts at Redneck Bank and its two sister banks have become much more competitive.

As of 3/11/2010, the three banks offer a reward checking and savings account with the following rates and balance caps:

  • Reward Checking: 4.00% APY up to $10K, 1.00% over (not available at Redneck Bank)
  • Mega Money Market: 2.00% APY up to $35K, 1.00% over

I just noticed that Redneck Bank's reward checking account is not available for new customers. So if you want this account, you'll have to open it at one of the two sister banks. Instead of a reward checking account, Redneck Bank offers a free checking account so if you just want the Redneck Bank debit card, you can still get it.

The reward checking account used to have a $25K balance cap. The 4% may not be worth it for many with a $10K cap. The nice thing about the reward checking account is that it doesn't have direct deposit requirements. The only "difficult" requirement is the 10 debit card purchases a month.

The Mega Money Market account is really more of a savings account since it doesn't offer checks. One important thing to note about this account is that you don't have to meet the checking account requirements to qualify for the top rate. The only issue is that they have a $35K balance cap for the top rate. Like the reward checking account, it has no monthly fees or minimum balance requirements.

Other banks have implemented similar caps. One example is Presidential Bank's Premier Savings which currently has a top rate of only 1.25% APY for the first $35K. The rate falls to 0.75% for balances over $35K.

All three Oklahoma banks have an online application that's based on the Andera service which allows funding by an ACH transfer. In the application, you can sign up for bank-to-bank transfers. One downside is that they have a very small transfer limit of $2,500 per day. A better way to transfer money in or out of these accounts is by initiating an ACH transfer from another bank.

These three Mega Money Market Accounts are some of the few nationwide savings accounts that are still paying at least 2.00% (as of 3/11/2010). With the $35K cap, it's not ideal, but at least the rate has been holding. Let's hope they can continue without any rate or balance cap cuts.

For details about these banks and accounts, please refer to the following posts:

Edit 3/15/10: Fixed links

Comments (2)
March Madness 12-Month CD with Rates up to 2.70% at Countryside FCU in New York - Local Only
Thursday, March 11, 2010 - 9:37 AM

Countryside Federal Credit Union is again offering a special March Madness CD. If you pick the right teams, you can get a 2.70% APY 12-month CD. The details are listed at this credit union page. The base rate is 1.70% APY for a $5,000 minimum deposit. Higher rates will depend on your correct picks for the Final Four NCAA basketball:

  • 0.10% for each Final Four team for a total of 0.40%
  • 0.20% for each Final Two team for a total of 0.40%
  • 0.20% for the National Championship team

Picks must be received by 3/24/2010.

I first reported on Countryside's March Madness CDs in 2006. In 2007 the March Madness 12-month CD yield ranged from 5.50% to 6.50% (the good old days).

Membership is open to those who live, work, worship, or attend school in Onondaga County, New York. The county seat is Syracuse. Please refer to the credit union's About Page for more details. Membership requires a $5 minimum deposit in the savings account.

Countryside's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 3 stars (performing) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 4745).

March Madness CDs?

This could be a good deal if you can at least pick a few teams that make it to the Final Four. For example, if you can pick at least two that make it to the Final Four and at least one that makes it to the Final but doesn't win, that will give you an extra 0.40% which would result in a 2.10% APY 12-month CD.

I've seen a few other credit unions offer similar CD promotions in the past. If you come across a March Madness CD special, please leave a comment.

Comments (1)
Reward Checking and a High-Yield Savings Account at BancorpSouth in Several Southern States
Thursday, March 11, 2010 - 7:46 AM

BancorpSouth Bank continues to offer a high-yield reward checking account called Performance Checking. I first reported on this account in May 2008. The rates have fallen a bit, but it remains competitive, and it has a higher-than-average balance cap of $30K. Another thing nice about this bank is that it's large with 289 offices throughout the Southeast. So if you're looking for a local reward checking account, a BancorpSouth branch may be nearby.

The rates are not easy to find at the bank's website. The only place I found the rate was at the start the online application (link to application located at this BancorpSouth page). You first have to select the state and the city of your home branch. The next page has links for each account, and you can click on the link for the Performance Checking to see the rate. It does vary based on your city. I've checked a few cities, and here are the two rates as of 3/11/2010:

  • 3.25% APY up to $30K for Baton Rouge, LA & Tyler, TX
  • 3.00% APY up to $30K for Destin, FL & Huntsville, AL

Please leave a comment about the rate if you check your city. The Performance Checking account has the typical reward checking features such as debit card usage (12 per month). Refer to this BancorpSouth page or my BancorpSouth checking review for more details.

Performance Savings Account

One thing that has been added since my 2008 post is a high-yield savings account. This also has the Performance name. The Performance Savings has a 1.50% APY (as of 3/11/2010) for all balances if the following two requirements are met:

  • Transfer at least $50 into your Performance Savings account each interest cycle electronically via ACH or Internet Banking Transfer.
  • Combine your Performance Savings statement with your BancorpSouth Checking account statement (you will no longer receive a separate statement for your Performance Savings account).

If these requirements are not met, the rate falls to the standard rate of 0.15%. This does require the Performance Checking account, but unlike other reward checking/savings combos, you don't have to meet the reward checking requirements to qualify for the bonus rate.

The Performance Checking and Savings accounts provide a nice alternative to savings accounts at internet banks, many of which now have rates of 1.25% or less.

Online Application and Branch Locations

As I mentioned above, there's an online application for both these accounts at this BancorpSouth page. The application makes it appear that you have to live near a branch to qualify. Most of BancorpSouth branches are located in Mississippi, Alabama, Tennessee, Arkansas and Louisiana. There are also a few in East Texas, the Florida Panhandle and in the Springfield and St. Louis metro areas of Missouri.

Financial Overview

BancorpSouth's ratings for safety and soundness are strong: 4 stars (excellent) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11813).

Thanks to the reader who emailed me news of this reward checking account.

Other Reward Checking Accounts

As I mentioned above, BancorpSouth is a large bank with 289 branches, $13.2 billion in assets and $10.6 billion in deposits. There are not many other large banks offering reward checking accounts. I recently reviewed a few large banks offering reward checking, but I forgot about BancorpSouth which happens to be larger than the ones I mentioned in that post.

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

Leave a comment
2.05% 18-Month CD & 3.00% 48-Month CD at Island FCU in New York - Local Only
Thursday, March 11, 2010 - 7:43 AM

Island Federal Credit Union has a couple of competitive certificates: a 2.05% APY 18-month CD and a 3.00% APY 48-month CD. These are also available in an IRA CD. Minimum deposit is $1,000. These rates are listed in the credit union's rates page as of 3/11/2010.

My last post on this credit union was in August of 2009 when the 18-month CD had a 2.65% APY.

Membership is open to those who live, work, worship or attend school in Suffolk County or Nassau County (with the exception of the townships of East Hampton, Southampton or Shelter Island). Refer to the credit union's Who We Are page for more details. Membership requires a minimum balance of $5 the regular savings account.

Branches are located in Sayville, Hauppauge and Hicksville, New York.

Island FCU continues to have strong financial ratings for safety and soundness: 5 star rating (superior) at BauerFinancial (based on 12/31/09 data) and 4 star rating (sound) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 10023).

Comments (12)
Update on Bank of the West Checking Account Bonus, Free ATMs and Online Savings Account
Wednesday, March 10, 2010 - 8:13 AM

Bank of the West has extended its $100 checking account bonus. According to the bank's promotions page, the new checking account must be opened by 4/16/2010. You can receive a $100 when you open a checking account with funds new to Bank of the West and set up direct deposit of at least $250 OR pay 10 bills online. I reviewed the small print in this January post.

Update: It appears Bank of the West has changed the availability of the promotion since January. According to the CSR, online account opening is limited to states which have Bank of the West branches. These states include AZ, CA, CO, ID, IA, KS, MN, MO, NE, NV, NM, ND, OK, OR, SD, UT, WA, WI and WY.

When I contacted the bank in January, I was told this bonus was available to people in any state, and you didn't need to come into a branch. Readers seemed to confirm this in the comments in January. Here's one of the comments:

We did this offer in late 2009 as well. We did NOT visit a local branch. We filled out the application online. We used direct deposit to fulfill the requirement. $100 bonus was paid eventually.

If you have participated in similar promotions in the past, please leave a comment about your experience.

Also from my January call, I was told they don't do a hard credit inquiry in the application (only a soft pull). So you shouldn't have to worry about a ding to your credit score. It should be noted that I've often received wrong info on this issue from CSRs so please leave a comment if you have personal experience on this issue.

Checking Account with no ATM Fees for One Year

Bank of the West's free checking account qualifies for the bonus. In addition, they have a new checking account called Choice ATM checking which offers one year of free ATM use within the USA. This allows you to withdraw cash from any financial institution's ATM free of charge for one year. Surcharges assessed by other banks will be automatically refunded. One thing to note about this Choice ATM Checking is that you have to worry about a $10 monthly fee unless you meet certain balance or activity requirements. Also, Choice ATM checking is only offered in the following states: CA, CO, MN, NV, OK and OR.

Online Savings Account

Bank of the West continues to offer an online savings account with a competitive yield. It has gone down from 1.50% APY in January to 1.25% APY as of today (3/10/10). Unfortunately, 1.25% APY is a decent savings account rate these days. This rate requires a $10,000 minimum balance. The low tier rate has also gone down by 0.25%. It's now 0.25% APY for balances under $10,000. In August I was told by the CSR that there's a $2/month fee if the balance falls below $300. Another downside is that their ACH bank-to-bank transfer service has a transfer limit of $2,000 per day.

Bank Overview

Branches are located throughout the Western and Midwestern states including Oklahoma, Kansas, Minnesota, Nebraska, Colorado, Arizona, Nevada, Wyoming, Washington, Oregon and California.

Bank of the West is one of the large regional banks with $60 billion in assets and $40.2 billion in deposits. Its ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 3514).

Other Bank Bonuses

To find other bonus deals, please refer to my bank bonus page which has all of my recent bank bonus posts.

Comments (4)
High-Yield Reward Checking Account Now Available Nationwide at HCSB in Texas
Tuesday, March 9, 2010 - 2:00 PM

HCSB in Texas is now offering its reward checking account nationwide. I first mentioned this account in this February review. At that time, I was told they required a branch visit to open the account. However, I was just informed by one of their banking reps that they now have the application at CheckingFinder.com and it shows up for any zip code. I have more details in my February review.

