Bank Deals Blog - December 2010

This year ended with 157 bank closures which was 17 more than failed last year. The number bank failures grew considerably when the financial crisis began in 2008. The number of failures went from 3 in 2007 to 25 in 2008. It's hard for me to remember the days before 2008 when bank failures were rare.

Depositors with large savings have a little less to worry about in terms of bank failures. The FDIC $250K coverage limit became permanent when the Dodd-Frank Wall Street Reform and Consumer Protection Act became law in July. This same coverage limit also applies to NCUA-insured credit unions.

The higher coverage limit was nice, but it didn't make a difference for the vast majority of bank failures this year. In these cases the FDIC was able to find buyers for the failed banks that assumed all regular deposits.

Large Banks That Failed

One thing that changed quite a bit from 2009 was that most of this year's failures were small banks with assets under $1 billion. In 2009 we had large regional banks like Colonial, Guaranty and BankUnited that failed. All had assets over $12 billion. The largest bank that failed in 2010 was Westernbank Puerto Rico which had $11.94 billion in assets. The largest bank based on the mainland that failed was Amcore Bank, N.A. which had $3.8 billion in assets. It's interesting to note that Puerto Rico had both the largest and second largest bank failure of 2010. R-G Premier Bank of Puerto Rico which had $5.92 billion was the second largest. The three Puerto Rican bank failures cost the FDIC Deposit Insurance Fund (DIF) an estimated $5.28 billion.

Below is a list of all the banks with at least $1 billion in assets that failed in 2010. The list is sorted by size. The total number of these banks is 23. As I was making the list I noticed the vast majority of these failures occurred in the first half of the year. Only 4 banks with at least $1 billion in assets failed in the second half of the year.

1. Westernbank Puerto Rico, Mayaguez, PR - $11.94 billion
2. R-G Premier Bank of Puerto Rico, Hato Rey, PR - $5.92 billion
3. Amcore Bank, N.A., Rockford, IL - $3.8 billion
4. La Jolla Bank, FSB, La Jolla, CA - $3.6 billion
5. Frontier Bank, Everett, WA - $3.50 billion
6. Riverside National Bank of Florida, Fort Pierce, FL - $3.42 billion
7. Midwest Bank and Trust Company, Elmwood Park, IL - $3.17 billion
8. TierOne Bank, Lincoln, NE - $2.8 billion
9. Eurobank, San Juan, PR - $2.56 billion
10. First Regional Bank, Los Angeles, CA - $2.18 billion
11. ShoreBank, Chicago, IL - $2.16 billion
12. CF Bancorp, Port Huron, MI - $1.65 billion
13. Hillcrest Bank, Overland Park, KS - $1.65 billion
14. Advanta Bank Corp., Draper, UT - $1.5 billion
15. Horizon Bank, Bellingham, WA - $1.3 billion
16. Community Bank and Trust, Cornelia, GA - $1.21 billion
17. Charter Bank, Santa Fe, NM - $1.2 billion
18. Broadway Bank, Chicago, IL - $1.2 billion
19. Premier Bank, Jefferson City, MO - $1.18 billion
20. City Bank, Lynnwood, WA - $1.13 billion
21. Columbia River Bank, The Dalles, OR - $1.1 billion
22. Crescent Bank and Trust Company, Jasper, GA - $1.01 billion
23. Appalachian Community Bank, Ellijay, GA - $1.01 billion

States with the Most Failures

In 2009 Georgia's 25 bank failures topped the list. This year Florida takes the top spot with 29 bank failures. That's more the double the number of failures Florida saw in 2009. Georgia was second this year with 21 failures. One thing I found interesting is that neither Nevada nor Arizona were near the top of the list. Both had only four failures. Since both were hit hard by the real estate bust, I expected we would see more failures. However, I did a search for the number of banks with headquarters in these states, and I found that there are not many banks: only 30 in Nevada and 42 in Arizona. As a comparison, there are 616 in Illinois.

Below is a graph showing the number of banks that failed in each state during 2010:

Failed Banks That Weren't Acquired by Other Banks

Just like in 2009, the FDIC was able to find buyers for the vast majority of banks that failed. Out of the 157 failures, I counted only 8 banks that were not acquired. In these cases the FDIC mailed checks to depositors for their insured deposits. Anything above the insured limits were not included. The FDIC typically posted the estimated uninsured amounts. Fortunately, the amounts were generally small. The largest estimated uninsured amounts were at First Arizona Savings which had $5.8 million and Centennial Bank in Utah which had $1.8 million. As a comparison to the IndyMac failure in 2008, the FDIC estimated that there was $1 billion of potentially uninsured deposits held by approximately 10,000 depositors (This went down after the $250K coverage limit was made permanent since it was retroactive to 2008). Below is the list of the banks that failed in 2010 that weren't acquired by other banks:

1. Advanta Bank Corp., UT - $1.6 billion in assets
2. Barnes Banking Company, UT - $827.8 million in assets
3. First Arizona Savings, A FSB, AZ - $272.2 million in assets
4. Centennial Bank, UT - $215.2 million in assets
5. Waterfield Bank, MD - $155.6 million in assets
6. Lakeside Community Bank, MI - $53.0 million in assets
7. Arcola Homestead Savings Bank, IL - $17.0 million in assets
8. Ideal Federal Savings Bank, MD - $6.3 million in assets

Some of the above banks were noteworthy for depositors. You might not recognize Waterfield Bank, but this affected many savers who had deposits at UFB Direct and the AARP Financial Savings Center. Both of these had offered top rates on internet savings accounts in previous years. These companies used Waterfield as their bank for deposits, and when Waterfield was closed, both of these institutions appeared to have ended operations. It's interesting to see their websites continue to say they're "down for program maintenance".

Another interesting thing to note is that Centennial Bank of Ogden, UT had operated CBDirect.com which offered a nationwide 3% reward checking account without a balance cap.

Most People with Uninsured Deposits Were Lucky in 2010

As you can see above, the vast majority of banks that failed were acquired by another bank with help from the FDIC. For the vast majority of these cases, all non-brokered deposits were assumed by the acquiring banks. This included the amounts that exceeded the FDIC insurance limits. So those who had over the FDIC limits were lucky in these cases.

This was not the case for brokered deposits. Most of the time the acquiring banks did not assume these deposits. The banks probably didn't see any benefit from assuming these types of deposits since there are no relationships with the depositors.

In December there were some additional types of deposits that were not assumed by the acquiring banks. This first happened when Earthstar Bank in PA failed on December 10th. The FDIC stated that certain out-of-state CDs were not assumed by the acquiring bank, Polonia Bank. One thing unique about Earthstar Bank was that it did market CDs nationwide with online applications. It appears Polonia Bank considered these out-of-state CDs similar to brokered CDs.

This non-assumption of certain CDs happened again on December 17th. The bank that acquired Appalachian Community Bank in Georgia did not assume certain CDs. The FDIC gave examples of these CDs as "out-of-state non-IRA CD or QwickRate CD." Quickrate CDs are not considered brokered CDs, but they have many similarities.

So in December a trend started in that certain out-of-state CDs are not always being assumed by acquiring banks. Thus, it's another reason to stay below the FDIC limit.

The Loss of High CD Rates When Your Bank Fails

The main issue for depositors when banks fail is the loss of the high interest rate on their existing CDs. By law the acquiring banks are allowed to lower the interest rates on existing CDs. Many of the acquiring banks did make use of this allowance. The depositors are free to close the CDs without a penalty, but in today's interest rate environment, it's impossible to replace those CDs with new ones with the same high rates.

The most unfortunate example of this rate cut happened to customers at Darby Bank & Trust Co in November. This bank had offered very attractive 3-year and 18-month CDs, and for a while these were available nationwide. Some of these CDs were earning 4.00%, but after Darby failed the acquiring bank decided to cut the rates for many of these CDs down to a pathetic 0.25%.

Credit Union Closures

The credit unions didn't get hit nearly as bad as the banks. There were only 19 credit unions that were liquidated in 2010. That's up from 15 in 2009. Many of these were tiny credit unions with under $10 million in assets. There were a few sizable credit unions. These included Beehive Credit Union in Utah that had $145 million in assets and Norbel Credit Union in Colorado that had $120 million in assets.

The main news with credit unions this year was the bailout of the corporate credit unions which serve other credit unions. Many of these corporate credit unions had invested in toxic mortgage securities. The bailout that's being done by the NCUA will be costly, and that cost is being passed on to the consumer credit unions in the form of assessments. This will likely be another headwind for deposit rates.

What To Expect for 2011?

We may see fewer bank failures in 2011. According to regulators quoted in this WSJ article, the "failures have passed their peak." Also, we saw fewer closures in the fourth quarter of 2010 compared to previous quarters. There were 41 closures in Q1, 45 in Q2 and 41 in Q3. But in Q4 the number of failures went down to 30. So based on this trend, I would expect to see fewer closures in 2011. However, in the latest unofficial problem bank list from the Calculated Risk Blog, there are 935 banks operating under enforcement actions from regulators. Several of these banks may fail next year.

So based on these factors, my guess for the number of bank failures in 2011 is 130. My guess last year for the number of 2010 failures was way off. I had predicted 300. So I'm being more conservative this time.

References to Help Keep Your Deposits Safe:

• FDIC deposit insurance summary
• NCUA deposit insurance summary for credit unions
• Review of private deposit insurance for credit unions
• Review of 2009 Bank Failures

List of Bank and Credit Union Failures:

• FDIC list of failed banks (sortable by state)
• NCUA list of credit union closures
• Full list of my bank failure posts

Avoid a CD Rate Cut By Sticking With Safe Banks:

• Bank Health Ratings & Texas Ratios [DepositAccounts.com]
• Bank, Thrift and Credit Union Ratings [Bankrate.com]
• Bank and Credit Union Star Ratings [BauerFinancial]
• Calculated Risk's unofficial list of problem banks

One of the concerns with long-term CDs is that the bank won't honor the terms of the CD. An important term is the right for an early withdrawal with a penalty specified in the disclosure when the CD was opened. The fear is that if rates shoot up in the next few years, banks will take steps to prevent early withdrawals by increasing the penalties or by just refusing the withdrawal requests.

Another important term is the maturity date. Unless the CD is callable, you expect that the CD will earn the specified interest rate until the maturity date as specified when the CD was opened. The only exception has been when a bank fails. By law the acquiring bank may decide to close the CD early. It looks like that's not the only exception. There has been a recent case in which a bank broke this contractual agreement. This is described in this blog post at Jumbo CD Investments.

Main Street Bank in Kingwood, TX used a clause in their disclosure to allow the early closures of the CDs. They claimed that they are being required by a consent order with the FDIC and Texas regulators to meet certain capital requirements, and this is the reason for the early CD closures. Here's the clause from the bank's disclosure:

Amendments and Termination - From time to time we may amend any term of this agreement upon giving you reasonable notice in writing or by any other method permitted by law, including, in appropriate circumstances, posting notice in our building. We may also close this account at any time upon reasonable notice to you and tender of the account balance personally or by mail. Notice from us to any one of you is notice to all of you.

We've seen some other banks include a similar clause in their disclosures which essentially turns the CDs into callable CDs, but this is the first time I've seen a bank make use of this clause to actually close the CDs early.

My contact at Jumbo CD Investments said they tried to work with the bank's CFO to see if the bank would at least honor some of the remaining interest they owed to the depositors. They suggested that the bank at least pay the depositors the difference in cost of what they expected to be earning and what rates they can currently receive now. The bank decided against this and is only paying interest up to January 3, 2011.

Not only did the bank decide to close the CDs, they did so on Christmas Eve. They sent out the letters on December 24th, and at the same time they returned the funds via wire transfer without any other warning. This appears to be a clear violation of Regulation DD:

§ 230.5 Subsequent disclosures.

(a) Change in terms--(1) Advance notice required. A depository institution shall give advance notice to affected consumers of any change in a term required to be disclosed under § 230.4(b) of this part if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.

Another disturbing issue of this is that the staff at Jumbo CD Investments isn't getting any help from the FDIC. Here's an excerpt from their blog post:

And shame on the FDIC for not doing their duty (and believe me this isn’t the first time) to protect depositors from unscrupulous banks that hide behind small print.

This case strengthens the concerns of many readers who fear these blanket clauses in the CD disclosures could be used by banks and credit unions to the detriment of the CD account holders. This concern was described in my blog post on the risks and benefits of long-term CDs and in this forum thread on Fort Knox FCU's early withdrawal penalty.

One interesting thing to note about Main Street Bank is that they appear financially healthy. I was disappointed to see that we gave Main Street Bank an overall health score of 4 out of 5 with a Texas Ratio of 5.01% based on September 2010 data. However, we're not alone. Bankrate.com gave them the top rating of 5 out of 5 stars. BauerFinancial won at the ratings in this case. They gave the bank a 2 out of 5 star rating. Calculated Risk Blog's unofficial problem bank list did list Main Street and their July 2010 FDIC consent order. I'm sure most of the CDs were opened before July, so this shows that even if a bank appears financially healthy, it doesn't mean you won't have to worry about the bank doing what Main Street Bank did.

In my opinion the regulations and the regulators are inadequate in the protection of depositors. There have been a lot of new regulations this year to protect borrowers, but nothing for savers. There needs to be regulations that ensure that banks can't use overly broad disclosure clauses to make major changes to CDs to the detriment of the CD account holders. It's bad enough that savers are having to live with these record low interest rates. We shouldn't have to worry about banks cheating us on our CDs.

I thought it would be fun to make my own best-of-2010 list. This was a tough year for savers as we had another year of record low interest rates. Many banks and credit unions had little desire to attract deposits as loan demand remained weak. Nevertheless, there were several banks and credit unions that did want our deposits and offered some good deals.

Looking back at the best bank deals of 2010 can also be useful. Most of these deals have long ended, but banks often repeat similar deals in the future. Also, for those who participated in these deals, we can share what we learned to see if the deals were worthwhile. Sometimes the extra work or hassles they required negated much of the benefits.

One disturbing trend this year was the increasing use of ChexSystems to reject applicants who had opened too many recent accounts. The worst case of this was 1st Mariner Bank. It was reported that they rejected applicants who had only 3 ChexSystem inquiries in the last 2 years. What made matters worse was that they rejected applicants several days after the online applications were accepted and the initial deposits were debited from their accounts.

I'm sure some of you might have different opinions on what you considered as the best deals. I've probably missed some of them. Feel free to comment on your opinions. You can find a full list of my 2010 posts here. Some of my criteria for the best deals included: 1) very high interest rate or large bonus, 2) nationwide availability, 3) easy application process, 4) little or no hoops to jump through. Those with large savings will probably have different opinions than those who haven't saved as much. If you only have $5,000 to put into an account, you'll probably like a $250 bonus more than a 4% yield.

1. Justice Federal Credit Union's 7.50% 75-Day $25K-Max CD - This is a recent deal that is still active, but it's likely to end soon. This doesn't score high in the ease of opening since there are some hoops to jump through to qualify for membership.
2. ING Direct's Black Friday Promotion - This year's promotion wasn't as good as in 2009 when they had a nice CD promotion, but this year they did have a nice $103 bonus for the Electric Orange checking account. For those who missed it, there is currently a $83 bonus for the Electric Orange account.
3. GiftsforBanking.com's CD and iPad Deal - A high CD rate along with an iPad gift package made for a good deal. However, several readers reported some problems in the account opening with 2 weeks for the CDs to be opened. If you've opened this CD, please leave a comment if you have received the gifts.
4. PenFed's 5% Watch it Grow CD Promotion - It was nice to see a 5 percent CD again even with a 10-year term. Unfortunately, the promotion was only intended for certain PenFed members with maturing CDs. Due to an IT problem, other members were able to participate. These special CDs should be taking effect in January. If you participated, make sure you have sufficient funds in your PenFed savings account.
5. Bank of the West's iPod touch Promotion - Several readers have recently reported receiving their 4th generation iPod touch from this promotion.
6. WTDirect $500 Savings Account Promotion - Qualifying for the $500 did require a $50K deposit kept in the account for at least 3 months, but that still made for a nice return. They've also been offering similar promotions after this one for as much as $350.
7. 2.65% 17-Month CD Special at North American Savings Bank - Now it's tough to find 2.65% on a 5-year CD. The bank still offers some nice CD specials with an online application, but the current rates are no where close to this April CD.
8. 2.00% Money Market Rate Guaranteed for 2010 at Metropolitan National Bank - In previous years it was common for banks to guarantee a high rate in a liquid account for several months. It was rare this year. This was one of the best deals. Unfortunately, it was local to New York City.
9. SunTrust's $150 Checking Account Bonus - This was available nationwide and didn't require direct deposit.
10. Ally Bank's 60-Day Early Withdrawal Penalty - Ally Bank's 5-year CD rates haven't been the best, but their 60-day early withdrawal penalty has been the best. This has made Ally's 5-year CDs much more appealing. There are concerns that the penalty could be changed on existing CDs. You can make up your own mind on the risk. I've received assurances from Ally that it would not change on existing CDs. There's more discussion of this issue in this post.

Edit: Corrected APY on JFCU's CD.

Dime Savings Bank is offering a special 1.65% APY 10-month CD. A checking account is required. Minimum deposit is $500, and the maximum is $100,000. The CD is listed on the bank's front page and in this promotions page as of 12/30/2010.

Here's some of the important small print:

To be eligible for this promotional CD rate offer, customer must also open a new Prime Dime Rewards Checking or Dime Rewards Checking account and conduct specific types of transactions. PLEASE CALL US FOR DETAILS at 1-800-321-3463. Dime reserves the right to modify or terminate this offer at any time. This offer is limited to one account per household. New customers only.

I called to ask about the specific transactions. According to the CSR, it requires that you have either one direct deposit or one online bill payment each month.

I asked about a hard credit pull, and the CSR thought the credit check they do is only a soft pull. A reader who commented about his experience, said he did not receive a hard pull when he applied for a similar deal. I also asked about ChexSystem. According to the CSR, they only use ChexSystem to ensure you have not abused past accounts.

According to the CSR, these accounts are available nationwide. Accounts can be opened online or by phone. If you don't open in a branch, they do require you to mail or fax copies of your driver's license and utility bill.

Since you have to open a checking account and conduct specific types of transactions, this special is similar to a checking account bonus. If you can invest $100K, you'll make about $1375 in 10 months. That's about $200 more than what you would make in 10 months in Bank of Internet USA's 1-year CD which is currently paying 1.41% APY.

These checking accounts are not high yield reward checking accounts. There is no high yield, but on the plus side, there are no debit card usage requirements. However, both accounts require that direct deposit or use of Dime's online bill payment services be maintained each month.

The Prime Dime Rewards Checking disclosure and the Dime Rewards Checking disclosure have the details of these accounts. Two features shared by both accounts include:

• Direct deposit of payroll, pension, or government benefits or use of Dime’s online bill payment services must be maintained each month to remain eligible for this account type. If this requirement is not maintained, you may be required to close the account upon 30 days written notice.
• Up to $10 in refunds for transaction charges at non-Dime ATMs each month (if balance requirements are met)

Specific features of the Prime Dime Rewards Checking include:

• Top interest rate of only 0.35%
• $15 monthly maintenance fee if average daily balance is under $5,000

Specific details of the Dime Rewards Checking include:

• Non-interest bearing checking account
• $12 monthly maintenance fee if average daily balance is under $2,500

The bank also some fairly competitive long-term CD rates. The best is a 3.00% APY 7-year CD as of 12/30/2010. Minimum deposit is $500. According to the CD disclosure, the early withdrawal penalty is harsh (2 years of interest).

Dime Savings' branches are located throughout the Greater New York metro area.

Dime Savings Bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 5.24% (excellent) based on September 2010 data. Please refer to our financial overview of Dime Savings Bank for more details. The bank has been a FDIC member since 1943 (FDIC Certificate # 16012).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

As 2010 comes to a close I thought it would be interesting to look back at how rates have changed this year on popular savings accounts and reward checking accounts. As we all know, this was another year of across-the-board rate cuts on deposit accounts. The intent of the post isn't to remind everyone of this, but just to compare rate cuts and other changes that have occurred in the different accounts.

I looked at 10 accounts from banks and credit unions: 5 savings accounts and 5 reward checking accounts. One of the 5 savings accounts is Incredible Bank's checking account. I grouped it with the savings accounts since customers can use it just like a savings account. I picked what I thought were popular savings accounts that maintained top rates during the year.

For the reward checking accounts, I picked the accounts that made my February list of top reward checking accounts with at least 2 years of history.

One thing that makes reward checking comparisons difficult is that rates are not the only thing that change. In addition to rate cuts, many banks have reduced balance caps (the balance that qualifies for the top rate). I noted these types of changes in the table.

I wish I could say the worst is over in terms of rate cuts, but there are many unknowns for next year. The Fed's ultra low interest rate policy will likely continue for much of next year. Also, the Fed's new debit card interchange rules may have significant effects on reward checking accounts.

Sample of Savings & Reward Checking Rate Changes in 2010

Southern Community Bank & Trust is offering a special 18-month CD called the Easy Access CD. It has a competitive yield of 1.50% APY with a minimum deposit of $500. It's called Easy Access because the bank allows one penalty-free withdrawal of principal during the term. An existing checking account is required. This CD is listed in the bank's rates page as of 12/29/2010.

Penalty-free CDs are rare these days. Ally Bank has one, but the rate is currently only 1.20% APY with a term of 11 months.

For regular 18-month CDs at internet banks, the best rate is 1.40% APY at Discover Bank as of 12/29/2010. You can get a little higher rate at Alliant Credit Union even after its recent rate cuts. With a $25K minimum deposit, Alliant's 18-month CD yield is 1.55% APY.

Other Southern Community Bank Accounts

Southern Community Bank & Trust still offers a nationally available reward checking account called Maximum Earnings Checking (see review). As of 12/29/2010 it pays 3% APY on balances up to $25K. This would be a good checking account to use to qualify for the Easy Access CD.

The bank also offers an online savings account called the Ready Saver Account (see review) which also has a competitive yield of 1.35% APY as of 12/29/2010.

Application Process

I used the bank's online chat service to ask about the CD. According to the CSR, the CD can be opened online in any state (just like the checking and savings accounts). However, you must first have an existing checking account. If you don't have one, you would need to apply for the checking account prior to applying for the CD.

Bank Overview

Southern Community Bank & Trust has its headquarters in Winston Salem with branches in several North Carolina cities including Asheville, Greensboro, Winston-Salem and Raleigh.

The bank isn't in the best financial health. It has an overall health score at DepositAccounts.com of 2 out of 5 with a Texas Ratio of 61.56% (below average) based on September 2010 data. Please refer to our financial overview of Southern Community Bank & Trust for more details. The bank has been a FDIC member since 1996 (FDIC Certificate # 34321).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Union Bank has a checking account promotion in which you can earn 3% cash back on eligible debit card purchases. Here are the basic requirements:

• Open a new consumer checking account with a $100 minimum by 1/31/2011
• Maximum cash back is $500
• Debit card purchases must be made by 4/30/2011

The promotion is listed at unionbank.com/rewardthree. The offer's small print describes what counts as eligible purchases:

Purchases returned do not qualify. The following count as "eligible debit card purchases:" purchases you sign for, PayPass™ tap purchases, purchases made on the Internet, by phone, or by mail-order, and small-dollar purchases that do not require a signature. Determination of eligible purchases is at the sole discretion of Union Bank.

Here is some additional important small print:

Cash Back will be deposited into the cardholder's primary linked checking account by May 31, 2011, which must be active and in good standing. Cannot be combined with other checking offers. Current Union Bank checking customers are ineligible. Cash Back may require a Form 1099-MISC be sent for tax purposes.

Note that the cash back may be reported on your 1099. That would be a significant downside compared to credit card cash back bonuses which aren't reported on 1099s.

Application Process

There's an online application, and according to the customer service rep, accounts can be opened in any state. The free checking account qualifies for this promotion. I was told that a hard credit inquiry was possible if you apply online or by phone, but typically, only a ChexSystem verification is used.

Other Debit Card Rewards

If you want a debit card cash back program that's not just a temporary promotion, PerkStreet Financial is a good choice. With PerkStreet Financial's checking account, you can get up to 2% cash back. They also have a new-account promotion (see review).

Future of Debit Card Rewards

This might be the last year of debit card rewards if the Fed implements its proposed rules that limit interchange fees. The new rules are suppose to only affect banks with assets over $10 billion. That would definitely affect Union Bank which has $79 billion in assets. It's questionable how much effect will occur for banks with assets under $10 billion. PerkStreet's parent bank is Bancorp Bank which has $2.66 billion in assets.

Union Bank Overview

Union Bank is a large regional bank that's based in San Francisco, California with over 400 branches in California, Washington and Oregon. Its overall health score at DepositAccounts.com is 4 out of 5 with a Texas Ratio of 16.18% (excellent) based on September 2010 data. Please refer to our financial overview of Union Bank for more details. The bank has been a FDIC member since 1979 (FDIC Certificate # 22826).

Other Bank Bonuses

To find other bonus deals at other banks, please refer to the bank bonus page which has all of my recent bank bonus blog posts. There are also additional bonuses listed in the checking account deals forum.

Several insurance companies like State Farm and MetLife have banks that offer deposit accounts. I just found another one that's under Shelter Insurance Companies. Its bank is called Shelter Financial Bank, and it's currently offering some very competitive long-term CD rates. The notable long-term CD rates include a 3.20% APY 7-year CD, a 2.95% APY 6-year CD, and a 2.55% APY 5-year CD. Minimum deposit is $1,000. Rates are 10 basis points higher for the Jumbo CDs with a $95K minimum deposit. These rates are listed in the bank's deposit rates page as of 12/28/2010.

As a comparison to internet banks on 12/28/2010, the best 7-year CD rate is 2.75% APY at Discover Bank. For credit unions with easy membership, PenFed has the best 7-year CD rate with a 3.25% APY.

There's an online application. However, according to the bank rep, they only open accounts for those in their insurance market area which includes the following 14 states: Arkansas, Colorado, Louisiana, Mississippi, Missouri, Iowa, Illinois, Indiana, Kansas, Kentucky, Nebraska, Nevada, Oklahoma and Tennessee.

The online application allows you to fund the CD with an ACH transfer from your current bank. I was told that you can also have the CD funds transferred out via ACH at maturity. Wire transfer is also an option, but the fee for an outgoing wire transfer is $25. I was told they usually decide on rate changes on Friday and make those changes effective the following Monday.

The bank does provide the CD disclosure online. One major downside is a harsh early withdrawal penalty. For terms of 5 years and above, the penalty is 730 days (2 years) of interest.

It's a small bank with $181 million in assets and with one branch in Columbia, Missouri. The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 2.63% (excellent) based on September 2010 data. Please refer to our financial overview of Shelter Financial Bank for more details. The bank has been a FDIC member since 1999 (FDIC Certificate # 35002).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Providence Bank is offering two competitive CD specials along with a good deal on a checking account. The CD rates include a 1.70% APY 2-year CD and a 1.40% APY 18-month CD. The shorter term CDs aren't as competitive. Those include a 1.00% APY 1-year CD and a 0.85% APY 6-month CD. Minimum deposit is $1,000. These rates are listed in the bank's rate sheet as of 12/28/2010.

The checking account deal is the bank's E-Checking account which has a 2.00% APY on balances up to $25K. As noted in the bank's rate sheet this is scheduled to last until 3/31/2011. Other details of this account are listed in the checking section of the personal banking page. Some notable ones include:

• $100 minimum amount to open the account
• Free ATM usage anywhere in the world (refunds up to 4 transactions per statement cycle)
• Free initial check order
• Additional basis points on any CD

From the description I wasn't sure if this is a reward checking account. So I called the bank at 252-937-2265 for more details. As I learned, this is not a reward checking account. No debit card usage is required. Here are some of the details that I was told by the bank rep:

• Only requirement is that you receive e-statements
• No monthly fees or minimum balance requirement
• Rate for portion of balance over $25K is the money market rate which is 0.35%
• The CSR didn't know what the rate would be after March
• Branch visit is required to open the account. They do accept deposits from those outside their area.

With the money market rate so low, this e-checking rate does seem like a teaser rate. Nevertheless, it's at least a good short-term deal, and the checking account has some nice features like no monthly fees and worldwide ATM fee refunds.

Branches are located in the North Carolina cities of Rocky Mount and Tarboro. Rocky Mount is about 40 miles east of Raleigh.

It's a small bank with $159 million in assets. The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 12.73% (excellent) based on September 2010 data. Please refer to our financial overview of Providence Bank for more details. It's a new bank that has been an FDIC member since 2006 (FDIC Certificate # 58239).

Professional Bank is offering two competitive short-term CD specials: 1.75% APY 1-year CD and a 1.50% APY 6-month CD. These require a checking account with a minimum $1K balance. These specials aren't listed at the bank's website. A reader emailed me news of these, and I called today (12/28/2010) for additional details. According to the bank rep, these should last at least through the end of year.

As a comparison to internet banks on 12/28/2010, the best 1-year and 6-month CD rates are 1.41% APY and 1.11% APY at Bank of Internet USA. Connexus Credit Union which makes it easy for anyone to join offers a 1.75% APY 1-year CD and a 1.50% APY 6-month CD, but these require an active checking account.

Professional Bank is a small bank with one office located in Coral Cables, Florida which is just south of Miami.

It's also a new bank that was established in 2008. One good aspect of this is that the bank isn't weighed down by lots of bad loans. The bank has an overall health score at DepositAccounts.com of 5 out of 5 with a Texas Ratio of 0.94% (excellent) based on September 2010 data. Please refer to our financial overview of Professional Bank for more details. The bank has been a FDIC member since 2008 (FDIC Certificate # 58862).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

US Bank, N.A. is offering two competitive long-term CD specials. The most competitive one is the 59-month CD which has a 2.50% APY. The other one is a 1.70% APY 37-month CD. There's also a 19-month CD special, but the rate is only 1.15% APY. Minimum deposit is $1,000. These rates are listed at the bank's CD specials page as of 12/28/2010.

You can get CD rates a little higher at some internet banks, but for a large brick-and-mortar bank, these US Bank rates are pretty good. As a comparison to internet banks on 12/28/2010, the best 5-year CD rate is 2.75% APY at Salem Five and the best 3-year CD is 1.91% APY at Bank of Internet USA.

There's an online application link on the bank's CD specials page. When I spoke with a US Bank rep earlier this year, I was told that people in any state can apply. If you're wanting to open these CDs at a US Bank branch, you should call to verify they offer these special rates. Rates may vary at branches.

After you submit the application, the CSR said that they'll send you a signature card that must be mailed back with a check for the deposit. You have 30 days to fund the CD. However, according to the CSR, the CD rate won't lock until they receive the funds. I was told you can also fund the CD with a free wire transfer. After you submit the application, you should have the account number which can be used for the wire transfer. You can also fund the CD at a branch, but you'll still need the account number and signature card.

One downside with US Bank CDs is a harsh early withdrawal penalty. Here's what is listed in the US Bank's CD Agreement:

If your account has an original maturity greater than one year, the penalty will be the greater of either A or B, plus a $25 early withdrawal fee.

A. One-half of the interest that would have been earned on the funds withdrawn if held for the entire term.

B. 3% of the amount withdrawn.

Early withdrawal penalties for long term CDs are typically only 6 months of interest, so this is much worse.

