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One Interesting Alternative To Low-Rate Savings Accounts

Friday, September 10, 2010 - 2:23 PM
This US News blog post reviews 6 alternatives to savings accounts, but 5 out of these 6 are pretty well know to DA readers such as long-term CDs with mild early withdrawal penalties. However, there is one interesting alternative:
Prepaid credit cards: If you know anything about prepaid credit cards, your first question is why it’s on a list of savings account alternatives. The reason is that some prepaid cards offer linked FDIC-insured savings accounts that pay really attractive interest rates.

One important issue with these is that there is typically a low balance cap like $5,000. Citibank had a good CD deal tied to its secured credit card. It still pays 4.07% APY for an 18-month term, but the cap has fallen from $25K to $5K. Once you factor in the annual fee from the credit card, the low cap can kill the deal.
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Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
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