At 3.51% APY for balances up to $25K (as of 3/09/2010), HCSB's reward checking rate isn't the best. However, the rate for balances over $25K is above average at 1.51% APY. If you look at the interest that would be earned on a $100K balance, it comes out to be about $2,000 which would be equal to a blended APY of around 2%.

It's important to note that HCSB is a relatively small bank with $321 million in deposits (based on 12/31/09 FDIC data). Like many small banks in the past, HCSB may decide to restrict availability. If you see that the account no longer shows up for your zip code at CheckingFinder.com, please leave a comment.

Also note, don't confuse HCSB in Texas with the banking giant HSBC.

High-Yield Reward Checking Account Resources

Comments (3)
High-Yield Reward Checking Account at Center National Bank in MN - Local Only
Tuesday, March 9, 2010 - 1:57 PM

Update 6/24/10: The balance cap has fallen to $15K.

Center National Bank is offering a high-interest reward checking account called Centers Rewards Checking. The account has the following rates and features as of 3/09/2010 if certain monthly requirements are met:

  • 4.11% APY on balances up to $15,000
  • 0.75% APY on portion of balance over $15,000
  • 0.25% base rate if requirements are not met
  • Unlimited ATM fee refunds nationwide

Monthly requirements include:

  • 10 debit card purchases
  • One direct deposit or authorize one ACH automatic payment
  • Receive e-statements

Other features of the account include:

  • No minimum deposit requirement to open
  • No minimum balance requirement
  • No monthly maintenance fee

According to the banking representative, Center National Bank has been offering this account since May 2009, and the 4.11% APY has remained the same since then. Of course the rate is subject to change at anytime.

There is an online application, but they do require a branch visit for ID and signature verification. Branches are located in the Minnesota cities of Litchfield and Plymouth. Plymouth is just west of Minneapolis.

The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 10976).

Other Reward Checking Accounts

It's not easy these days to find a reward checking account with a yield over 4.00%. The best reward checking accounts that are available nationwide are just over 4% APY.

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

Rate History:

06/01/10: 4.11% APY up to $15K; 0.75% over

03/15/10: 4.11% APY up to $25K; 0.75% over

03/09/10: 4.11% APY up to $25K; 1.01% over

Comments (13)
Ally Bank's 5-Year CD and 2-Year Raise Your Rate CD - Which is Better?
Tuesday, March 9, 2010 - 9:02 AM

I first reviewed Ally Bank's 2-year Raise Your Rate CD in this January post. The rate has gone down a bit, but the rate remains competitive even without the bump-up feature (it's 2.04% APY as of 3/09/2010). Ally's 5-year CD currently pays more than a percentage point above this (3.09% APY as of 3/09/2010). So which is the better option?

Both CDs have an early withdrawal penalty of only 60 days of interest. As I described in my survey of penalties, this is much better than what other banks offer. As I showed in my review of Ally's 60-day penalty, the effective 2-year yield if you do the early withdrawal from the 5-year CD at year 2 would be over 2.80%. Once the funds are withdrawn, you can then reinvest the money into a savings account or CD with higher rates if interest rates have gone up.

With the 2-year Raise Your Rate CD, you have the option to bump-up the rate one time during the 2-year term to Ally's current 2-year CD rate. It's quite possible that we'll see higher rates in 2011, so this can provide a little protection, and you don't have to depend on the 60-day early withdrawal penalty.

This Raise Your Rate feature does depend on Ally keeping the 2-year CD rate competitive. Ally Bank has a history of keeping their rates competitive although I'm a little disappointed by Ally lowering its 9-month no-penalty CD to under 1.00%.

Some readers have pointed out that it's possible that Ally Bank could increase the early withdrawal penalty during the term of your CD. I can't say how much of a possibility this is. Based on my reading of Ally's disclosure and my conversations with the CSRs, I have felt confident enough that I've put some of my own money into these 5-year CDs.

My experience opening Ally Bank's CDs has been very positive. I was able to choose to have the CD funded with money from my Ally savings account. Since I was already a customer, I didn't have to enter my personal info. You can also have the CD funded from an external account.

One thing to note if you're going to open an Ally CD is that they can't do partial withdrawals. An early withdrawal of any amount of the principal will cause the closure of the CD. So it makes sense to open multiple small CDs instead of one big one. Since the CDs don't have a minimum requirement, you don't have to worry about not being able to afford it. However, keep in mind that if you use your Ally savings or money market account to fund the CDs, each withdrawal counts toward the 6-per-month withdrawal limit. That may be one more reason to open an Ally Bank interest checking account which doesn't have these withdrawal limitations.

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How to Avoid the Gotchas of High-Yield Reward Checking Accounts
Tuesday, March 9, 2010 - 9:00 AM

Bank of the Sierra (BotS) is one of the few banks offering a nationwide reward checking account with a yield over 4.00% (4.09% APY for up to $25K as of 3/09/2010). However, the yield doesn't mean much if you don't qualify. Readers have reported a few issues that have caused them to miss a month of interest. I thought a review of these issues would be useful not only for those thinking about a Bank of the Sierra account, but also for those new to any reward checking account.

The first issue relates to the e-statements. Like all reward checking accounts, BotS requires you to enroll and receive e-statements. You might assume the enrollment is automatic. It is not. You have to activate after you apply. Here's a comment from a reader about this:

Be careful of their E-statement signup. In addition to check it during application, you need to sign up on the bank's website. The link is at the bottom of front page. Many people have been hit by this shady tactic.

Another issue concerns bill pay. One of BotS's monthly reward checking requirements is the use of its bill pay. This is not typical. Other banks often have bill pay usage as an option if you don't want to do a direct deposit or an ACH transaction. But it's a requirement at BotS that can't be substituted with direct deposit. Here's how they describe the requirement on the website:

Make at least one payment using Sierra BillPay per statement cycle (must be posted, not pending)

Note, it states that it must be posted and not pending. A reader reported an issue with this that caused him to lose a month of interest. If the payee can't take payment electronically and requires an actual check, it may take a long time before the check clears. This is what happened to the reader, and Bank of the Sierra didn't offer any leeway and was unwilling to pay the reward interest rate for that month. Update 3/10/10: The reader informed me that the disclosure that BotS gave him had no mention of posting or pending for the bill pay.

This BotS issue with bill pay may also be an issue at other banks if they require bill payment checks to clear. So if you're using bill pay to qualify for the rewards, it's better to have a payee that takes payment electronically. And make sure you give yourself plenty of time before the end of the cycle.

And this brings up another potential issue with meeting BotS's reward checking requirements. The cycles can vary each month. Here's how the bank explains it:

Statement period ends the first Thursday of every month with the qualifying period ending the business day prior, meaning that the qualifying number of days will vary from month to month

I've seen other banks have a similar policy with the end of the statement cycle. So it's something to keep in mind for anyone with a reward checking account.

I described other reward checking gotchas in December. Have you been denied the top rate on your reward checking account? Please leave a comment about your experience.

High-Yield Reward Checking Account Resources

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Wells Fargo $50 Checking Account Bonus in a Few States
Tuesday, March 9, 2010 - 8:58 AM

Wells Fargo is offering a $50 cash bonus for opening any of its checking accounts. Here's the link to the offer. According to the small print, it's "available only at participating Wells Fargo stores in Indiana, Iowa, Michigan, Minnesota, North Dakota and Wisconsin." The list of participating branches is available here. You're required to print the coupon and take it to the Wells Fargo branch and open the checking account by 5/31/2010. Here are some additional important small print details with my highlighting of things to note:

To qualify for your $50 bonus, you must open and fund a new personal Wells Fargo checking account with a minimum opening deposit of $100 (not including the $50 bonus) by 5/31/2010. The $50 bonus is available with all Wells Fargo checking accounts, including non-interest earning checking accounts except the Wells Fargo Teen Checking and Wells Fargo Opportunity Checking accounts. You will receive the $50 bonus within 30–45 days of account opening.

Credit for this find goes to markber at iBankDesign.

Wells Fargo Checking Review

The $50 bonus isn't much for a checking account these days, but at least this doesn't require direct deposit or debit card usage. One thing to note is that there may be a hard credit inquiry. This is based on my conversation with a Wells Fargo CSR in 2008.

Even though Wells Fargo's Free Checking has no monthly service fees, the online bill pay is not free with this checking account. Also, there are no free checks, not even the first order. You can get free online bill pay and free checks with other Wells Fargo checking accounts, but you'll have to watch out for monthly fees.

Wells Fargo's New Way2Save Program

Wells Fargo has a new Way2Save program. I don't think it's available nationwide yet. It's going to be introduced on a state-by-state basis as Wells Fargo converts the Wachovia branches. I reviewed this new program in depth in this October post. I did an update post in January reviewing the progress Wells Fargo is making in the conversions. For those who have Wachovia's Way2Save accounts, you may be disappointed if you've been maxing out the bonus. However, the new program should make it easier to receive a small bonus for the first year.

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Competitive CD Rates at First Jackson Bank in AL & TN
Tuesday, March 9, 2010 - 8:56 AM

First Jackson Bank is offering some competitive CD and IRA CD rates. The best ones include:

  • 2.05% APY 12-month CD
  • 2.10% APY 18-month CD
  • 2.25% APY 24-month CD
  • 2.75% APY 30-month CD
  • 3.00% APY 36-month CD

The above rates are listed in the bank's CD rates page as of 3/09/2010. Similar rates are listed in the bank's IRA rates page. Minimum deposit is $1,000.

A reader mentioned that a bank representative was going to let him to open a CD by mail. As with any small bank, these policies can often change. So your miles may vary. Branches are located in the Alabama cities of Stevenson, Bridgeport, Scottsboro, Owens Crossroads and in the Tennessee city of South Pittsburg.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 1 star (lowest) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1981 (FDIC Certificate # 23376).

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UFB Direct and AARP Financial Savings Center Appear to be Shutting Down after Waterfield's Closure
Monday, March 8, 2010 - 7:56 PM

As I mentioned on Friday after the FDIC announced the closure of Waterfield Bank, both UFB Direct and AARP Financial Savings Center had used Waterfield Bank to hold their customers' deposits. It appears that both are shutting down. I sent an email to the AARP Financial Savings Center asking about how this will affect them and their customers. Here is the reply I received:

Dear Customer,

Waterfield Bank was closed Friday March 5, 2010, by the Office of Thrift Supervision. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was appointed Receiver. The FDIC will fulfill its obligations to Waterfield Bank depositors.