US Bank START Savings Program

US Bank also a pretty good deal on a savings account program called S.T.A.R.T. Like the savings programs at Bank of America (Keep the Change), it's not going to make you a lot of money, but you can easily earn $100 in one year without much work or money (my US Bank START review).

US Bank Overview

US Bank has branches in many states. It has most of its branches in the states of Arizona, California, Colorado, Illinois, Iowa, Kentucky, Minnesota, Missouri, Nevada, Ohio, Washington and Wisconsin.

US Bank is one of the nation's largest regional banks with $286 billion in assets. The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 16.83% (excellent) based on September 2010 data. Please refer to our financial overview of US Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 6548).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Premier Community Credit Union continues to offer a 3.00% APY 5-year CD and IRA CD. The 3-year CD rate is also competitive at 2.00% APY. Minimum deposit is $500 for IRAs and $1,000 for regular CDs. These rates are listed in the credit union's rates sheet as of 12/28/2010..

As a comparison to internet banks on 12/28/2010, the best 5-year CD rate is 2.75% APY at Salem Five and the best 3-year CD is 1.91% APY at Bank of Internet USA.

According to the credit union's account disclosure, the early withdrawal penalty for terms of 24 months and longer is up to 6 months of interest on the amount withdrawn.

The credit union also has versions of its long-term CD with various flexible features. One version allows add-on deposits, but there's a $10,000 cap. Please refer to my July review of these CDs for more details.

Refer-a-Friend Promotion

The credit union is currently having a nice refer-a-friend bonus If you refer someone who becomes a member, both that person and you will receive a $25 bonus. The new member has to open a checking account and maintain membership for at least 6 months.

Membership

Membership is open to those who live or work in San Joaquin County, California. There are also a few other ways that people can qualify for membership through associations and colleges. Please refer to the credit union's About Us page for more details.

Credit Union Overview

Branches are located in Stockton, Lodi and Manteca, CA.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 8.85% (excellent) based on September 2010 data. Please refer to the financial overview of Premier Community Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 64515).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Incredible Bank is again offering an internet CD. Compared to the internet CD they offered last June, this one is far less incredible. This new one has a 1.30% APY for a 1-year term. Minimum deposit is $10,000, and the maximum is $225,000 (in one or more CDs). More CD details are listed at the bottom of the bank's FAQ page. The rate is listed in the bank's Open An Account page as of 12/27/2010.

All 1-Year CD Rates are Low

I'm afraid a 1.30% APY for a 1-year CD is fairly competitive and on par with Discover Bank and Sallie Mae Bank. You can get a higher rate at internet banks Bank of Internet USA which is offering a 1.41% APY for a 1-year CD with a $1K minimum deposit and CNB Bank Direct which is offering a 1.50% APY for a 1-year CD with a $25K minimum deposit. These rates are accurate as of 12/27/2010.

1-Year CD vs. Checking Account

It might seem strange that Incredible Bank's internet checking account has a higher rate than its 1-year CD. The checking account is paying 1.35% APY on balances of up to $250K as of 12/27/2010. I have more details of this checking account and Incredible Bank in this November review.

One reason to open the CD is if you want to protect yourself from more cuts in checking and savings account rates. How much would you lose out? Let's assume that a year from now the Incredible Internet checking account rate is half of what it is now (0.675%). You can approximate the interest earned in this checking account by taking the average of the current yield (1.35%) and this assumed yield (0.675%). That comes out to 1.01%. That's 29 basis points less than the CD. For a $10K deposit, that's $29. So under this scenario, you would earn $29 more in the CD than in the checking account. That's not much of a gain for giving up the liquidity of a checking account. It's also important to note that the $29 could be much less if rates don't fall as much as anticipated in this scenario.

As you can see, it's hard to argue for a 1-year CD in this environment. An approach that could do better is going long on CDs with mild early withdrawal penalties. I reviewed these issues in my post last week on Strategy for Getting the Best Yields in Deposit Accounts.

F&A Federal Credit Union continues to offer top rates on its money market accounts and CDs. I first posted on this credit union in September. Since that time the rates have gone down, but they remain competitive. The money market account's top rate is 1.50% APY for balances of at least $100K and 1.40% APY for balances of $2.5K to $50K. CD and IRA CD rates range from 1.30% APY for a 6-month CD to 2.70% APY for a 5-year CD. Minimum deposit is $1K. CD rates are 5 basis points higher for Jumbo CDs with a $50K minimum. One account that I didn't mention in September is the urMoney savings account. It's a youth account, but young adults up to 26.5 years of age are eligible. It has a 6.18% APY for balances up to $1K. Balances over $1K earn a rate of 1.25% which is very competitive even for internet savings accounts. These rates are listed in the credit union's rates page as of 12/27/2010. At the top of the page, there's a date range of 12/16/2010 to 12/31/2010.

Membership Eligibility

As I mentioned in September, F&A FCU doesn't make it easy to join. Membership is primarily based on Select Employer Groups. Some of these include the County of Los Angeles Fire Department, the Office of the Farm Advisory and the Los Angeles County Lifeguards. The SEG also includes employees of several California cities. Please refer to the credit union's membership page for the full details.

The credit union's main branch is located at Monterey Park, California. The credit union is part of the shared-branch cooperative, CU Service Centers. This allows you to make many transactions at shared branches across the nation as if it were your home branch.

F&A FCU is a sizable credit union with $1.12 billion in assets. It's in good financial shape with an overall health score at DepositAccounts.com of 4 out of 5 and a Texas Ratio of 1.58% (excellent) at DepositAccounts.com based on September 2010 data (see our financial overview of F&A Federal Credit Union). The credit union is federally insured by the NCUA (Charter # 1493).

Searching for the Best CD and Money Market Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following sections of DepositAccounts.com:

• CD rates
• IRA CD rates
• Money Market rates
• Savings Account Rates

Happy Holidays! This is a reduced version of my weekly rate recap. Last week was a slow banking news week, but unfortunately, there continued to be a few rate cuts.

The Fed funds future charts didn't change much from the previous week. As compared to December 18th, the implied probability of a higher Fed funds rate has gone down from 19.2% to 18.2% for June, it went up from 45.5% to 47.9% for September and it stay the same at 57.1% for November.

Savings Account Rates

This was a quiet week for rate changes. There was just one savings account in my top list that had a rate cut. As I mentioned last week, Alliant Credit Union is scheduled to cut the rate of its savings account from 1.35% to 1.15% APY in January.

Rate Hikes:

1. None

Rate Cuts:

1. Hudson City Internet Money Market Savings - 1.25% (was 1.35%)
2. Alliant Credit Union Savings - 1.15% in January (currently 1.35%)
3. Alliant Credit Union Checking - 1.10% in January (currently 1.35%)

Certificate of Deposit Rates

The special 75-day CD at Justice Federal Credit Union brings back memories of high CD rates. The special has a 7.50% APY. As you might expect, it has a maximum deposit, but it's high enough ($25K) to still make this a good deal. I have more details in this post.

For long-term CDs, Fort Knox Federal Credit Union continues to offer some good deals including a 2.75% APY 5-year CD and a 2.25% APY 3-year CD. An additional 0.15% is added for Jumbo CDs with a $100K minimum deposit (see post).

Starting next Saturday PenFed is scheduled to start offering 10-year CDs. It's unlikely we'll see rates as high as the CD reservation program, but hopefully they'll be higher than the 7-year CD rates which are currently the best for nationally available rates. Ten years is a long time, but since this 10-year CD will have the same early withdrawal penalty as the 7-year CD, it could be a better deal than the 7-year CD (see post).

Reward Checking Accounts

There were a few large rate cuts this week that either took effect or are scheduled to take effect early next year on reward checking accounts. Two of them had their yields fall from around 5% to 2.50%. This may be a sign that reward checking rates over 3% may not last. Thanks to the readers who mentioned these in the discussion forum. I've summarized the cuts below:

• Texas Citizens Bank - 2.50% up to $25K (was 5.01% up to $25K)
• Randolph Bank - 2.50% up to $25K (4.75% until Jan, cap will remain unchanged)
• Incommons Bank - 3.01% up to $10K (4.25% until Jan 3, $25K cap until Feb 1)
• CB&S Bank - 2.25% up to $25K (was 2.60% up to $25K)

To find reward checking accounts available nationwide or to find those that are only available in your state, please refer to the reward checking section of DepositAccounts.com.

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

Banking News/Resources

• Merry Christmas and Happy Holidays!
• Strategy for Getting the Best Yields in Deposit Accounts - Part 2
• Strategy for Getting the Best Yields in Deposit Accounts

CD Deals - National

• Top CD Rates at Fort Knox Federal Credit Union - Easy Membership
• Hot 75-Day CD Special at Justice Federal Credit Union - Easy Membership
• Higher Long-Term CD and IRA CD Rates at EverBank - Available Nationwide

Checking/Savings Bonuses

• Checking Account Promotion Continues at Flagstar Direct - Available Nationwide

Reward Checking Accounts

• Competitive Short-Term CD and Reward Checking Rates at Northstar Bank of Texas - Local Only
• Competitive Reward Checking & CD Rates at Consumers Credit Union - Easy Membership

CD and Money Market Deals - Local

• Top CD Rates at First American International Bank in New York City - Local Only
• Competitive Short-Term CD Rates at MidCoast Community Bank in Delaware - Local Only
• CD and Money Market Specials Continue at Customers Bank for PA & NJ Residents
• Top 3-Year CD Rate Continues at EBSB Direct - New England and NY Only

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. 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.

Rates as of December 26, 2010

Checking/Savings/Money Market Accounts:

• Best Reward Checking Account Rates (Nationwide & by State)
• Best Savings Account Rates (Nationwide & by State)
• Best Money Market Rates (Nationwide & by State)
• Best Checking Account Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• EverBank - 2.01% ($5K min), 3 mo promo rate up to $50K (1.06% ongoing) account review
• AmericaNet/Evantage Bank - 1.75% (up to $35K, 1% over) account review
• SmartyPig - 1.75% (min $25, max $50K) withdrawal restrictions, account review
• The Morrill and James Bank - 1.51% Checking (min $1.5K) account review
• SFGI Direct - 1.41% (min $500 to open) account review
• Ready Saver - 1.35% account review
• Alliant Credit Union - 1.35% (1.15% eff Jan 1st) (min $100) account review
• Incredible Bank - 1.35% Checking ($1K min) account review
• Sallie Mae Bank - 1.30% (Upromise rewards) account review
• Clear Sky Accounts - 1.30% account review
• American Express Bank - 1.30%, account review
• Capital One/Costco - 1.30% InterestPlus Savings ($5K min) quarterly bonuses for $10K+, account review
• H&R Block Bank - 1.25% MMA (min $50K) account review
• Discover Bank - 1.25% Savings (min $500) account review
• Capital One - 1.25% InterestPlus Savings ($1K min) quarterly bonuses for $10K+, account review
• Hudson City Savings Bank - 1.25% (min $2.5K)
• WTDirect - 1.21% ($10K min) account review
• CNB Bank Direct - 1.20% account review
• Zions Bank - 1.11% ($1K min)
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• DollarSavingsDirect - 1.10% ($1K min) account review
• ING Direct - 1.10% Orange Savings
• Ally Bank - 1.09% MMA account review

• Noteworthy Accounts - Local Only

• Mid America Bank & Trust Company - 1.54% (min $10K) in MO
• Affinity Bank (formerly Atlanta Business) - 1.40% MMA (min $100K) in GA
• Solera National Bank - 1.25% (min $100) in CO

3-Month Certificates of Deposit:

• Best 3-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Self-Help CU - 1.01% (min $500) account review
• AmTrust Direct - 1.00% (4-mo) (min $1K)
• Fort Knox FCU - 1.00% (min $500)
• TotalBank - 0.85% e-CD (min $1K)
• Virtual Bank - 0.75% (min $10K)
• Ally Bank - 0.64%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 1.45% (min $500) in NYC
• Bank of Georgetown - 1.40% (4-mo w/relationship) (min $1K) in Washington DC metro
• NavyArmy FCU - 1.30% (min $100K) in South TX
• Atlanta Postal CU - 1.00% (min $2K) in GA

6-Month Certificates of Deposit:

• Best 6-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.50% Active checking required, account review
• America's Credit Union - 1.25% (min $25K)
• Aurora Bank FSB - 1.11% (min $1K)
• Virtual Bank - 1.06% (min $10K)
• OneWest Bank - 1.05% (min $1K)
• Ally Bank - 1.04%

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.56% IRA-only (min $2.5K) in NY
• Self Reliance New York FCU - 1.65% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.41% (min $1K) in GA
• Industrial Credit Union - 1.40% (min $1K) in MA
• NavyArmy FCU - 1.40% (min $100K) in South TX
• F&A Federal Credit Union - 1.40% (min $50K) in CA
• Fayetteville Bank - 1.26% (min $500) (1.41% $100K+) in TX

9-Month Certificates of Deposit:

• TotalBank - 1.15% e-CD (min $1K)
• Virtual Bank - 1.11% (min $10K)
• Easthampton Savings Bank - 1.10% (min $1K)
• Discover Bank - 1.10% (min $2.5K)
• OneWest Bank - 1.10% (min $1K)

• Noteworthy Accounts - Local Only

• Island Federal Credit Union - 2.00% (min $2K) Requires active checking, in NY
• Miami Postal Service CU - 1.76% (min $5K) in Miami, FL
• Self Reliance New York FCU - 1.70% (min $500) in NYC
• NavyArmy FCU - 1.45% (min $100K) in South TX

12-Month Certificates of Deposit:

• Best One-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.75% Active checking required, account review
• RTN Federal Credit Union - 1.55% (min $50K)
• America's Credit Union - 1.55% (13-mo) (min $25K)
• Alliant Credit Union - 1.50% (min $25K) account review
• CNB Bank Direct - 1.50% (min $25K) (shown at the bank's online banking login page) account review
• Melrose CU - 1.41% (min $5K) account review
• Bank of Internet - 1.41% (min $1K) account review
• Salem Five - 1.35% (14-mo) (min $10K)
• North American Savings Bank - 1.35% (14-mo) (min $1K)
• Discover Bank - 1.30% (min $2.5K) account review
• Sallie Mae Bank - 1.30% (no min) account review
• Ally Bank - 1.28% (min $0) account review
• Virtual Bank - 1.26% (min $10K)
• Choice Financial - 1.25% (13 mo) (min $5K) add-on feature, account review
• Ally Bank - 1.20% (11-mo) (min $0) No-Penalty CD
• ING Direct - 1.00%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.00% (min $500) in NYC
• NavyArmy FCU - 1.85% (min $100K) in South TX
• University of Iowa Community CU - 1.80% (15-mo) (min $100K) in Iowa
• Affinity Bank (formerly Atlanta Business) - 1.71% (min $1K) in GA
• Progressive Credit Union - 1.71% in NYC
• Barksdale Federal Credit Union - 1.61% (min $1K) in Louisiana
• Industrial Credit Union - 1.60% (min $1K) in MA
• Fayetteville Bank - 1.56% (min $100K) in TX

18-Month Certificates of Deposit:

• Best 18-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Alliant Credit Union - 1.75% (min $25K) account review
• America's Credit Union - 1.65% (min $25K)
• CNB Bank Direct - 1.65% (min $25K) (shown at the bank's online banking login page) account review
• Fort Knox FCU - 1.50% (min $500)
• Aurora Bank FSB - 1.43% (min $1K)
• Acacia Federal - 1.40% (min $500)
• Discover Bank - 1.40% (min $2.5K), account review
• MetLife Bank - 1.35% (min $25K)
• Ally Bank - 1.35% (no min)
• USAA Bank - 1.35% (min $1K) (1.70% $175K min) account review
• First Savings Bank Northwest - 1.28% unlimited add-on (min $500) account review

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.82% IRA-only (min $200) in NY
• Self Reliance New York FCU - 2.10% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.87% (min $1K) in GA
• Hyde Park Savings Bank - 1.70% (16-mo) Online Only (min $1K) in MA
• Truliant Credit Union - 1.50% (17-mo) (min $1K) in NC, SC & VA

24-Month Certificates of Deposit:

• Best Two-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• America's Credit Union - 2.05% (25-mo) (min $25K)
• Alliant Credit Union - 1.90% (min $25K) account review
• CNB Bank Direct - 1.85% (min $25K) (shown at the bank's online banking login page) account review
• Fort Knox FCU - 1.75% (min $500)
• Melrose CU - 1.66% (min $5K) account review
• Bank of Internet - 1.60% (min $1K)
• Delta Community CU - 1.60% (min $1K) account review
• Ally Bank - 1.55% Raise Your Rate CD

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.35% (min $500) in NYC
• First Peoples Community Credit Union - 2.20% (21-mo) (min $5K) in MD, PA & WV
• NavyArmy FCU - 2.15% (min $100K) in South TX
• Barksdale Federal Credit Union - 2.12% (min $1K) in Louisiana
• University of Iowa Community CU - 2.10% (25-mo) (min $100K) in Iowa
• Affinity Bank (formerly Atlanta Business) - 2.07% (min $1K) in GA

36-Month Certificate of Deposit:

• Best 3-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Fort Knox FCU - 2.25% (min $500)
• RTN Federal Credit Union - 2.25% (min $50K)
• Air Force FCU - 2.25% (min $25K) membership restrictions account review
• Melrose CU - 2.17% (min $5K) account review
• Navy Federal - 2.15% (30-mo) (min $10K) membership restrictions account review
• Alliant Credit Union - 2.10% (min $25K) account review
• America's Credit Union - 2.05% (min $25K)
• Andrews FCU - 2.00% (min $1K) account review
• Bank of Internet - 1.91% (min $1K)
• Delta Community CU - 1.85% (min $1K) account review
• Acacia Federal Savings Bank - 1.85% (min $500) account review
• USAA Bank - 1.85% (min $1K) (2.15% $175K min) account review
• Pentagon Federal CU - 1.75% (min $1K), account review
• Sallie Mae Bank - 1.75% (no min) account review

• Noteworthy Accounts - Local Only

• Sea Comm Federal Credit Union - 2.63% (min $1K) in Northern NY
• First Peoples Community Credit Union - 2.60% (39-mo) (min $5K) in MD, PA & WV
• Massena Savings and Loan - 2.56% (min $1K) in NY
• First Community CU - 2.50% w/relationship (min $300) in MI
• Barksdale Federal Credit Union - 2.43% (min $1K) in Louisiana
• Security Service FCU - 2.35% (min $100K) in TX & CO
• Affinity Bank (formerly Atlanta Business) - 2.32% (min $1K) in GA
• American Heritage Credit Union - 2.30% (min $1K) in PA
• Redding Bank in Commerce - 2.27% (min $100K) in Northern CA
• Montauk Credit Union - 2.25% in NYC
• Fort Bragg Federal Credit Union - 2.23% (min $25K) in NC

48-Month Certificate of Deposit:

• Best 4-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Fort Knox FCU - 2.55% (min $500)
• America's Credit Union - 2.55% (min $25K)
• Alliant Credit Union - 2.50% (min $25K) account review
• Melrose CU - 2.42% (min $5K) account review
• Self-Help CU - 2.28% (min $500) account review
• Pentagon Federal CU - 2.25% (min $1K), account review
• Hudson City Bank - 2.25% (min $5K) account review
• EverBank - 2.19% ($1.5K min) account review
• Bank of Internet - 2.16% (min $1K)
• Acacia Federal Savings Bank - 2.10% (min $500) account review

• Noteworthy Accounts - Local Only

• First Community CU - 3.25% w/relationship (min $300) in MI
• Barksdale Federal Credit Union - 2.89% (min $1K) in Louisiana
• Sea Comm Federal Credit Union - 2.75% (min $1K) in Northern NY
• Police & Fire Credit Union - 2.75% (min $500) in PA
• Education First CU - 2.75% in SE Michigan
• LOMTO FCU - 2.63% in NYC
• The Napoleon State Bank - 2.58% (min $50K) in IN

60-Month Certificate of Deposit:

• Best 5-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 3.00% Active checking required, account review
• Melrose CU - 2.93% (min $5K) account review
• Air Force FCU - 2.85% (min $25K) membership restrictions account review
• Fort Knox FCU - 2.75% (min $500)
• Salem Five - 2.75% (min $10K)
• Pentagon Federal CU - 2.75% (min $1K), account review
• Velocity Credit Union - 2.63% (min $1K) (2.73% IRA)
• EverBank - 2.55% ($1.5K min) account review
• Andrews FCU - 2.50% (min $1K) account review
• Acacia Federal Savings Bank - 2.50% (min $500) account review
• Northrop Grumman FCU - 2.46% (min $40K), account review
• Mountain America CU - 2.45% (min $1K) account review
• Delta Community CU - 2.45% (min $1K) account review
• First Internet Bank - 2.40% (min $1K)
• Ally Bank - 2.40% (min $0) account review
• USAA Bank - 2.40% (min $1K) (2.45% $175K min) account review
• Navy FCU - 2.40% ($20K min) (2.50% $100K+) restrictions to membership, account review
• Sallie Mae Bank - 2.35% (no min) account review

• Noteworthy Accounts - Local Only

• PEF Federal Credit Union - 3.29% (min $500)
• Police & Fire Credit Union - 3.25% (min $500) in PA
• First Community CU - 3.25% w/relationship (min $300) in MI
• First Peoples Community Credit Union - 3.10% (min $5K) in MD, PA & WV
• LOMTO FCU - 3.10% in NYC
• Barksdale Federal Credit Union - 3.04% (min $1K) in Louisiana
• Security Service FCU - 3.00% (min $100K) in TX & CO
• Sea Comm Federal Credit Union - 2.99% (min $1K) in Northern NY
• First Choice Bank - 2.90% (min $1K) in NJ
• Hudson Valley Credit Union - 2.85% (min $500) in NY State
• F&A Federal Credit Union - 2.75% (min $50K) in CA

84-Month Certificate of Deposit:

• Best 6+-Year CD Rates (Nationwide & by State)

• Pentagon Federal CU - 3.25% 7yr (min $1K), account review
• Capital One - Costco - 3.05% (10-yr) (min $5K)
• Capital One Direct Banking - 3.00% (10-yr) (min $5K)
• Navy FCU - 3.00% 7yr ($20K min) restrictions to membership, account review
• Discover Bank - 2.75% 7yr (min $2.5K) (3.00% 10yr) account review
• USAA Bank - 2.70% 7yr (min $1K) (2.74% $175K min) account review
• Apple FCU - 2.60% (min $500) (3.25% 10yr) account review

• Noteworthy Accounts - Local Only

• Security Service FCU - 3.50% 7yr (min $100K) in TX & CO
• Randolph-Brooks Credit Union - 3.45% (min $75K) 7yr in Central TX
• Montauk Credit Union - 3.00% 7yr in NYC
• Access National Bank - 3.00% 7yr (min $10K) in VA, DC & MD
• Anchor Mutual Savings Bank - 3.00% 8yr (min $500) in WA
• Cardinal Bank - 2.91% 6yr (min $1K) in VA, DC & MD

Various Deposit Account Deals

• Bank Deals Forum
• Checking/Savings Account Bonuses
• Best IRA CD rates, local and nationwide deals
• Latest CD and Savings Account Deals with No Major Deposit Limitiations

Bank Account Alternatives

• Ford Interest Advantage - 1.65% rate for $50k+, Ford Interest Advantage review
• GE Interest Plus - 1.45% rate for $50k+
• Vanguard Tax-Exempt Money Market Fund - 0.16% 7-day yield
• Paypal Money Market Fund - 0.12% 7-day yield
• Vanguard Prime Money Market Fund - 0.06% 7-day yield
• Fidelity Money Market Fund - 0.02% 7-day yield (reviews on Fatwallet)
• Fidelity Municipal Money Market Fund - 0.01% 7-day yield
• TIAA-CREF Money Market Fund - 0.00% 7-day yield
• FW Thread on Treasury Bills
• I & EE Savings Bonds for 2010, I Bond Article, I Bonds as CD Alternatives

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

I would like to thank all of you for your support this year, and I wish you all a safe and happy holiday season. I'll be taking a break on the blog postings for the next couple of days as I visit with family.

The discussion forum remains active where you can stay on top of the latest rate changes, deals and financial related news. The Featured Threads page provides a list of the latest threads that I've marked with a featured status. The Latest Posts page provides a list of the threads with the latest posts.

And of course our rate tables that are accessible in the top menu remain active.

I reviewed some strategies to get better yields on liquid accounts yesterday. Today I'll review some strategies for certificates of deposit. As I mentioned yesterday, this record low interest rate environment is making it very difficult for those who depend on interest from their bank accounts. With rates so low, you'll want to take every opportunity to maximize the rates. The first decision for savers is how much if any of their money should go into CDs.

CDs or Savings Accounts?

Liquid accounts can be tempting when many have yields higher than 1-year CDs. But as we have seen over the last two years, savings and checking account rates can fall substantially. At least with a CD, your rate is locked until the CD matures. A good example of this was in 2007 when PenFed was offering 3-to-7 year CDs with 6% APY. During this time FNBO Direct was offering a savings account with a 6% APY and State Bank of Toledo was offering a reward checking account with a 6% APY on all balances. Locking your money into a long-term CD didn't seem as appealing as a liquid account with the same rate. Now FNBO Direct's savings account pays only 1.10% APY. State Bank of Toledo's reward checking account only pays 2.51% APY on balances up to $25K.

Of course the rate lock feature of a CD can be a downside when rates start to rise. The problem is that no one knows when this will be. So it makes sense not to put all your eggs in one basket when you decide about how much to put into CDs and how much to put into liquid accounts.

CD Ladders

One common way to hedge you bets is to use a CD ladder approach. In this approach, your long-term CDs are staggered so some mature on regular intervals (i.e. every 6 months or every 1 year). If CD rates start to rise, you can slowly start rolling those maturing CDs into higher yielding CDs.

If you're just starting a CD ladder, the common approach is to start with short-term CDs for most of the CDs, and when they mature, you roll them into long-term CDs. With most short-term CD rates so low, you may want to consider just keeping that money in savings or reward checking accounts.

Early Withdrawal Penalties

Another important consideration for long-term CDs is the early withdrawal penalty. Instead of waiting for a long-term CD to mature before you buy a new CD with higher rates, you usually have the option to close the CD early. You'll have to pay a penalty for the early withdrawal, but if that penalty is mild, you could earn more than if you just wait for the CD to mature.

As many of the regular readers of this blog know, I've been writing a lot about long-term CDs with mild early withdrawal penalties. Two good deals continue to be the 5-year CD at Ally Bank and the 5-year and 7-year CDs at PenFed. I reviewed these CDs in this blog post and looked at effective rates if these CDs were closed early. As you can see in that post, you can earn more with these CDs closed early than you could with short-term CDs.

There are some potential risks with depending on the mild early withdrawal penalty on long-term CDs. I reviewed these risks in this blog post. One risk is that the bank could refuse an early withdrawal. Some banks give themselves that right in their disclosures. So it's important to review the bank disclosures so you're aware of any possible gotchas.

Tips to Earn More Interest on CDs

If you do decide to go with CDs, there are some basic steps that can help you get higher rates. First, remember that CD rates are negotiable. You often can get higher rates than the rates listed by the bank. This is especially true if you're a long-term customer at your local bank. If you request a higher rate, try to have rates of a few of the bank's competitors handy.

Another important step is to make sure you don't let CDs automatically roll over at maturity. This is especially true if your original CD was a special CD at any large bank. These special CDs are typically rolled over into standard CDs which can have very low rates.

If your CD matures and your bank isn't willing to offer a rate that's competitive, you should consider moving that CD to a new bank or credit union. When the CD matures, you typically have a grace period of 5 to 15 days in which you can close the CD without a penalty. However, some banks won't pay interest during the grace period if you close the CD. So if you decide to move your money, try to move it as soon as the CD matures.

For non-local banks, it can be problematic to receive the funds from a matured CD. Make sure you plan for this and check with the bank before the CD matures. It's not a good option to have the bank mail you the check. This can take one or more weeks. During this time the money isn't earning interest. A better option is a free ACH transfer to your other bank account. Unfortunately, not many banks provide this option. However, most will transfer the CD money to a liquid account that you have with that same bank. Once it's in that liquid account, you can then write a check or pull the money using the ACH service of another bank. Finally, a wire transfer is an option to receive the funds. However, there's almost always a fee for an outgoing wire transfer, but this fee may cost you less than the loss of interest while waiting for the check in the mail.

CDs may not have the appeal of online savings accounts or reward checking, but if you want to earn the most on your safe money, CDs shouldn't be dismissed. Hopefully, the above tips can help you make more on your CDs. If you have any tips, please leave a comment.

Earlier this month Fort Knox Federal Credit Union did something that's rare these days, it raised its CD rates. Its long-term CD rates are now very competitive. These include a 2.75% APY 5-year CD, a 2.55% APY 4-year CD and a 2.25% APY 3-year CD. Minimum deposit is $500. One thing that recently changed is an extra rate of 0.15% for Jumbo CDs with a $100K minimum deposit. These rates are listed on the credit union rates page as of 2/23/2010.

This credit union used to offer high rates on its short-term special CDs. These rates not only went down, but the credit union restricted these special CDs to local residents. The regular CDs remain open to all members.

Earlier this year one reader emailed me about a very convenient way to open CDs. The credit union is part of the CU Service Center which allows you to take care of many banking transactions at a shared branch. The reader deposited a large check at a local credit union that belonged to this network. The deposit was made to his Fort Knox savings account. He called Fort Knox FCU that same day, and he was able to open the CD with the funds from the deposited check.

For more CD details, please refer to my previous post in which I discuss the early withdrawal policy and penalties.

Visa Platinum Cash-Back Credit Card

Fort Knox FCU also offers a great cash-back credit card with 5% cash back for gas and 1.25% cash back on all other purchases.

Membership Eligibility

Fort Knox FCU used to have a typical field of membership which included residents of several counties in Kentucky. However, earlier this year I noticed the following highlighted sentence in the credit union's membership eligibility page:

If you do not meet any of these eligibility criteria, you may qualify for membership by joining the American Consumer Council --it's free!

I just noticed the credit union now has an online application. In the online application where you select how you're eligible to join, it states:

If you can't find an eligibility requirement to match your situation, you can still join the credit union. Just select the "I'm eligible for membership through" drop down to the left and choose the "other" option.

Credit Union Overview

Branches are located in several cities in Kentucky including Fort Knox, Radcliff, Elizabethtown and Campbellsville. Also, as I mentioned above, the credit union belongs to the shared credit union network that allows you to perform several banking transactions at shared branches across the nation.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 2.20% (excellent) based on September 2010 data. Please refer to our financial overview of Fort Knox Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 7000).

Searching for Top CD Rates

To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.

This record low interest rate environment is making it very difficult for those who depend on interest income from their bank accounts. Many savers are probably trying to find what to do with their matured CDs which had been earning over 5.00%. Now it's very hard to find a 3.00% APY. I thought it would be useful to describe some strategies that may help you make a little more interest in this environment.

The first decision you'll need to make is if you want a liquid account or a certificate of deposit. In this post I'll focus on liquid accounts. The next post will focus on CDs (see post).

