Update 6/25/2011: The internet money market savings account yield has fallen to 1.05% APY for balances of at least $2,500.
As I reported on Sunday in a forum thread, Hudson City Savings Bank has made a substantial increase in its Internet Money Market Savings account rate. It's now 1.35% APY which puts the account near the top for nationally available savings accounts. I did a brief review of this account in that thread, but I thought it would be useful for a more detailed review.
It's nice to see a rate increase these days, but with savings account rates, you always have to be a little suspicious of rate hikes. You never know how long the rates will stay competitive. Hudson City's money market savings account had dropped off my radar when the rate had fallen to 0.85% last April. It remained at this level until early October when it increased to 1.00%.
The rates and a few details of the account are listed at Hudson City's internet accounts page. It's a tiered account with the following rates as of 10/26/2010:
- 1.35% APY on balances of $2,500 and above
- 1.10% APY on balances of $10 to $2,499
Update 6/25/11: I just noticed the following in the truth in savings disclosure for the money market account:
If the account balance at any point during the statement period is less than $2,500, a service charge of $10 will be assessed
A $100 minimum balance is required to avoid a $2 monthly fee.
I called the bank yesterday (internet banking department can be reached at 201-967-1900, Ext. 1887), and the money market savings account appears the same as it was when I reviewed it in February 2009. Here are some of the important features:
- Nationally available
- Online application (via Andera.com) with ACH funding
- No bank-to-bank ACH transfer service
- Accepts ACH transfers from another bank
- Deposits can be also be made at a branch or by mailing checks
- No check writing
In my forum thread, reader me1004 warned about Hudson City's policy of not paying accrued interest that hasn't posted when you close accounts. This was for a CD, but based on the disclosure, it also applies to the money market savings account:
If you close your account before interest is credited, you will not receive the accrued interest for the month.
There was also concern that this could reduce your yield if you do withdrawals without closing the account. However, the disclosure states they use the daily balance method to calculate interest so you should earn interest on your funds even if you withdraw them a couple of days before the interest is posted.
Note, the only way I was able to find the disclosure is to go through the online application. Before you're requested to enter your personal info, there are links to the disclosures including the Truth in Savings disclosure which has the above details.
Hudson City Savings Bank is a sizable regional bank with $60.93 billion in assets and 134 offices in New Jersey, New York and Connecticut. Even though its recent earnings report was a little below expectations, the bank held up well during the mortgage crisis due to its conservative lending policies.
The bank's overall health score at DepositAccounts.com is 4 out of 5 with a Texas Ratio of 14.49% (excellent) based on 6/30/2010 data. Please refer to our financial overview of Hudson City Savings Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 13047).
How It Compares with Other Online Savings Accounts
Without a very high interest rate and without a history of staying competitive, there's little incentive to go with Hudson City's money market savings accounts over the savings accounts at Sallie Mae, Capital One and Alliant Credit Union. All three of these institutions have comparable rates, a long history of staying competitive and an ACH bank-to-bank transfer service.
For those who live near a Hudson City branch, there might be advantages since you can make branch deposits and withdrawals. Also, if you want to stick with a strong and large bank, Hudson City has an advantage.