Depositors of the former Waterfield Bank will be able to conduct most of their banking business as usual until they transfer their deposits to another financial institution.

Certificate of Deposits accounts that were placed at Waterfield Bank, insurance checks for their certificates of deposits will be mailed on Monday, March 8, 2010, to addresses on record with Waterfield Bank.

Checking & Savings Accounts will have continued access to their accounts until April 5, 2010. Customers are encouraged to open new accounts with another institution as soon as possible. Any automatic transactions, including social security checks and automated payments, should be transferred to the new institution. Customers who do not move their accounts by Monday, April 5, 2010, will be mailed checks for any remaining insured deposit balances to the mailing address on record with Waterfield Bank and all automatic transactions will stop.

Regards, Customer Care

I also sent an email to UFB Direct, but I haven't received a reply. However, Fatwallet member sfchris reported a very similar memo posted at UFB Direct's website. It appears that it must only be viewable for customers who log in. A FDIC closure page was posted at UFB Direct's website over the weekend. The website appeared back to normal this morning. However, there was a change this afternoon. You can tell there's a problem by the look of UFB Direct's front page:

0.00% APY One of the Highest Rates in the Country!

Interest rates may be low, but fortunately they're not that low! I guess since the bank is temporarily operating under the FDIC, no interest will be paid. If you're an UFB Direct customer, this is another reason not to delay in moving your money.

I'm sorry to see the loss of UFB Direct and AARP Financial Savings Center. I've been reporting on UFB Direct since I started the blog back in 2005. UFB Direct's new US Savings Account rate had been holding up well. AARP's rate had fallen to near 1% many months ago so this isn't quite as disappointing.

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Understanding Interest Rate and APY
Monday, March 8, 2010 - 7:52 PM

Understanding the different terms used to describe interest rates can be confusing at first. Generally you will see the term interest rate mentioned, along with APR or APY, so what’s the difference? Using APR and APY calculations to compare various investments and the real cost of a purchase requires that you understand what each of these terms mean, and how interest is calculated and compounded.

Interest rate

The “interest rate” is the simplest term to understand. It simply means the amount of interest that will be paid on an investment you make; or the amount charged on a loan per year. It may seem that this is all you need to know and when looking at deposit products that pay simple interest, it pretty much is. Interest rates get slightly more confusing to calculate and make sense of when there is compounding involved.

Simple Interest

Simple interest is just that and is typically used with savings bonds. It means if you invest $1,000 at 5% interest, at the end of the year you will receive a $50 check. At the end of next year you will receive another $50 check. This will happen every year for the length savings bond term. Simple.

Compounding Interest

The problem is most of us don’t want to receive a small check in the mail each year for the interest we earn. Instead, we want to leave the interest earned in the account and let it grow over time. When the interest earnings are left in the account, the balance of your money grows and the interest is calculated on that total balance.

In this scenario, during the second year you really should earn more than $50 in interest since the bank has $1,050 of your money, instead of just the original $1,000. This act of receiving a larger amount each year due to being paid interest on the prior year’s interest is known as compounding. Here’s a table that shows how your original $1,000 investment would grow over 10 years.

Year Starting Balance Interest Ending Balance
1 $1,000 $50.00 $1,050.00
2 $1,050.00 $52.50 $1,102.50
3 $1,102.50 $55.13 $1,157.63
4 $1,157.63 $57.88 $1,215.51
5 $1,215.51 $60.78 $1,276.29
6 $1,276.29 $63.81 $1,340.10
7 $1,340.10 $67.01 $1,407.11
8 $1,407.11 $70.36 $1,477.47
9 $1,477.47 $73.87 $1,551.34
10 $1,551.34 $77.57 $1,628.91

By year 10 in this example, you are earning $77.57 in interest compared to $50 in the first year. The growth is very gradual at 5%, but with higher returns and longer investment periods the compounding effect is much more dramatic. A retirement account funded with a single $1,000 initial investment, that averages 12% return for 40 years, will earn $9,969.75 in the 40th year alone thanks to compounding interest.

Compounding Period

In the previous example, interest was paid on the investment once per year, which means it has an annual compounding period. In this case the APY and interest rate paid on the investment are identical. However, most banks offer more frequent compounding periods. Common values are quarterly, monthly, weekly or even daily. In these situations, you will be paid 1/4th of the 5% each quarter, 1/12th of it each month or 1/365th of it each day. So what’s the difference? Isn’t it still 5% a year no matter how you slice it?

No, it’s not. The reason is the same compounding effect that happened each year in the previous example, also starts to happen on a much smaller scale with more frequent compounding periods, which results in better returns. Where earning 5% once per year earned $50 in the previous example, earning 1/12th of 5%, or 0.417% each month will yield you $51.20 thanks to the compounding interest effect taking place on a monthly basis. It may seem like a small difference but this adds up over time.

APY

What if one bank is offering 5.1% interest compounded annually and another is paying 5.0% interest compounded daily. How do you know which one is better? Without doing a bunch of math every time you want to compare another offer, you really can’t tell. This is where the APY comes in handy.

APY stands for annual percentage yield. It takes into account the interest rate and compounding period to give you a single number that represents how much you will earn from that investment in one year. In the example in the previous section where you earned $51.20 thanks to your account compounding monthly, that account would have an APY of 5.12%, even though the interest rate on it was 5.00%. This gives you a single number that allows you to easily compare one bank’s offerings to another.

APY is similar to APR or Annual Percentage Rate. The difference is APY is used with deposit accounts where you are earning the interest and APR is used to describe the rate you pay on loans. APR also factors in loan fees that must be paid, which is not applicable in APY calculations for deposit accounts.

Calculating APY

Most banks publish the APY for their accounts just as prominently as the interest rate so it’s rare that you would ever need to calculate it, but I know there are some math junkies out there who want a simpler way than putting together an Excel spreadsheet with a repeating formula. Here’s how you do it.

APY = (1 + InterestRate / CompoundingCycles)CompoundingCycles - 1

To give you an example, with the 5% interest rate, compounding 12 times per year the formula would be:

APY = (1 + 0.05 / 12)12 - 1
APY = 0.05116
APY = 5.12%

Blended APY

Some accounts pay different rates based on how much you have invested, known as tiered rates. For example, you may earn 3% on balances under $10,000 and 4% on balances over $10,000. In most cases if you deposit more than $10,000 you will receive the 4% on the entire balance, but in some cases you will only receive the 4% on the portion of the balanced. This is known as a blended APY.

Banks that offer blended APYs are required to list the rate for the higher tier as a range. Instead of just showing 4% in this example, the APY will show 3%-4% because the APY you receive on the entire balance will vary based on how much you deposit. This can make it difficult to compare rates between banks. Is this account better or worse than one that pays 3.5% on your entire balance?

It depends on how much you have invested. If you have $15,000 invested, the first $10,000 will earn 3% and the remaining $5,000 will earn 4% for a average return, or blended APY of 3.33% making the 3.55 flat rate a better deal, but if you plan to invest $50,000, the blended APY jumps to 3.80%. To calculate the blended APY you use the formula.

Blended Apy = (Amount1 * Rate1 + Amount2 * Rate2) / Total Amount

For the $15,000 example it would be:

Blended Apy = ($10,000 * 0.03 + $5,000 * 0.04) / $15,000
Blended Apy = ($300 + $200) / $15,000
Blended Apy = 3.33%

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2.00% 11-Month CD at Quorum FCU in New York - Easy Membership
Monday, March 8, 2010 - 8:47 AM

Quorum Federal Credit Union is offering a special 2.00% APY 11-month CD. Minimum deposit is $1,000. The yield is 2.10% APY for a $100,000 minimum deposit. This is a limited time offer that is listed on the credit union's promotions page as of 3/08/2010.

Membership is open those associated with a long list of companies and groups at the credit union's membership requirements page. One group listed is the Select Savers Club. In the eligibility section of the Andera online application, one of the options is to join this club. This is what the option says.

I would like to join the Select Savers Club Inc, and become a Quorum FCU member

When you check this option, the following is shown:

The Select Savers Club Inc. provides its members with information on spending, saving, borrowing and managing debt wisely. Membership is open to anyone who has an interest in achieving his or her financial goals. Members pay a $5 lifetime membership fee. Quorum will cover this fee for any new member wishing to join the credit union concurrently.

Quorum FCU is located in Purchase, NY 10577. Its ratings for safety and soundness are mixed: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The credit union is federally insured by the NCUA (Charter # 22769).

Credit for this find goes to FW member RichTJ99 who mentioned it in the FW CD thread.

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2.15% 18-Month CD at First Citizens Bank in NC - Local Only
Monday, March 8, 2010 - 8:43 AM

First Citizens Bank is offering a special 2.15% APY 18-month CD. Minimum deposit is $1,000, and a checking account is required. There's also a 6-month CD special, but the rate is much less competitive at 1.15% APY. These specials are not listed at the bank's website. A reader mentioned them, and I just called this morning (3/08/2010) for additional details. According to the CSR, these specials could end at any time.

First Citizens Bank has branches in several states. However, not all are operating under the name First Citizens Bank. According to the CSR, these specials may not be available at these other branches. An example are some branches in California that are operating under the name IronStone Bank. Those branches have different promotions. The best one is much less competitive (2.25% APY 36-month CD).

A branch visit is required to open an account. Make sure to contact your local branch to ensure they are offering this promotion. Branches are located throughout North Carolina. It also has branches in Florida, Arizona, Maryland, Tennessee, Washington, California, Virginia and West Virginia.

First Citizens Bank has been expanding in the last few years with much of the expansion coming from the acquisition of failed banks. The latest acquisition was on Friday when it acquired Sun American Bank in South Florida.

First Citizens Bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11063).

Yesterday I reviewed First Citizen Bank's FreeMoney debit card reward program.

Comments (8)
Survey of CD Early Withdrawal Penalties from Internet Banks
Sunday, March 7, 2010 - 4:34 PM

Locking into a long-term CD may be questionable now since there's the possibility of much higher interest rates sometime in the future. However, there's also the possibility that interest rates will stay low for several years. CD ladders can help take the guess work out of choosing terms. Even with CD ladders, it's a good idea to compare CDs not only based on rates, but also early withdrawal penalties. If rates shoot up or if you just need the money, you typically can break the CD with a penalty.

To help you compare early withdrawal penalties, I've put to together a short list of penalties from internet banks and popular credit unions. I chose the institutions based on their history of competitive long-term CD rates. I tried to summarize the penalties to make it easier to read. So it may not be exact compared to what is in the disclosures. I included links when possible to the disclosures so you can view the official details. I've also included links to my recent account review posts for additional CD details.