A liquid account like a savings account or checking account has the advantage of not locking in your money. There's no penalty if you need the money either for an expense or a better bank deal. Also, the rates are variable which is a plus if interest rates start to rise. However, in the last two years this variable interest rate feature has been a disadvantage as rates have fallen.

Liquid accounts can be tempting when many have yields higher than 1-year CDs. However, it should be noted that rate leaders rarely stay on top for more than a year. If you want the top rates, you need to plan to move your money to new banks or credit unions at least once a year.

The best rates on liquid accounts are typically only available online. If you only want to bank at brick-and-mortar offices, the yields that you find will likely be much lower.

Another issue to consider is that the liquid accounts with the best rates typically have balance caps. You only earn the top rate up to that balance cap. This cap can range from $10K to $250K. In the past it used to be the best rates were for those with the largest balances. For many liquid accounts today, it's the other way around.

For liquid accounts, there are two basic accounts to consider for maximum interest rates: 1) Savings Accounts 2) Reward Checking Accounts.

Savings Accounts

With a savings account, your money earns interest without any work. I consider money market accounts to be essentially the same as savings accounts. The main difference between these is that money market accounts typically have limited check writing. I'm also going to include a regular checking account in this group. There are now some internet checking accounts that offer rates just as high as online savings accounts. The main difference between checking accounts and savings accounts is that checking accounts don't have withdrawal limitations. Savings accounts and money market accounts are limited to six electronic or check withdrawals per month per federal regulation. The main feature shared by all of these liquid accounts is that they don't require any work to qualify for the high rates. Perhaps a better name would be work-free liquid accounts.

High-Yield Reward Checking Accounts

The other type of liquid account is the high-yield reward checking account. These accounts have higher yields than internet savings accounts, but there are two main disadvantages: 1) Balances that qualify for the high yield are capped, typically at $25K, 2) Monthly requirements like making 10 debit card purchases a month are required to qualify for the high yield.

Some banks that offer reward checking accounts also offer a companion savings account. The savings account also offers a high interest rate. Like the checking account, the high rate is typically limited to a certain balance. Also, you have to qualify for the high rate by meeting the reward checking requirements. Thus, I consider the reward checking/savings combo to be just a version of the reward checking account.

The debit card usage requirement is the main feature that allows these reward checking accounts to pay higher rates than savings accounts. For every debit card purchase, the retailer pays a small fee to the banks. This is called the interchange fee, and it averages around 1.40% of the purchase. There's concern that the Fed's proposed regulation on interchange fees will end these reward programs. It's too early to know what the actual effect will be, but it's something to consider. Rates could be considerably lower in the next few years.

Comparing Yields on Savings, Money Market and Checking Accounts

If you want to find the best rate regardless of the type of account, you can use our Deposit Account Comparison Tool. In the top right box, you can select the type of accounts you want to search for and the dollar amount for your investment. The dollar amount is useful to factor in balance caps. The larger your balance, the more effect the balance cap will have.

What's Your Strategy?

How do you maximize the interest in your liquid accounts? When do you decide to move your money to another bank? Has reward checking replaced online savings accounts for most of your money that you want to stay liquid?

Justice Federal Credit Union is offering a special CD for its 75th anniversary. It's a 75-day CD with a 7.50% APY. Maximum deposit is $25,000. Minimum is $500. New money is required. Offer is available to new and existing members. It's a limited time special that began on December 1st. It's listed on the credit union's front page as of 12/22/2010. Details are listed in the credit union's promo page.

If a member deposits $25K, he'll make around $385 from this CD. As a comparison, if he deposited $25K in SmartyPig earning 1.75% APY (the highest non-reward liquid account rate), we would make around $90 after 75 days.

The credit union also has competitive rates on its standard and IRA certificates and Jumbo certificates. For the Jumbo certificates, the best yields include a 2.70% APY 5-year CD and a 2.00% APY 3-year CD. These are listed in the credit union's rates page as of 12/22/2010.

Membership Eligibility

JFCU membership eligibility is based on employment in Select Employer Groups and membership in certain law enforcement organizations. A list of eligible law enforcement associations is available at this section of the membership page. A couple of these associations allow anyone to be a member for a fee. Once you are eligible, the instructions for joining provide an application that can be downloaded. Membership requires a minimum balance of $5 in the share savings account.

In 2007 JFCU had a very popular CD deal with a 6.25% 24-month CD. Many readers went through the membership process which wasn't easy. To review the issues, please refer to this post and the comments. Below is a list of the important membership issues from that post:

• Hard credit pull by Equifax is done
• National Sheriffs' Association (NSA) and National Native American Law Enforcement Association (NNALEA) are part of JFCU's FOM
• NSA membership costs $35, and you can join online.
• NNALEA membership costs $15. In 2007 readers reported problems with the NNALEA online application.
• Notarized copy of driver's license was required
• Proof of association membership was required. For the NSA, you must include the membership number.

Make sure to contact the credit union for the latest requirements for joining.

Branches are located in Washington DC, Los Angeles, San Diego, New York, Texas, Virginia and West Virginia. Many of their branches have restricted or limited access. They are members in the Shared Service Center which allows you to perform many banking transactions at credit unions around the country.

JFCU has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 13.62% (excellent) based on September 2010 data. Please refer to our financial overview of Justice Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 151).

Credit for this find goes to FW member ck90211 who mentioned this special in this FW CD thread.

Searching for Top CD Rates

To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.

Flagstar Direct continues to offer a nice promotion on its free interest Checking Account. First, it's offering an intro rate of 1.50% APY for the first 4 months. Second, it's offering an additional $100 bonus for establishing direct deposit within the first four months. Only one promotional account is allowed per household. This promo is listed at Flagstar Direct's Express Checking Account page as of 12/21/2010.

The Express Checking Account has some nice features:

• No monthly maintenance fees
• $1 minimum opening deposit
• Free checks
• Fee-free access to ATMs in the Allpoint and Presto! networks in all 50 states

The standard interest rate isn't the best, but it's competitive for regular checking accounts (non-reward). As of 12/21/2010, the rate is 0.85% APY on all balances.

I last reported on this promotion in this September blot post. One reader already has reported receiving the $100 bonus. Today I used the online chat to ask the Flagstar customer service rep some questions. Below is what I was told regarding the direct deposit requirement for the bonus. It appears you can substitute debit card purchases and/or online bill payment. You may want to double check. CSRs are not always correct.

you: What is defined as a direct deposit?

CSR: Direct deposit is defined as a minimum of $250 in ACH activity per month, or perform at least 15 transactions monthly via debit card or online bill payment.

you: thanks. do you mean that one could qualify for the $100 bonus by making at least 15 debit card purchases or online bill payments?

CSR: That is correct Ken. In order to receive the $100 bonus, you must perform 15 debit card or online bill payment transactions per month.

I also asked about hard credit pulls and ChexSystem.

CSR: Flagstar Bank does a soft credit check to verify your credit history. We use Chexsystems to verify this information.

you: thanks. In the ChexSystem verification, do you reject applicants with too many recent inquiries (account openings).

CSR: That information does not apply to our credit check.

The use of ChexSystem to reject applicants who have too many recent inquiries appears to be more common these days. Readers have also commented that they did not receive a hard pull when they opened accounts.

Other Accounts

Flagstar Direct used to offer some good deals on its CDs, but its CD rates are now under 1.00%.

Its Express Money Market account has a yield of 1.06% APY (1.20% APY for $100K+) as of 12/21/2010. Like the checking account, the money market account is free with no minimum balance requirement and checks are free. A reader mentioned that they have an ACH bank-to-bank transfer service via Cashedge. It allows up to 5 links to external banks, and transfers take 3 business days.

Bank Overview

Flagstar Bank currently operates around 165 branches in Michigan, Indiana and Georgia. The bank has been hit hard by mortgage problems that started during the financial crisis. It has made some improvements this year with an increase in its Tier 1 Capital Ratio.

Flagstar Bank has an overall health score of 2 out of 5 with a Texas Ratio of 85.27% (poor) based on September 2010 data. The Texas Ratio has become worse since it was based on June data when it was 70.87%. It is also operating under an OTS supervisory agreement which was issued last January. Please refer to our financial overview of Flagstar Bank for more details. The bank has been a FDIC member since 1987 (FDIC Certificate # 32541).

Other Bank Bonuses

To find other bonus deals, please refer to my bank bonus page which has all of my recent bank bonus blog posts. Additional bonuses are listed in the checking discussion forum

First American International Bank is offering a special 1.50% APY on its 15-month and 18-month CD. Minimum deposit is $500. For the 18-month CD, higher rates are listed in a graphic: 1.60% APY for a $100K and 1.70% APY for $250K. The 18-month CD is also available in an IRA. These rates are listed at the bank's rates page as of 12/21/2010.

Compared to internet banks as of 12/21/2010, the best 12-month CD rate is 1.50% and the best 18-month CD rate is 1.65% APY at CNB Bank Direct with a minimum $25K deposit.

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

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 46.04% (average) based on September 2010 data. Please refer to our financial overview of First American International Bank for more details. The bank has been a FDIC member since 1999 (FDIC Certificate # 35186).

Searching for Top CD Rates

To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.

MidCoast Community Bank is offering a very competitive rate on its short-term CDs. For terms from 6 months to 12 months the CD yield is 1.00% APY. Minimum deposit is $500. These CDs are listed at the bank's rates page as of 12/21/2010.

It appears that a branch visit is required to open an account. Branches are located in Wilmington and Dover, Delaware.

As a comparison to internet banks on 12/21/2010, the best 6-month CD rate is 1.11% APY at Aurora Bank FSB. ING Direct's 6-month CD rate is only 0.75%. Both of these internet banks have their headquarters in Wilmington. It's interesting to see a brick-and-mortar bank in the same city as these two internet banks that has a rate that is so much higher.

Midcoast Community Bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 3.07% (excellent) based on September 2010 data. Please refer to our financial overview of MidCoast Community Bank for more details. The bank has been a FDIC member since 2007 (FDIC Certificate # 58498).

Searching for Top CD Rates

To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.

Customers Bank continues to offer good deals on CDs and a money market account. The rates have gone down since my September post, but the rates remain very competitive. There's also a new 2-year CD. Here are the special CD and money market account rates listed on the bank's rates page as of 12/20/2010:

• 2.00% APY 2-year CD, $500 minimum
• 1.75% APY 11-month CD, $500 minimum
• 1.75% APY money market account (1% under $10K)

The 11-month CD and money market account yield had been 2.00%. A reader mentioned in the forum that those who had signed up for the money market promotion before the rate change were still getting the 2% APY as of Dec 11 2010.

The bank offers an online application. On the first page, you have to choose a branch. However, one of the options is "too far from branch - online only". If you select this option, the next page will require you to select your state. Unfortunately, there are only two options: Pennsylvania and New Jersey.

Branches are located in the suburbs of Philadelphia in the cities of Doylestown, Phoenixville, Malvern, Wayne and Newtown Square.

The bank does business as Customers Bank, but it's actual name is New Century Bank. In September they took over ISN Bank after its failure. Century Bank's overall health score of 4 out of 5 with a Texas Ratio of 26.32% (above average) based on September 2010 data. Please refer to our financial overview of Customers Bank for more details. The bank has been a FDIC member since 1997 (FDIC Certificate # 34444).

Searching for High-Interest CD and Money Market Rates

• Best CD rates
• Money Market rates

Northstar Bank of Texas continues to offer a good deal on a 7-month CD. The rate has gone down since my August review of this bank, but it's still competitive at 1.25% APY. Minimum deposit is $1,000. This rate is listed in the bank's rates page as of 12/20/2010.

As a comparison to internet banks on 12/20/2010, the best 6-month CD rate is 1.11% APY at Bank of Internet USA.

The bank continues to offer an attractive high-yield reward checking account called Velocity Checking that pays 3.51% on balances up to $50K as of 12/20/2010. I first reported on this account in March 2009 when the yield was 4.51%. It's one of the few reward checking accounts that continue to have a $50K balance cap. For more details please see my Velocity reward checking review.

A branch visit is required to open an account. Branches are located in the northern parts of the Dallas/Fort Worth metro area in the cities of Denton, Argyle, Colleyville, Corinth, Grapevine, Krum, Lake Dallas, Lewisville and Pilot Point.

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 36.35% (above average) based on September 2010 data. Please refer to our financial overview of Northstar Bank of Texas for more details. The bank has been a FDIC member since 1973 (FDIC Certificate # 20935).

Searching for the Top CD Rates and Reward Checking Rates

• Best CD rates
• Reward Checking rates

In the last two weeks EverBank has made some nice increases in its 5-year CD rate. It's now 2.66% APY which is near the top for banks with accounts available nationwide. The 4-year CD rate is also competitive with a 2.21% APY. Minimum deposit is $1,500. These rates are listed at EverBank's High Yield CD page as of 12/19/2010.

One downside with EverBank's long-term CDs is a harsh early withdrawal penalty. According to page 31 of EverBank's disclosure:

We will impose an early withdrawal penalty on withdrawals made before the maturity date of the CD. 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.

For a 5-year CD that's 15 months of interest which is way above the average 6-month interest penalty.

Yield Pledge Money Market and Checking Accounts

EverBank continues to offer a 3-month interest rate bonus of 2.01% for its Yield Pledge checking and money market accounts. The ongoing yield for the money market account is 1.06% APY as of 12/19/2010. One thing to keep in mind regarding this 3-month bonus is that readers in the past have warned about a slow new-account opening process. So that could reduce the time your money is earning 2.01%.

One nice feature of EverBank's checking and money market accounts is their online check deposit which allows you to scan checks and deposit them online without having to mail in the checks. I was told in July that they have a limit of $10K per day. A separate form must be filled out and mailed or faxed.

For more details about EverBank accounts, please refer to my February EverBank account review.

Bank Overview

EverBank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 44.17% (average) based on September 2010 data. It's one of the larger internet banks with $11.55 billion in assets. Please refer to our financial overview of EverBank for more details. EverBank has been a FDIC member since 1998 (FDIC Certificate # 34775).

Searching for the Best CD and Savings Account Rates

• CD rates
• Savings Account rates

EBSB Direct continues to offer a competitive 3-year CD rate of 2.25% APY. It's the same rate as in my last report on this bank in early October. With rates trending down since October, this rate has become even more competitive. There's also a 10-month CD, but the rate is less competitive at 1.05% APY. Minimum deposit is $1,000. These rates are listed at EBSBdirect.com as of 12/19/2010.

One thing that appears to have changed since my October post is a reduction in the early withdrawal penalty. According to the bank's disclosure, "terms over 12 months the penalty will equal 6 months interest on the amount withdrawn."

EBSBdirect.com continues to offer a savings account with a 1.30% APY for balances of $50K to $1 million (0.75% for $5K to $50K). This was a better deal in October due to the guarantee that the rate will last until January 1, 2011. With that date less than two weeks away, that's probably more of a downside instead of a plus since one would expect a rate cut in January. Another downside is the $15 monthly maintenance fee for balances under $5K. I first reviewed this savings account in May 2009 when they were guaranteeing 2.81% for over 4 months. As you can see, interest rates have fallen quite a bit over the last year, but the account has remained competitive. That review of EBSB Direct also included details about the bank's ACH transfer service.

New England and New York Only

When I called the bank in October, I was told that EBSB Direct now only accepts customers from New England and New York State. This doesn't seem to be stated on the website. A reader commented in October that you can open new accounts even if you don't live in the New England area as long as you have at least one account already.

EBSB Direct is an online division of East Boston Savings Bank. The bank has an overall health score of 3 out of 5 with a Texas Ratio of 22.49% (above average) based on September 2010 data. Please refer to our financial overview of East Boston Savings Bank for more details. The bank has been a FDIC member since 1991 (FDIC Certificate # 33510).

Searching for the Best CD and Savings Account Rates

• CD rates
• Savings Account rates

It has been a while since I posted on Consumers Credit Union. They used to have a very nice reward checking account, but this account became less attractive when they reduced the balance cap from $25K to $10K. However, the top rate remains competitive at 4.09% APY as of 12/19/2010.

In previous years, they also used to offer some very competitive CD specials. They still offer these CD specials, but only one is now noteworthy. That's the 59-month CD and IRA CD special which has a 2.75% APY for a $100K minimum and 2.50% APY for the a $250 minimum. These rates are listed in the credit union's certificates rates table as of 12/19/2010.

As a comparison to other 5-year CDs on 12/19/2010, you can get a little higher rate at Melrose Credit Union which has a 2.93% APY on a 5-year CD.

One advantage at Consumers Credit Union is a smaller early withdrawal penalty than average. According to Consumers's CD disclosure, the early withdrawal penalty for terms over 1 year is 120 days of dividends.

Refer a Friend Bonus

The credit union currently is offering a nice refer-a-friend bonus. Both you and the person being referred will get $50 if the new member opens the reward checking account and meets the monthly requirements for the first full two months.

Membership

The credit union continues to make it easy for anyone to join. According to its membership page:

Membership follows a simple, two-step process: Pay a one-time, non-refundable $5 fee to our sponsor, the Consumers Cooperative Association, and then deposit and maintain a minimum $5 in your Membership Share/Savings Account.

There's an online application that's provided by Andera. It appears to allow you to apply for both the association membership and the credit union membership at the same time. You can also select the accounts that you want to open and fund the accounts with an ACH transfer from a checking or savings account. When you select the accounts, a pop-up states that the maximum amount that you can fund an account using a checking or savings account is $205,000.

Update 12/21/2010: Multiple readers have mentioned that they were rejected in the application process. Here's a comment from one reader:

They are declining people who have a large number of inquires with ChexSystems and since they pull your funds right away (before a determination is made) and you have to wait 10 business days to get your funds returned. PROCEED WITH CAUTION!

Credit Union Overview

Branches are located in the Illinois cities of Waukegan, Mundelein, Round Lake Beach, Gurnee and Volo.

The credit union has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 20.65% (above average) based on September 2010 data. Please refer to our financial overview of Consumers Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 68588).

Searching for the Best CD Rates and Reward Checking Rates

• CD rates
• Reward Checking rates

The FOMC held its last scheduled meeting of 2010 on Tuesday. As expected the Fed kept its monetary policy stance unchanged. The ultra-low interest rate policy that now includes QE2 continues without any end in sight. Short-term interest rates will likely stay low, but for long-term rates, conditions have changed. Treasury yields have risen sharply in the last month. The 10-year yield on Thursday was at 3.47% which is over 100 basis points higher than it was back in October. Claims have been made that the higher bond yields have been due to increased expectations of economic growth and inflation in 2011 from both QE2 and the recent tax deal that was passed.

The Fed funds future charts at the CME Group website are back in operation, and they're showing increased expectations for rate hikes next year. As compared to December 4th, the implied probability of a higher Fed funds rate have gone up from 9.3% to 19.2% for June, from 27.1% to 45.5% for September and from 34.0% to 57.1% for November.

Debit Card Interchange Fees

The Federal Reserve's monetary policy isn't the only thing that can affect savers. Its regulatory actions can also affect us, and that happened this week when they released proposals for debit card interchange fee caps. The caps were more severe than what had been expected. The proposal is a cap of 12 cents for all debit card transactions. Currently, the average is 44 cents.

These interchange fees are paid by retailers to the banks, and retailers claim that lower costs will be passed on to consumers. One thing is more certain: debit card rewards and free checking will suffer. However, the one question that's not easy to answer is how much will this affect small banks and credit unions that issue debit cards. They are the ones that offer the vast majority of reward checking accounts which depend on these debit card fees to help pay for the high yields.

The debit card fee caps are suppose to only apply to banks with at least $10 billion in assets. But it's not that simple. That would require two debit interchange schedules, and Visa and MasterCard may have reasons to have only one.

The new rules won't be final until April and won't take effect until July 2011. Then we'll have to wait and see if MasterCard and Visa decide on two schedules. In short, don't give up on reward checking. It's too early to know how much effect this new regulation will have.

Bank Failures

The FDIC had a busy night on Friday with six bank closures which brings the yearly total to 157. That may be the final total for 2010 since the next two Fridays are holidays. For all six closures, the FDIC was able to find another bank to take over the failed bank. However, one of these acquiring banks was allowed not to assume certain out-of-state CDs. Another interesting note on these closures is that one of the banks that failed had solid health ratings and no enforcement actions against it. It appears the failure was due to fraudulent bonds that the bank had invested in.

Savings Account Rates

This was a quiet week for rate changes. One change that hasn't happened yet but is scheduled is a rate drop at Alliant Credit Union. I confirmed with an Alliant CSR that its board has approved a new savings account yield of 1.15% APY and a new High Rate Checking yield of 1.10% APY for January. Both yields are currently 1.35% APY. The news is disappointing, and it's also worrisome. Savings account rates have continued to slowly trend downward this year, and it looks like that may continue into 2011.

Rate Hikes:

1. None

Rate Cuts:

1. Alliant Credit Union Savings - 1.15% in January (currently 1.35%)
2. Alliant Credit Union Checking - 1.10% in January (currently 1.35%)

Certificate of Deposit Rates

With rising 10-year Treasury yields, one might expect to see some interest rate hikes on long-term CD rates. Just like last week, there were a few banks and credit unions that raised their long-term CD rates. EverBank did another increase on its 5-year CD rate. This week it went up from 2.55% to 2.66% APY. I also added another bank to the list. Salem Five is offering 2.75% APY on a special 5-year CD and IRA CD. This is available nationwide and can be opened online.

Reward Checking Accounts

I added one reward checking account to the nationwide list this week. It's at First National Bank in north Louisiana, and the account can be opened online from any state. However, its low balance cap of $15K is a big downside. On the plus side, the rate is currently above average at 3.55% APY.

Compared to other nationwide reward checking accounts, the rate is a little higher, but the balance cap is a little lower. There are still four nationwide reward checking accounts that offer 3% APY on balances up to $25K.

To find reward checking accounts available nationwide or to find those that are only available in your state, please refer to the reward checking section of DepositAccounts.com.

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

Banking News/Resources

• Personal Banking 101: Certificates of Deposit
• Six Banks Closed by Regulators in Four States
• Fed Proposes Large Cut in Debit Card Interchange Fees
• FDIC Deposit Insurance Coverage Changes in 2011 - No Effects for Most of Us
• Federal Reserve Continues with Same Policies
• Lessons from Recent High-Profile Security Breaches for Protecting Your Bank Accounts

Savings/Checking Accounts - Nationwide

• Alliant Credit Union's Savings and Checking Rate Scheduled to Drop in January

CD Deals - National

• Top 5-Year CD and IRA CD Rates at Velocity Credit Union in Texas - Easy Membership
• Top 1-Year & 3-Year CD Rates at RTN Federal Credit Union in MA - Easy Membership
• Competitive CD Specials at Salem Five Bank - Available Nationwide
• Top 3-Year CD Rate at First Bank Richmond in Indiana - RATE CUT
• Competitive 18-Month CD and IRA CD Rate at MetLife Bank - RATE CUT

Checking/Savings Bonuses

• $150 Checking Account Promotion at Susquehanna Bank in Parts of PA, MD, NJ & WV Only
• New Checking Account Bonus at PerkStreet Financial

Reward Checking Accounts

• High-Yield Reward Checking Account at First National Bank in Louisiana - Available Nationwide
• High-Yield Reward Checking Account at Fort Morgan State Bank in Colorado - Local Only
• Reward Checking Accounts When Your Balance Tops $25K

CD and Money Market Deals - Local

• Competitive CD Rates at Greater Metro FCU in New York City - Limited Membership
• Competitive CD Rates at Credit Union of Atlanta in Georgia - Local Only
• Top CD and IRA CD Rates at LOMTO FCU in New York City - Local Only
• Top Long-Term CD Rates Continue at Randolph-Brooks Credit Union in Texas - Local Only
• Competitive CD, Money Market and Reward Checking Rates at Grand Bank in NJ - Local Only

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. 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.

Rates as of December 18, 2010

Checking/Savings/Money Market Accounts:

• Best Reward Checking Account Rates (Nationwide & by State)
• Best Savings Account Rates (Nationwide & by State)
• Best Money Market Rates (Nationwide & by State)
• Best Checking Account Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• EverBank - 2.01% ($5K min), 3 mo promo rate up to $50K (1.06% ongoing) account review
• SmartyPig - 1.75% (min $25, max $50K) withdrawal restrictions, account review
• AmericaNet/Evantage Bank - 1.75% (up to $35K, 1% over) account review
• The Morrill and James Bank - 1.51% Checking (min $1.5K) account review
• SFGI Direct - 1.41% (min $500 to open) account review
• Incredible Bank - 1.35% Checking ($1K min) account review
• Hudson City Savings Bank - 1.35% (min $2.5K)
• Alliant Credit Union - 1.35% (1.15% eff Jan 1st) (min $100) account review
• Ready Saver - 1.35% account review
• Capital One/Costco - 1.30% InterestPlus Savings ($5K min) quarterly bonuses for $10K+, account review
• American Express Bank - 1.30%, account review
• Clear Sky Accounts - 1.30% account review
• Sallie Mae Bank - 1.30% (Upromise rewards) account review
• Capital One - 1.25% InterestPlus Savings ($1K min) quarterly bonuses for $10K+, account review
• Discover Bank - 1.25% Savings (min $500) account review
• H&R Block Bank - 1.25% MMA (min $50K) account review
• WTDirect - 1.21% ($10K min) account review
• CNB Bank Direct - 1.20% account review
• Zions Bank - 1.11% ($1K min)
• ING Direct - 1.10% Orange Savings
• DollarSavingsDirect - 1.10% ($1K min) account review
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• Ally Bank - 1.09% MMA account review

• Noteworthy Accounts - Local Only

• Mid America Bank & Trust Company - 1.54% (min $10K) in MO
• Affinity Bank (formerly Atlanta Business) - 1.40% MMA (min $100K) in GA
• Solera National Bank - 1.25% (min $100) in CO

3-Month Certificates of Deposit:

• Best 3-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Self-Help CU - 1.01% (min $500) account review
• Fort Knox FCU - 1.00% (min $500)
• AmTrust Direct - 1.00% (4-mo) (min $1K)
• TotalBank - 0.85% e-CD (min $1K)
• Virtual Bank - 0.75% (min $10K)
• Ally Bank - 0.64%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 1.45% (min $500) in NYC
• Bank of Georgetown - 1.40% (4-mo) (min $1K) in Washington DC metro
• NavyArmy FCU - 1.30% (min $100K) in South TX
• Atlanta Postal CU - 1.00% (min $2K) in GA

6-Month Certificates of Deposit:

• Best 6-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.50% Active checking required, account review
• America's Credit Union - 1.25% (min $25K)
• Aurora Bank FSB - 1.11% (min $1K)
• Virtual Bank - 1.06% (min $10K)
• OneWest Bank - 1.05% (min $1K)
• Ally Bank - 1.04%

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.56% IRA-only (min $2.5K) in NY
• Self Reliance New York FCU - 1.65% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.41% (min $1K) in GA
• F&A Federal Credit Union - 1.40% (min $50K) in CA
• NavyArmy FCU - 1.40% (min $100K) in South TX
• Industrial Credit Union - 1.40% (min $1K) in MA
• Fayetteville Bank - 1.26% (min $500) (1.41% $100K+) in TX

9-Month Certificates of Deposit:

• TotalBank - 1.15% e-CD (min $1K)
• Virtual Bank - 1.11% (min $10K)
• OneWest Bank - 1.10% (min $1K)
• Discover Bank - 1.10% (min $2.5K)
• Easthampton Savings Bank - 1.10% (min $1K)

• Noteworthy Accounts - Local Only

• Island Federal Credit Union - 2.00% (min $2K) Requires active checking, in NY
• Miami Postal Service CU - 1.76% (min $5K) in Miami, FL
• Self Reliance New York FCU - 1.70% (min $500) in NYC
• NavyArmy FCU - 1.45% (min $100K) in South TX

12-Month Certificates of Deposit:

• Best One-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.75% Active checking required, account review
• America's Credit Union - 1.55% (13-mo) (min $25K)
• RTN Federal Credit Union - 1.55% (min $50K)
• CNB Bank Direct - 1.50% (min $25K) (shown at the bank's online banking login page) account review
• Alliant Credit Union - 1.50% (min $25K) account review
• Bank of Internet - 1.41% (min $1K) account review
• Melrose CU - 1.41% (min $5K) account review
• North American Savings Bank - 1.35% (14-mo) (min $1K)
• Salem Five - 1.35% (14-mo) (min $10K)
• Sallie Mae Bank - 1.30% (no min) account review
• Discover Bank - 1.30% (min $2.5K) account review
• Ally Bank - 1.28% (min $0) account review
• Virtual Bank - 1.26% (min $10K)
• Choice Financial - 1.25% (13 mo) (min $5K) add-on feature, account review
• Ally Bank - 1.20% (11-mo) (min $0) No-Penalty CD
• ING Direct - 1.00%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.00% (min $500) in NYC
• NavyArmy FCU - 1.85% (min $100K) in South TX
• University of Iowa Community CU - 1.80% (15-mo) (min $100K) in Iowa
• Progressive Credit Union - 1.71% in NYC
• Affinity Bank (formerly Atlanta Business) - 1.71% (min $1K) in GA
• Barksdale Federal Credit Union - 1.61% (min $1K) in Louisiana
• Industrial Credit Union - 1.60% (min $1K) in MA
• Fayetteville Bank - 1.56% (min $100K) in TX

18-Month Certificates of Deposit:

• Best 18-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Alliant Credit Union - 1.75% (min $25K) account review
• CNB Bank Direct - 1.65% (min $25K) (shown at the bank's online banking login page) account review
• America's Credit Union - 1.65% (min $25K)
• Fort Knox FCU - 1.50% (min $500)
• Aurora Bank FSB - 1.43% (min $1K)
• Discover Bank - 1.40% (min $2.5K), account review
• Acacia Federal - 1.40% (min $500)
• USAA Bank - 1.35% (min $1K) (1.70% $175K min) account review
• Ally Bank - 1.35% (no min)
• MetLife Bank - 1.35% (min $25K)
• First Savings Bank Northwest - 1.28% unlimited add-on (min $500) account review

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.82% IRA-only (min $200) in NY
• Self Reliance New York FCU - 2.10% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.87% (min $1K) in GA
• Hyde Park Savings Bank - 1.70% (16-mo) Online Only (min $1K) in MA
• Truliant Credit Union - 1.50% (17-mo) (min $1K) in NC, SC & VA

24-Month Certificates of Deposit:

• Best Two-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• America's Credit Union - 2.05% (25-mo) (min $25K)
• Alliant Credit Union - 1.90% (min $25K) account review
• CNB Bank Direct - 1.85% (min $25K) (shown at the bank's online banking login page) account review
• Fort Knox FCU - 1.75% (min $500)
• Melrose CU - 1.66% (min $5K) account review
• Delta Community CU - 1.60% (min $1K) account review
• Bank of Internet - 1.60% (min $1K)
• Ally Bank - 1.56% Raise Your Rate CD

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.35% (min $500) in NYC
• First Peoples Community Credit Union - 2.20% (21-mo) (min $5K) in MD, PA & WV
• NavyArmy FCU - 2.15% (min $100K) in South TX
• Barksdale Federal Credit Union - 2.12% (min $1K) in Louisiana
• University of Iowa Community CU - 2.10% (25-mo) (min $100K) in Iowa
• Affinity Bank (formerly Atlanta Business) - 2.07% (min $1K) in GA

