EmigrantDirect Savings Now 4.00%
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Update: EmigrantDirect Savings Account rate as of 9/10/09 is 1.30% APY. A higher rate is available at Emigrant Bank's other internet bank, DollarSavingsDirect (see post).
EmigrantDirect increased the APY on its AmericanDream Savings Account from 3.5% to 4.0% today. It comes on the same day that the Fed raised the funds rate a quarter-percent to 3.75%.
I had thought ED might make the big jump from 3.5% to 4.0%. Early in the year its 3.0% rate was way ahead of most other banks for several months. At the time, ING Direct's savings rate was only 2.35%. This allowed ED to gain the reputation as America's highest rate. However, for the last few months, it started to lag many other banks like HSBC which also had a savings account without a minimum balance requirement.
As can be seen from this chart, ED has made fewer rate increases this year compared to ING or HSBC. Instead of incrementally increasing the rate, it just made a quarter-percent increase in March and in July. So I would guess it's likely ED will stick with this 4.0% rate for the rest of the year.
Now the question is how will the other banks respond? My guess is that ING Direct will raise its rate this week to 3.5%. I don't know about HSBC. During most of this year, HSBC has lagged ED. So I don't think HSBC feels compelled to be even or ahead of ED. Its no-minimum 3.75% is still very competitive.
Information on EmigrantDirect
Here are some of my EmigrantDirect related posts which may be useful if you're deciding whether to join.
EmigrantDirect increased the APY on its AmericanDream Savings Account from 3.5% to 4.0% today. It comes on the same day that the Fed raised the funds rate a quarter-percent to 3.75%.
I had thought ED might make the big jump from 3.5% to 4.0%. Early in the year its 3.0% rate was way ahead of most other banks for several months. At the time, ING Direct's savings rate was only 2.35%. This allowed ED to gain the reputation as America's highest rate. However, for the last few months, it started to lag many other banks like HSBC which also had a savings account without a minimum balance requirement.
As can be seen from this chart, ED has made fewer rate increases this year compared to ING or HSBC. Instead of incrementally increasing the rate, it just made a quarter-percent increase in March and in July. So I would guess it's likely ED will stick with this 4.0% rate for the rest of the year.
Now the question is how will the other banks respond? My guess is that ING Direct will raise its rate this week to 3.5%. I don't know about HSBC. During most of this year, HSBC has lagged ED. So I don't think HSBC feels compelled to be even or ahead of ED. Its no-minimum 3.75% is still very competitive.
Information on EmigrantDirect
Here are some of my EmigrantDirect related posts which may be useful if you're deciding whether to join.