The most common early withdrawal penalty for CD terms over 1 year to 5 years is 6 months of interest. For terms over 5 years, the penalty is usually over 6 months of interest.

Ally Bank has the smallest penalty by far. At the other end is EverBank which has one of the highest penalties. There are a couple institutions with odd penalties which are confusing and could cause the penalty to be much higher. These two are Melrose Credit Union and Capital One Direct Banking.

There is one risk when planning on an early withdrawals. Some banks have small print that gives them the right to refuse an early withdrawal request. Banks rarely make use of this right, but there have been cases where this has happened. I described some examples in this post on long-term CDs. When I found this right-to-refuse in the disclosures, I noted it in the list.

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Competitive Online CDs at Clinton Savings Bank - MA Only
Sunday, March 7, 2010 - 4:29 PM

Clinton Savings Bank has a few competitive CDs that can be opened online if you're a MA resident. The two best are a 2.40% APY 24-month CD and a 2.01% APY 18-month CD. Minimum deposit is $500. These are also available in an IRA. These rates are listed in the bank's rates page as of 3/07/2010.

According to the bank's truth in savings disclosure, the early withdrawal penalty is 6 months of interest on the amount of principal withdrawn for all CD maturities of one year or more. The grace period is 10 calendar days after the maturity date.

The bank also offers a reward checking account that currently pays 2.76% APY on balances up to $50K (see account review). When I first reviewed this account over two years ago, the rate was 6.01% APY.

There's an online application provided by Andera that allows ACH funding. However, the application only allows residents of Massachusetts to apply.

Branches are located in the Massachusetts cities of Berlin, Bolton, Boylston, Clinton, Sterling and West Boylston.

The bank's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial (based on 12/31/09 data) and 2 stars (below peer group) at Bankrate.com (based on 9/30/09 data). The bank was established in 1851 and has been a FDIC member since 1985 (FDIC Certificate # 90181).

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First Citizens Bank FreeMoney Debit Card Reward Program in Several States
Sunday, March 7, 2010 - 4:25 PM

Firsts Citizens Bank has a check card reward program called FreeMoney in which you can earn close to 4% cash back on your debit card purchases with a maximum of $500 per year. Unlike other debit card and credit card cash back reward programs, this requires some work if you want to maximize the cash back reward.

First, you're required to open the First Citizens personal checking account and FreeMoney Bonus Savings Account. To earn cash back, the following debit card usage is required:

  • Make 10 non-PIN check card purchases per month
  • AFTER these 10 check card purchases are made, you'll earn $1 for every non-PIN check card purchase of $25 or more.
  • The FreeMoney bonus is deposited into the FreeMoney Bonus Savings Account each month

According to the terms and conditions, the maximum bonus per checking account is $500 per calendar year.

As you can see, it won't be easy to get close to 4% cash back from this program. Your first 10 check card purchases would have to be small since there's no cash back associated with them. The additional check card purchases during the month would have to be $25 or just a little bit higher. Then you could get close to earning 4% cash back. Of course if it were too easy, everybody would earn the 4%, and the bank wouldn't be able to afford it.

A branch visit is required to open an account. Branches are located throughout North Carolina. It also has branches in Arizona, Maryland, Tennessee, Washington, California, Virginia and West Virginia.

You might be wondering why the branches are so scattered across the country. First Citizens Bank has been expanding in the last several months with much of the expansion coming from the acquisition of failed banks. The latest acquisition was on Friday when it acquired Sun American Bank in South Florida.

First Citizens Bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial (based on 12/31/09 data) and 4 stars (sound) at Bankrate.com (based on 9/30/09 data). The bank has been a FDIC member since 1934 (FDIC Certificate # 11063)

Other debit card and credit card reward programs

As I've mentioned in previous posts, banks make sizable profits from non-PIN debit card usage. This is one new type of program that encourages debit card use. PerkStreet Financial is one that's available nationwide which offers 1% cash back without any hoops to jump through. It also has a special 2% cash back promo (see review). For those with large savings, you'll probably do better with high-yield reward checking accounts (refer to the reward checking section of DepositAccounts.com).

If you prefer using credit cards, some of the best cash back programs are from PenFed, Charles Schwab and Fidelity.

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Bank Deals Weekly Summary for March 6, 2010
Saturday, March 6, 2010 - 8:09 PM

Hot Deals, Quick Link for Rates, Recap of this week's posts

There was a bit of good news this week with the release of February's unemployment numbers. According to CNNMoney.com, "the Labor Department said the economy lost 36,000 jobs in the month, fewer than the 68,000 jobs economists were expecting". However, the unemployment rate remains very high at 9.70%. As has been shown, it's unlikely we'll see rate hikes until there are several months of declining unemployment.

Another issue affecting depositors is the bank failures. Four banks failed yesterday with two of the bank closures affecting many internet rate chasers. The bank that UFB Direct had used to hold its deposits was one of the failed banks. This was Waterfield Bank, and the FDIC wasn't able to find a buyer, so it's being completely shut down. The front page of UFB Direct's website has been replaced with the FDIC page. UFB Direct was one of 38 affinity groups that took deposits for Waterfield Bank. The AARP Financial Savings Center was one. Their site is still up, but the online application is down. I'm not sure if these affiliate groups will be forced to close along with Waterfield or if they'll be able to find other banks to take the place of Waterfield. If you have accounts at any of these groups, please keep us posted on what happens to your accounts.

The other bank closure that's affecting internet rate chasers is the closure of Cenntenial Bank which had operated the internet bank, CBDirect.com. Like Waterfield, the FDIC wasn't able to find a buyer. It's even worse than Waterfield's closure in that the FDIC isn't creating a temporary bank to allow depositors to transfer their liquid accounts. All accounts are closed, and the FDIC will be mailing the checks. CBDirect.com had been offering a reward checking account with a 3.00% APY on all balances. Hopefully, none of this blog's readers pushed this "all balance" feature too far and exceeded the FDIC limit. According to the FDIC, there were $1.8 million in potentially uninsured deposits (see my review).

Savings Account Rates

UFB Direct had been doing a good job at keeping its US Savings account competitive. The latest rate was 1.45% APY. I'm sorry to see the bank failure, and the loss of this account.

Rate cuts were widespread this week. Savings account rates over 1.50% are becoming rare. American Express Bank had held its rate at 1.50% APY for a while, but it didn't last. The rate fell this week to 1.30% APY. Other major online banks that cut rates this week include Ally, ING Direct, Discover and Dollar Savings Direct.

Rate Hikes:

  1. NewDominion Bank Savigns & MMA - 1.50% (newly added)
  2. Sallie Mae Savings - 1.35% (newly added)

Rate Cuts:

  1. Palladian PrivateBank - 1.55% (was 1.70%)
  2. Clear Sky Savings - 1.50% (was 1.55%)
  3. Savings Square Savings - 1.35% (was 1.45%)
  4. Delta Community CU MMA - 1.35% $25K (was 1.40%)
  5. Nationwide MMA - 1.35% (was 1.40%)
  6. American Express Savings - 1.30% (was 1.50%)
  7. Dollar Savings Direct Savings - 1.30% (was 1.40%)
  8. Ally Savings & MMA - 1.30% (was 1.39%)
  9. Discover Bank MMA - 1.30% $10K (was 1.40%)
  10. Hudson City Savings - 1.25% (was 1.40%)
  11. Bank of American Fork Savings - 1.20% (was 1.30%)
  12. AIG Bank MMA - 1.20% $10K (was 1.26%)
  13. ING Direct Savings - 1.10% (was 1.15%)
  14. Intervest National Bank MMA - 1.10% $2.5K (was 1.13%)
  15. UFB Direct - Bank Failure (was 1.45%)

Certificate of Deposit Rates

In addition to rate cuts, banks have also been reducing availability of their CDs. The latest example is at EBSB Direct which has been offering a 1.77% APY 10-month CD. This used to be available nationwide, but according to the bank's CSR, it's now only available to residents of New England and New York State.

For 1-year CDs, it's getting tough to find rates at or above 2.00% APY. Most of the institutions at this level are credit unions which include Alliant, Southeast Financial and Melrose.

You still can get rates over 3% APY for terms of at least 3 years. It can be worrisome to lock in these low rates for several years when there's a chance of big rate hikes within the next two years. If you do choose a long-term CD, make sure it doesn't have a harsh early withdrawal penalty. The internet bank with the best early withdrawal penalty is Ally Bank. The penalty is only 60 days of interest for all terms.

There was a slight rate reduction on Ally's 5-year CD. The rate fell 5 basis points to 3.10% APY. Thanks to Ally's Ten Day Best Rate Guarantee, you'll get the 3.15% APY if you applied before this change was made. Ally's description of this policy was a little confusing, and there were questions of whether the 10-day rate guarantee may extend before you apply. I just did a chat session with a CSR, and unfortunately, the 10 day rate guarantee only covers the 10 calendar days after the application is entered and accepted.

Below are some of the best nationwide and local CD deals that are still active.

Best Nationwide CD Deals as of 3/06/10: Also listed are savings account promos with rate guarantee periods. The full list of nationwide CD rates is farther down.

  1. 2.25% 3-mo money market/checking promo at EverBank (account review)
  2. 1.76% 9-mo CD at Velocity Credit Union (account review)
  3. 2.10% 12-mo CD at Alliant CU (account review)
  4. 2.07% 12-mo CD at Melrose Credit Union (account review)
  5. 2.30% 21-mo CD at Stonebridge Bank (account review)
  6. 3.00% 36-mo CD at Pentagon FCU (may change in March) account review)
  7. 3.25% 48-mo CD at BankUnited (account review)
  8. 3.15% 48-mo CD at Hudson City Savings Bank (account review)
  9. 3.65% 60-mo CD at Melrose CU (account review)
  10. 3.60% 60-mo CD at Apple FCU (account review)
  11. 3.50% 60-mo CD at BankUnited (account review)
  12. 3.40% 60-mo CD at Hudson City Savings Bank (account review)
  13. 3.10% 60-mo Small-Penalty CD at Ally Bank (account review)
  14. 4.25% 84-mo IRA CD/4.00% CD at Navy FCU - Limited Membership (account review)
  15. 4.06% 84-mo CD (min $175K) at USAA Bank (account review)

Best Local CD Deals as of 3/06/10: Some of the best CD deals are from banks and credit unions that don't offer accounts nationwide. Refer to the recap section and the state index section to find all the recent local deals. Here are some of the best deals to note.