36-Month Certificate of Deposit:

• Best 3-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Air Force FCU - 2.25% (min $25K) membership restrictions account review
• RTN Federal Credit Union - 2.25% (min $50K)
• Fort Knox FCU - 2.25% (min $500)
• Melrose CU - 2.17% (min $5K) account review
• Navy Federal - 2.15% (30-mo) (min $10K) membership restrictions account review
• Alliant Credit Union - 2.10% (min $25K) account review
• America's Credit Union - 2.05% (min $25K)
• Bank of Internet - 2.00% (min $1K)
• Andrews FCU - 2.00% (min $1K) account review
• USAA Bank - 1.85% (min $1K) (2.15% $175K min) account review
• Acacia Federal Savings Bank - 1.85% (min $500) account review
• Delta Community CU - 1.85% (min $1K) account review
• Sallie Mae Bank - 1.75% (no min) account review
• Pentagon Federal CU - 1.75% (min $1K), account review

• Noteworthy Accounts - Local Only

• Sea Comm Federal Credit Union - 2.63% (min $1K) in Northern NY
• First Peoples Community Credit Union - 2.60% (39-mo) (min $5K) in MD, PA & WV
• Massena Savings and Loan - 2.56% (min $1K) in NY
• First Community CU - 2.50% w/relationship (min $300) in MI
• Barksdale Federal Credit Union - 2.43% (min $1K) in Louisiana
• Security Service FCU - 2.35% (min $100K) in TX & CO
• Affinity Bank (formerly Atlanta Business) - 2.32% (min $1K) in GA
• American Heritage Credit Union - 2.30% (min $1K) in PA
• Redding Bank in Commerce - 2.27% (min $100K) in Northern CA
• Montauk Credit Union - 2.25% in NYC
• Fort Bragg Federal Credit Union - 2.23% (min $25K) in NC

48-Month Certificate of Deposit:

• Best 4-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• America's Credit Union - 2.55% (min $25K)
• Fort Knox FCU - 2.55% (min $500)
• Alliant Credit Union - 2.50% (min $25K) account review
• Melrose CU - 2.42% (min $5K) account review
• Self-Help CU - 2.28% (min $500) account review
• Hudson City Bank - 2.25% (min $5K) account review
• Pentagon Federal CU - 2.25% (min $1K), account review
• EverBank - 2.21% ($1.5K min) account review
• Bank of Internet - 2.20% (min $1K)
• Acacia Federal Savings Bank - 2.10% (min $500) account review

• Noteworthy Accounts - Local Only

• First Community CU - 3.25% w/relationship (min $300) in MI
• Barksdale Federal Credit Union - 2.89% (min $1K) in Louisiana
• Education First CU - 2.75% in SE Michigan
• Police & Fire Credit Union - 2.75% (min $500) in PA
• Sea Comm Federal Credit Union - 2.75% (min $1K) in Northern NY
• LOMTO FCU - 2.63% in NYC
• The Napoleon State Bank - 2.58% (min $50K) in IN

60-Month Certificate of Deposit:

• Best 5-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 3.00% Active checking required, account review
• Melrose CU - 2.93% (min $5K) account review
• Air Force FCU - 2.85% (min $25K) membership restrictions account review
• Pentagon Federal CU - 2.75% (min $1K), account review
• Salem Five - 2.75% (min $10K)
• Fort Knox FCU - 2.75% (min $500)
• EverBank - 2.66% ($1.5K min) account review
• Velocity Credit Union - 2.63% (min $1K) (2.73% IRA)
• Northrop Grumman FCU - 2.53% (min $40K), account review
• Acacia Federal Savings Bank - 2.50% (min $500) account review
• Delta Community CU - 2.50% (min $1K) account review
• Andrews FCU - 2.50% (min $1K) account review
• Mountain America CU - 2.45% (min $1K) account review
• Navy FCU - 2.40% ($20K min) (2.50% $100K+) restrictions to membership, account review
• USAA Bank - 2.40% (min $1K) (2.45% $175K min) account review
• Ally Bank - 2.40% (min $0) account review
• First Internet Bank - 2.40% (min $1K)
• Sallie Mae Bank - 2.35% (no min) account review

• Noteworthy Accounts - Local Only

• PEF Federal Credit Union - 3.29% (min $500)
• First Community CU - 3.25% w/relationship (min $300) in MI
• Police & Fire Credit Union - 3.25% (min $500) in PA
• LOMTO FCU - 3.10% in NYC
• First Peoples Community Credit Union - 3.10% (min $5K) in MD, PA & WV
• Barksdale Federal Credit Union - 3.04% (min $1K) in Louisiana
• Security Service FCU - 3.00% (min $100K) in TX & CO
• Sea Comm Federal Credit Union - 2.99% (min $1K) in Northern NY
• First Choice Bank - 2.90% (min $1K) in NJ
• Hudson Valley Credit Union - 2.85% (min $500) in NY State
• F&A Federal Credit Union - 2.75% (min $50K) in CA

84-Month Certificate of Deposit:

• Best 6+-Year CD Rates (Nationwide & by State)

• Pentagon Federal CU - 3.25% 7yr (min $1K), account review
• Capital One - Costco - 3.05% (10-yr) (min $5K)
• Navy FCU - 3.00% 7yr ($20K min) restrictions to membership, account review
• Capital One Direct Banking - 3.00% (10-yr) (min $5K)
• Discover Bank - 2.75% 7yr (min $2.5K) (3.00% 10yr) account review
• USAA Bank - 2.70% 7yr (min $1K) (2.74% $175K min) account review
• Apple FCU - 2.60% (min $500) (3.25% 10yr) account review

• Noteworthy Accounts - Local Only

• Security Service FCU - 3.50% 7yr (min $100K) in TX & CO
• Randolph-Brooks Credit Union - 3.45% (min $75K) 7yr in Central TX
• Anchor Mutual Savings Bank - 3.00% 8yr (min $500) in WA
• Access National Bank - 3.00% 7yr (min $10K) in VA, DC & MD
• Montauk Credit Union - 3.00% 7yr in NYC
• Cardinal Bank - 2.91% 6yr (min $1K) in VA, DC & MD

Various Deposit Account Deals

• Bank Deals Forum
• Checking/Savings Account Bonuses
• Best IRA CD rates, local and nationwide deals
• Latest CD and Savings Account Deals with No Major Deposit Limitiations

Bank Account Alternatives

• Ford Interest Advantage - 1.65% rate for $50k+, Ford Interest Advantage review
• GE Interest Plus - 1.45% rate for $50k+
• Vanguard Tax-Exempt Money Market Fund - 0.14% 7-day yield
• Paypal Money Market Fund - 0.11% 7-day yield
• Vanguard Prime Money Market Fund - 0.06% 7-day yield
• Fidelity Money Market Fund - 0.01% 7-day yield (reviews on Fatwallet)
• Fidelity Municipal Money Market Fund - 0.01% 7-day yield
• TIAA-CREF Money Market Fund - 0.00% 7-day yield
• FW Thread on Treasury Bills
• I & EE Savings Bonds for 2010, I Bond Article, I Bonds as CD Alternatives

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

For those who are interested in possibly earning more interest than can be had with many savings accounts, but still want the low degree of risk that comes with a deposit account insured by the FDIC, a certificate of deposit (CD) can be a reasonable choice.

What is a CD?

The Federal Reserve defines a certificate of deposit as a “time deposit.” This means that the money you put in the bank is held for a specific period of time. The understanding is that you will not withdraw the money before the maturity date. Because banks expect to have that money available to them for a specific period of time, they pay a higher rate of interest to you than they would on a savings account or an interest-bearing checking account. If you withdraw the money early, the financial institution will penalize you for it.

The Federal Reserve’s Regulation D insists that account withdrawals on time deposits made within six days after being deposited are subject to the loss of six days’ interest, but that is the only penalty required by the Fed. Many banks allow a “grace period” after the maturity date in which you can withdraw the money from the CD without penalty beyond the Fed’s required loss of interest. However, once you get beyond a “grace period” that a bank may have, you are subject to rather hefty early withdrawal fees.

CDs come in a variety of maturities. Most CDs can be found in maturities ranging from one month on up to seven years – or more. You can also get IRA CDs, marketed as ideal for retirement accounts. In many cases, longer terms can mean higher rates of return. CDs typically have minimums that range from $500 to $10,000. There are also jumbo CDs that deal in amounts in excess of $100,000. It is a good idea to do research on CD ladders are popular because they allow you to set up a system to access your money with more regularity, and because CD laddering also offers the chance to take advantage of rising interest rates. Because of the nature of CDs, once you put the money in, it is stuck there until maturity (unless you want to pay a hefty penalty) and you are stuck with the same interest rate. So, if interest rates rise two years after you lock into a five-year CD, you don’t get the advantage of those higher yields.

CD laddering helps you reduce the liquidity and yield issues presented by CDs. Instead of putting all of your money into one CD, you can divide it into five CDs. So, if you have $15,000 you divide it up into five CDs of $3,000, and then invest it in CDs of different maturities: one-year, two-year, three-year, four-year and five-year. This way, each year a CD matures. (There are also CD ladders that can be set up for months, rather than years.)

The beauty of the system is that once you get your ladder set up, you renew for five years. So, after the first year, you renew your expiring CD for five years, getting the higher yield for a longer-term CD that matures in year six of your ladder. You have access to the money if you should need it, and you can take advantage of interest rates that might be higher. Watch out for automatic renewal policies, though. Some banks will renew the CD for the same maturity, which could throw your ladder off. Find out if your bank practices this policy on your CD, and make sure you withdraw the funds at maturity and then open a new CD for the appropriate maturity.

Alternative CDs

Realize, too, that there are other, less “traditional” CD products. You can find them if you are looking for them. Here are some of the options you might run across:

• Penalty Free: A very few banks offer penalty free CDs that allow to withdraw funds before the end of the CD without penalty. The flexibility, though, usually means that you will have to settle for a lower yield.
• Bump Up: If these CDs see a rate increase for new depositors during the term, you have the option of increasing your yield.
• Callable: You can find higher rates if you get a callable CD. Basically this means that the bank can close your deposit account after a certain protection period has passed. So, you might open a seven-year CD with a one-year protection period. Any time after that year passes (and you might see a great yield for that year), the bank can close your account, forcing you to open a new CD – usually at a lower rate.
• Brokerage: Using a broker, you can look for CDs that can be traded on the secondary market. (Realize that not all brokerage CDs are FDIC insured.) If you need the money before maturity, instead of taking an early withdrawal penalty, you have to sell the CD on the secondary market, which could be for a loss.

Carefully consider your options, and then make a decision that makes the most sense for you. For many people, that is likely to be traditional CDs that are laddered.

The FDIC was busy today with six bank closures. This will probably be the last of the bank closures for 2010. The next two Fridays are holidays. The total number of bank failures for this year is now 157.

There was another bank failure in Florida which puts the number of Florida closures at 29. That's the most of any state. Second place goes to Georgia which had 3 closures today which puts the yearly total at 21.

For each of the six bank closures, the FDIC was able to find another bank to assume the deposits. There was another case of an acquiring bank not assuming some out-of-state CDs. The failed bank was Appalachian Community Bank, F.S.B. in Georgia. Here is how the FDIC described this:

If you have a CD that was not assumed by Peoples Bank of East Tennessee, such as an "out-of-state" non-IRA CD or QwickRate CD, your CD, if unencumbered, will automatically be closed, and the FDIC will mail your proceeds check, including interest earned through closing date, on Monday, December 20, 2010. You will not be assessed an early withdrawal penalty.

Most banks that failed had very weak health ratings. However, there was one exception. First Southern Bank in Arkansas had high ratings at Bankrate, BauerFinancial and in our own health score at DepositAccounts.com. Also, it didn't have any public enforcement action against it. I found the reason for the closure in an Arkansas newspaper. According to ArkansasBusiness.com:

First Southern Bank of Batesville bought $22 million worth of rural improvement district bonds that may be fraudulent. It is now looking to merge with another bank because of the potential loss.

Update 12/18/2010: I just noticed this press release from the Arkansas State Bank Department. It included the following reason for the closure:

This instance was not the result of poor quality loans, but the result of an imprudent business relationship between First Southern Bank and one individual

This is one example in which ratings can miss some important details.

Last Tuesday there was another credit union liquidation. Beehives Credit Union in Salt Lake, Utah was liquidated. The NCUA arranged for Security Service FCU to acquire Beehives. This was the 19th credit union liquidation of 2010. In addition to this liquidation, the AEA Federal Credit Union in Arizona was placed into conservatorship.

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

152nd Bank Failure of 2010 (29th in Florida)

• FDIC Press Release
• Closed Bank: The Bank of Miami, N.A., Coral Gables, FL
• Size: 3 branches, $448.2 million in assets, $374.2 million in deposits
• Acquiring Bank: 1st United BankBoca Raton, FL
• Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by 1st United Bank
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $64.0 million
• Enforcement Action: OCC 7/21/10 Consent Order
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 449.37% at DepositAccounts.com

153rd Bank Failure of 2010 (19th in Georgia)

• FDIC Press Release
• Closed Bank: Chestatee State Bank, Dawsonville, GA
• Size: 4 branches, $244.4 million in assets, $204.5 million in deposits
• Acquiring Bank: Bank of the Ozarks, Little, AR
• Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by Bank of the Ozarks
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $75.3 million
• Enforcement Action: FDIC 8/21/08 C&D Order
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of 1,085.44% at DepositAccounts.com

154th Bank Failure of 2010 (20th in Georgia)

• FDIC Press Release
• Closed Bank: Appalachian Community Bank, F.S.B., McCaysville, GA
• Size: 3 branches, $68.2 million in assets, $76.4 million in deposits
• Acquiring Bank: Peoples Bank of East Tennessee, Madisonville, TN
• Possible Uninsured Deposits: All the deposits, excluding the Cede & Co. deposits and certain "Out of State" CDs have been assumed by Peoples Bank of East Tennessee
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $26.0 million
• Enforcement Action: OTS 12/30/09 C&D Order, OTS 10/14/10 PCA
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 0 out of 5 with a Texas Ratio of over 1000% at DepositAccounts.com

155th Bank Failure of 2010 (21st in Georgia)

• FDIC Press Release
• Closed Bank: United Americas Bank, N.A., Atlanta, GA
• Size: 2 branches, $242.3 million in assets, $193.8 million in deposits
• Acquiring Bank: State Bank and Trust Company, Macon, GA
• Possible Uninsured Deposits: all deposit accounts, excluding the Cede & Co deposits, have been assumed by State Bank and Trust Company
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $75.8 million
• Enforcement Action: OCC 10/07/10 Consent Order
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 487.21% at DepositAccounts.com

156th Bank Failure of 2010 (1st in Arkansas)

• FDIC Press Release
• Closed Bank: First Southern Bank, Batesville, AR
• Size: 2 branches, $191.8 million in assets, $155.8 million in deposits
• Acquiring Bank: Southern Bank, Poplar Bluff, MO
• Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by Southern Bank
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $22.8 million
• Enforcement Action: None (FDIC consent order issued on 12/7/2010 became public on 1/28/2011)
• Financial Ratings: 4 stars at Bankrate.com, 3.5 stars at BauerFinancial, 4 out of 5 with a Texas Ratio of 8.03% at DepositAccounts.com

157th Bank Failure of 2010 (8th in Minnesota)

• FDIC Press Release
• Closed Bank: Community National Bank, Lino Lakes, MN
• Size: 2 branches, $31.6 million in assets, $28.8 million in deposits
• Acquiring Bank: Farmers & Merchants Savings Bank, Manchester, IA
• Possible Uninsured Deposits: The Farmers & Merchants Savings Bank has assumed all of the deposit accounts, including brokered deposits
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $3.7 million
• Enforcement Action: None
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 130.88% at DepositAccounts.com

19th Credit Union Liquidation of 2010 (closed on Dec 14, 2010)

• NCUA Press Release
• Liquidated CU: Beehive Credit Union, Salt Lake City, UT
• Size: $145 million in assets and served 18,000 members
• Acquiring CU: Security Service Federal Credit Union
• Financial Ratings: 0 out of 5 with a Texas Ratio of 376.47% at DepositAccounts.com, 1 star at Bankrate.com, 0 star at BauerFinancial

The above ratings are based on September 2010 data.

References:

• FDIC list of failed banks
• NCUA list of closed credit unions
• Texas Ratios for banks and credit unions
• Latest FDIC info on deposit insurance
• My bank failure review posts
• Review of the 2009 bank and credit union failures
• 10 Lessons from the 2008 bank failures
• Review of the 2008 credit union liquidations

First National Bank is offering a reward checking and savings account under the Kasasa brand. The accounts have the following rates and features if certain monthly requirements are met (as of 3/3/2011):

Kasasa Cash

• 3.55% APY on balances up to $15,000
• 0.55% APY on portion of balances over $15,000
• 0.05% base rate if requirements are not met
• Nationwide ATM fee refunds (up to $25 per monthly cycle)

Kasasa Saver

• 1.55% APY on balances up to $15,000
• 0.55% APY on portion of balances over $15,000
• 0.05% base rate if requirements are not met

Monthly requirements for the Kasasa Cash account include:

• 12 debit card purchases
• 1 direct deposit or automatic bill payment
• Receive e-statements

To qualify for the Kasasa Saver rates, you must have the Kasasa Cash account and meet its monthly requirements. Both accounts are free of monthly service charges and have no minimum balance requirements.

Application and Availability

There's an "open now" link at the Kasasa Cash page that takes you to an online application. Update 3/3/11: The start of the application now states that you must be a resident of either Louisiana, Texas, Arkansas or Mississippi. I received confirmation from the bank today that the accounts are available nationwide. Note, it's a small bank so this policy may not last. As we've seen many times in the last couple of years, small banks offering reward checking accounts nationwide often reduce the availability of the accounts to their state or local market area.

How it Compares

Compared to other nationwide reward checking accounts, the rate is a little higher, but the balance cap is a little lower. There are still four nationwide reward checking accounts that offer 3% APY on balances up to $25K (as of 12/17/2010).

Bank Overview

It's a small bank with six branches located in north Louisiana.

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 20.85% (above average) based on September 2010 data. Please refer to our financial overview of First National Bank for more details. The bank has been a FDIC member since 1935 (FDIC Certificate # 15059).

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

Other High-Yield Reward Checking Accounts

To find reward checking accounts in your state or to find those available nationwide, please refer to the reward checking section of DepositAccounts.com.

After a reader emailed me the news, I called and confirmed it. Alliant Credit Union's board of directors has approved deep rate cuts for January on the savings account and High Rate Checking. The savings account yield will fall to 1.15% APY and the High Rate Checking yield will fall to 1.10% APY. Both are currently at 1.35% APY.

Alliant Credit Union's savings account has been a rate leader for the last three years. So it's worrisome to see this drop. Alliant may not be alone on rate cuts in January. With the Quantitative Easing and new regulations, banks and credit unions may find it necessary to cut deposit rates yet again.

It should be noted that Alliant Credit Union's savings account rate will remain above the rates of the savings accounts at ING Direct and Ally Bank. I did a graph comparing the savings account rates between Alliant and Ally for the past 3 years (includes the time when Ally was GMAC Bank). As you can see in the graph, Alliant Credit Union's rates have never been below Ally's rates. Note, before October 2008 the graph compares GMAC Bank's money market account yield with Alliant's savings account yield. GMAC didn't have a savings account back then. In September 2008 GMAC introduced the savings account which had a higher rate than the money market account. In the graph I switched from the MMA to the savings account in October 2008. That's the reason for the Ally rate hike. There were only two times that Ally and Alliant had the same rates (January 2009 and July 2009). All other times, Alliant's rates have been higher.

For the full details of Alliant's rate history, please refer to the bottom of the post of my Alliant Savings Account review.

Alliant Credit Union's CD and IRA CD rates continue to be very competitive. They haven't changed since October. Unlike the savings and checking account rates which always change at the start of a month, Alliant's CD rates can change at any time during the month. For more details about Alliant's CDs and credit union membership, please refer to my October review of Alliant Credit Union and its CDs.

The Federal Reserve released proposed rules today that would slash debit card interchange fees that banks get when we use debit cards. According to Bloomberg, the "result could be an 80 percent to 90 percent drop in the fees that Visa and MasterCard pass on to banks." The reduction was much more than analysts were predicting which resulted in a dive in Visa and MasterCard stock prices.

For savers the question is how will this affect checking accounts. In particular, it's worrisome for high-yield reward checking accounts since the debit card fees help pay for much of the high yields.

These new rules are due to the financial reform act that was passed by Congress in July. Under the new law, the Federal Reserve is directed to establish standards to ensure interchange fees are "reasonable and proportional." The new rules are to take effect on July 21, 2011.

From page 13 of the draft of the Fed's proposed rules, there's a good summary of the current interchange fees:

The average interchange fee for all debit transactions was 44 cents per transaction, or 1.14 percent of the transaction amount. The average interchange fee for a signature debit transaction was 56 cents, or 1.53 percent of the transaction amount. The average interchange fee for a PIN debit transaction was significantly lower than that of a signature debit transaction, at 23 cents per transaction, or 0.56 percent of the transaction amount.

And on page 58 there's a summary of the proposed interchange fee cap:

The Board proposes a cap of 12 cents per transaction because, while it significantly reduces interchange fees from current levels (approximately 44 cents per transaction, on average, based on the survey of payment card networks), it allows for the recovery of per-transaction variable costs for a large majority of covered issuers (approximately 80 percent). The proposed cap does not differentiate between different types of electronic debit transactions (e.g., signature-based, PIN-based, or prepaid)

It's interesting to note that the cap is fixed at 12 cents and does not vary with the purchase amount. Also note that signature-based and PIN-based purchases would have the same cap.

One aspect that could prevent this new rule from hurting reward checking accounts is the fee restrictions are suppose to apply only to institutions having at least $10 billion in assets. Since the vast majority of banks and credit unions offering reward checking accounts are under this size, reward checking may not be affected. However, many believe it will still affect small institutions. According to the Credit Union Times, the fee cap "will reduce credit union income from debit card interchange."

It'll be a while before we know the full impact to reward checking and to all of our deposit accounts. The potential effects may be enough to discourage some banks and credit unions from reward checking. And if banks had been considering ending their reward checking programs, this may give them another reason. Hopefully the effects on the small institutions will be less than expected, and this will give the small institutions an advantage over the megabanks.

If you receive a notice from your bank regarding FDIC deposit insurance coverage changes for 2011, don't be overly concerned. This is separate from the standard $250K deposit insurance which is now permanent. A reader emailed me a notice he received from his bank with the title "year-end changes in temporary FDIC insurance coverage is coming that may affect the deposit insurance coverage on one or more accounts you have with us." For those who weren't closely following the FDIC rule changes, this notice might be confusing.

During the financial crisis the FDIC adopted the Transaction Account Guarantee Program (TAGP) to provide unlimited deposit insurance on non-interest-bearing transaction accounts. Bank participation into this program was optional. The temporary coverage was extended a few times, but it's now set to expire at the end of 2010.

The TAGP was intended to ease the concerns of businesses who may have millions of dollars in transactional accounts that are used for things like payroll. With this program, the chance of bank runs would be reduced.

Starting in 2011, the TAGP is being replaced by a new rule that's part of the recent financial reform act. This new rule extends unlimited coverage for 2 years. The coverage is similar, but it does not cover accounts which pay any interest. The original TAGP included NOW accounts that paid interest of up to 0.50%. Thus, if you had a checking account that had unlimited deposit insurance due to TAGP, it may lose this unlimited deposit insurance in 2011. However, the standard deposit insurance (for at least $250K) will still remain.

For most of us who keep our large deposits earning as much interest as possible, this change won't have any effect.

Velocity Credit Union just recently made a sizable increase in its 5-year CD rates. Its 5-year CD has a 2.63% APY, and its 5-year IRA CD has a 2.73% APY. For members who are at least 50, you can qualify for Elite Rewards which can boost these yields from 0.10% to 0.20%. Minimum deposit is $1,000. The shorter terms are not nearly as competitive. These rates are listed in the credit union's savings rates page as of 12/16/2010.

As a comparison to internet banks, the best 5-year CD rate is 2.55% APY at EverBank. Like Velocity, EverBank also recently increased its 5-year CD rate. Perhaps it's an early sign of a trend.

According to Velocity's account disclosure, the early withdrawal penalty is 180 days of interest:

For certificate Accounts having a term greater than one year, the penalty imposed will equal 180 days of dividends on the amount withdrawn.

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.

You might remember Velocity Credit Union from last year. It's the credit union that tried to switch from NCUA deposit insurance to the private ASI deposit insurance. Early this year, the credit union management changed their minds and decided to stay with the NCUA.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 2.93% (excellent) based on September 2010 data. Please refer to our financial overview of Velocity Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 68359).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

RTN Federal Credit Union is offering two competitive CD and IRA CD rates: 2.25% APY for a 3-year CD and a 1.55% APY for a 1-year CD. These require a minimum deposit of $50K. The rates for a minimum deposit of $1K are 50 basis points lower. This is one of the few institutions that provide a sizable reward for a large deposit. These rates are listed in the credit union's rate table as of 12/16/2010.

As a comparison to internet banks on 12/16/2010, the best 1-year CD rate is 1.50% APY at CNB Bank Direct and the best 3-year CD rate is 2.00% APY at Bank of Internet USA.

In addition to select employee groups, you can also qualify for membership in this credit union if you belong to certain organization groups. Please refer to the credit union membership page for more details. The sponsors group list has all the eligible employers and organizations. Two organizations which appear open to all are the Gore Place Society or the Waltham Historical Society. Individual membership for the Gore Place Society is $30. Note, it's always best to check with the credit union about an organization to ensure membership will make you eligible to join the credit union. There have been cases at other credit unions in which they changed the listed requirement from membership of an organization to an employee of that organization.

The credit union has some details about the member application process in this page. Here's an important excerpt:

If you are a Massachusetts resident, we request that you visit an RTN branch location to process your membership application. When applying for an RTN membership via the US mail from outside of Massachusetts, we require your signature to be notarized and you provide us proof of membership eligibility.

You can tell this credit union was originally set up to serve Raytheon employees. Many of the branches are located in Raytheon facilities. Branches that are publicly available are located in the Massachusetts cities of Amesbury, Danvers, Marlborough, Tekksbury and Waltham.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 4.30% (excellent) based on September 2010 data. Please refer to our financial overview of RTN Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 24311).

Searching for the Best CD and IRA CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Greater Metro Federal Credit Union is offering some very competitive long-term CD and IRA CD rates. The best is a 3.30% APY 5-year CD. Other rates include a 3.05% APY 4-year CD, a 2.28% APY 3-year CD and a 1.77% APY 2-year CD. Minimum deposit is $500. There's also a good deal on the short-term Jumbo CDs which require a $50K minimum deposit. You can get a 1.77% APY on terms from 6 to 12 months. Also, you can get a 1.26% APY on terms from 1 to 5 months. These rates are listed in the credit union's rates page as of 12/16/2010.

As a comparison to credit unions with nationwide memberships, the best 5-year CD rate is 3.00% APY at Connexus Credit Union as of 12/16/2010. However, this requires an active checking account. Melrose Credit Union is in second place with a 2.93% APY.

Membership in Greater Metro FCU is primarily based on select employer groups. Unfortunately, this makes it difficult for many to join. Please refer to the credit union's Membership Eligibility section for more details. Greater Metro FCU was originally established in 1970 by a group of IBM employees in the Metropolitan New York area. They've added more employer groups, but they haven't gone to a community-based field of membership.

Branches are located in New York City.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 2.25% (excellent) based on September 2010 data. Please refer to our financial overview of Greater Metro Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter 20382).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Credit Union of Atlanta is offering some very competitive CD and IRA CD rates. The best is a 2.52% APY 3-year CD. Some other top rates include a 2.78% APY 5-year CD and a 1.51% APY 1-year CD. Minimum deposit is $500. These rates are listed in the credit union's deposit rates page as of 12/16/2010.

According to the credit union's share savings certificates page the penalty for early withdrawal is 90 days dividends for terms of 6 to 12 months, and 180 days dividends for terms of 24 to 60 months.

As a comparison to internet banks on 12/16/2010, the best 3-year CD rate for small deposits is 2.00% APY at Bank of Internet USA. For credit unions with nationwide membership, the best CD rate is 2.25% APY at Fort Knox FCU.

Membership in Credit Union of Atlanta is open to residents in parts of Atlanta, Georgia. You can also be eligible to join via select employer groups. The credit union used to be the Atlanta City Employees Credit Union so as you would expect, the employer groups include employees of the City of Atlanta and Fulton County. Please refer to the credit union's membership page for the full details.

The credit union has an overall health score at DepositAccounts.com of 5 out of 5 with a Texas Ratio of 5.72% (excellent) based on September 2010 data. Please refer to our financial overview of Credit Union of Atlanta for more details. The credit union is federally insured by the NCUA (Charter # 67383).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Salem Five Bank is offering three special CDs: a 2.75% APY 5-year CD, a 1.50% APY 2-year CD and a 1.35% APY 14-month CD. Minimum deposit is $10K for a regular CD and $2K for an IRA CD. These CD rates are listed in the bank's account rates page as of 12/15/2010. According to a bank rep, rates changes are typically made on Tuesdays so these rates will likely last at least until 12/21/2010.

Certificate of Deposit Details

These CDs can be opened online by people in any state. I contacted the bank yesterday and received confirmation of this. According to the CSR, the CD rate will lock at the time you submit the application. The CD can be funded with an ACH transfer from an account at another bank. They will mail you a signature card.

When a CD matures, I was told they require written instructions if you don't want to renew. They can mail you a check or perform a wire transfer. Domestic outbound wire transfers cost $20.

One downside to Salem Five's long-term CDs is a severe early withdrawal penalty. For a 60-month term, it's 15 months of interest. The penalty for the 14-month and 24-month CDs is 6 months of interest. Please refer to their CD Disclosure for more details.

Compared to CDs at Other Banks and Credit Unions

As compared to internet banks, the best 5-year CD rate is 2.55% APY at EverBank as of 12/15/2010. For credit unions which are easy to join, the best 5-year CD rate is 3.00% APY (requires an active checking) at Connexus Credit Union and 2.93% APY (no checking required) at Melrose Credit Union.

Salem Five Direct

This bank also offers an online savings and checking account at Salem Five Direct. The eOne Savings account has a 1.10% APY on all balances and the eOne Checking has yields of 0.60% to 0.65% APY. It's hard to believe that this checking account had an APY of up to 5.30% back in 2007.

Unlimited Deposit Insurance (FDIC + DIF)

One advantage that Salem Five over some other banks is that it has private DIF insurance which combines with FDIC insurance to fully cover all deposits. Salem Five's overview of DIF explains DIF. Here's a useful excerpt:

Deposits at Salem Five in excess of the standard insurance amounts provided by the FDIC and the temporary full FDIC insurance coverage for noninterest-bearing transaction accounts are covered by the Depositors Insurance Fund (DIF). The DIF is a private, industry-sponsored insurance fund that insures all deposits above FDIC limits at Massachusetts-chartered savings banks. The DIF was established by the Massachusetts legislature in 1932 and has been insuring deposits since 1934. No depositor has ever lost a penny in a bank insured by both the FDIC and the DIF.