  1. 2.30% Money Market Account (min $100K) at Georgia Primary Bank in Atlanta (account review)
  2. 2.02% Money Market Account at South Florida FCU (account review)
  3. 2.29% 6-mo CD at American Pride Bank in GA (account review)
  4. 2.10% 12-mo CD at Workmen's Circle CU in Georgia (account review)
  5. 2.06% 12-mo CD w/chk at Chartway FCU in VA, GA, RI, NC, TX, FL & NJ (account review)
  6. 2.00% 12-mo CD at Vision Bank in Dallas (account review)
  7. 2.00% 12-mo CD at Premier American Bank, NA in Miami, FL (account review)
  8. 2.01% 13-mo CD at Prudential Savings Bank in PA (account review)
  9. 2.01% 15-mo CD at Aspire FCU in NY, NJ, NH & VA (account review)
  10. 2.18% 18-mo CD w/chk at Greater Western Bank in AZ, CO, KS, NE, SD, IA & MO (account review)
  11. 2.20% 18-mo CD & 3.20% 44-mo CD at Crescent Bank & Trust in Louisiana (account review)
  12. 3.00% 26-mo/49-mo CD Combo at SunTrust Bank in Several States (account review)
  13. 3.00% 30-mo & 2.10% 13-mo CD at Texas Advantage Community Bank (account review)
  14. 3.35% 48-mo CD at Fidelity Bank of FL (account review)
  15. 4.00% 60-mo CD at PFFCU in Philadelphia (account review)
  16. 3.56% 72-mo CD at Broadway Federal Bank in Los Angeles (account review)
  17. 4.25% 10-year Flex-CD at First Choice CU in Florida (account review)

Reward Checking Accounts

I reported on two new reward checking accounts this week with yields of 3.51% and 4.25% APY. With the loss of CBDirect.com and its 3% no-cap reward checking account and the rate reduction at City National Bank (no-cap reward checking rate is now 1.68% APY), it's getting harder to earn high rates on large balances. One new account that may help a little is a new type of savings account that is paired with the reward checking account. This savings account can be useful for those with large balances. You won't get the top reward checking rates for large balances, but you may be able to get better rates than what you can get at Alliant Credit Union. I listed some of these reward checking/savings accounts in this post on the Best Reward Checking/Savings Combo Accounts.

To see all of the high yield reward checking accounts available throughout the nation, please refer to the reward checking section of DepositAccounts.com.

Don't Forget to Check the Notices Section

As I mentioned before, lots of my posts are now in the Notices Section. Notices are very short posts that are intended to alert you to rate changes or point you to some interesting banking news or deals on the web. This allows me to post more often on news and deals. I'll continue the blog posts in the same format that you're used to. You can get to the Notices Section from the top menu. You can also see the recent Notices on the front page. Just select the Notices tab which is next to the Blog Posts tab. If you want to subscribe to both blog posts and Notices, just click on the RSS icon at the top of either the Blog or Notices section.

Recap for the Week - Links to This Week's Posts

Banking News

CD Deals - National

Savings/Checking Accounts - Nationwide

Checking/Savings Bonuses

Reward Checking Accounts

CD and Money Market Deals - Local

The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums under $100,000. Previous weekly summaries are available at this page. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs, CDs by state Comments: read and discuss

As of March 6, 2010

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

9-Month Certificates of Deposit:

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:



24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

84-Month Certificate of Deposit:

Various Deposit Account Deals



High Yield Reward Checking Accounts - Open to All



Recent CD Specials at Local Credit Unions and Banks

Bank Account Alternatives

Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)

Comments (3)
Bank Rating Update and Why You Should Care
Saturday, March 6, 2010 - 2:55 PM

As I was checking the ratings of yesterday's failed banks, I noticed that BauerFinancial has updated its bank ratings with financial data that the FDIC released on February 23. If you do a search at BauerFinancial, it will say "based on December 31, 2009 financial data." It had been based on 9/30/09 data. The data has also been updated for credit unions.

Some recent bank and credit union failures had high ratings, and this may be due to the ratings being based on financial data that is over 4 months old. An example of this happened yesterday with the credit union that was liquidated. Bankrate's rating, based on 9/30/09 data, was 4 stars (sound) and BauerFinancial's rating, based on 12/31/09 data, was 0 stars (lowest).

Now we'll have to wait on Bankrate.com to update its database. When the FDIC released its third quarter data on November 24, Bankrate didn't update its database until around January 20 (almost two months.) So we may not see new Bankrate ratings until late April.

If you keep under $250K, should you care about bank ratings?

The FDIC and NCUA have demonstrated that they pay all insured deposits up through the day of the closure. This includes both the principal and accrued interest. So if you keep under the insurance limit (the standard limit is $250K until 12/31/2013), you don't have to worry about losing your money. However, there are at least three reasons why depositors should care about the health of their bank or credit union even if they keep under the insurance limit:

  1. If a bank fails and the FDIC can't find a buyer, it'll send depositors checks for the insured principal and accrued interest. This takes at least a week. You'll lose at least a week of interest during this time, and there's the worry of it being lost in the mail. One reader who had deposits at Community Bank of Nevada when it failed last year waited several weeks before he received the money. The FDIC had the wrong address, and he had to spend quite a bit of time on the phone with the FDIC for this to be resolved. Another reader reported having a 10-day hold when he deposited the FDIC check at his bank.
  2. When a bank fails, it's common that existing CDs will either be closed or the rate will be lowered (if another bank assumes the deposits). Principal and accrued interest may be safe, but a high interest rate is not safe. Depositors are free to make penalty-free early withdrawals, but they may have trouble finding CDs paying anywhere near the rates that the old CDs were paying. This has been very common in today's low-interest rate environment.
  3. FDIC now has rate caps for less than well capitalized banks. This isn't an issue for fixed-rate CDs, but it has been an issue with high-yield reward checking accounts. There have been cases in which banks had to significantly lower their reward checking rates in order to meet the FDIC rate cap for interest checking.

Can you think of other reasons to care about the health of a bank or credit union?

Comments (7)
Credit Union Pays Members to Withdraw Their Money
Saturday, March 6, 2010 - 2:30 PM

This is disturbing news for savers. Las Vegas Review-Journal reported that Nevada Federal Credit Union is paying bonuses to members to transfer their savings OUT of the credit union. According to the article:

Starting Monday, the credit union has cut the variable interest rates on deposits held by members that only save money to zero.

"We're losing money, and they are not making money," Beal [CU's President/CEO] said.

So the credit union will pay these savers a $25 bonus for withdrawing amounts between $25,000 and $49,999. The bonus jumps to $50 for amounts up to $74,999 and goes to $75 for larger sums.

Here's an excerpt of the letter to the members from the credit union's President/CEO:

With investment rates near all-time lows, very weak loan demand and increasing deposit insurance costs, it has become difficult for your credit union to earn a positive spread on some of the high-balance deposits. As a result, we have asked a small number of our members with higher balances to consider moving their money to another financial institution to earn a higher rate than what we currently offer.

The credit union has already set many of its deposit rates to zero. Currently, all of its certificates are listed with a zero percent rate.

This reminds me of what happened at ETrade Bank when it slashed deposit rates last year as part of its strategy to shrink its banking business. If banks and credit unions can't make enough loans, they're forced to invest the money into investments like short-term Treasuries which are paying very little. Add on the deposit insurance premiums, and they have no incentive to pay any decent interest rates. According to the article, the credit union expects the NCUA to boost deposit insurance premiums by 0.15% to 0.40% this year. Hopefully, the economy will grow and loan demand will increase so that we won't see more banks and credit unions give up on attracting deposits.

Thanks to the reader who emailed me this news.

Comments (10)
Four Banks and One Credit Union Fail - Includes UFB Direct and CBDirect
Friday, March 5, 2010 - 10:47 PM

Four banks and one credit union failed today. The first two bank failures (Sun American Bank in FL and Bank of Illinois) were the typical closures. The FDIC was able to find buyers which assumed all deposits even those above the FDIC limit. The other two bank failures were different. The FDIC wasn't able to find buyers for either Waterfield Bank in MD or Centennial Bank in UT. Thus, these banks are being closed, and the FDIC will be mailing checks to depositors. The checks will only include the insured amounts. Fortunately, the FDIC reported that the vast majority of deposits were under the FDIC limit.

End of UFB Direct, AARP Financial Savings Center?

Note what the FDIC mentioned about Waterfield Bank:

[Waterfield Bank] took deposits from customers via the Internet and 38 affinity groups.

Here's what was stated in the small print at UFB Direct's website:

All deposit products offered through this Banking Center will be opened and deposit processing services provided by Waterfield Bank.

UFB Direct's website has now been replaced with a FDIC page. So this appears to be the end of UFB Direct. The FDIC did arrange for a new version of Waterfield Bank to continue for another 30 days to give customers time to access their insured funds and time to move accounts to other banks.

As of 10:45pm, AARP Financial Savings Center's website is still operational. They had a similar arrangement with Waterfield as UFB Direct:

All Checking and Money Market Savings deposit products available through the Savings Center are offered by and will be opened and processed through Waterfield Bank

End of the 3% No-Cap Reward Checking Account

Centennial Bank of Ogden, Utah was the bank that operated CBDirect.com which offered the nationwide 3% no-cap reward checking account. Since the FDIC wasn't able to find a buyer, this reward checking account no longer exists. Unlike Waterfield, the FDIC didn't set up a temporary bank. Customers will not have access to their money for at least a week until they receive a check for their insured deposits. This shows why you don't want to rely 100% on any one bank.

One other note regarding this bank is that it has no relationship to Centennial Bank in California.

Small Credit Union Liquidation

The NCUA liquidated a small credit union, Lawrence County School Employees Federal Credit Union. The NCUA was able to arrange for another credit union to purchase and assume the credit union. One interesting thing to note about this credit union is that Bankrate.com had rated this credit union with 4 stars (sound) based on 9/30/09. However, BauerFinancial gave it only a zero-star rating (lowest). I'm not sure why there's such a large difference. BauerFinancial ratings are now based on 12/31/09 data. Bankrate.com ratings are still based on 9/30/09. So that may be part of the reason.

Below is a summary of today's bank and credit union failures:

23rd Bank Failure of 2010 (4th in FL)

  • FDIC Press Release
  • Closed Bank: Sun American Bank, Boca Raton, FL
  • Size: 12 branches, $535.7 in assets, $443.5 million in deposits
  • Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co. brokered deposits have been transferred
  • Acquiring Bank: First-Citizens Bank & Trust Company, Raleigh, NC
  • Rate Changes: First-Citizens Bank & Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $103.8 million
  • Enforcement Action: Federal Reserve 2/3/2009 Written Agreement, 1/04/10 Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

24th Bank Failure of 2010 (3rd in IL)

  • FDIC Press Release
  • Closed Bank: Bank of Illinois, Normal, IL
  • Size: 2 branches, $211.7 million in assets, $198.5 million in deposits
  • Possible Uninsured Deposits: All deposits transferred, excluding the Cede & Co. brokered deposits
  • Acquiring Bank: Heartland Bank and Trust Company, Bloomington, IL
  • Rate Changes: Heartland Bank and Trust Company will review rates
  • Estimated Cost to Deposit Insurance Fund: $53.7 million
  • Enforcement Action: 10/14/09 Federal Reserve written agreement, 11/24/09 Prompt Correcdtive Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

25th Bank Failure of 2010 (1st in MD)

  • FDIC Press Release
  • Closed Bank: Waterfield Bank, Germantown, MD
  • Size: 1 branch, $155.6 million in assets, $156.4 million in deposits
  • Possible Uninsured Deposits: $407,000
  • Acquiring Bank: None
  • Rate Changes: N/A
  • Estimated Cost to Deposit Insurance Fund: $51.0 million
  • Enforcement Action: 10/1/09 OTS Cease & Desist Order, 2/3/10 OTS Prompt Corrective Action
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

26th Bank Failure of 2010 (2nd in UT)

  • FDIC Press Release
  • Closed Bank: Centennial Bank, Ogden, UT
  • Size: 5 branches, $215.2 million in assets, $205.1 million in deposits
  • Possible Uninsured Deposits: $1.8 million
  • Acquiring Bank: None
  • Rate Changes: N/A
  • Estimated Cost to Deposit Insurance Fund: $96.3 million million
  • Enforcement Action: FDIC 6/26/09 Cease & Desist Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star (lowest) at BauerFinancial

4th Credit Union Liquidation of 2010

  • NCUA Press Release
  • Liquidated CU: Lawrence County School Employees Federal Credit Union, New Castle, PA
  • Size: $2.6 million in assets and served 1,085 members
  • Acquiring CU: First Choice Federal Credit Union, New Castle, PA
  • Financial Ratings: 4 star (sound) at Bankrate.com, 0 star (lowest) at BauerFinancial

The above Bankrate ratings are based on 9/30/09 data. BauerFinancial Ratings are based on 12/31/09 data.

References:

Comments (6)
Beware of Zero Balance When Withdrawing from Internet Savings Accounts
Friday, March 5, 2010 - 9:30 AM

With interest rates plummeting on many internet savings accounts, more people are transferring their money out of those accounts. If you do transfer out your money, make sure you don't go below the minimum balance that could trigger a monthly fee. If the bank claims not to have a minimum balance requirement for the account, you may be tempted to transfer out 100% of the money. You have to be careful when you leave a zero balance in your account even for banks which claim they don't have a minimum balance requirement. With a zero balance, the bank may consider the account closed, and they may not pay interest for that month. For these cases, it's best to leave at least $1 in the account until the interest for the previous month has been credited.

A reader emailed me a problem that he had with 1st Constitution Direct. He transferred all of his money out before the end of the statement period, and 1st Constitution Direct is refusing to pay him the interest accrued for the last month. 1st Constitution Direct does state in its FAQs that there is no minimum balance requirement:

Must I maintain a minimum balance in my 1st Constitution Direct account?

You must open your account with the required minimum initial deposit. Once your account is established, there is no minimum balance requirement.

The reader also forwarded me an email from 1st Constitution Direct which informed him the account has not been closed yet, but it will be closed if he doesn't fund it. Unfortunately, they don't appear to have a copy of the terms and conditions on their website. Based on the FAQ, it sure seems that the fair thing to do would be for 1st Constitution Direct to pay the accrued interest for February.

I've seen a similar issue happen at Emigrant Direct which also claims on its website to have no minimum balance requirements. Emigrant Direct's disclosure does state that "If you close your Account before interest is credited, you will not receive the accrued interest." However, I don't see where they say that a zero balance is equivalent to having closed the account.

Even if you are right in terms of the fairness of this issue, it's not worth the time or the money. Just make sure you leave at least $1 in any "no-minimum" account until your interest is credited. Then you can transfer out the remaining balance.

It's a good idea to check with the bank for account closure instructions and to ensure you won't be hit with any fee. For most internet banks the typical process is to transfer your remaining balance out and then send them a secure message instructing them to close the account. Just be sure you receive your last month interest before you transfer out all of your funds.

Leave a comment
2.01% 13-Month CD at Prudential Savings Bank in PA - Local Only
Friday, March 5, 2010 - 9:29 AM

Prudential Savings Bank is offering a 2.01% APY 13-month CD special. Minimum deposit is $5,000. There's also a regular 5-year CD that's fairly competitive with a 3.26% APY. This is also available in an IRA. These rates are listed at the bank's rate table as of 3/05/2010. There's a 3/3/2010 date at the bottom of the rate table.

This bank has a history of offering some of the best CD rates in Philadelphia. My last post on this bank was on January 2009 when it was offering a 3.50% 9-month CD. It's hard to believe how much rates have gone down in the last year.

Note, at the bottom of the rate table it states that deposits are accepted at their discretion. So they may only accept local deposits. Branches are located in Philadelphia and Drexel Hill, Pennsylvania.

Prudential Savings Bank's ratings for safety and soundness are a little above average: 3 stars (performing) at Bankrate.com and 4 stars (excellent) at BauerFinancial. Both ratings are based on 9/30/08 financial data. The bank has been a FDIC member since 1938 (FDIC Certificate # 30011).

Comments (6)
Best Reward Checking/Savings Combo Accounts
Thursday, March 4, 2010 - 7:21 PM

Banks have a hard time paying high reward checking rates on large balance caps. The latest example is City National Bank which has no balance cap on its reward checking account. They recently cut the yield from 2.05% to 1.68% APY. Rate cuts are not the only worry for reward checking customers. Banks have also cut their balance caps. State Bank of Toledo is one example. They used to pay their top rate on all balances (back in the good old days). The first cut took the balance cap to $70K. Now it's down to only $25K.

Reward Checking/Savings combo accounts can help a little in allowing those with balances over $25K to earn a competitive rate on their entire balance without having to manage multiple reward checking accounts. These combos have a reward checking account that looks like the typical reward checking. The top rate is usually limited to $25K and you have to meet the monthly debit card usage requirement plus a few other requirements (ACH and e-statements). If you have more than $25K, the savings account becomes useful. The savings accounts typically have rates lower than the checking accounts, but many have rates that are still higher than most internet savings account rates. If you have very large balances (i.e. over $100K), these savings accounts may not be too useful since many have caps from $25K to $100K.

An important feature of these savings accounts is that you have to meet the reward checking account requirements in order to qualify for both the top reward checking rate and the top savings account rate. If you don't meet the requirements, you'll just get the base rate which is usually pretty close to zero.

Another thing to note is that in BancVue's new Kasasa terminology the reward checking is called Kasasa Cash and the savings account is called Kasasa Saver. I wonder how they came up with those names?

I went through my old posts and identified the best reward checking/savings combo accounts. The following are a few that I found with rates high enough that they have an advantage over Alliant Credit Union's 2% savings account.

Rates as of 3/04/2010:

Note, I did not include RedNeck Bank and its two sister banks (AmericaNet and Evantage) which offer a reward checking account and a savings account. The savings account rate doesn't depend on the customer meeting the reward checking requirements. In fact, you can open the savings account without the reward checking account. The one downside is that only the first $35K qualifies for the top rate (2.00% APY as of 3/04/2010). Please refer to my account review for more details.

Please leave a comment if you know of any other reward checking and/or savings accounts that are good deals for those with large balances.

Other Reward Checking Accounts

To find nationwide reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

Comments (37)
CD Gift Program and Competitive CD Rates at GiftsforBanking.com
Thursday, March 4, 2010 - 8:44 AM

GiftsforBanking.com is a new reward program for CD buyers that offers a free gift with the purchase of an internet CD. The site's FAQ explains who's behind it:

GiftsforBanking, a value added program, is offered by iGObanking.com the online division of Flushing Savings Bank, FSB. Flushing Savings Bank, FSB is an FDIC insured institution established in 1929. GiftsforBanking CDs are FDIC insured to the maximum allowable limits.

GiftsforBanking.com offers three CD terms, and the rates are currently competitive as of 3/04/2010:

  • 2.05% APY 2-year CD
  • 2.49% APY 3-year CD
  • 3.15% APY 5-year CD

Minimum deposit is $5,000, and the free gift will depend on the size of your deposit. There are five balance tiers: $5K, $10K, $25K, $50K and $100K.

A couple of important things to note from FAQs:

  • They include the value of the gift on your 1099 (hopefully the reported value won't be inflated)
  • Early withdrawal penalty may include the value of the gift chosen, applicable sales tax and shipping fees

I've reviewed some of the gifts available for the different tiers. Here are a few that got my attention:

  • for 5 years and $25K: Sharp Aquos 40" LED LCD 1080p HDTV with 120 Hz Fin
  • for 5 years and $50K: Samsung 52" High Definition 240Hz 1080p
  • for 5 years and $100K: Canon Realis SX7 LCD Multimedia Projector

I did a quick check of the value of the Canon projector at Amazon, and you can get a new one for about $4K. So that would be about equal to an extra $800 for 5 years which comes out to be about an extra 0.80% for a $100K CD. Please leave a comment if you've found any good deals in the gifts they list.

Credit for this find goes to this FW thread.

I just did a new review of iGObanking.com's CDs last month when they were offering 3.55% APY on a 5-year CD. This has gone down to 3.25% in the last week. I would guess these Gift CDs would have similar features and a similar application process as the iGObanking.com's CDs.

My previous iGObanking reviews:

iGObanking.com is a division of Flushing Savings Bank, FSB, a New York bank with $4.1 billion in assets and 16 branches. Its ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial and 3 stars (performing) at Bankrate.com. Both ratings are based on 9/30/09 data. It has been a FDIC member since 1943 (FDIC Certificate # 16049).