Bank Overview

The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 14.47% (excellent) based on September 2010 data. It's a sizable bank with $2.80 billion in assets. Please refer to our financial overview of Salem Five for more details. The bank has been a FDIC member since 1981 (FDIC Certificate # 23296).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

First Bank Richmond is offering three special CD rates. The best one is the 3-year CD with a 2.25% APY. The other two are a 1.75% APY 2-year CD and a 1.25% APY 1-year CD. Minimum deposit for customers outside their market area is $10,000. These rates are listed at the bank's Richmond area CD rates page as of 12/15/2010.

The bank's Shelbyville branch offers an even higher 3-year rate of 2.60% APY as of 12/15/2010. This was noted last week by reader dk in the discussion forum. Unfortunately, the bank limited this rate to local residents.

So far the bank continues to offer the CD rates listed in the Richmond area CD page to out-of-state customers. It's a small bank, so this may not last much longer. The email I received from the bank yesterday confirmed that they still accept out-of-state deposits. Here are some of the instructions which they sent:

For our out-of-state depositors, we require a $10,000.00 minimum deposit into a Certificate of Deposit account only. We will need a copy of your driver's license or passport and also your social security card. Please provide your home address, phone number, mother's maiden name, birth place and date of birth. Indicate the term you would like the money invested in and make the check payable to First Bank Richmond.

Make sure to contact the bank for the latest instructions and qualifications.

As a comparison to internet banks on 12/15/2010, the best 3-year CD rate is 2.00% APY at Bank of Internet USA. For credit unions with easy membership, the best 3-year CD rate is 2.25% APY at Fort Knox Federal Credit Union.

First Bank Richmond has 9 branches in the Indiana cities of Richmond, Centerville, Cambridge City and Shelbyville.

The bank isn't in the best financial shape. It has a overall health score at DepositAccounts.com of 2 out of 5 with a Texas Ratio of 60.35% (below average) based on September 2010 data. Please refer to our financial overview of First Bank Richmond for more details. The bank has been a FDIC member since 1935 (FDIC Certificate # 28533).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Fort Morgan State Bank is offering a very competitive rate on its reward checking account that it calls Windmill Smart Checking. The account is described in the bank's what's new page as of 12/15/2010 with the following rates and features:

• 4.05% APY on balances up to $25,000
• 0.25% on portion of balance over $25,000
• 0.25% base rate if requirements are not met

Monthly requirements include:

• 12 Visa debit card purchases
• One direct deposit or ACH debit
• Receive e-statements

The best nationally available reward checking accounts are only paying around 3.00% APY on balances up to $25K as of 12/15/2010. As in this case, you often can get higher rates with local deals.

It appears that a branch visit is required to open an account. It's a small bank with 2 offices in Fort Morgan, Colorado which is about 60 miles northeast of Denver.

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 17.39% (excellent) based on September 2010 data. Please refer to our financial overview of Fort Morgan State Bank for more details. The bank has been a FDIC member since 1982 (FDIC Certificate # 23764).

Other High-Yield Reward Checking Accounts

To find reward checking accounts in your state or to find those available nationwide, please refer to the reward checking section of DepositAccounts.com.

The last scheduled FOMC meeting for 2010 ended today with no changes from November's meeting. Today's FOMC statement is very similar to last month's. The $600 billion in Treasury security purchases (QE2) continues without change:

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.

As everyone expected, the same ultra low interest rate policy continues with no end it sight:

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 for the federal funds rate for an extended period.

Just as he has done all through this year, Thomas Hoenig was the only one to vote against this policy:

Voting against the policy was Thomas M. Hoenig. In light of the improving economy, Mr. Hoenig was concerned that a continued high level of monetary accommodation would increase the risks of future economic and financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.

This is Thomas Hoenig's last FOMC meeting as a voting member. The presidents of the Reserve Banks serve one-year terms on a rotating basis. So next year Thomas Hoenig and three other current voting members are being replaced. This CNN article has a good review of the new voting members. According to the article:

three of the four new voting positions will go to so-called inflation hawks who have been outspoken with their criticism of the Fed's latest stimulus plan.

So we may see more votes against Bernanke's policies next year. However, that may still not result in much change since the committee has 12 members.

Future FOMC Meetings

If you want an idea about what the market thinks regarding when the Fed will start hiking rates, check out this CME Group FedWatch tool (came back sometime after Saturday). It shows the probability of rate hikes in the future FOMC meetings based on the 30-Day Fed Funds futures prices. The probability of a higher Fed funds rate by next June is shown to be 17.2%. That's up from 3.2% after last FOMC meeting in November. The chance of a rate hike by next November is 59.8% which is up from 18.6% after the last meeting.

The first and second FOMC meetings of 2011 are scheduled for January 25-26 and March 15.

Gawker Media, McDonald's and Walgreens have recently been hit by hackers. No financial data should be at risk, but there are some things to learn from these incidents to help protect your bank accounts.

Protecting Passwords

Gawker Media reported that their servers were compromised, resulting in a security breach at sites like Lifehacker and Gizmodo. The user names and passwords of registered users were leaked. The passwords were encrypted, but they're still vulnerable to hackers. Registered users have been advised to change their passwords at both the Gawker Media sites and any other sites in which the same passwords were used.

One important thing to note regarding this Gawker Media incident is to avoid sharing passwords. At the very least you should have unique passwords at each of your financial institutions.

Another thing to help avoid problems is to keep ensure you use strong passwords. Once hackers get hold of a list of encrypted passwords, they can apply programs to the lists to try to uncover the passwords. Dictionary words are easy to break. Mixing capital letters, small case letters, numbers and special characters into your passwords can make it tougher for hackers.

Protecting Email Addresses

At McDonald's and Walgreens email addresses used in email lists were compromised.

McDonald's described the security breach on its website. Here's an excerpt:

Recently McDonald’s was informed by one of its partners that limited customer information collected in connection with our promotions or websites was improperly accessed by a third party. Limited customer information such as name, address, phone number, birth date and gender was included in the information that was accessed. It is important to note that this incident has nothing to do with credit card use at the restaurants. The database did not contain any credit card information or any other financial information.

Walgreens sent emails last Friday to its email subscribers informing them of the unauthorized access of email addresses. Here's an excerpt from Walgreens' email:

We recently became aware of unauthorized access to an email list of customers who receive special offers and newsletters from us. As a result, it is possible you may have received some spam email messages asking you to go to another site and enter personal data.

The main risk of these incidents is that hackers could use these email addresses and other information to trick you into giving out your personal info. This can be avoided if you don't click on links or open attachments in emails from questionable sources.

Another risk is that these email addresses will be used by spammers. There have been past allegations that banks have leaked email addresses of their customers, and these were used by spammers. Back in 2006 several readers made allegations that EmigrantDirect leaked customers' email addresses. These readers created unique email addresses that were used only for EmigrantDirect. When they received spam to these addresses, they were able to pinpoint the source of the spam. Some have suggested this might be due to spammers just mass mailing to random addresses or spammers picking up addresses as the messages are transmitted across the web. However, readers reported this has only occurred with their Emigrant email and not others, so it appeared that the problem was with Emigrant.

Giving Out Your Email Address

These incidents show why it's a good idea to create disposable addresses or unique email addresses when you give your email address to any website. This also includes bank applications. Many of the popular email services allow this.

Yahoo email allows you to create disposable addresses. Emails sent to the disposable address will go to your regular email address. Not only will the "to" address be the disposable address, Yahoo gives them a special mark in the email summary. If one of these disposable addresses become a target of spam, you can delete the address.

Google gmail allows you to make an email alias by adding "+alias" to your email address. For example, if you're applying at MyBank, you could give them the email address of john.doe+mybank@gmail.com. If anyone besides MyBank sends you email to this address, you'll know that email addresses at MyBank may have been compromised. You can then set up filters to automatically direct these messages to Trash.

Update 12/16/2010: The 18-month CD rate has fallen to 1.35% APY.

Every now and then MetLife Bank comes out with a competitive CD rate. Last month it was the 1-year CD rate. Now it's the 18-month CD rate which has a 1.65% APY for balances of at least $25K (1.40% APY for a $15K minimum deposit). These rates are listed in MetLife Bank's CD page as of 12/14/2010.

A 1.65% yield for an 18-month term is nothing to get excited about, but I'm afraid it is competitive these days. You can do a little better at Alliant Credit Union which is offering a 1.75% APY for a $25K minimum deposit as of 12/14/2010. For other internet banks, CNB Bank Direct is also offering a 1.65% APY 18-month CD with a $25K minimum deposit.

I did a detailed review of MetLife CDs last year. Readers have reported that the CDs can be easily opened, but several readers have not had good experiences with CD closures. Here is an excerpt from one reader's comment:

I called MetLife two days prior to maturity (as they requested) to let them know that I wanted my maturing CD funds to be sent to my bank account via ACH. When after one week post maturity I still had not received funds, I called again and they said they had not yet processed my request, and that it may take another week for me to get my money.

One little perk for MetLife Bank customers is free Identity Theft resolution services through Identity Theft 911. Details are described at MetLife Bank's Identity Theft page. This may be a reason to open MetLife's savings account. You only need a $50 balance in the savings account to avoid monthly fees.

MetLife Bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 8.17% (excellent) based on September 2010 data. It's a sizable bank with $16.58 billion in assets and $9.36 billion in deposits. Please refer to our financial overview of MetLife Bank for more details. The bank has been a FDIC member since 1999 (FDIC Certificate # 35055).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

LOMTO Federal Credit Union continues to offer some very competitive CD rates. The following rates are listed in the credit union's certificates of deposit page as of 12/14/2010:

• 1.25% APY 6 months
• 1.50% APY 1 year
• 1.85% APY 2 years
• 2.32% APY 3 years
• 2.63% APY 4 years
• 3.10% APY 5 years

Minimum deposit is $2,000. Terms from 1 to 5 years are also available in IRA certificates. When I last contacted this credit union, I was told that the early withdrawal penalty for the longer term CDs is 6 months of interest (earned or unearned).

As a comparison to credit unions with nationwide memberships, the best 5-year CD rate is 3.00% APY at Connexus Credit Union as of 12/14/2010. However, this requires an active checking account. Melrose Credit Union is in second place with a 2.93% APY. The best 3-year CD rate is 2.25% APY at Fort Knox FCU.

LOTMO FCU membership is open to anyone who lives, works, worships, attends school in parts of the west side of Manhattan. Please see the credit union's membership page for more details. Credit union membership requires a $3 fee and a minimum deposit of $25 in your share savings account. You can also be eligible for membership via family and via membership in LOMTO Inc. which according to one reader is not worth joining unless you're a cab driver. Please refer to the LOMTO Inc. membership page for more details.

Branches are located in New York City and in Woodside.

The credit union has an overall health score at DepositAccounts.com of 5 out of 5 with a Texas Ratio of 0.80% (excellent) based on September 2010 data. Please refer to our financial overview of LOMTO Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 1532).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

For high-yield reward checking accounts, most of the focus has been on the top rates. The rates that apply to balances over the balance caps are often overlooked. When many of the banks began offering these in 2007, the second-tier rate was often 1.01% APY. This seemed very low when you could easily get over 4.00% APY at internet savings accounts. However, in today's interest rate environment, this compares favorably to many of the popular internet savings accounts. For example, Ally Bank's savings account currently pays 1.09% APY. So if your reward checking account balance goes above $25K, you're not losing out on much.

Just like the top rates, we have also seen cuts to many of these second-tier rates. So the 1.01% yield for the portion of the balances over $25K is now rare. You can look for these in our reward checking account table by clicking on the "filter accounts" button and increasing the investment amount. The APY column will show the yield in effect for that investment amount. So if you include an investment amount of $30K, The APYs will be the second-tier yields for accounts with $25K balance caps. The column for the 1st year estimated earnings will combine the earnings from the first $25K and the earnings from the portion of the balance above $25K.

If you specify a search for only nationwide reward checking accounts with an investment account balance of $30,000, the first four banks as of 12/13/2010 should be the four banks that are still offering around 3% APY for the first $25K. These include:

• Liberty Bank for Savings
• Coulee Bank
• Danversbank
• Southern Community Bank & Trust

Liberty Bank is on top since its second-tier rate is currently 1.01% APY. The second-tier rates of the others are much lower (0.30% and below).

If you think there will be times in which you'll have over $25K in your reward checking account, Liberty Bank will have an advantage. These second-tier rates are another factor to keep in mind if you're looking for a new reward checking account.

Susquehanna Bank is offering up to $150 in its checking account promotion. It's listed on the bank's front page. Here's the link to the promotion page. A new personal checking account must be opened by December 31, 2010. Here are the additional requirements as listed in the promotion's small print:

• $50 for three signature-based Visa Check Card purchases
• $50 for enrollment in Internet Banker with Bill Payment and payment of two bills of at least $25 each
• $50 for establishing direct deposit of $100 or more

Some of the important details in the small print include:

A qualifying Direct Deposit or ACH can be any regular transaction made by an employer, outside agency or business with an occurrence of at least monthly. Transfers between accounts, interest deposits or deposits from a Susquehanna office or ATM do not qualify.

Households are limited to one reward for each of the three offers. All rewards can be issued separately and will be paid in the form of a deposit to your Susquehanna Bank checking account on the 15th day of the month following the month you have completed the required transactions. Deposit(s) will appear on your statement as “Acct Premium MISC Income.

Checking accounts are subject to approval and customers with existing personal Susquehanna checking accounts or checking accounts closed within the last 90 days are not eligible. Not valid with other offers, is non-transferable, is for a limited time and may be withdrawn, modified or subject to change at any time.

The bank's free checking account qualifies for this promotion. A minimum deposit of $25 is required to open the account. It has no minimum balance requirement and no monthly fees.

Susquehanna will also donate 50 meals to food banks throughout their service region for every new checking account opened.

Credit for this find goes to iBankDesign

Available Only to Susquehanna Market Area

I called the bank today and according to the bank's CSR, you must live within their market area (parts of PA, MD, NJ and WV). If you live in these areas, you can apply online and avoid coming into a branch. They can mail you the documents after you submit your application online.

No Hard Pull, ChexSystems is Used

The CSR also said there is no hard credit pull. They only do ChexSystem verification in the application. I asked if multiple ChexSystem inquiries would be an issue. I didn't get a clear answer about this, but the CSR said that they are mostly concerned with negative items on the ChexSystems history like bounced checks.

Susquehanna Bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 11.32% (excellent) based on September 2010 data. It's a sizable bank with $13.88 billion in assets. Please refer to our financial overview of Susquehanna Bank for more details. The bank has been a FDIC member since 1934 (Certificate # 9694).

Other Bank Bonuses

To find other bonus deals at other banks and credit unions, please refer to the bank bonus page which has all of my recent bank bonus blog posts. There are also additional bonuses listed in the checking account deals forum.

PerkStreet Financial is offering a sign-up bonus of $25 for opening its checking account. The bonus isn't much, but it's an easy bonus to get. Here are the requirements listed at PerkStreet Financial's website:

Open your account online by December 31, 2010 and fund the account with $25 or more. Once your account is opened we will credit $25 to your Perks Account within 7 business days.

The promo is listed on PerkStreet Financial's home page as of 12/12/2010.

In addition to the cash bonus, there's a debit card cash back bonus for the first 3 months. Here's how PerkStreet Financial describes this:

earn 2% cash back for all non-PIN debit card purchases you make for the first 3 months starting on the day that your account is opened. A month is defined as a 30 day period - not a calendar month. There is no limit to the total amount you can earn.

The standard cash back program has the following features:

1. 5% cash back when you shop at stores included in categories that change monthly
2. 2% cash back everywhere for the days your checking account balance is at least $5K
3. 1% cash back for all other cases

Debit card purchases must be signature-based without using your PIN. There are also some limitations on the purchases that qualify. According to the disclosure, the following are not qualifying purchases:

Purchases of currency, cash or cash equivalents are not Qualifying Purchases and includes, without limitation, currency from the U.S. Mint, travelers cheques, gift cards, prepaid debit cards or other cash equivalents.

I reviewed the 5% cash back feature in October. For more details of the checking account, please refer to my PerkStreet Financial account and bonus review. The downside of the checking account is that it earns no interest. Also, there's a $4.50 monthly fee if there are no transactions during the month.

Why PerkStreet Financial?

PerkStreet Financial's checking account will mostly appeal to those who prefer debit cards over credit cards. If you maintain a sizable balance in your checking account, you may earn more with a checking account from Alliant Credit Union or Incredible Bank combined with PenFed's Visa Platinum Rewards Credit Card. If you have a sizable balance and prefer a debit card, you may earn more with a high-interest reward checking account.

According to the PerkStreet Financial's website, banking services are provided by The Bancorp Bank which is a FDIC member. The Bancorp Bank has a been a FDIC member since 2000 (FDIC Certificate # 35444).

Other Bank Bonuses

To find other bonus deals at other banks and credit unions, please refer to the bank bonus page which has all of my recent bank bonus blog posts. There are also additional bonuses listed in the checking account deals forum.

Randolph-Brooks Credit Union continues to offer several competitive long-term CD and IRA CD rates. Rates have gone down a bit since my October post, but the long-term CD rates are still higher than what PenFed is offering for large deposits. The best rates require a minimum deposit of $75K. The rates are 0.05% less for a $20K minimum, and 0.10% less for a $5K minimum. Below are some of the best deals as listed in the credit union's rates page as of 12/12/2010:

• 3.45% APY 7-year CD, $75K min, 420-day EWP
• 3.14% APY 6-year CD, $75K min, 360-day EWP
• 2.89% APY 5-year CD, $75K min, 300-day EWP
• 2.32% APY 4-year CD, $75K min, 240-day EWP
• 2.12% APY 3-year CD, $75K min, 180-day EWP

Note, EWP stands for early withdrawal penalty, and these penalties are stated below the rate table. I included them with the rates since they vary by term, and they're above average for the longer terms. For CD terms over 5 years, it's common to have EWPs of 1-year or more in interest. For example, both Pentagon Federal Credit Union and Navy FCU have a 1-year EWP for their 7-year CDs. Most 5-year CDs only have a 6-month penalty. So that's an important consideration if you're looking to increase your yield.

Membership is open to those who live, work or worship in certain parts of Austin, San Antonio, San Marcos, Seguin and other parts of Central Texas. Please refer to the credit union's membership page for the full details.

The credit union's overall health score is 4 out of 5 at DepositAccounts.com with a Texas Ratio of 2.59% (excellent) based on September 2010 data. Please refer to our financial overview of Randolph-Brooks Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 8111). It's a large credit union with $4.08 billion in assets.

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Grand Bank, N.A. continues to offer competitive rates on several of its deposit products. Rates have gone down since my last post in July, but the rates continue to better than what most banks are offering. The best CD rates include a 2.80% APY for 5 years and a 2.00% APY for 3 years. Minimum deposit is $1,000. The reward checking account rate has recently fallen from 4.01% to 3.01% APY. This applies to balances up to $25K. The money market account rate is now 1.25% APY for balances of at least $50K. This used to be 1.50%. These rates are listed in the bank's rates page as of 12/12/2010.

It appears a branch visit is required to open an account. Branches are located in Hamilton and Hamilton Square, New Jersey.

The bank isn't in the best financial shape. The bank has an overall health score at DepositAccounts.com of 2 out of 5 with a Texas Ratio of 44.60% (average) based on September 2010 data. Please refer to our financial overview of Grand Bank, N.A. for more details. The bank has been a FDIC member since 2002 (FDIC Certificate # 57274).

Searching for the Best Money Market, Reward Checking & CD Rates

• Best Money Market Rates
• Best Reward Checking Rates
• Best CD Rates

Next Tuesday the Fed will meet for their last scheduled FOMC meeting of 2010. The Fed will probably do some assessment of its Quantitative Easing 2 (QE2). In the recent 60 Minutes interview, Bernanke described the Fed's intentions:

What we're doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster.

So far QE2 hasn't been working as Bernanke described. This article at iMarketNews.com has a good review of how the 10-year Treasury yields have changed:

But in fact, yields are up not just from Nov. 3 levels but also from where they were on Aug. 27, when Bernanke began signaling QE2's likelihood in Jackson Hole. At this writing, the 10-year Treasury note yield stood at 3.23% -- up from 2.67% on Nov. 3 and from 2.66% on Aug. 27.

As the article mentioned, it's unlikely the Fed will make any changes to QE2 in this upcoming meeting, and of course, expect the ultra-low interest rate policy to continue.

There were changes to the charts at the CME Group website where I used to get the Fed fund rate futures data. So I don't know how the market expectations have changed for next year's Federal funds rates. If you can find another place that has these charts, please leave a comment.

Two small banks failed yesterday which brings the total number of bank failures for the year to 151. The pace of closures have been going down lately. We only have one more non-holiday Friday left this year, so we probably won't see too many more failures for 2010.

Savings Account Rates

Two rate leaders cut their rates this week. Incredible Bank reduced the rate of its internet checking account by 7 basis points, and Capital One reduced the rate of its InterestPlus savings accounts by 5 basis points. The Incredible Bank checking account remains very competitive with a 1.35% APY. It has been over a year since my first review of this account. At that time, there were concerns that the high rate was just a teaser rate. The rate has gone down, but it has remained a rate leader in comparison to other savings and regular checking accounts.

The history of Incredible Bank may be a good sign for The Morrill and James Bank which continues to offer a very competitive yield of 1.51% APY on its regular checking account. It has been two months since I first reviewed this account, and it continues to remain on top of the list.

WTDirect is offering another promotion for its online savings account. The top bonus is $350 which is a little better than the previous promotions. If you want to take advantage of this promo, you'll have to hurry. You are required to open and fund the account by December 17th.

Rate Hikes:

1. None

Rate Cuts:

1. Incredible Bank Checking - 1.35% (was 1.42%)
2. Capital One (Costco) Savings - 1.30% (was 1.35%)
3. Capital One Savings - 1.25% (was 1.30%)

Certificate of Deposit Rates

With rising 10-year Treasury yields, one might expect to see some interest rate hikes on long-term CD rates. A couple of banks did increase their CD rates, but there were more CD rate cuts than increases. EverBank increased its 5-year CD rate quite a bit from 2.36% to 2.55% APY. An even better hike came from Fort Knox FCU which raised its 5-year CD rate from 2.50% to 2.75% APY. Some of its shorter term CD rates were also raised.

Unfortunately, we saw more CD rate cuts than hikes this week. Rate cuts came from USAA Bank, Sallie Mae Bank, Acacia Federal Savings and Navy Federal.

Ally Bank's 5-year CD rate may be near the bottom of my list of nationally available 5-year CDs, but it remains a good deal thanks to its very mild early withdrawal penalty of 60 days of interest. The best nationally available CD rate continues to be 3.25% APY on PenFed's 7-year CD. I did a new comparison of these CDs with a table of the effective rates if these CDs were to be closed early.

Reward Checking Accounts

My list of nationally available reward checking accounts became smaller this week as banks reduced the availability of their reward checking accounts. Two banks that are offering 3% APY on balances up to $25K are no longer offering their reward checking accounts nationwide. I reviewed these banks in addition to the remaining top banks that continue to offer their accounts nationwide.

In the last year there have been many cases of banks with top reward checking accounts being overwhelmed by the demand. This has caused them to reduce the availability of their accounts to their state or local area. One example of this is what happened at Randolph Bank & Trust Company in North Carolina. It only took a couple of days after it launched its online application for it to restrict new accounts to North Carolina residents. Those who were able to sign up before the restriction continue to get a good deal: 4.75% APY for up to $25K. However, customers are going to have to spend more with their debit cards in January to keep this rate. This debit card usage requirement is worrisome, and I discussed the issue in this Thursday blog post.

To find reward checking accounts available nationwide or to find those that are only available in your state, please refer to the reward checking section of DepositAccounts.com.

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

Banking News/Resources

• Personal Banking 101: Savings Accounts
• Two Banks from Michigan and Pennsylvania Closed by Regulators
• First Clue That a Checking Account Isn't Free
• 60 Minutes' Ben Bernanke Interview

Savings/Checking Accounts - Nationwide

• SFGI Direct Increases Rate on its Internet Savings Accounts

CD Deals - National

• The Best CD Rates Available Nationwide: Comparing PenFed with Ally Bank

Checking/Savings Bonuses

• $100 Checking Account Bonus at Huntington Bank in OH, MI, IN, PA, KY, WV & FL
• FNBO Direct $25 Online BillPay Account Bonus
• WTDirect Savings Account Promotion - Up to $350 Bonus
• $100 Checking Account Bonus at the Bank of Kansas City - Local Only

Reward Checking Accounts

• Reward Checking Accounts and Debit Card Requirements
• High-Yield Reward Checking Account at Fidelity Homestead Savings Bank in Louisiana - Local Only
• High Demand of Reward Checking Accounts Forcing Banks to Reduce Availability

CD and Money Market Deals - Local

• Competitive CD Rates Continue at The National Republic Bank of Chicago - Local Only
• Top Short-Term and Long-Term CD Rates at HarborOne Credit Union in MA - Local Only
• Top Long-Term CD Rates at Community First Bank in Missouri - Local Only
• Competitive CD Specials at Truliant Federal Credit Union in NC, SC & VA - Local Only
• Special 30-Month CD at Fort Financial Credit Union in Parts of IN, NC, MS, IL and WI
• Competitive CD Rates at Montauk Credit Union in New York City - Local Only
• Top CD and IRA CD Rates at Barksdale FCU in Louisiana - Local Only
• Top 2-Year CD and IRA CD Rate at Columbia Bank in New Jersey - Local Only
• Special 13-Month CD at The Bank of Union in Oklahoma - Local Only

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. 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.

Rates as of December 11, 2010

Checking/Savings/Money Market Accounts:

• Best Reward Checking Account Rates (Nationwide & by State)
• Best Savings Account Rates (Nationwide & by State)
• Best Money Market Rates (Nationwide & by State)
• Best Checking Account Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• EverBank - 2.01% ($5K min), 3 mo promo rate up to $50K (1.06% ongoing) account review
• AmericaNet/Evantage Bank - 1.75% (up to $35K, 1% over) account review
• SmartyPig - 1.75% (min $25, max $50K) withdrawal restrictions, account review
• The Morrill and James Bank - 1.51% Checking (min $1.5K) account review
• SFGI Direct - 1.41% (min $500 to open) account review
• Ready Saver - 1.35% account review
• Alliant Credit Union - 1.35% (min $100) account review
• Hudson City Savings Bank - 1.35% (min $2.5K)
• Incredible Bank - 1.35% Checking ($1K min) account review
• Sallie Mae Bank - 1.30% (Upromise rewards) account review
• Clear Sky Accounts - 1.30% account review
• American Express Bank - 1.30%, account review
• Capital One/Costco - 1.30% InterestPlus Savings ($5K min) quarterly bonuses for $10K+, account review
• H&R Block Bank - 1.25% MMA (min $50K) account review
• Discover Bank - 1.25% Savings (min $500) account review
• Capital One - 1.25% InterestPlus Savings ($1K min) quarterly bonuses for $10K+, account review
• WTDirect - 1.21% ($10K min) account review
• CNB Bank Direct - 1.20% account review
• Zions Bank - 1.11% ($1K min)
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• DollarSavingsDirect - 1.10% ($1K min) account review
• ING Direct - 1.10% Orange Savings
• Ally Bank - 1.09% MMA account review

• Noteworthy Accounts - Local Only

• Mid America Bank & Trust Company - 1.54% (min $10K) in MO
• Affinity Bank (formerly Atlanta Business) - 1.40% MMA (min $100K) in GA
• Solera National Bank - 1.25% (min $100) in CO

3-Month Certificates of Deposit:

• Best 3-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Self-Help CU - 1.01% (min $500) account review
• AmTrust Direct - 1.00% (4-mo) (min $1K)
• Fort Knox FCU - 1.00% (min $500)
• TotalBank - 0.85% e-CD (min $1K)
• Virtual Bank - 0.75% (min $10K)
• Ally Bank - 0.65%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 1.45% (min $500) in NYC
• Bank of Georgetown - 1.40% (4-mo) (min $1K) in Washington DC metro
• NavyArmy FCU - 1.30% (min $100K) in South TX
• Atlanta Postal CU - 1.00% (min $2K) in GA

6-Month Certificates of Deposit:

• Best 6-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.50% Active checking required, account review
• America's Credit Union - 1.25% (min $25K)
• Aurora Bank FSB - 1.11% (min $1K)
• OneWest Bank - 1.10% (min $1K)
• Virtual Bank - 1.06% (min $10K)
• Ally Bank - 1.04%

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.56% IRA-only (min $2.5K) in NY
• Self Reliance New York FCU - 1.65% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.46% (min $1K) in GA
• Industrial Credit Union - 1.40% (min $1K) in MA
• NavyArmy FCU - 1.40% (min $100K) in South TX
• F&A Federal Credit Union - 1.40% (min $50K) in CA
• Fayetteville Bank - 1.36% (min $500) (1.51% $100K+) in TX

9-Month Certificates of Deposit:

• TotalBank - 1.15% e-CD (min $1K)
• Virtual Bank - 1.11% (min $10K)
• Easthampton Savings Bank - 1.10% (min $1K)
• Discover Bank - 1.10% (min $2.5K)
• OneWest Bank - 1.10% (min $1K)

• Noteworthy Accounts - Local Only

• Island Federal Credit Union - 2.00% (min $2K) Requires active checking, in NY
• Miami Postal Service CU - 1.76% (min $5K) in Miami, FL
• Self Reliance New York FCU - 1.70% (min $500) in NYC
• NavyArmy FCU - 1.45% (min $100K) in South TX

12-Month Certificates of Deposit:

• Best One-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.75% Active checking required, account review
• America's Credit Union - 1.55% (13-mo) (min $25K)
• Alliant Credit Union - 1.50% (min $25K) account review
• CNB Bank Direct - 1.50% (min $25K) (shown at the bank's online banking login page) account review
• Melrose CU - 1.41% (min $5K) account review
• Bank of Internet - 1.41% (min $1K) account review
• North American Savings Bank - 1.35% (14-mo) (min $1K)
• Discover Bank - 1.30% (min $2.5K) account review
• Sallie Mae Bank - 1.30% (no min) account review
• Ally Bank - 1.29% (min $0) account review
• Virtual Bank - 1.26% (min $10K)
• Choice Financial - 1.25% (13 mo) (min $5K) add-on feature, account review
• Ally Bank - 1.20% (11-mo) (min $0) No-Penalty CD
• ING Direct - 1.00%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.00% (min $500) in NYC
• NavyArmy FCU - 1.85% (min $100K) in South TX
• University of Iowa Community CU - 1.80% (15-mo) (min $100K) in Iowa
• Affinity Bank (formerly Atlanta Business) - 1.71% (min $1K) in GA
• Progressive Credit Union - 1.71% in NYC
• Fayetteville Bank - 1.66% (min $100K) in TX
• Barksdale Federal Credit Union - 1.61% (min $1K) in Louisiana
• Industrial Credit Union - 1.60% (min $1K) in MA

18-Month Certificates of Deposit:

• Best 18-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Alliant Credit Union - 1.75% (min $25K) account review
• America's Credit Union - 1.65% (min $25K)
• CNB Bank Direct - 1.65% (min $25K) (shown at the bank's online banking login page) account review
• MetLife Bank - 1.65% (min $25K)
• Fort Knox FCU - 1.50% (min $500)
• Aurora Bank FSB - 1.44% (min $1K)
• Acacia Federal - 1.40% (min $500)
• Discover Bank - 1.40% (min $2.5K), account review
• Ally Bank - 1.37% (no min)
• USAA Bank - 1.35% (min $1K) (1.70% $175K min) account review
• First Savings Bank Northwest - 1.33% unlimited add-on (min $500) account review

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.82% IRA-only (min $200) in NY
• Self Reliance New York FCU - 2.10% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.87% (min $1K) in GA
• Truliant Credit Union - 1.75% (17-mo) (min $1K) in NC, SC & VA
• Hyde Park Savings Bank - 1.70% (16-mo) Online Only (min $1K) in MA

24-Month Certificates of Deposit:

• Best Two-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Alliant Credit Union - 1.90% (min $25K) account review
• CNB Bank Direct - 1.85% (min $25K) (shown at the bank's online banking login page) account review
• Fort Knox FCU - 1.75% (min $500)
• America's Credit Union - 1.75% (26-mo) (min $25K)
• Melrose CU - 1.66% (min $5K) account review
• Bank of Internet - 1.60% (min $1K)
• Delta Community CU - 1.60% (min $1K) account review
• Ally Bank - 1.56% Raise Your Rate CD

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.35% (min $500) in NYC
• First Peoples Community Credit Union - 2.20% (21-mo) (min $5K) in MD, PA & WV
• NavyArmy FCU - 2.15% (min $100K) in South TX
• Barksdale Federal Credit Union - 2.12% (min $1K) in Louisiana
• University of Iowa Community CU - 2.10% (25-mo) (min $100K) in Iowa
• Affinity Bank (formerly Atlanta Business) - 2.07% (min $1K) in GA

36-Month Certificate of Deposit:

• Best 3-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Fort Knox FCU - 2.25% (min $500)
• Air Force FCU - 2.25% (min $25K) membership restrictions account review
• Melrose CU - 2.17% (min $5K) account review
• Navy Federal - 2.15% (30-mo) (min $10K) membership restrictions account review
• Alliant Credit Union - 2.10% (min $25K) account review
• America's Credit Union - 2.05% (min $25K)
• Andrews FCU - 2.00% (min $1K) account review
• Bank of Internet - 2.00% (min $1K)
• Delta Community CU - 1.85% (min $1K) account review
• Acacia Federal Savings Bank - 1.85% (min $500) account review
• USAA Bank - 1.85% (min $1K) (2.15% $175K min) account review
• Pentagon Federal CU - 1.75% (min $1K), account review
• Sallie Mae Bank - 1.75% (no min) account review

• Noteworthy Accounts - Local Only

• Sea Comm Federal Credit Union - 2.63% (min $1K) in Northern NY
• First Bank Richmond - 2.60% (min $1K) in IN
• First Peoples Community Credit Union - 2.60% (39-mo) (min $5K) in MD, PA & WV
• Massena Savings and Loan - 2.56% (min $1K) in NY
• First Community CU - 2.50% w/relationship (min $300) in MI
• Barksdale Federal Credit Union - 2.43% (min $1K) in Louisiana
• American Heritage Credit Union - 2.40% (min $1K) in PA
• Affinity Bank (formerly Atlanta Business) - 2.38% (min $1K) in GA
• Security Service FCU - 2.35% (min $100K) in TX & CO
• Redding Bank in Commerce - 2.27% (min $100K) in Northern CA
• Montauk Credit Union - 2.25% in NYC
• Fort Bragg Federal Credit Union - 2.23% (min $25K) in NC

48-Month Certificate of Deposit:

• Best 4-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Fort Knox FCU - 2.55% (min $500)
• America's Credit Union - 2.55% (min $25K)
• Alliant Credit Union - 2.50% (min $25K) account review
• Melrose CU - 2.42% (min $5K) account review
• Self-Help CU - 2.28% (min $500) account review
• Pentagon Federal CU - 2.25% (min $1K), account review
• Hudson City Bank - 2.25% (min $5K) account review
• Bank of Internet - 2.20% (min $1K)
• Acacia Federal Savings Bank - 2.10% (min $500) account review

• Noteworthy Accounts - Local Only

• First Community CU - 3.25% w/relationship (min $300) in MI
• Barksdale Federal Credit Union - 2.89% (min $1K) in Louisiana
• Sea Comm Federal Credit Union - 2.75% (min $1K) in Northern NY
• Police & Fire Credit Union - 2.75% (min $500) in PA
• Education First CU - 2.75% in SE Michigan
• LOMTO FCU - 2.63% in NYC
• The Napoleon State Bank - 2.58% (min $50K) in IN

60-Month Certificate of Deposit:

• Best 5-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 3.00% Active checking required, account review
• Melrose CU - 2.93% (min $5K) account review
• Air Force FCU - 2.85% (min $25K) membership restrictions account review
• Fort Knox FCU - 2.75% (min $500)
• Pentagon Federal CU - 2.75% (min $1K), account review
• EverBank - 2.55% ($1.5K min) account review
• First Internet Bank - 2.55% (min $1K)
• Andrews FCU - 2.50% (min $1K) account review
• Delta Community CU - 2.50% (min $1K) account review
• Acacia Federal Savings Bank - 2.50% (min $500) account review
• Mountain America CU - 2.45% (min $1K) account review
• Northrop Grumman FCU - 2.42% (min $40K), account review
• Ally Bank - 2.40% (min $0) account review
• USAA Bank - 2.40% (min $1K) (2.45% $175K min) account review
• Navy FCU - 2.40% ($20K min) (2.50% $100K+) restrictions to membership, account review
• Sallie Mae Bank - 2.35% (no min) account review

• Noteworthy Accounts - Local Only

• PEF Federal Credit Union - 3.29% (min $500)
• Police & Fire Credit Union - 3.25% (min $500) in PA
• First Community CU - 3.25% w/relationship (min $300) in MI
• First Peoples Community Credit Union - 3.10% (min $5K) in MD, PA & WV
• LOMTO FCU - 3.10% in NYC
• Barksdale Federal Credit Union - 3.04% (min $1K) in Louisiana
• Truliant Credit Union - 3.00% (min $1K) in NC, SC & VA
• Security Service FCU - 3.00% (min $100K) in TX & CO
• Sea Comm Federal Credit Union - 2.99% (min $1K) in Northern NY
• First Choice Bank - 2.90% (min $1K) in NJ
• Hudson Valley Credit Union - 2.85% (min $500) in NY State
• F&A Federal Credit Union - 2.75% (min $50K) in CA

84-Month Certificate of Deposit:

• Best 6+-Year CD Rates (Nationwide & by State)

• Pentagon Federal CU - 3.25% 7yr (min $1K), account review
• Capital One - Costco - 3.05% (10-yr) (min $5K)
• Capital One Direct Banking - 3.00% (10-yr) (min $5K)
• Navy FCU - 3.00% 7yr ($20K min) restrictions to membership, account review
• Discover Bank - 2.75% 7yr (min $2.5K) (3.00% 10yr) account review
• USAA Bank - 2.70% 7yr (min $1K) (2.74% $175K min) account review
• Apple FCU - 2.60% (min $500) (3.25% 10yr) account review

• Noteworthy Accounts - Local Only

• Security Service FCU - 3.50% 7yr (min $100K) in TX & CO
• Randolph-Brooks Credit Union - 3.45% (min $75K) 7yr in Central TX
• Montauk Credit Union - 3.00% 7yr in NYC
• Access National Bank - 3.00% 7yr (min $10K) in VA, DC & MD
• Anchor Mutual Savings Bank - 3.00% 8yr (min $500) in WA
• Cardinal Bank - 2.91% 6yr (min $1K) in VA, DC & MD

Various Deposit Account Deals

• Bank Deals Forum
• Checking/Savings Account Bonuses
• Best IRA CD rates, local and nationwide deals
• Latest CD and Savings Account Deals with No Major Deposit Limitiations

Bank Account Alternatives

• Ford Interest Advantage - 1.65% rate for $50k+, Ford Interest Advantage review
• GE Interest Plus - 1.45% rate for $50k+
• Vanguard Tax-Exempt Money Market Fund - 0.13% 7-day yield
• Paypal Money Market Fund - 0.11% 7-day yield
• Vanguard Prime Money Market Fund - 0.06% 7-day yield
• Fidelity Money Market Fund - 0.01% 7-day yield (reviews on Fatwallet)
• Fidelity Municipal Money Market Fund - 0.01% 7-day yield
• TIAA-CREF Money Market Fund - 0.00% 7-day yield
• FW Thread on Treasury Bills
• I & EE Savings Bonds for 2010, I Bond Article, I Bonds as CD Alternatives

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

One of the most basic accounts available is the savings account. These accounts are meant to allow you a place to save your money, accumulating it for the future. Savings accounts are classified as “savings deposit” accounts by the Federal Reserve in its Regulation D, Section 204.2. You have the opportunity to earn interest on the money you have in a savings account, providing you with a return that is considered very low risk. If you keep your money in a financial institution that is insured by the FDIC or NCUA, then your money will be protected from the failure of the institution – for at least $250,000.

However, it is important to realize that this safety does come with a price: Your yield is usually quite low, especially during times of low interest rates. In some cases, your interest yield will not even overcome the annual inflation rate, depending on the type of savings account you have, and what the bank is willing to pay you. Even with this return, though, having a savings account can be useful in some situations, especially if you want an emergency fund that is readily accessible and fairly liquid.

Savings Deposit Account vs. Transaction Account

One of the most important things to realize about a savings account is that its position as a “savings deposit” account means that there are more restrictions on it than what you might see on a “transaction” account like a checking account. A checking account is still considered a deposit type account, but because it is designated for transactions, the Fed allows for unlimited withdrawals from checking accounts. Not so with savings deposit accounts. Savings accounts have a limit of six withdrawals a month, as required by Regulation D. If you exceed the withdrawal amount, your financial institution can switch your account to a transaction account.

Of course, Regulation D just sets out the conditions that define a savings account. Some financial institutions might impose a withdrawal transaction limit of three or four, rather than using the Federal Reserve’s maximum. Additionally, rather than switching your account automatically to a transaction account, some banks might close your account altogether, or restrict your access to it until certain conditions are met. Make sure you understand the fine print on your savings account terms, and that you understand exactly what your bank requires.

From the bank’s standpoint, a savings deposit account is fairly attractive. Banks are not required to hold any money in your savings account in reserve (although they can if they want to). Instead, if the financial institution wants to, it can lend out all of the money in your savings account to someone else in order to earn a higher return. With a checking account, though, the institution is required to hold at least 10% of the money in your account in reserve. This is because you are expected to be taking money out of a transaction account regularly. This is not the case with a savings deposit account. This is one of the justifications that banks have for charging high fees when you exceed your withdrawal limit on a savings account. Make sure you understand the fees that could be charged, and make sure that you keep within the limit on your savings account.

Types of Savings Accounts

There are a number of options when it comes to choosing a savings account. Some of your options include the following:

• Traditional Savings Account: The lowest yields available are often found in traditional accounts from brick and mortar financial institutions. Some of these accounts are starting to require minimum balances in order to avoid monthly fees, but it is still possible to find some of these accounts with no minimum balance requirement and no fees. However, the low yields mean that fewer people are interested in traditional savings accounts. Their main advantage is that in a pinch it is often quicker to access these accounts than it is to get money from some other types of accounts.
• Online Savings Account: The rise of technology has resulted in a number of online options for your banking. Brick and mortar institutions might offer special deals when you use the Internet to open a special online account. However, most people think of institutions like ING Direct, Emigrant Direct, Ally and others when they think of online savings accounts. These accounts typically pay much higher rates than traditional savings accounts. These accounts typically require that you set up a link to an existing checking account. This link allows you to make deposits and withdrawals, which typically take between one and five days.
• Money Market Account: If you are interested in a fairly attractive yield, you can put your money in a money market account. These are considered deposit accounts, but they also come with the ability to write a limited number of checks per month. These accounts typically require larger balances than savings accounts to avoid monthly fees and to earn the top interest rate. Additionally, it is important not to confuse a money market account with a money market fund. A money market fund is not FDIC insured.

You can also look for special savings programs at your financial institution. Many banks and credit unions offer special accounts for children, college students and other groups. These accounts might come with bonuses and incentives not associated with regular offerings. It might be worth it to consider these options if you qualify.

Deciding on a Savings Account

As with any banking product or service, it is important for you to determine your own needs before opening an account. Decide why you want the account, and what it is most likely to be used for. Any savings account should be primarily used for savings, whether you are building an emergency fund or whether you are saving for next year’s family vacation. The type of account you choose should be based on how often you think you will need to access the money, how quickly you think you might need to access it, and what kind of yield you are getting. Once you know what you need, you can begin to determine which savings account – and which financial institution – will provide you with what you need.

Huntington Bank has an checking account promotion that makes it easy to qualify for a $100 bonus. However, it's a very limited time promotion. The checking account must be opened by December 13, 2010. It's listed on the bank's home page. The promo page is listed at www.huntington.com/100dollars. To qualify for the $100, you must open a checking account with a $25 deposit and either set up an automatic direct deposit OR make 5 debit card purchases in 60 days.

According to the small print, the offer is available to online applicants only in Ohio, Michigan, Indiana, Pennsylvania, Kentucky, West Virginia, and Florida. They promo page includes several checking accounts including the free one. There's an online application link in the promo page. Note that the small print states that the online application must be completed and submitted by 8:00 pm December 13, 2010 to be eligible for the bonus. Here are some additional important points from the small print:

Bonus will be deposited to the new checking account within 90 (ninety) days of account opening (if "i" or "ii" condition is also met). Bonus is considered interest and will be reported on IRS Form 1099-INT. An Early Account Closing Fee will apply to accounts closed within 180 days of opening. This offer is limited to one cash bonus per household per calendar year, and the offer is not available on account conversions, existing money, or in combination with any other offer.

In my March review of a Huntington Bank promo, a reader mentioned that there's a monthly inactivity fee if the free checking is not used in a six month period. Be sure to review the fee schedule. Another reader mentioned receiving a hard pull in the application. Hard credit pulls can temporarily ding your credit score. One reader reported receiving the bonus credited to his account in less than 2 months from the time he applied.

Thanks to the reader Carnholio who mentioned this bonus in the discussion forum.

Huntington still offers an online savings account but the rates are low. I first reported on this in February 2007.

Huntington Bank is headquartered in Columbus, Ohio. It's a sizable regional bank with $52.7 billion in assets. The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 21.42% (above average) based on September 2010 data. Please refer to our financial overview of Huntington Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 6560).

Other Bank Bonuses

To find other bonus deals at other banks and credit unions, please refer to the bank bonus page which has all of my recent bank bonus blog posts. There are also additional bonuses listed in the checking account deals forum.

Two small banks in Michigan and Pennsylvania failed today. The two bank closures came early this evening, and it appeared we were headed to a very busy Friday. However, it turned out that only these two banks failed. This brings the total number of bank failures for this year to 151.

Paramount Bank was the Michigan bank that failed, and its closure was typical. Another bank assumed all deposits except certain brokered deposits.

Earthstar Bank was the Pennsylvania bank that failed, and its closure had something that I haven't seen in any other bank failure. The assuming bank did not agree to assume certain out-of-state CDs. All other deposits, including brokered deposits, were assumed. Here is what the FDIC Q&A Guide stated:

As an All-Deposits Transfer transaction, the total of all deposit accounts, excluding certain out-of-state certificates of deposits (CD) have been assumed by Polonia Bank. If you have an excluded CD, your CD will automatically be closed, and the FDIC will mail your insurance check, except encumbered CD’s, on Monday, December 13, 2010. You will not be assessed an early withdrawal penalty.

Since these out-of-state CDs are not being assumed by Polonia Bank, the FDIC will be closing the CDs and sending checks. I assume they will limit the checks to the insured amounts. Any deposits above the FDIC limits would be lost. However, no one appears to have uninsured balances in their CDs. According to the FDIC Q&A Guide:

No one lost any money on deposit as a result of the closure of this institution.

One thing unique about Earthstar Bank was that it did market CDs nationwide with online applications. Back in 2008 I did some blog posts on this bank and its hot CDs. I guess the assuming bank is considering these out-of-state CDs like brokered CDs in the sense the out-of-state depositors don't really have any relationship with the bank.

There were no credit union liquidations this week. The total number of credit union liquidations this year remains at 18.

Below is a summary of today's bank failures:

150th Bank Failure of 2010 (5th in Michigan)

• FDIC Press Release
• Closed Bank: Paramount Bank, Farmington Hills, MI
• Size: 4 branches, $252.7 million in assets, $213.6 million in deposits
• Acquiring Bank: Level One Bank, Farmington Hills, MI
• Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co deposits, have been assumed by Level One Bank
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $90.2 million
• Enforcement Action: Federal Reserve 10/23/08 written agreement, Federal Reserve 8/9/09 PCA
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 202.69% at DepositAccounts.com

151st Bank Failure of 2010 (2nd in Pennsylvania)

• FDIC Press Release
• Closed Bank: Earthstar Bank, Southampton, PA
• Size: 4 branches, $112.6 million in assets, $104.5 million in deposits
• Acquiring Bank: Polonia Bank, Huntingdon Valley, PA
• Possible Uninsured Deposits: all deposit accounts, excluding certain out-of-state certificates of deposits (CD) have been assumed by Polonia Bank
• Rate Changes: Current rates will be reviewed by the acquiring institution and may be lowered
• Estimated Cost to Deposit Insurance Fund: $22.9 million
• Enforcement Action: FDIC 4/29/10 C&D Order
• Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 203.97% at DepositAccounts.com

The above DepositAccounts.com and BauerFinancial ratings are based on 9/30/2010 data. Bankrate ratings are based on 6/30/2010 data.

References:

• FDIC list of failed banks
• NCUA list of closed credit unions
• Texas Ratios for banks and credit unions
• Latest FDIC info on deposit insurance
• My bank failure review posts
• Review of the 2009 bank and credit union failures
• 10 Lessons from the 2008 bank failures
• Review of the 2008 credit union liquidations

This bonus isn't much, but it's a fairly easy bonus to get. FNBO Direct will give a $25 bonus when you open an FNBO Direct Online BillPay Account and use your check card 6 times before December 31, 2010. They will automatically credit your FNBO Direct Online BillPay Account by January 14, 2011. This bonus is mentioned on FNBO Direct's home page as of 12/10/2010. Here's the direct link to the promo page. Below is the offer's small print:

Limited Time Bonus Offer: If you do not have an existing FNBO Direct Online BillPay Account, open an FNBO Direct Online BillPay Account between October 1 and December 31, 2010 and you can earn a $25.00 account bonus. In order to earn the bonus, your FNBO Direct Online BillPay Account must: (1) remain open for 90 days, and (2) you must use your FNBO Direct Visa® check card at least six (6) times before December 31, 2010. If you earn the bonus, we will credit your FNBO Direct Online BilPay Account by January 14, 2011. This offer is only applicable to FNBO Direct Online BillPay accounts opened after October 1, 2010 and is limited to one bonus per household. This promotion is set to end on December 31, 2010, however, we may change or discontinue this offer at any time. The FNBO Direct Online BillPay Account pays an annual percentage yield of 1.10% as of 12/10/2010 and is subject to change.

I was told that it takes between 7 and 10 business days to receive the check card in the mail. So if you don't open the account in the next week, there won't be enough time to make the necessary six check card purchases.

I had reported on this same promotion in early November, but at that time the bonus wasn't listed on the website and it was only for those with the online savings account.

Cash Back Program

In that November post I reviewed FNBO Direct's new My Deals program for FNBO credit and debit card holders. It's intended to help you to get some cash back when you shop. For the ExtraEarnings Visa Card, the cash back would be on top of 1%-to-2% cash back that's part of the ExtraEarnings program. Please refer to my FNBO Direct Cash Back Program review for more details.

Online BillPay Review

The one nice feature of FNBO Direct's Online BillPay Account is that it has one of the better interest rates for internet checking accounts. The yield is 1.10% APY on all balances as of 12/10/2010. It's not as good as Alliant Credit Union or Incredible Bank, but it's better than most of the others like ING Direct and Ally Bank for small and moderate balances.

ATM Policy

The one downside with this Online BillPay Account is their policy on ATMs. The only ATMs that are free are their own ATMs that have the circle 1 logo which are very limited to where FNBO has branches. On the website they mention the Plus ATM network, but I was told you may still be charged an ATM surcharge in this network. In addition, if you haven't maintained a $25,000 balance in the previous month, you'll be charged a $2.50 fee by FNBO for withdrawing money from any non-FNBO ATMs including those in the Plus ATM network. At the very least FNBO Direct should do what ING Direct does and offer free ATM use at Plus ATMs or some other major network of ATMs. For the case of ING Direct, you're not charged on any Allpoint ATMs.

FNBO Direct Overview

FNBO Direct became popular in 2007 when it launched its 6.00% savings account promotion. However, it also angered many customers back in 2007 when it put holds on some customer accounts when FNBO Direct determined the customers didn't comply with an employment history verification. I had an account during this time, but I didn't have this problem.

In terms of interest rates, FNBO Direct's savings account is now on par with ING Direct's Orange Savings. The rate is now about average for internet savings accounts.

FNBO Direct is a division of First National Bank of Omaha, and accounts at FNBO Direct are FDIC insured under First National Bank of Omaha (FDIC Certificate # 5452). For more about the financials of First National Bank of Omaha and more links of my previous FNBO Direct posts, please refer to the FNBO Direct rates and reviews page.

With deposit rates so low, the last thing we need are account fees that eat away at our savings. If you prefer to stay with the megabanks, you'll have to pay special attention to ensure you don't get hit by new fees. Banks are blaming the new regulations as the reason more fees are being added.

Many of the large banks like to say they still have free checking. But how does one define free? A Wells Fargo spokesperson interviewed by the Clarion-Ledger gave her opinion about free:

"It's misleading in a way to say we don't have free checking anymore," she said. "There are lots of ways to get a free account."

Banks have to be careful about what they officially label as "free checking". According to the FDIC consumer news:

Under Federal Reserve Board rules, an institution can't advertise a "free" checking account if you could be charged a maintenance or activity fee (such as for going below a required minimum balance). But your bank can offer a free account and still impose charges for certain services, such as check printing, ATM use or overdrafts.

Thus, if you have to maintain a minimum balance or direct deposit to avoid a monthly fee, it cannot be advertised as a free checking account.

So the first clue that you may have to worry about monthly fees is if your bank changes the name of your checking account. An example is at Chase Bank. Former WaMu customers who had WaMu's free checking had been converted over to Chase Free Extra Checking. Recently, these customers were sent letters from Chase informing them that this account was being converted over to Chase Total Checking in February 2011. As you can see, there's no mention of "free" in the new checking account name. The reason is that it will require customers to either maintain a minimum balance or direct deposit to avoid a $10 to $12 monthly fee.

Some banks are grandfathering in free checking account customers, at least for now. Wachovia customers in states that were converted over to Wells Fargo had their free checking accounts preserved. However, new Wells Fargo customers will have to worry about monthly fees. The checking account that's closest to a free checking account is the Wells Fargo Value Checking. Note, there's no "free" in the name. To avoid a $5 monthly service fee, you'll need either a $1,500 minimum balance or direct deposit of at least $250.

Bank of America is smart enough to know it's best not to include "free" in their checking account names. It makes it easier to add fees in the future. That was the case with the MyAccess Checking Account. This used to be a free checking account when opened online. Now the monthly service fee is waived only if you maintain a $1,500 balance or maintain direct deposit. The new eBanking checking account is closest to a free checking account. It doesn't require a minimum balance or direct deposit. To avoid monthly fees you'll just have to stick with ATMs for all deposits and withdrawals and receive online statements. If you use a teller to make a deposit instead of an ATM, a monthly fee applies. Thus, it's officially still not a free checking account by the Fed's definition.

Some regional banks are also converting their free checking accounts. Readers have been notified by BB&T Bank that their free checking account will be converted into the BB&T Bright Banking account. Note the lack of "free" in the name. To avoid a $10 monthly fee, you'll need either a minimum balance or direct deposit.

Citizens Bank's Green Checking used to be a free checking. Now it requires a $1,500 minimum balance requirement or 5 qualifying transactions per month to avoid a $4.99 monthly fee.

Finding Free Checking Accounts

You can find free checking accounts at credit unions and community banks that offer reward checking accounts powered by BancVue. It's easy to forget that these reward checking accounts are free since they include monthly requirements like debit card usage and direct deposit. However, those requirements are only to qualify for high interest rates and ATM fee reimbursements. Even if you don't meet those requirements, the checking accounts are free. There's never a monthly service fee. However, not all reward checking accounts are free. There are some reward checking accounts that are not powered by BancVue that do have monthly fees. One example is MB Financial's MB Red Checking account. You have to maintain a $500 minimum balance to avoid a $10 monthly service fee.

Another option is an internet bank like Ally Bank, ING Direct and USAA Bank. Ally Bank not only has no monthly service fees, it offers free paper checks and reimburses all ATM surcharges.

The National Republic Bank of Chicago continues to offer some competitive CD rates. The best ones continue to be mid-term CDs like the 3-year CD with a 2.12% APY and the 30-month CD with a 2.02% APY. The shorter terms are also fairly competitive: 1.26% APY for 1-year and 1.41% APY for 18 months. Minimum deposit is $1,000. These rates are listed at the bank's rates page as of 12/10/2010. Higher rates may be available for Jumbo CDs with a $99K minimum deposit. They don't list these rates so you'll have to call.

As a comparison to internet banks on 12/10/2010, the best 3-year CD rate is 2.00% APY at Bank of Internet USA and the best 1-year CD rate is 1.50% APY at CNB Bank Direct.

It appears that a branch visit is required to open an account. The bank has two offices in Chicago.

The bank's overall health score at DepositAccounts.com is 3 out of 5 with a Texas Ratio of 23.11% (above average) based on September 2010 data. Please refer to our financial overview of The National Republic Bank of Chicago for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 916).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

HarborOne Credit Union is offering two short-term CD specials: 1.25% APY for a 7-month term and 1.30% APY for a 10-month term. Minimum deposit is $1,000 for a regular CD and $500 for an IRA. The credit union also has competitive rates on its regular long-term CDs. This includes a 2.70% APY 5-year CD, 2.40% APY 4-year CD and a 2.00% APY 3-year CD. You can get a rate that's 15 basis points higher if you have the Advantage Gold Checking Account. This requires a $15K combined balance to avoid a $20 monthly fee. These rates are listed at the credit union's deposit rates page as of 12/10/2010.

As a comparison to internet banks on 12/10/2010, the best 6-month CD rate is 1.11% APY at Aurora Bank FSB and the best 5-year CD rate is 2.55% APY at First Internet Bank.

Credit union membership is open to those living or working in Bristol, Norfolk, Plymouth, or Barnstable counties. Please refer to the credit union's About Page for more details.

Branches are located in the Massachusetts cities of Abington, Bridgewater, Brockton, Canton, Easton, Middleborough, Plymouth, Randolph and Raynham.

It's a sizable credit union with $1.8 billion in assets. The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 14.59% (excellent) based on September 2010 data. Please refer to our financial overview of HarborOne Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 67560).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

The main requirement of reward checking accounts is the monthly debit card usage. There are a few other requirements like ACH credits/debits and e-statements, but the debit card usage is the main one. If you make the required number of debit card purchases and meet those other requirements, you are rewarded with a high interest rate and ATM fee reimbursements for that month.

The vast majority of reward checking accounts don't place minimum purchase requirements on the debit card usage. You only have to make X number of debit card purchases. There's no requirement that each debit card purchase be at least a certain amount. However, we've seen more banks starting to implement a minimum requirement.

One of the latest banks to have this type of minimum requirement is Randolph Bank & Trust Company in North Carolina. Their Extra-Miles Choice Checking Account had been requiring a minimum of 12 debit card purchases with each purchase being a minimum of $5. Readers who have this account have reported being informed by the bank that the minimum purchase will be $20 effective in January. On the plus side, the number of debit card purchases is going down from 12 to 6. So instead of making 12 purchases of at least $5 each, the customer will have to make 6 purchases of at least $20 each. The total in purchases now needs to be at least $120 instead of $60.

This requirement is similar to a reward checking account that I just recently found in New York City. It's from The Berkshire Bank's Power NOW Checking which requires debit card purchases totaling at least $100 per month to qualify for the high interest rate.

I don't believe these accounts from Randolph and Berkshire are powered by BancVue, the company that powers the vast majority of reward checking accounts. BancVue's reward checking accounts don't have this type of minimum purchase requirements since BanVue believes this is a violation of a federal regulation (I don't know of the specific regulation). However, banks are allowed to close accounts if they feel the customer isn't using the account in the true spirit of the program (i.e. too many small debit card purchases) Last year I described a case in which City National Bank informed a customer that her debit card purchase history didn't appear to be consistent with a primary checking account.

Why do banks want to see larger debit card purchases? Around one percent of your signature-based debit card purchases are paid to the banks by the retailers. That is what's called an interchange fee. That helps to pay for the high interest rate. I have more details on the math behind this in my post on the future of reward checking accounts.

Before reward checking, most reward programs were based on the amount you purchased. Just like cash back credit cards, if you spent $1,000, your reward may have been 0.5% or $5. In those cases, the banks didn't have to worry about small purchases. Only the merchants were concerned since they could be charged 10 cents for a 50-cent purchase. The merchants achieved a victory last year with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Merchants are now permitted to set a minimum purchase amount up to $10.00 for credit cards. Note, this doesn't apply to debit cards.

As reward checking customers, we don't want any explicit or implicit requirements on our debit card usage. However, these accounts have to be profitable for the banks or they will either stop offering them or reduce the rates. I actually prefer the implicit requirement of using it as a primary checking account. That allows me to include a few small purchases (like for coffee) with a few larger purchases. The new requirements at Randolph would be difficult for me.

Fidelity Homestead Savings Bank has a reward checking account with some above average rates. The following is a list of the rates and features if certain monthly requirements are met (as of 12/9/2010):

• 4.11% APY on balances up to $25,000
• 1.00% APY on portion of balance over $25,000
• 0.25% base rate if requirements are not met
• Nationwide ATM fee refunds of up to $4.95 per event with a cap of $25 per month

Monthly requirements include:

• 10 debit card purchases
• One ACH Credit or Debit
• Enroll and receive E-Statements

There are no monthly service fees and no minimum balance requirement.

Not only is the top tier rate above average, but the second-tier rate is also above average. A second-tier rate of around 1.00% used to be common, but many banks have cut this rate along with the top tier rate this year. A 1.00% second-tier rate may sound low, but it's actually not a bad deal when you consider many internet savings accounts now pay only around 1.00%.

Fidelity Homestead only opens new accounts for residents of the community areas where their branches are located. Their branches are located in several Louisiana cities including New Orleans, Baton Rouge, Hammond, Covington and Slidell.

The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 5.79% (excellent) based on September 2010 data. Please refer to our financial overview of Fidelity Homestead for more details. The bank has been a FDIC member since 1936 (FDIC Certificate # 28316).

Other High-Interest Reward Checking Accounts

To find reward checking accounts in your state or to find those available nationwide, please refer to the reward checking section of DepositAccounts.com.