Comments (8)
One of the Risks of Rate Chasing - Inactivity Fees
Wednesday, March 3, 2010 - 9:50 AM

I looked into many considerations for rate chasers in this post from last year: Internet Banks and Rate Chasing - Is It Worthwhile?. With rates continuing to fall, this is still a reasonable question to ask. This same question was asked recently by Flexo in his blog post at Consumerism Commentary. Flexo also mentioned several important issues to consider.

One rate chasing issue Flexo mentioned that I didn't mention in my last year's post is the risk of inactivity fees. I have been hit twice this year by inactivity fees. One was a $10 fee at my local credit union, and the other was a $5 fee at Patelco Credit Union. Both were due to having no activity on the share savings account after one year. It's also important to note that these fees keep getting applied month after month until you have activity in the account (they don't count the fee debit as an activity). I noticed these fees pretty quickly, and I was able to get these reimbursed by contacting the service reps. If you don't catch them soon, it gets harder to have the old ones reimbursed.

Another fee to watch out for is a low balance fee. There have been cases when internet banks have added a minimum balance requirement or increased the minimum. Amboy Direct added a minimum balance to its online savings account last year. They now require a $100 minimum to avoid a monthly fee. They notified customers of this change in the statements, but with e-statements, it's easy to overlook changes like this.

My experience does show that you need to keep an eye on all of your accounts. If you don't have time and don't want to close the accounts, you may want to consider services like Mint.com (see my review).

One way you can prevent inactivity fees is by setting up automatic monthly or quarterly transfers initiated at a bank like Ally. Each month or quarter, money will be automatically transferred to or from your bank account that you're not using. Just be careful that you don't go over the 6-per-month withdrawal limit on savings accounts.

I became members at both of these credit unions in hopes that their CD rates would remain competitive. Unfortunately, that hasn't been the case in the last year. Thus, I've just kept a little bit in the share savings accounts to maintain membership. I'm sure if I closed these accounts, they would soon be offering some great CD deals ;-)

Comments (2)
4.25% Reward Checking Account at MidCarolina Bank in NC - Discontinued
Wednesday, March 3, 2010 - 8:16 AM

Update 12/7/2010: It has been reported that MidCarolina Bank has discontinued their reward checking account.

MidCarolina Bank is offering a high-yield reward checking account called MidCarolina Reward Checking. The account has the following rates and features as of 3/03/2010 if certain monthly requirements are met:

  • 4.25% APY on balances up to $25,000
  • 1.01% APY on portion of balance over $25,000
  • 0.05% base rate if requirements are not met
  • Nationwide ATM fee refunds

Monthly requirements include:

  • 10 check card purchases
  • 1 direct deposit or automatic withdrawal
  • Receive e-statements

Additional features of the account include:

  • $500 minimum opening balance
  • No monthly fees
  • No minimum balance requirements

There's an online application at the bank's micro-website, but the first page of the application implies that you have to come in to a branch location to complete the application process.

Branches are located in the North Carolina cities of Burlington, Greensboro, Graham and Mebane.

The bank's ratings for safety and soundness are strong: 4 stars (excellent) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 9/30/09 financial data. The bank has been a FDIC member since 1997 (FDIC Certificate # 34454).

Other Reward Checking Accounts

It's nice to find a reward checking account these days with a yield over 4.00%. It's not getting easy. You can't get much above 4% for nationwide reward checking accounts.

To find nationwide reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.

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Competitive CD & IRA CD Rates at Visions FCU in New York State - Local Only
Wednesday, March 3, 2010 - 8:14 AM

Visions Federal Credit Union is offering some competitive CD and IRA CD rates. The noteworthy rates for a minimum of $500 include:

  • 2.02% APY 1-year CD
  • 2.53% APY 30-month CD
  • 3.50% APY 60-month CD
  • 2.53% APY 15-month IRA-only CD
  • 3.05% APY 32-month IRA-only CD

These rates are listed at the credit union's rate table as of 3/03/10. Above the table there's a date range of 3/03/10 to 3/09/10.

For the non-IRA CD rates above, you can get an extra 25 basis points with an account relationship. Refer to the bottom of the rate table for details about eligible relationships. A VisionsPlus Checking with Visa Check Card and a Gold credit card can qualify you.

Membership is open to those who live, work or worship in Broome, Chenango, Tioga, Schuyler or East/Central Chemung Counties in New York and Bradford County in Pennsylvania. There's a $1 membership fee and a $25 minimum deposit into the Share Money Manager Account. Please refer to the credit union's membership page for more details.

Branches are located in the New York cities of Binghamton, Elmira, Endicott, Endwell, Horseheads, Johnson City, Newark Valley, Owego, Spencer, Syracuse, Vestal and Watkins Glen. In Pennsylvania, the branches are in Sayre and Wysox.

Visions FCU has strong ratings for safety and soundness: 5 stars (superior) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 9/30/09 financial data. The credit union is federally insured by the NCUA (Charter # 17429). It's a large credit union with $2.2 billion in assets and 120,997 members.

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Review of the New Sallie Mae Internet Bank and Its Link to Upromise Rewards
Tuesday, March 2, 2010 - 8:33 PM

Update 2/1/2011: The savings account rate has fallen to 1.25% APY

Sallie Mae, a company known for its student loan business, has started an internet bank which offers a savings account and CDs. By the look of the rates and features, it appears to be a solid online bank. The rates are competitive, but nothing to get excited about. The savings account rate is 1.35% APY as of 3/02/2010. This isn't great, but it is competitive compared to many other online banks. The one unique feature is the link with the Upromise rewards program. I'll describe more about this later in the post.

Sallie Mae Savings Account Review

The savings account and CDs are offered through Sallie Mae Bank which has been a FDIC member since 2005 (FDIC Certificate # 58177). The online bank website has a decent FAQ section. However, it didn't mention a few things, so I called the bank at its toll-free number (877-346-2756, M-F 8am-8pm ET). I was able to quickly connect to a customer service rep who was friendly and knowledgeable. Some of the important savings account features based on the bank's FAQs and based on my conversation with the bank CSR include:

  • 1.40% APY as of 9/02/2010
  • No minimum balance or monthly fees
  • Entirely online account application process (CSR)
  • Beneficiaries (up to 4) can be added (CSR as of 9/02/10)
  • No hard credit inquiry (CSR)
  • ACH bank-to-bank transfer service (FAQ)
  • Micro-deposit method (trial deposit) are used to link external accounts (FAQ)
  • No limit on the ACH transfer size (CSR)
  • Limit on the number of external links is six (CSR as of 9/02/10)
  • Typical savings account limitation of 6 withdrawals per month
  • Hold on deposits after the initial deposit: 5 business days for $5K and under, 10 business days for over $5K (FAQ)
  • ACH withdrawals take 2 to 3 business days (FAQ)
  • Interest is compounded daily and credited to your account monthly (FAQ)

Sallie Mae Internet CD Review

The internet CDs are a little less competitive than the savings account. Three terms are currently offered. The rates as of 9/02/2010 include:

  • 1.55% APY 12-month CD
  • 2.30% APY 36-month CD
  • 3.00% APY 60-month CD

Like the savings account, there is no minimum initial deposit. Some important features mentioned in the disclosure include:

  • Interest rate is fixed and is established when your CD is opened
  • Interest earned on your CD will be credited to your Account on a monthly basis
  • Early withdrawal penalty is 3 months of interest for the 12-month CD and 6 months of interest for the longer terms
  • Grace period at maturity is 10 calendar days

Sallie Mae Bank Financial Overview

Sallie Mae Bank is sizable with $4.7 billion in assets and $3.6 billion in deposits. Its ratings for safety and soundness are above average: 4 stars (sound) at Bankrate.com and 3 stars (adequate) at BauerFinancial. Both ratings are based on 9/30/09 financial data. Note, this is one of the rare times that Bankrate has a higher star rating than BauerFinancial.

Link with Upromise Rewards Program

As I mentioned above, the one unique thing about the Sallie Mae savings account is its link with the Upromise program. I haven't used this program, but it appears that you can make some extra cash back on your purchases on top of what you get from your credit or debit cards. You can earn cash back in the following ways:

  • Shop Upromise partners through upromise.com (1% to 25% back)
  • Sign up as a preferred diner. Register your credit or debit card. Visit eligible restaurants (up to 8% back)
  • Register your grocery store cards at Upromise. Buy participating products and make sure your grocery store card is scanned at checkout (1% to 3% back).

In the past you only had three options to redeem the earnings: 1) invest them in a 529 college savings plan, 2) use them to pay down student loans, 3) receive a check. You can now have the earnings transferred automatically into your linked Sallie Mae Savings Account when the Upromise balance reaches $10.

Another benefit of transfering your Upromise earnings to the Sallie Mae savings account is that Upromise can provide a 10% annual match on your Upromise earnings. The 10% match requires you to link your Upromise Account with your Savings Account, and within 90 days of opening your Savings Account, you must either 1) set up an automatic savings plan with a monthly deposit of $25 or more, or 2) fund the account with $5,000 or more. One important note about this 10% match, Upromise can change it at any time. Also, Upromise Accounts are not FDIC insured. However, the Savings Account is FDIC insured.

Do you have a Upromise Account? How easy has it been to earn cash back?

Rate History:

  • 02/01/11: 1.25% APY
  • 11/05/10: 1.30% APY
  • 05/01/10: 1.40% APY
  • 03/09/10: 1.25% APY
  • 03/02/10: 1.35% APY
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Velocity Credit Union's 9-Month CD Special - Easy Membership
Tuesday, March 2, 2010 - 9:09 AM

Update 3/24/10: The promotion has been extended to 4/16/2010.

Velocity Credit Union is offering a new CD special with a 1.76% APY for a 9-month term. Minimum deposit is $5,000. It's available as a regular or IRA certificate (1-year term). The special is listed on the credit union's home page as of 3/02/2010. According to this promo page, the special is scheduled to last through 3/15/2010.

Last month Velocity's CD special was a 2.02% APY 15-month CD. The 1.76% APY may seem low even for a short-term CD, but I'm afraid it's very competitive for 9-month CDs. As a comparison, the best 9-month CD yield currently listed at Bankrate is 1.44% APY at Nexity Bank.

There's an online application for membership and account opening via Andera, a common service used for account opening. In the application page that covers eligibility, the bottom of the page states "None of the above apply. I would like to join one of the following organizations." In the select box, Paramount Theater Association is the only one included. There's a $15 fee to join this association, and it appears to be open to all.