Community First Bank is offering some competitive long-term CD rates. The two best include a 3.07% APY 5-year CD and a 2.77% APY 4-year CD. Minimum deposit is $1,000. These are also available as an IRA CD. These yields are listed in the bank's interest rates page as of 12/09/2010.

As a comparison to internet banks, the best 5-year CD rate is 2.55% APY at First Internet Bank and the best 4-year CD rate is 2.25% APY at Hudson City Savings Bank.

It appears Community First Bank requires a branch visit for opening accounts. Branches are located in Butler and Appleton City which are about 40 miles south of Kansas City.

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 23.69% (above average) based on September 2010 data. Please refer to our financial overview of Community First Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 10595).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Truliant Federal Credit Union is offering three competitive CD and IRA CD specials. These include a 3.00% APY 5-year CD, a 1.75% APY 17-month CD and a 1.25% APY 8-month CD. Minimum deposit is $1,000. These rates are listed at the bottom of the Truliant's certificate rates table as of 12/9/2010.

My last post on Truliant was in March 2009 when they were offering a special 3% 20-month CD. This is an example of how interest rates have gone down over the last two years. Now 3% requires triple the term length. Finding Three Percent CDs is hard these days. As a comparison to internet banks, the best 5-year CD rate is 2.55% APY at First Internet Bank.

Membership is open to anyone who lives, works or worships in one of two dozen counties in North Carolina, in portions of Greenville County, South Carolina, and in parts of a few counties in Virginia. Please refer to the credit union's Communities We Serve Page for the full details. Membership requires a minimum balance of $5 in the Regular Savings Account.

Branches are located throughout North Carolina including the cities of Burlington, Charlotte, Greensboro and Winston-Salem. Branches are also in Greenville, South Carolina, in Richmond, Virginia and in Canton, Ohio.

The credit union has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 20.17% (above average) based on September 2010 data. It's a large credit union with $1.35 billion in assets. Please refer to our financial overview of Truliant Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 7840).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

In the last few months we've seen several changes for the worse in many reward checking accounts. I have a few more to report. I and several readers have been reporting on these changes as they occur in the reward checking forum. These include the new debit card requirements at Randolph Bank & Trust Company, and the lower rates at Bank of the Sierra, First Arkansas Bank & Trust and The Bank of Fayetteville.

Another type of change that has been common is when banks reduce the availability of their accounts. Many banks have started out offering these accounts with nationwide availability. Before long they start restricting new accounts to a smaller and smaller region. Too much demand appears to be the main reason. A bank rep from one of these banks told me that they had to reduce availability because they couldn't keep up with the demand. I thought it would be useful to summarize these banks that have fallen off the nationwide list and to provide a new top nationwide list.

Reward Checking Overview

For those new to high-yield reward checking accounts, these are free checking accounts that reward customers with high interest rates and ATM fee reimbursements when customers meet monthly activity requirements. The main one is debit card usage. Most reward checking accounts require at least 10 debit card purchases a month. If the requirements are met, the customer earns a high rate on his checking account balance (typically up to a maximum of $25K) for that month. Also, ATM fees charged when using other banks' ATMs are reimbursed.

Many reward checking accounts have rates 2 to 3 percentage points higher than the best internet savings accounts. The debit card usage requirements and the balance caps help make this possible. I have more details about this in my post on the future of reward checking accounts.

Reduced Availability

These high rates are probably looking very attractive especially to savers with maturing CDs. Most banks that offer these reward checking accounts are small banks, so you can see why the nationwide availability often doesn't last long. Here are three banks that have just recently ended the nationwide availability of their reward checking accounts:

• KANZA Bank in Kansas (3.00% APY up to $25K as of 12/8/10) is now limiting new accounts to their market area inside Kansas.
• Ouachita Independent Bank in Louisiana (3.01% APY up to $25K as of 12/8/10) is now limiting new accounts to LA, TX, MS and AR.
• HCSB Bank in Texas (2.78% APY up to $25K as of 12/8/10) is now limiting new accounts to Texas residents.

Top Nationwide Reward Checking Accounts

After these changes, I now have four banks in our nationwide reward checking account list which offer around 3.00% APY for balances up to $25,000. I've listed these banks below along with their asset size and the date that I first reviewed their reward checking accounts:

• Coulee Bank in Wisconsin. $264 million in assets. My first review was in 8/1/2007.
• Danversbank in Massachusetts. $2.62 billion in assets. My first review was in 4/8/2007.
• Liberty Bank in Illinois. $861 million in assets. My first review was in 12/19/2007.
• Southern Community Bank & Trust in North Carolina. $1.66 billion in assets. My first review was in 2/8/2008.

One thing that is promising is that these four accounts are around 3 or more years old. It appears these banks have been able to make the reward checking model work. All had started these accounts with a 6% APY. Now they're half of that. Considering most internet savings account rates are only around one fourth of what they were in 2007, these reward checking rate cuts are not that bad.

One thing to keep in mind is that there are a lot of savers out there with CDs that are maturing. With CD rates so low these days, I'm sure many of these savers will be looking for alternatives. These banks with reward checking accounts may continue to see growing demand, and thus, they may have trouble keeping these accounts nationally available.

Other High-Yield Reward Checking Accounts

To find reward checking accounts in your state or to find those available nationwide, please refer to the reward checking section of DepositAccounts.com.

Fort Financial Credit Union has a special 30-month CD with a 2.01% APY. It's called the COMFORT Certificate, and it allows you to bump up the rate one time during the term of the CD and add additional funds at the same time. A checking account is required. Minimum deposit is $500. The special is also available as a Traditional or Roth IRA. The rate is listed at the credit union's rate table as of 12/07/2010.

As a comparison to internet banks, the best 30-month CD rate is 1.74% APY (2.05% APY for a $175K deposit) at USAA Bank. The best 30-month CD rate at a nationwide credit union is 2.15% APY at Navy Federal (limited membership).

Membership in Fort Financial Credit Union is open to anyone who lives, works, worships, attends school within certain areas around Corinth, Mississippi; Fort Wayne, Indiana; Gastonia and Morganton, North Carolina; Janesville, Wisconsin; and South Beloit, Illinois. You can also be eligible via select employer groups. Please refer to the credit union's Membership Page for the full details. Membership requires a minimum balance of $5 in the regular share savings account.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 10.58% (excellent) based on September 2010 data. Please refer to our financial overview of Fort Financial Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 5431).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Montauk Credit Union continues to offer competitive rates on its CDs and IRA CDs. The rates have gone down for the shorter terms since my April 2010 post, but the rates remain competitive. Below is the full list of rates as listed at the credit union's rate table as of 12/07/2010:

• 1.25% 12-month
• 1.50% 18-month
• 1.75% 24-month
• 2.25% 36-month
• 2.50% 48-month
• 2.75% 60-month
• 3.00% 84-month

Note, they only do simple interest, so there's no compounding. A reader reported that they'll deposit the interest in your credit union savings account every quarter. You can also request for them to send you a check. For more details about these CDs and account application process, please refer to my April review.

According to the credit union's About page, anyone is eligible to join:

MCU has an "open charter" which enables us to extend membership to anyone.

A reader reported that she had to go into the branch to join. According to the reader, the office is in a teeny "storefront" on west 26th Street just off 6th Avenue.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 7.58% (excellent) based on September 2010 data. Please refer to our financial overview of Montauk Credit Union for more details. The credit union is federally insured by the NCUA (Certificate # 63231).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Update 12/13/2010: The promotion has ended early.

WTDirect has started a new promotion with a bonus of up to $350. Here's the link to the promotion page. This is an exclusive promotion for the readers of DepositAccounts.com.

Just like the previous promotions, this new one is based on your balance that you maintain for 3 months. It's a little bit better than the one they offered in October. Here are the new bonus levels:

• $100 bonus for a $10,000 balance
• $150 bonus for a $25,000 balance
• $350 bonus for a $50,000 balance

And here are the requirements to receive this bonus:

1. Open and fund your savings account with $10,000 or more by December 17, 2010
2. Maintain your balance for three months
3. Receive a cash bonus directly in your WTDirect account

If the standard yield remains at 1.21% APY during these 3 months, you can calculate the effective yields if you factor in the bonuses. Note, these yields are annualized just like the APY of a 3-month CD.

• 1.21% APY + $100 bonus on $10K = 5.21% APY for 3 months
• 1.21% APY + $150 bonus on $25K = 3.61% APY for 3 months
• 1.21% APY + $350 bonus on $50K = 4.01% APY for 3 months

Below is the offer's small print:

This offer is available to new WTDirect clients only. First account holder must NOT have held a WTDirect account in the past 12 months. WTDirect account must be opened and funded via electronic (ACH) transfer received by 12/17/10. Eligibility for bonus is based upon maintaining a minimum daily balance of $10,000 during the promotional period of 12/17/10 - 3/17/11. Bonuses will be paid approximately 2 weeks after the end of the promotional period to clients whose accounts remain open and in good standing. Wilmington Trust employees and their family members are not eligible. WTDirect reserves the right to cancel or modify this promotion at any time without notice.

Note, it states that they may cancel the promo at any time without notice. This is what happened last May and in 2008 with similar promotions. This one isn't quite as good as those past ones, so it will hopefully last longer.

Internet Savings Account Features

WTDirect's standard interest rate isn't the best (1.21% APY for $10K+ as of 12/06/2010), but it has held up fairly well. For example, it's now above the savings account rates at Ally Bank, CNB Bank Direct and Dollar Savings Direct. It also has some features that can make it a good choice for the long-term. First, it has a solid ACH bank-to-bank transfer service that can act as a useful hub account to transfer funds to and from other banks. I described many of these features in my May review. WTDirect's FAQs describes all of these bank-to-bank transfer features better than I've seen any other internet bank describe them.

Extra Perk for Bonus Customers

One thing nice that this bank has done for those who have participated in these past promotions is to offer them a higher interest rate around the time that the 3-month bonus period ends. For the May promo, WTDirect offered the bonus customers an extra 0.20% on top of WTDirect's standard savings account rate for six months. There's no guarantee that they will repeat this, but this is an example of the effort they have made to keep customers.

Customer Service

In my September WTDirect poll I asked how many WTDirect bonus customers planned to keep their money at WTDirect after the 3-month promo ended. Out of the 33 who responded, 15 said they planned to keep all of their money that they had deposited for the May promo at WTDirect. The extra interest rate was one reason, but high-quality customer service was another important factor. Here is what one reader said in the comments:

I admit I opened a WTDirect account back in May simply for the $500 bonus, but I plan to stay for the incredible customer service and competive interest rates. Every bank advertises "great customer service" but it's been my experience that very few actually provide it. WTDirect is one of the few: Every time I've called the bank, I've been connected to a live CSR, not a voicemail menu. Moreover, it's CSRs are immeasurably polite, very well trained, and extraordinarily helpful.

Financial Overview

WTDirect is a division of Wilmington Trust FSB. You can confirm this at Wilmington Trust's FDIC page which lists www.wtdirect.com as the bank's primary internet web address. The bank has an overall health score of 3 out of 5 with a Texas Ratio of 28.03% (above average) based on 9/30/10 data. Please refer to our financial overview of Wilmington Trust FSB for more details.

On November 1st, Wilmington Trust announced that it will merge with M&T Bank Corporation which is a large regional bank that covers much of the Mid-Atlantic Region.

Since this is so rare these days, I thought it would be worthwhile to highlight SFGI Direct's rate increase. SFGI Direct increased the yield on its online savings account from 1.26% to 1.41% APY late last week. With rate cuts so common these days, it's nice to see a rate hike for a change.

SFGI Direct is fairly new, but it does have more than a year of history with competitive rates. It was launched during the summer of 2009 with a 2.25% APY. My first report on the account was in July 25, 2009. The bank was careful not to let SFGI Direct grow too fast. Twice it stopped accepting new account applications. For most of 2010 the account was closed to new customers. It finally reopened the account in October. We'll see how long it'll stay open to new customers now. Banks sometimes choose to reduce deposit growth by lowering rates. Stopping new applications is a better approach in my opinion.

You can review SFGI Direct's rate history and when they closed new accounts in my July 2009 account review. The rate history is at the bottom of the post.

As I mentioned in the 2009 review, the savings account has some nice features. Some of the notable features include:

• No monthly fees or minimum balance requirements (initial opening deposit is $500)
• Online line account application and funding (per FAQ)
• You can initiate external transfers (ACH)
• Allowed to initiate ACH transfers through another institution (per FAQ)
• Fast external transfers (readers have reported one day delays)
• No maximum dollar limit on external transfers (per FAQ)

It does have a few downsides:

• Only allow one external link for ACH transfers (per FAQ)
• No beneficiaries (per FAQ)
• 5 business-day hold for the initial ACH deposit and 2 day hold for ongoing ACH deposits (per account disclosure)

SFGI Direct is the online division of Summit Community Bank which has 15 branches in West Virginia and Virginia. The bank isn't in the best financial shape. We give it an overall health score of 2 out of 5 with a Texas Ratio of 76.49% (below average) based on June 2010 data. Please refer to our financial overview of Summit Community Bank for more details. The bank has been a FDIC member since 1995 (FDIC Certificate # 34102).

The bank is under the bank holding company, Summit Financial Group, Inc, which trades on the NASDAQ. When the holding company released its 2009 results, it mentioned SFGI Direct and indicated it was being used to "improve its funding mix":

Total deposits as of December 31, 2009 were $1.02 billion, up $51.5 million, or 5.3 percent, compared to $966 million at December 2008. Summit used this opportunity to improve its funding mix, replacing $103.4 million of short-term borrowings with $106.3 million of retail deposits, driven primarily by the successful introduction of a new internet savings account product, SFGI Direct. Savings account balances grew by $126.7 million during 2009.

Hopefully it'll let the savings account balances grow for a while so it can keep accepting new customers.

Barksdale Federal Credit Union is offering several competitive CD and IRA CD rates. Minimum deposit is $1,000. The following yields are listed in the credit union's share account rates page as of 12/06/2010:

• 3.04% APY 5-year CD & IRA CD
• 2.89% APY 4-year CD & IRA CD
• 2.43% APY 3-year CD & IRA CD
• 2.12% APY 2-year CD & IRA CD
• 1.61% APY 1-year CD & IRA CD

As a comparison to internet banks, the best 1-year CD rate is 1.50% APY at CNB Bank Direct and the best 5-year CD rate is 2.60% APY at Acacia Federal Savings Bank.

Credit union membership is open to those who live, work, worship, own a business or attend school in any of the following Louisiana parishes: Bossier, Caddo, Webster, Rapides, Allen and Grant. Also eligible are active military at the Barksdale Air Force Base and at the Fort Polk Army Post. In addition, all retired military living within a 100 mile radius of a center are eligible. Please refer to the credit union's membership eligibility page for the full details.

Branches are located in the Louisiana cities of Bossier City, Alexandria, Blanchard, Cotton Valley, DeRidder, Shreveport, Fort Polk, Hodge, Leesville, Benton and Oakdale.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 4.41% (excellent) based on September 2010 data. Please refer to our financial overview of Barksdale Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 9589).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Bank of Kansas City is offering a $100 bonus for opening a checking account and enrolling in its savings program called QuickSave. This promotion doesn't appear to be listed at the bank's website. It was advertised in the 12/05/2010 edition of the Kansas City Star. The ad is available online here.

According to the ad, you need to bring the ad in to one of their branches. According to the offer's small print, the $100 offer is valid for personal checking accounts opened from 12/05/10 to 02/03/11. The offer is limited to one per household. A $50 minimum opening deposit is required. The account must remain open for a minimum of 6 months.

The bank does offer a free checking account called Free Checking 2.0. One nice perk is free ATMs nationwide. They'll automatically reimburse you when another bank charges you to use its ATM.

The QuickSave program is very similar to Bank of America's Keep the Change program. Every time you use your debit card or make an online bill payment, money gets transferred from your checking to your savings account. Unlike Keep the Change, you specify either 25 or 50 cents for each transfer. Like Keep the Change, they do a 100% match for the first 3 months and 5% thereafter.

The Personal Savings 2.0 account does have potential monthly fees, but these are waived for a $100 minimum balance.

Branches are located in Overland Park, Kansas and Kansas City, Missouri.

The bank has an overall health score at DepositAccounts of 4 out of 5 with a Texas Ratio of 0.76% (excellent) based on September 2010 data. Please refer to our financial overview of Bank of Kansas City for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 12690).

Similar Accounts at Bank of Kansas City's Sister Banks

Bank of Kansas City is part of the bank holding company BOK Financial Corporation. This holding company has several other banks in addition to Bank of Kansas City, and all seem to offer the same free checking and QuickSave program. I'm not sure if all have similar checking account bonuses. The only other one I've found advertised is at Bank of Oklahoma which is offering a $25 bonus. This was advertised in the 12/05/2010 Oklahoman newspaper. The ad is available online here. Other banks in this holding company are located in Texas, Arkansas, New Mexico, Arizona and Colorado. Refer to the holding company website for links to the websites of these banks.

Other Bank Bonuses

To find other bonus deals at other banks and credit unions, please refer to the bank bonus page which has all of my recent bank bonus blog posts. There are also additional bonuses listed in the checking account deals forum.

The 60 Minutes interview of Bernanke was aired tonight. Just like the last 60 Minutes interview in March 2009, there was no question about the negative effects of the ultra low interest rate policy on retirees and savers.

When Scott Pelley of 60 Minutes asked about what caused the Fed to start the purchasing of $600 billion in Treasury securities, also known as Quantitative Easing 2 (QE2), Bernanke gave the following reasons:

It has to do with two aspects. The first is unemployment. The other concern I should mention is that inflation is very, very low, which you think is a good thing and normally is a good thing. But we're getting awfully close to the range where prices would actually start falling.

At the start of the interview, Bernanke had the following to say about unemployment:

At the rate we're going, it could be four, five years before we are back to a more normal unemployment rate. Somewhere in the vicinity of say five or six percent.

That could mean the ultra low interest rate policy could last for many years.

Scott Pelley asked about the risk of inflation. Bernanke said he thinks this fear is "way overstated". He said the Fed isn't printing money, and the "money supply is not changing in any significant way." According to Bernanke:

What we're doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that's what we're gonna do.

Our best hope for higher deposit rates is a growing economy with declining unemployment, and hopefully, Bernanke and the Fed will be able to unwind this ultra low interest rate policy fast enough so inflation doesn't get out of control. What's worrisome is a condition in which inflation is rising while interest rates stay low. And it becomes more worrisome when it always seem like inflation that retirees and savers see is higher than what is measured by the government.

CD rates at both Pentagon Federal Credit Union and Ally Bank have gone down lately. However, both continue to have the best long-term CD deals that are nationally available. PenFed has some of the best rates on 7-year and 5-year CDs, and its early withdrawal penalties are reasonable. Ally Bank's 5-year CD rate is lower, but it has the smallest early withdrawal penalty of any institution.

Below is an updated early withdrawal yield table that shows approximate average yields you would receive if you close these CDs early. It allows you to determine if it makes more sense to buy a long-term CD rather than a short-term CD. With only a 2-month interest penalty for early withdrawals, Ally Bank's 5-year CD continues to be the best deal if you think it's likely that the CD will be closed before 3 years. This could be due to interest rates shooting up or if you need the money. PenFed's 5-year CD has a slight advantage around 3 years. At 4 years, PenFed's 7-year CD starts to have an advantage. The 7-year CD has an early withdrawal penalty of up to 1 year of interest compared to a 6-month penalty for the 5-year PenFed CD. The higher 7-year rate starts to offset this larger penalty as more time advances from the issue date.

The early withdrawal yields listed below are based on the spreadsheet developed by Bogleheads forum members. It's available from the Bogleheads Wiki: Comparing CDs. It should be noted that the following simple formula comes very close to this spreadsheet:

Post Penalty APY = (Full APY) x (D - P) / D

D = days into term when the CD was closed.
P = days of the early withdrawal penalty

These CD rates are based on the rates listed at the institutions' websites as of 12/05/2010.

Approximate Yields After Early Withdrawal Penalties

I don't have any updates to the potential risks of long-term CDs that I discussed last month. This includes the risk that the bank could increase the early withdrawal penalty on existing CDs. I've received an assurance from Ally's public relations director that the penalty would not be increased on existing CDs. Allan Roth at The Irrational Investor Blog received a similar assurance from PenFed. You can review Ally's disclosure and PenFed's CD terms to make your own decision regarding this risk.

For more details on PenFed CDs and membership, please refer to my recent PenFed CD review. For more information on Ally Bank CDs, please refer to my Ally Bank CD review.

You may be able to get higher CD rates at banks or credit unions in your state. To search for the best deals available both nationwide and in your area, please refer to the CD rates and CD IRA rate tables at DepositAccounts.com.

Columbia Bank is offering a very competitive 2-year CD rate of 2.00% APY. Minimum deposit is $500. It's also available as an IRA CD. Most of its other CD rates aren't that great. The 4-year and 5-year CD rates are fairly competitive with a 2.25% APY and a 2.50% APY. One downside to these CDs is an early withdrawal penalty that's a little high: 270 days of interest for terms of 2 to 4 years and 365 days of interest for the 5-year CD. These CD rates and early withdrawal penalties are listed at the bank's CD rates page as of 12/05/2010. Kudos to the bank for listing both the rates and the early withdrawal penalties in its online rate sheet.

As a comparison to internet banks on 12/5/2010, the best 2-year CD rate is 1.85% APY at CNB Bank Direct.

It appears that a branch visit is required to open an account. Branches are located in several New Jersey cities some of which include Fair Lawn, Paramus, Medford, Voorhees, Sewell, Edison, Middletown, Butler, Wayne and Clark.

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 18.00% (excellent) based on September 2010 data. It's a sizable bank with $4.66 billion in assets. Please refer to our financial overview of Columbia Bank for more details. The bank has been a FDIC member since 1937 (FDIC Certificate # 28834).

Thanks to the reader who emailed me news of this CD.

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

The Bank of Union is advertising a special 13-month CD with a 1.55% APY. Minimum deposit is $1,000. This special doesn't appear to be listed on the bank's website. It was advertised in the 12/4/2010 edition of the Oklahoman newspaper. The ad is available online here.

As a comparison to internet banks on 12/5/2010, the best 1-year CD rate is 1.50% APY at CNB Bank Direct.

It appears that a branch visit is required to open an account. The Bank of Union branches are located in Union City and El Reno which are suburbs of Oklahoma City.

The bank has an overall health score at DepositAccounts.com of 3 out of 5 with a Texas Ratio of 15.67% (excellent) based on September 2010 data. Please refer to our financial overview of The Bank of Union for more details. The bank has been a FDIC member since 1959 (FDIC Certificate # 17967).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

The week started off with some positive economic news, and that helped to raise the 10-year Treasury yields to over 3% for the first time since July. However, the unemployment numbers released on Friday were worse than expected which increased the odds that the Fed will stick with QE2 to drive down interest rates. Some economists are predicting high unemployment will last for several years, and that could lead the Fed to continue its ultra low interest rate policy.

The Fed fund rate futures haven't changed much from last Saturday. Expectations for rate hikes next June inched up from 9.0% to 9.3%. For next September, it went down from 29.2% to 27.1%, and for next November, it went down from 35.9% to 34.0%

There were no bank or credit union failures this week. So far this year there have been 149 bank failures. The total for all of last year was 140. With two more non-holiday Fridays left in the year, I doubt we'll see more than 160 bank failures for 2010.

As I mentioned last week, we have updated all of the Texas Ratios and health scores for all banks and credit unions. These are based on September data that the FDIC and NCUA have recently released. You can view our list of Texas Ratios of banks and credit unions in our Bank Health Ratings page.

Savings Account Rates

What factors contribute to the very low interest rates? There's a good review of all of the factors in this NYT article, Why Savings Account Rates Are So Pathetic. It mentions the well-known reasons such as the Fed policy and the low loan demand. It also mentioned lazy customers as helping to keep rates down. This is especially the case for the megabanks which have millions of customers who let their money sit in deposit accounts that earn practically nothing.

We finally have a rate hike. SFGI Direct increased its savings account rate from 1.26% to 1.41% APY. SFGI Direct first offered its savings account in July 2009 with a competitive yield of 2.25%. They did a good job at attracting customers. In less than a month they stopped taking new applications. They reopened it for a while but for most of 2010 it remained closed for new customers. They finally reopened it again last October. The rates have remained very competitive. I have the rate history and more details about the account in my SFGI Direct savings account review.

Rate Hikes:

1. SFGI Direct savings - 1.41% (was 1.26%)

Rate Cuts:

1. EverBank MMA (ongoing yield) - 1.06% (was 1.11%)
2. Discover Bank Premium Savings - 1.35% (was 1.50%)
3. HSBC Advance Savings - 1.00% (was 1.10%)

Certificate of Deposit Rates

With the start of a new month, several banks and credit unions reduced their CD rates. Some of the rate leaders that cut their rates include PenFed, Melrose Credit Union, GiftsforBanking.com and Bank of Internet USA.

I reported on America's Credit Union this week and its high-yield promotional CDs. Many readers joined this credit union in 2009 when it was offering hot add-on CDs. The current promotional CDs don't have add-on features, but they have very competitive rates for terms of 6 months to 48 months.

Reward Checking Accounts

Several banks that have been offering popular reward checking accounts made or announced rate cuts this week. Bank of the Sierra slashed its top rate from 3.09% APY to 2.09% APY. This account had been one of the top nationwide reward checking accounts through 2009 and the first quarter of 2010. Last April the bank restricted new accounts to only CA and WV residents, and last July, it cut its yield from 4.09% to 3.09%.

First Arkansas Bank & Trust announced to its customers both a rate cut and a balance cap cut that take effect in January. The top yield is falling from 3.50% to 3.03% and the balance cap is falling from $35K to $25K. Like Bank of the Sierra, FAB&T used to be one of the top nationwide reward checking accounts until the bank restricted new accounts to residents in its state.

Should we expect reward checking accounts to continue to offer yields of at least 3 percent? With almost all CD rates now below 3%, it may be too much to expect. If you compare reward checking with internet savings accounts, they have done reasonably well this year. Many reward checking accounts have multiple years of history, so it would seem we shouldn't see major rate cuts. But every now and then we get some surprises like the rate cut at Bank of the Sierra.

I reported on two new reward checking accounts this week. One being offered by a bank in Tennessee is offering a very nice rate of 4.09% APY for balances up to $25K. The other one is closer to the norm with a 2.50% APY for balances up to $25K. That is being offered by a bank that's based in New York City. It has a unique debit card usage requirement: to qualify for the top rate, the customer needs 6 debit card purchases that total at least $100.

To find reward checking accounts available nationwide or to find those that are only available in your state, please refer to the reward checking section of DepositAccounts.com.

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

Banking News/Resources

• Another Friday Without Bank Failures - Updated 2010 Stats
• FDIC's Fall 2010 Consumer News: Avoiding Scams, FDIC Coverage Changes, Estate Planning

Savings/Checking Accounts - Nationwide

• SmartyPig Gift Card for a Holiday Gift

CD Deals - National

• Competitive CD Rates at America's Credit Union in WA - Easy Membership
• PenFed Lowers CD Rates But Long-Term CD Rates Remain Competitive
• Melrose Credit Union CD Rates Fall From Leader Position

Reward Checking Accounts

• High-Yield Reward Checking Account at Commercial Bank and Trust Company in TN - Local Only
• High-Yield Reward Checking Account at The Berkshire Bank in New York City
• Best Reward Checking Accounts for Large Balance Caps

CD and Money Market Deals - Local

• Competitive 3-Year CD Rates at LA Financial Credit Union in CA & AZ - Local Only
• Top CD and Reward Checking Rates at NEFCU in New York - Local Only
• High-Yield Savings Account at Dollar Bank in Pittsburgh and Cleveland - Local Only
• Top CD Rates at Appalachian Community FCU in TN & VA - Local Only
• Top CD and Reward Checking Rates Continue at The East Carolina Bank - NC Only

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. 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.