In addition to Paramount Theater Association members, credit union membership is open to those who live or work in one of the following Texas counties: Travis, Williamson, Hays, Bastrop or Caldwell. Please refer to their Eligibility Page for the full details. Membership requires a minimum $5 deposit into the savings account.

Branches are located in Austin and Round Rock, Texas.

The credit union's ratings for safety and soundness are above average: 4 stars (excellent) at BauerFinancial and 3 stars (performing) at Bankrate.com. Both ratings are based on 9/30/09 financial data. The credit union is currently federally insured by the NCUA (Charter # 68359).

Velocity Will Retain NCUA Deposit Insurance

Members no longer have to worry about losing federal deposit insurance at Velocity Credit Union. The credit union was on the verge of switching from federal to private ASI deposit insurance. The management and the board were able to convince the members to vote for it in late December. Then the ASI instituted an assessment on its credit unions similar to what the NCUA had done. The cost savings was one of the main reasons for the switch. Even though this specific assessment wasn't going to affect Velocity, it was enough to make the board and management change their minds, and they decided to stay with NCUA deposit insurance. Refer to my last Velocity post for more details.

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2.00% 11-Month CD Special at Bellwether Community Credit Union - New Hampshire Only
Tuesday, March 2, 2010 - 9:08 AM

Bellwether Community Credit Union in New Hampshire is offering a special 11-month CD with a 2.00% APY. Minimum deposit is $500, and it's also available in an IRA. This special is listed in the credit union's deposit rates page as of 3/2/2010.

Membership is open to all residents of New Hampshire. Refer to the credit union's Who-Can-Join page for the full details.

The credit union's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 9/30/09 financial data. The credit union is federally insured by the NCUA (Charter # 60747).

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$150 to $200 Checking Account Bonuses at KeyBank - Only Certain States
Tuesday, March 2, 2010 - 9:05 AM

KeyBank is offering a decent checking account promotion. Here's the link to the promotion. The $150 bonus is for opening its free checking account. The $200 bonus requires one of their checking accounts that has monthly fees. Both bonuses require the same activities:

  • Open the checking account by April 30, 2010
  • Make one KeyBank Rewards debit card transaction (ATMs excluded)
  • Make a combination of two direct deposits and/or automated payments each of $100 or more by July 2, 2010

Some important small print:

  • You must have or request a KeyBank Rewards debit card and enroll in the KeyBank Rewards points program. ... There is a $20 annual fee for the KeyBank Rewards program that will be waived for the first year.
  • Offer not available to individuals who have opened a KeyBank checking account in the last 12 months.
  • If you close your account within 180 days of account opening, you will be charged a $25 account early closure fee.

The promotion FAQs has some important points including who's eligible:

The offer is not available in all areas. Individuals and businesses will only be eligible in the following districts: Cleveland, Eastern OH, Idaho, Western NY, Oregon, Seattle Cascades, South Puget Sound, Central NY, Rochester, Maine, Northwest OH, Michigan, and Capital Region NY.

There's also a business checking account promotion that offers up to $275.

When I had contacted KeyBank in previous years, I've been told by their customer service reps that they don't do a hard credit inquiry. They only use ChexSystem in the application approval process.

KeyBank has been a FDIC member since 1956.

Credit for this find goes to FW member DreamKrusher who posted on it in this FW thread.

Other Bank Bonuses

To find other bonus deals, please refer to my bank bonus page which has all of my recent bank bonus posts.

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Competitive CD Rates at Alaska USA Credit Union in AK, WA & CA - Local Only
Tuesday, March 2, 2010 - 9:02 AM

Alaska USA Credit Union is offering some competitive rates. The most competitive include a 2.01% APY 18-month CD, a 2.25% APY 24-month CD and a 3.35% APY 60-month CD. Minimum deposit is $500. These are also available in an IRA. These rates are listed in the credit union's certificates rates page as of 3/02/2010.

The 2.01% APY may seem low for an 18-month term, but I'm afraid it's competitive these days. As a comparison, the top 18-month CD rate at Bankrate is currently 1.84% APY at Aurora Bank.

In addition to Alaska, the credit union has branches in several parts of Washington State and in the Victor Valley region of California. Last year they took over Members’ Own Federal Credit Union of Victorville, California through a NCUA purchase agreement. Refer to the credit union's branch location page for the full details.

Alaska USA doesn't provide many details on membership eligibility. The credit union's membership page recommends that you contact the credit union to find out if you are eligible. It appears there's a good chance you can be eligible if you live near one of their branches. If you have experience with this credit union, please leave a comment.

The credit union's ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial and 2 stars (below peer group) at Bankrate.com. Both ratings are based on 9/30/09 financial data. Alaska USA is a large credit union with $4.0 billion in assets and 357,369 members. It's federally insured by the NCUA (Charter # 5913).

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Update on Ally Bank: CD Policies and New Commercials
Monday, March 1, 2010 - 8:54 AM

I finally saw the new Ally Bank commercials last night while watching 60 Minutes. These came out just over a week ago and continue to feature kids having to deal with the "unfair" bankers. It's a good ad campaign in my opinion.

Closing an Ally CD?

I hope Ally Bank lives up to their "a different kind of bank" claim. Readers have mentioned a few issues that have me a little worried. One reader sent me an exchange he had with Ally concerning instructions to close his Ally CD. He wanted Ally to close the CD at maturity and transfer the funds to his Ally savings account. Here is how the Ally CSR replied:

Thank you for contacting Ally Bank. I am sorry to hear that you have decided to close your account. Unfortunately for security reasons Ally Bank can no longer process account closures via this email function.

It should be noted that this isn't normal email. It's the message system that you access when you log into your account. So I'm not sure why the CSR claims there's a security issue. Here is what the CSR instructed him to do:

To close your account and provide closure instructions, please contact our customer care department at the number listed below or via our new online click to chat option. You may also send in a signed written request to close your account.

I wonder if there's another reason for not allowing closure instructions via the secure email. Making it harder to close a CD increases the chance the customer will let the CD automatically renew. Also, if the customer has to call or use the online chat, the CSR may be able to convince the customer to renew the CD instead of closing it.

I should note that I asked about this in an online chat with an Ally CSR. My CD was not near maturity, but I was asking as if I was about to open a CD. In my question about closing a CD via the secure message system, the CSR replied "depending on the request, usually." So it appears "your miles may vary" on this issue.

Loyalty Bonus for CD Renewals?

Note, if you do have an Ally CD that matures, it may be to your advantage to speak with an Ally CSR. There are still reports that CSRs can give you a loyalty renewal bonus. However, reports are that this bonus amount is now only 0.25% above the posted rates. It had been 0.50%. On the plus side, Ally is still allowing customers to change terms and add money to the account. It should be noted that not all customers are receiving the loyalty bonus, so "your miles may vary."

Ally's 5-Year CD Is Still a Good Deal

This issue of not accepting closure instructions via their secure message system is a little worrisome, but it's not stopping me from opening Ally's 5-year CDs. I was able to open a small CD last night in about 3 minutes. It was very easy, and I just used the money in my Ally savings account to fund it. The rate is not the best, but it does have the best early withdrawal penalty that I've seen (only 60 days of interest). As I described in my Ally CD review, this is a huge advantage when there's a risk of much higher interest rates in a couple of years.

CD Early Withdrawal Penalty?

Some readers have reported being told by Ally CSRs that Ally could increase the penalty on existing CDs or refuse an early withdrawal request. I was told this was not the case in my contact with an Ally CSR. When I asked in an online chat if Ally could increase the penalty on existing CDs, the CSR replied:

No, our policy is 60 days of interest.

When I asked about their right to refuse an early withdrawal request, the CSR responded:

Once the account is funded, and the funds are available, if you choose to close the account before maturity, the only penalty is the 60 days of interest.

Also, I can't find anything in Ally's account disclosure that would lead me to believe what I was told by the CSR is not correct. If you find something in the disclosure that could allow Ally to refuse an early withdrawal request or make changes to the penalty on existing CDs, please leave a comment.

If Ally did refuse an early withdrawal or increase the penalty on existing CDs, this would clearly put them on the side of the "unfair bankers" that are mocked by their commercials. In my opinion, I don't think Ally Bank will do this. So I'm taking my chances with some of my money.

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3.00% 30-Month & 2.10% 13-Month CD Specials at Texas Advantage Community Bank - Local Only
Monday, March 1, 2010 - 8:51 AM

Texas Advantage Community Bank is offering two very competitive CD specials: a 3.00% APY 30-month CD and a 2.10% APY 13-month CD. These are only for new money or existing checking account holders. Maximum deposit is $99,000 per CD. This promotion doesn't seem to be listed at the bank's website. A reader emailed me a scan of the bank's ad that was in a local newspaper yesterday (2/28/2010). The scan of the ad is available here. According to the ad, the offer ends on 3/15/2010.

It appears that a branch visit is required to open an account. Branches are located in the Texas cities of Pearland and Alvin which are between Houston and Galveston.

The bank's ratings for safety and soundness are fair: 3½ stars (good) at BauerFinancial and 3 stars (performing) at Bankrate.com. Both ratings are based on 9/30/09 financial data. The bank has been a FDIC member since 2006 (FDIC Certificate # 58450).

Special thanks to the reader who emailed me the news and scan of this CD promotion.

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$150 Checking Account Bonus at Crescent Credit Union in MA - Local Only
Monday, March 1, 2010 - 8:49 AM

Crescent Credit Union has a nice checking account promotion. It's offering up to $150 for opening any Crescent checking account and meeting the following criteria. If you meet only 2 out of the 3 following criteria, you can still qualify for $100. A link to this promotions page is on the credit union's front page as of 3/1/2010. Below are the criteria:

  1. Sign up for direct deposit of your recurring net income source
  2. Enroll in our free bill pay service and pay 2 bills in the first 60 days
  3. Use a Crescent debit card to pay for 10 purchases within 60 days of account opening

Crescent Credit Union does offer a free checking account with no monthly fees or minimum balance requirements.

The credit union also has some CD specials, but the rates are not that competitive.

Membership is open to those who live or work in Plymouth, Bristol, Norfolk, or Barnstable counties in Massachusetts. A minimum balance of $25 in the savings account is required for membership. Please refer to the credit union's Join page for the full details.

Branches are located in the Massachusetts cities of Brockton, Taunton, Norwell and Cambridge.

The credit union is federally insured by the NCUA (Charter # 68048).

Other Bank Bonuses

To find other bonus deals, please refer to my bank bonus page which has all of my recent bank bonus posts.

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