Rates as of December 4, 2010

Checking/Savings/Money Market Accounts:

• Best Reward Checking Account Rates (Nationwide & by State)
• Best Savings Account Rates (Nationwide & by State)
• Best Money Market Rates (Nationwide & by State)
• Best Checking Account Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• EverBank - 2.01% ($5K min), 3 mo promo rate up to $50K (1.06% ongoing) account review
• SmartyPig - 1.75% (min $25, max $50K) withdrawal restrictions, account review
• AmericaNet/Evantage Bank - 1.75% (up to $35K, 1% over) account review
• The Morrill and James Bank - 1.51% Checking (min $1.5K) account review
• Incredible Bank - 1.42% Checking ($1K min) account review
• SFGI Direct - 1.41% (min $500 to open) account review
• Hudson City Savings Bank - 1.35% (min $2.5K)
• Capital One/Costco - 1.35% InterestPlus Savings ($5K min) quarterly bonuses for $10K+, account review
• Alliant Credit Union - 1.35% (min $100) account review
• Ready Saver - 1.35% account review
• Capital One - 1.30% InterestPlus Savings ($1K min) quarterly bonuses for $10K+, account review
• American Express Bank - 1.30%, account review
• Clear Sky Accounts - 1.30% account review
• Sallie Mae Bank - 1.30% (Upromise rewards) account review
• Discover Bank - 1.25% Savings (min $500) account review
• H&R Block Bank - 1.25% MMA (min $50K) account review
• WTDirect - 1.21% ($10K min) account review
• CNB Bank Direct - 1.20% account review
• Zions Bank - 1.11% ($1K min)
• ING Direct - 1.10% Orange Savings
• DollarSavingsDirect - 1.10% ($1K min) account review
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• Ally Bank - 1.09% MMA account review

• Noteworthy Accounts - Local Only

• Mid America Bank & Trust Company - 1.54% (min $10K) in MO
• Affinity Bank (formerly Atlanta Business) - 1.40% MMA (min $100K) in GA
• Solera National Bank - 1.25% (min $100) in CO

3-Month Certificates of Deposit:

• Best 3-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Self-Help CU - 1.01% (min $500) account review
• TotalBank - 0.85% e-CD (min $1K)
• Fort Knox FCU - 0.85% (min $500)
• RiverLand CU - 0.75% (min $1K)
• Virtual Bank - 0.75% (min $10K)
• Ally Bank - 0.65%

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 1.45% (min $500) in NYC
• Bank of Georgetown - 1.40% (4-mo) (min $1K) in Washington DC metro
• NavyArmy FCU - 1.30% (min $100K) in South TX
• Atlanta Postal CU - 1.00% (min $2K) in GA

6-Month Certificates of Deposit:

• Best 6-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.50% Active checking required, account review
• America's Credit Union - 1.25% (min $25K)
• Aurora Bank FSB - 1.12% (min $1K)
• Ally Bank - 1.09%
• Virtual Bank - 1.06% (min $10K)
• NewDominion Bank - 1.03% (min $3K) account review

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.56% IRA-only (min $2.5K) in NY
• Self Reliance New York FCU - 1.65% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.46% (min $1K) in GA
• F&A Federal Credit Union - 1.40% (min $50K) in CA
• NavyArmy FCU - 1.40% (min $100K) in South TX
• Industrial Credit Union - 1.40% (min $1K) in MA
• Fayetteville Bank - 1.36% (min $500) (1.51% $100K+) in TX

9-Month Certificates of Deposit:

• TotalBank - 1.15% e-CD (min $1K)
• Virtual Bank - 1.11% (min $10K)
• Discover Bank - 1.10% (min $2.5K)
• Easthampton Savings Bank - 1.10% (min $1K)
• NewDominion Bank - 1.05% (min $3K) account review

• Noteworthy Accounts - Local Only

• Island Federal Credit Union - 2.00% (min $2K) Requires active checking, in NY
• Miami Postal Service CU - 1.76% (min $5K) in Miami, FL
• Self Reliance New York FCU - 1.70% (min $500) in NYC
• NavyArmy FCU - 1.45% (min $100K) in South TX

12-Month Certificates of Deposit:

• Best One-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.75% Active checking required, account review
• America's Credit Union - 1.55% (13-mo) (min $25K)
• CNB Bank Direct - 1.50% (min $25K) (shown at the bank's online banking login page) account review
• Alliant Credit Union - 1.50% (min $25K) account review
• Bank of Internet - 1.41% (min $1K) account review
• Melrose CU - 1.41% (min $5K) account review
• North American Savings Bank - 1.35% (14-mo) (min $1K)
• Sallie Mae Bank - 1.30% (no min) account review
• Discover Bank - 1.30% (min $2.5K) account review
• Ally Bank - 1.29% (min $0) account review
• Virtual Bank - 1.26% (min $10K)
• Choice Financial - 1.25% (13 mo) (min $5K) add-on feature, account review
• ING Direct - 1.25%
• NewDominion Bank - 1.21% (min $3K) account review
• Ally Bank - 1.20% (11-mo) (min $0) No-Penalty CD

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.00% (min $500) in NYC
• NavyArmy FCU - 1.85% (min $100K) in South TX
• University of Iowa Community CU - 1.80% (15-mo) (min $100K) in Iowa
• Progressive Credit Union - 1.71% in NYC
• Affinity Bank (formerly Atlanta Business) - 1.71% (min $1K) in GA
• Fayetteville Bank - 1.66% (min $100K) in TX
• Industrial Credit Union - 1.60% (min $1K) in MA

18-Month Certificates of Deposit:

• Best 18-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Alliant Credit Union - 1.75% (min $25K) account review
• MetLife Bank - 1.65% (min $25K)
• CNB Bank Direct - 1.65% (min $25K) (shown at the bank's online banking login page) account review
• America's Credit Union - 1.65% (min $25K)
• Aurora Bank FSB - 1.44% (min $1K)
• Discover Bank - 1.40% (min $2.5K), account review
• Acacia Federal - 1.40% (min $500)
• Ally Bank - 1.37% (no min)
• USAA Bank - 1.35% (min $1K) (1.70% $175K min) account review
• NewDominion Bank - 1.35% (min $3K) account review
• First Savings Bank Northwest - 1.33% unlimited add-on (min $500) account review

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.82% IRA-only (min $200) in NY
• Self Reliance New York FCU - 2.10% (min $500) in NYC
• Affinity Bank (formerly Atlanta Business) - 1.87% (min $1K) in GA
• Hyde Park Savings Bank - 1.70% (16-mo) Online Only (min $1K) in MA

24-Month Certificates of Deposit:

• Best Two-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• America's Credit Union - 2.05% (26-mo) (min $25K)
• Alliant Credit Union - 1.90% (min $25K) account review
• CNB Bank Direct - 1.85% (min $25K) (shown at the bank's online banking login page) account review
• Melrose CU - 1.66% (min $5K) account review
• Delta Community CU - 1.60% (min $1K) account review
• Bank of Internet - 1.60% (min $1K)
• Ally Bank - 1.57% Raise Your Rate CD
• NewDominion Bank - 1.52% (min $3K) account review
• Northwest FCU - 1.00% (min $500) add-on, account review

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.35% (min $500) in NYC
• First Peoples Community Credit Union - 2.20% (21-mo) (min $5K) in MD, PA & WV
• NavyArmy FCU - 2.15% (min $100K) in South TX
• University of Iowa Community CU - 2.10% (25-mo) (min $100K) in Iowa
• Affinity Bank (formerly Atlanta Business) - 2.07% (min $1K) in GA

36-Month Certificate of Deposit:

• Best 3-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Air Force FCU - 2.25% (min $25K) membership restrictions account review
• Navy Federal - 2.25% (30-mo) (min $10K) membership restrictions account review
• America's Credit Union - 2.25% (min $25K)
• Melrose CU - 2.17% (min $5K) account review
• Alliant Credit Union - 2.10% (min $25K) account review
• USAA Bank - 2.00% (min $1K) (2.30% $175K min) account review
• Acacia Federal Savings Bank - 2.00% (min $500) account review
• Bank of Internet - 2.00% (min $1K)
• Andrews FCU - 2.00% (min $1K) account review
• Sallie Mae Bank - 1.85% (no min) account review
• Delta Community CU - 1.85% (min $1K) account review
• Pentagon Federal CU - 1.75% (min $1K), account review
• RiverLand CU - 1.75% (min $1K)

• Noteworthy Accounts - Local Only

• Sea Comm Federal Credit Union - 2.63% (min $1K) in Northern NY
• First Peoples Community Credit Union - 2.60% (39-mo) (min $5K) in MD, PA & WV
• Massena Savings and Loan - 2.56% (min $1K) in NY
• First Community CU - 2.50% w/relationship (min $300) in MI
• American Heritage Credit Union - 2.40% (min $1K) in PA
• Affinity Bank (formerly Atlanta Business) - 2.38% (min $1K) in GA
• Security Service FCU - 2.35% (min $100K) in TX & CO
• Redding Bank in Commerce - 2.27% (min $100K) in Northern CA
• Montauk Credit Union - 2.25% in NYC
• Fort Bragg Federal Credit Union - 2.23% (min $25K) in NC
• First Choice Bank - 2.10% (min $1K) in NJ

48-Month Certificate of Deposit:

• Best 4-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• America's Credit Union - 2.55% (min $25K)
• Alliant Credit Union - 2.50% (min $25K) account review
• Melrose CU - 2.42% (min $5K) account review
• Self-Help CU - 2.28% (min $500) account review
• Fort Knox FCU - 2.25% (min $500)
• Hudson City Bank - 2.25% (min $5K) account review
• Acacia Federal Savings Bank - 2.25% (min $500) account review
• Pentagon Federal CU - 2.25% (min $1K), account review
• Bank of Internet - 2.20% (min $1K)
• NewDominion Bank - 2.02% (min $3K) account review

• Noteworthy Accounts - Local Only

• First Community CU - 3.25% w/relationship (min $300) in MI
• Education First CU - 2.75% in SE Michigan
• Police & Fire Credit Union - 2.75% (min $500) in PA
• Sea Comm Federal Credit Union - 2.75% (min $1K) in Northern NY
• LOMTO FCU - 2.63% in NYC
• The Napoleon State Bank - 2.58% (min $50K) in IN
• First Choice Bank - 2.35% (min $1K) in NJ

60-Month Certificate of Deposit:

• Best 5-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 3.00% Active checking required, account review
• Melrose CU - 2.93% (min $5K) account review
• Air Force FCU - 2.85% (min $25K) membership restrictions account review
• Pentagon Federal CU - 2.75% (min $1K), account review
• Acacia Federal Savings Bank - 2.60% (min $500) account review
• First Internet Bank - 2.55% (min $1K)
• Fort Knox FCU - 2.50% (min $500)
• Navy FCU - 2.50% ($20K min) (2.60% $100K+) restrictions to membership, account review
• Delta Community CU - 2.50% (min $1K) account review
• Andrews FCU - 2.50% (min $1K) account review
• Northrop Grumman FCU - 2.46% (min $40K), account review
• Sallie Mae Bank - 2.45% (no min) account review
• Mountain America CU - 2.45% (min $1K) account review
• USAA Bank - 2.40% (min $1K) (2.50% $175K min) account review
• Ally Bank - 2.40% (min $0) account review
• EverBank - 2.36% ($1.5K min) account review

• Noteworthy Accounts - Local Only

• PEF Federal Credit Union - 3.29% (min $500)
• First Community CU - 3.25% w/relationship (min $300) in MI
• Police & Fire Credit Union - 3.25% (min $500) in PA
• LOMTO FCU - 3.14% in NYC
• First Peoples Community Credit Union - 3.10% (min $5K) in MD, PA & WV
• Security Service FCU - 3.00% (min $100K) in TX & CO
• Sea Comm Federal Credit Union - 2.99% (min $1K) in Northern NY
• First Choice Bank - 2.90% (min $1K) in NJ
• Hudson Valley Credit Union - 2.85% (min $500) in NY State
• F&A Federal Credit Union - 2.75% (min $50K) in CA
• Inter National Bank - 2.75% (min $1K) Add-On CD in TX (requires branch visit but accepts out-of-state deposits)

84-Month Certificate of Deposit:

• Best 6+-Year CD Rates (Nationwide & by State)

• Pentagon Federal CU - 3.25% 7yr (min $1K), account review
• Navy FCU - 3.15% 7yr ($20K min) restrictions to membership, account review
• Capital One - Costco - 3.05% (10-yr) (min $5K)
• Capital One Direct Banking - 3.00% (10-yr) (min $5K)
• Discover Bank - 2.75% 7yr (min $2.5K) (3.00% 10yr) account review
• Bank of America DOW - 2.71% (10-yr) (min $1K) account review
• USAA Bank - 2.70% 7yr (min $1K) (2.80% $175K min) account review
• Apple FCU - 2.60% (min $500) (3.25% 10yr) account review

• Noteworthy Accounts - Local Only

• Security Service FCU - 3.50% 7yr (min $100K) in TX & CO
• Randolph-Brooks Credit Union - 3.45% (min $75K) 7yr in Central TX
• Cardinal Bank - 3.11% 6yr (min $1K) in VA, DC & MD
• Anchor Mutual Savings Bank - 3.00% (min $500) 8yr in WA
• Access National Bank - 3.00% 7yr (min $10K) in VA, DC & MD
• Montauk Credit Union - 3.00% 7yr in NYC

Various Deposit Account Deals

• Bank Deals Forum
• Checking/Savings Account Bonuses
• Best IRA CD rates, local and nationwide deals
• Latest CD and Savings Account Deals with No Major Deposit Limitiations

Bank Account Alternatives

• Ford Interest Advantage - 1.65% rate for $50k+, Ford Interest Advantage review
• GE Interest Plus - 1.45% rate for $50k+
• Vanguard Tax-Exempt Money Market Fund - 0.15% 7-day yield
• Paypal Money Market Fund - 0.11% 7-day yield
• Vanguard Prime Money Market Fund - 0.06% 7-day yield
• Fidelity Money Market Fund - 0.01% 7-day yield (reviews on Fatwallet)
• Fidelity Municipal Money Market Fund - 0.01% 7-day yield
• TIAA-CREF Money Market Fund - 0.00% 7-day yield
• FW Thread on Treasury Bills
• I & EE Savings Bonds for 2010, I Bond Article, I Bonds as CD Alternatives

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

One of the most basic of bank accounts is the checking account. A checking account is considered a deposit account because you put money into the bank, and the bank holds it for you. In most cases, you can access the money in your checking account by using a debit card or ATM, withdrawing money at the teller window, or writing a check. Options to use ACH transfers online and over the phone are also usually available.

It is important to understand the terms associated with your bank account, and make sure that you choose an account that fits your needs.

Types of Checking Accounts

First of all, you need to decide whether you need a single checking account or a joint checking account. If you have a single checking account, you are the only person authorized to use it. A joint checking account is one that two or more people can access. Couples who combine finances usually choose a joint account, and minors who open accounts usually have joint checking accounts with their parents. There are other ways for checking accounts to be accessed, but most households will usually need a single account or a joint checking account.

Here are three of the most popular types of checking accounts:

1. Free Checking: This type of account is designed to cater to the greatest number of people. Until recently, most banks have not charged monthly service charges associated with your balance (as long as you remain above $0) with free checking. Usually, there are no limits on the number of debit card transactions you can make. However, some banks appear to be moving away from this generous type of checking account. Some "free' checking accounts now come with activity, minimum balance, and other requirements to avoid service charges.
2. Interest Bearing Checking: Some banks offer interest bearing checking accounts. You earn a small yield on the money in your account. There are usually no restrictions on the number of transactions that you make. However, you may be required to maintain a substantial minimum balance if you want to avoid a fee that destroys the value of your yield.
3. Money Market Checking: If you are looking for a higher return on your checking account, you can try a money market checking account. In reality, a money market account of this type is actually more like a savings account with some checking account privileges. Sometimes these accounts are referred to as money market deposit accounts. The interest paid to you on this type of account is based on market rates, and is often higher than what you would earn on a regular interest bearing checking account – and higher interest than you would get with a traditional savings account. However, there are more restrictions on a money market checking account. You are limited as to withdrawals you are allowed (no more than six checks can be written a month from these accounts, per Fed regulations), and you generally have to maintain a substantial minimum balance.

You might also find that many banks offer special checking accounts aimed at specific demographic groups, like students or seniors. You might get special check writing privileges, or you might receive better rates on loans, as well as be eligible for special promotions and discounts. Other types of checking accounts that you might encounter include:

• Lifeline Checking: Some states require that banks offer these very basic accounts meant for those with low incomes. Monthly fees are usually no more than a few dollars a month (and often $0 a month) and usually do not require a minimum balance. Check writing might be limited. Terms and fees of lifeline checking accounts are set by the states that require them, rather than the banks themselves.
• Express Checking: This type of checking account is aimed at people who rarely go into the bank. Express checking is designed to encourage account holders to do their banking by phone, ATM or computer. These accounts are very similar to free checking accounts, but there might be a charge if you visit the bank teller more than two or three times a month.

Rewards and Bonuses

Many banks offer accounts now that come with rewards. In order to compete with credit card rewards programs, you might be able to get a rewards debit card. When you use your debit card, you build up reward points – or even cash back. However, many debit rewards programs come with annual fees.

There are some high-yield reward checking accounts that reward you for certain behaviors. If you meet certain requirements each month, such as using direct deposit, making a certain number of debit card transactions (sometimes with a requirement that they be signature rather than PIN), or receiving statements online, then you are rewarded by receiving a higher yield.

In order to entice you to deposit your money in a bank, many offer cash bonuses. These bonuses can range from $25 to $300. While it can be tempting to sign up for the checking account with the highest bonus, it is important to be careful. The higher the bonus, the more likely you are to need to complete a number of steps in order qualify for the bonus. Some of the things you might have to do in order to get your bonus include:

• Maintain a minimum balance for a set period of time.
• Make a certain number of debit transactions with a certain time period. (You might have to make sure you sign for the purchase, instead of entering your PIN.)
• Set up a direct deposit.
• Schedule automatic bill pay.
• Open another account at the bank, and possibly link the two.

Requirements for receiving your bonus vary by financial institution, and you should make sure that you understand exactly what is expected of you if you want to receive the cash bonus. Realize, too, that the bonus is likely to be added to your account. If it isn’t added to your bank account, you might be issued a debit card with the bonus on it. Actually handing you a check for the amount of your bonus is not likely.

Fees, Fees, Fees

Even if you have a free checking account, you need to be aware of fees. All checking accounts come with fees for overdrawing your account. Additionally, you need to be aware of fees charged when you elect to receive paper statements, as well as fees that might be associated with using bill pay services.

The fees of biggest concern, though, are usually overdraft fees. These fees can be anywhere from $15 to more than $45, depending on your bank and the checking account terms. One of the best things you can do as a savvy checking account owner is to understand the main differences between overdraft protection and standard overdraft practices:

• Overdraft Protection: This is usually a line of credit. Your credit history might be checked before you are allowed overdraft protection. When you have overdraft protection, transactions that put you beyond the amount of money in your checking account clear. However, you will be charged interest on the amount that you are negative until you are back in the black. Many banks will put a limit on the amount that you can go into the red. Additionally, some banks charge an annual fee for checking accounts with overdraft protection.
• Standard Overdraft Practices: Prior to the summer of 2010, banks usually offered this type of overdraft protection automatically. Now, though, you have to opt in to the service if you want it. If you spend more than you have in your account, the bank will allow the transaction to go through – but you will have to pay a fee of up to $45 or more. And, after a certain number of transactions, your debit card will be declined. If you decide not to allow standard overdraft practices, your debit card will be denied if you try to use it and you have insufficient funds. This does not apply, however, to ACH bill payments and in some other circumstances.

Bottom Line

Checking accounts can be quite useful, and they provide you with a relatively simple and convenient way to manage your money. Consider what different banks have to offer, and then choose the checking account that will best fit your needs.

It looks like the FDIC is taking its time after Thanksgiving to get back on track for bank closures. There were no bank failures today. The total number of bank failures for 2010 remains at 149. As a comparison, the total number of bank failures at this time last year was 130. The total number for all of 2009 was 140. We only have two more Fridays left in 2010 in which we'll see bank failures. I'm sure we won't see any bank failures for the last two Fridays of 2010 which are Christmas Eve and New Year's Eve.

I thought it would be interesting to update the state table that I last posted in October 8th. The table shows the number of bank failures by state so far in 2010. There have been 20 additional failures since October 8th.

Florida continues to be the top state with the most bank failures at 28. Georgia overtook Illinois for second place with 18 failures. Illinois is now in third place with 16 failures.

There were also no credit union liquidations this week. The total number of credit union liquidations for this year remains at 18. There were a total of 15 credit union liquidations in 2009.

References:

• FDIC list of failed banks
• NCUA list of closed credit unions
• Texas Ratios for banks and credit unions
• Latest FDIC info on deposit insurance
• My bank failure review posts
• Review of the 2009 bank and credit union failures
• 10 Lessons from the 2008 bank failures
• Review of the 2008 credit union liquidations

America's Credit Union is offering six competitive CDs with terms from 6 to 48 months. Several readers may remember this credit union from last year when they offered some hot add-on CDs. These new CDs don't have an add-on feature, but the rates are noteworthy. These are promotional share certificates with a $25,000 minimum deposit. The rates are listed in the credit union's deposit rates page as of the morning of 12/03/2010, and are shown below:

• 2.55% APY 48-month and over
• 2.25% APY 33-48 month
• 2.05% APY 26-32 month
• 1.65% APY 17-19 month
• 1.55% APY 13-14 month
• 1.25% APY 6-10 month

According to the credit union's Truth-in-Savings Certificate Account Disclosure, the early withdrawal penalty is up to 90 days of dividends (interest).

As a comparison to internet banks on 12/3/2010, the best 1-year and 2-year CD rates are 1.50% APY and 1.85% APY at CNB Bank Direct. The best 3-year and 4-year CD rates are 2.05% APY and 2.28% APY at Bank of Internet USA.

Credit Union Membership

In addition to being open to all members of the United States Armed Forces, the credit union provides an easy way for anyone to join. According to the credit union's Membership Eligibility Page:

We do not have zip code or employment restrictions. Just join the Association of the United States Army. Membership is open to everyone!

Civilian membership into this association costs $33.

Application Process

As many readers experienced last year, the credit union doesn't have an easy application process. A reader who appeared to work at the credit union described in this comment what they required for opening accounts. They require that you make a copy of your ID and Social Security card and have these notarized. Also, if you're joining via that association, they require a copy of your association application. It was also mentioned that the credit union pulls a credit report on all new members.

Credit Union Overview

If you happen to live near one of their branches, it's definitely cheaper and quicker to apply at a branch. America's Credit Union is located in the Washington State cities of Fort Lewis, DuPont, Olympia, Lakewood, Tacoma, Spanaway and University Place.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 11.24% (excellent) based on September 2010 data. Please refer to our financial overview of America's Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 9373).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Commercial Bank and Trust Company is offering a reward checking account called Choice Checking with a rate that's currently much better than what you can get from nationally available reward checking accounts. Choice Checking has the following rates if certain monthly requirements are met (as of 12/03/2010):

• 4.09% APY on balances up to $25,000
• 0.80% APY on balances over $25,000
• 0.05% base rate if requirements are not met

Monthly requirements include:

• 12 debit card purchases
• One ACH debit/credit
• Access NetTeller at least once
• Receives e-statements

There is no monthly maintenance fee. Also, there are unlimited foreign ATM refunds, and this doesn't appear to be conditional with meeting the monthly requirements.

It appears that a branch visit is required to open an account. Branches are located in the Tennessee cities of Memphis, Jackson, Paris and Union City.

The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 7.43% (excellent) based on September 2010 data. Please refer to our financial overview of Commercial Bank and Trust for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 8660).

Other High-Yield Reward Checking Accounts

To find reward checking accounts in your state or to find those available nationwide, please refer to the reward checking section of DepositAccounts.com.

LA Financial Credit Union is offering some competitive long-term CD and IRA CD rates. The most competitive is the 3-year CD which has a top rate of 2.15% APY for a $200K minimum deposit. Lower rates are available for smaller deposits including a 2.05% APY for a $100K deposit and 1.85% APY for a $10K deposit. The 5-year CD is not quite as competitive. Its top rate is 2.40% APY for a $200K deposit. According to the credit union's Term Share page, these CDs have an early withdrawal penalty of 180 days of dividends (interest). These rates are listed in the credit union's savings rates page as of 12/03/2010.

As a comparison to internet banks on 12/03/2010, the best 3-year CD rate for small deposits is 2.05% APY at Bank of Internet USA. For very large deposits ($175K), the best 3-year CD rate is 2.30% APY at USAA Bank.

Credit union membership is open to those who live, work, worship, volunteer or attend school in Los Angeles County, California. Membership is also open to anyone who lives or works in Lake Havasu City, Arizona through Havasu Community Credit Union (a division of LA Financial CU). Please refer to LA Financial CU's membership page and Havasu Community CU's membership page for more details. A minimum $5 balance is required in the savings account to maintain membership.

Branches are located in Los Angeles, Pasadena and Norwalk, CA, and in Lake Havasu, AZ.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 12.44% (excellent) based on September 2010 data. Please refer to our financial overview of LA Financial Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 2024).

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

Nassau Educators Federal Credit Union (NEFCU) is offering competitive rates on some of its CDs, and it continues to offer a competitive reward checking rate. The best CD rate is 2.75% APY for the 5-year certificate. This is also available in an IRA. According to the disclosure, the early withdrawal penalty is 180 days of dividends on the amount withdrawn. NEFCU also has fair deals on its two bump certificates which allow for a one-time increase in the interest rate during the term of the CD. The two bump-up CDs include a 1.75% APY 30-month CD and a 1.25% APY 15-month CD. These rates are listed in the deposit rates page as of 12/02/2010.

The credit union continues to offer a reward checking account that pays 4.00% APY on balances up to $25K. I first reported on this reward checking account in December 2008. During this time it has kept the top yield at 4.00%.

The credit union has recently expanded its membership to include all those who live, work, worship or attend school in Nassau and Suffolk County, New York. Please refer to their Membership page for the full details. Membership requires a minimum deposit of $5 in the share savings account. An online application is provided.

The credit union has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 11.88% (excellent) based on September 2010 data. It's a sizable credit union with $1.53 billion in assets. Please refer to our financial overview of Nassau Educators FCU for more details. The credit union is federally insured by the NCUA (Charter # 2760).

Searching for the Best CD Rates and Reward Checking Rates

• CD rates
• Reward Checking rates

Dollar Bank is offering a high-yield savings account that is an interesting variation to a high-yield reward checking concept. The savings account is called FreeMoney Savings and it pays 2.00% APY on balances up to $20,000 as of 12/02/2010. It has no monthly fees and no minimum balance requirement. It does require that you maintain a FreeMONEY Checking account, and the checking account requires that you make 6 electronic payment transactions (including Online Banking or Telephone Banking bill payments, ACH Debit or Point of Sale transactions) per month. On the plus side, the checking account also has no monthly fees or minimum balance requirements. There's a limit of one FreeMONEY Checking and Savings Account per customer.

The FreeMONEY Checking account doesn't earn any interest. One small perk with this checking account is that you can earn 10 cents every time you sign for a debit MasterCard purchase and 5 cents every time you choose to pay a bill online using Online Banking. The maximum cash rewards is $150 per year.

Like a high-yield reward checking account, the savings account has a high yield up to a small maximum balance. Also, it requires that you perform certain account activity. Compared to reward checking accounts, the savings account rate is low. On the plus side, you can meet the requirements without debit card usage. For those who hate using debit cards, this account may be appealing.

There are savings account that are available nationwide that currently have yields close to this account. AmericaNet Bank and Evantage Bank offer 1.75% APY on balances up to $35K without any requiring any monthly account activity. Also, SmartyPig offers 1.75% APY on balances up to $50K.

It appears the accounts are only available to those who live in either the Pittsburgh or Cleveland metro areas.

The bank has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 8.23% (excellent) based on September 2010 data. It's a sizable bank with $5.82 billion in assets. Please refer to our financial overview of Dollar Bank for more details. The bank has been a FDIC member since 1984 (FDIC Certificate # 32245).

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

• Can You Spot a Scam? - This article in quiz format has some useful tips on things like verifying that a cashier's check is legitimate and in your liability if your debit card and ATM card is stolen. Here is what is mentioned regarding confirming a cashier's check:

  your best strategy is to contact the bank the check is drawn on or take the check to your bank's branch manager (to contact the other bank on your behalf) to have the check authenticated.

• What to Know About the New Law Affecting FDIC Insurance Coverage - If you're a regular reader of this blog, you know about these changes, but it's a good basic overview:

  The basic standard maximum deposit insurance amount has been permanently increased from $100,000 to $250,000. [....] A new, temporary insurance category will fully insure all funds, regardless of the dollar amount, in checking accounts that pay no interest.

• Estate Planning and Banking: How to Protect Money for Your Heirs in FDIC-Insured Accounts - This is a basic overview of POD accounts, Living trust accounts and Irrevocable trust accounts with a focus on how they "can be used to pass funds on to heirs and explain how to make sure your money is fully insured if your bank fails."
• Having Difficulties Paying Your Mortgage? Pay Attention to These Tips - Article describes "refinancing opportunities and loan modifications available through the federal government's Making Home Affordable program."
• Weighed Down by Debt? Here are Ways to Ease the Load - Useful tips for those dealing with debt collection companies.
• Credit Protection: Understand the Costs, Limitations and Alternatives Before You Buy - The best tip in this article in my opinion is this:

  If life or disability insurance is too costly or you are ineligible for the coverage for health reasons, you might consider establishing an emergency savings account funded by the money you would have paid for credit protection.

• Student Loans: What's New, What's Important - Here's one thing that has change:

  In the past, borrowers received federal student loans from banks and other financial institutions. Under a new law that went into effect July 1, 2010, all federal student loans will be provided directly from the government through the financial aid office at the post secondary institution the student is attending.

• Happy Returns: Tips for Saving Money at Tax Time - There's not much in this article for savers. It just has a few tips like avoiding refund anticipation loans and being on guard against tax-related frauds.

Please refer to my August post for highlights of the FDIC's Summer 2010 Consumer News.

Pentagon Federal Credit Union (PenFed) cut some of its CD rates for December. Its 7-year, 4-year and 3-year CD rates were cut by about 25 basis points. The 5-year CD rate remains unchanged at 2.75% APY which is very competitive. Even with the rate cut, the 7-year CD yield of 3.25% APY also remains very competitive. As a comparison to banks with nationwide availability, the best 7-year CD rate is 3.00% APY at Dime Savings Bank as of 12/01/2010 and the best 5-year CD rate is 2.60% APY at Acacia Federal Savings Bank as of 12/01/2010. Below are the new PenFed CD yields for December 2010. I've noted the old yields in parenthesis.

• 3.25% APY 7-year CD (was 3.49%)
• 2.75% APY 5-year CD (no change)
• 2.25% APY 4-year CD (was 2.50%)
• 1.75% APY 3-year CD (was 2.00%)
• 1.50% APY 2-year CD (no change)
• 1.26% APY 1-year CD (no change)

Minimum deposit is $1,000. The rates are also available in an IRA. These yields are listed in PenFed's Money Market Certificates page as of 12/01/2010. Even though PenFed typically maintains CD rates through the month, they no longer guarantee it. For more details about PenFed CDs, please refer to my PenFed CD review.

New 10-year CDs Are Coming

I was told that PenFed will be making available 10-year CDs and IRA CDs in January. We'll have to wait to know what their rates will be. The 5.00% APY 10-year CDs were made available in PenFed's CD reservation program. This program was limited and is no longer available so don't expect the publicly available 10-year CD rates to be close to 5.00%. Hopefully, the rate will be substantially higher than the 7-year rate.

PenFed Membership

PenFed makes it easy for anyone to join and open accounts online. If you don't qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to How to Join Overview Page for details. Joining NMFA and PenFed can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a PenFed member.

Branch Locations

Accounts can be opened online, but for those who prefer branches, PenFed has branches in several parts of the country including Washington DC, Maryland, Virginia, New Jersey, New York, Colorado, North Carolina, Hawaii, Puerto Rico, Missouri and Texas.

Financial/NCUA Info

PenFed has an overall health score at DepositAccounts.com of 4 out of 5 with a Texas Ratio of 7.05% (excellent) based on June 2010 data. It's one of the largest credit unions in the nation with $14.33 billion in assets and $11.62 billion in deposits. Please refer to our financial overview of Pentagon Federal Credit Union for more details. It's federally insured by the NCUA (Charter # 227).

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:

• Best CD rates
• Best IRA CD rates

Melrose Credit Union cut its CD rates on Tuesday by 10 basis points. The CD rates remain competitive, but they are no longer on top of the list for the best nationally available CD rates. The 5-year CD yield dropped below 3.00%. It's now 2.93% APY. The only nationwide 5-year CD with at least a 3.00% APY is at Connexus Credit Union as of 12/01/2010. However, Connexus requires an active checking account for this rate. For internet banks, the best 5-year CD rate is 2.60% APY at Acacia Federal Savings Bank as of 12/01/2010.

Below is a full list of the CD and IRA CD rates as shown in Melrose Credit Union's rate table as of 12/01/2010:

• 2.93% APY 5-year CD
• 2.42% APY 4-year CD
• 2.17% APY 3-year CD
• 1.66% APY 2-year CD
• 1.41% APY 1-year CD

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. Melrose also offers Jumbo CD rates that are 25 basis points higher. However, it's a very large Jumbo CD that requires a minimum deposit of $1 million. Details are listed in the credit union's Jumbo certificates page. One downside of Melrose Credit Union is a harsh and confusing early withdrawal penalty. For more details about Melrose Credit Union CDs and early withdrawal penalties, please refer to my November post.

Membership

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.

Even though Melrose makes it easy to qualify, they don't make it easy to apply. Several readers have commented about problems they had in the application. Here's what one reader experienced:

Membership is open - but the application process is very onerous. I rent an apartment that includes utilities so I don't have a utility bill with a street address. I provided copies of my voter registration, my DL, my passport, and a letter from my landlord. And they still rejected me.

Melrose Credit Union has an overall health score at DepositAccounts.com of 5 out of 5 with a Texas Ratio 1.53% (excellent) based on September 2010 data. It's a sizable credit union with $1.35 billion in assets. Please refer to our financial overview of Melrose Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 62005).

Thanks to reader dave9354 who mentioned these rate changes in the discussion forum.

Searching for the Best CD and IRA CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following sections of DepositAccounts.com:

• CD rates
• IRA CD rates