Update on Providentdirect's Online Savings Account and CDs

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Update 4/10/09: The APY is scheduled to fall to 1.25% APY on 4/17/09.

With the recent rate hike at Providentdirect and its new ACH transfer system, I thought it would be worthwhile to take a new look at Providentdirect. The online savings account yield was recently increased from 3.50% to 3.75% APY. It does have a history of competitive rates since it was launched in November of 2007. Below are the savings account's basic features:
  • $100 minimum opening balance
  • No minimum balance requirements
  • No monthly fees
  • Interest is paid monthly
  • Maximum allowed on deposit is $500,000
  • ATM card available
  • No checks
  • No hard credit inquiry. Only ChexSystem is used during application (per CSR)
One thing that has changed is that it has greatly improved the ACH bank-to-bank transfer system. Here's how a reader described the new system:
The number of linked accounts is indeed unlimited, and transfers up to $100,000/day are indeed permitted. And there is NO INTEREST LOSS on pulls OR pushes in my experience. (On one of my samller pushes the deposit to the other bank was actually posted the day BEFORE it was debited from Provident-Direct.)

The only downside to the ACH system that I've read about is the initial verification of external accounts. In addition to the two small trial deposits, there are also two small matching withdrawals. So if you link to a savings account with monthly withdrawal limits, make sure you consider this.

Online CDs

Providentdirect is also offering some competitive CD rates. There's a 4.40% APY 24-month CD and a 5.15% APY 60-month CD. Both have a minimum deposit of $1,000. The maximum allowed deposit is $500,000. I have more details about these Providentdirect CDs in this June post.

Bank Overview

Providentdirect is an online division of Provident Bank which is based in Baltimore, Maryland. The latest news on Provident indicates that it's another bank hurt by the mortgage crisis. In recent months it had to write down the value of investment securities related to real estate and mortgages. The bank's financial ratings are a little weak: 2 stars (below peer group) at Bankrate.com and 3 stars (adequate) at BauerFinancial. As I recommend for any bank, it's best to stay under the FDIC limits. Provident Bank has been FDIC insured since 1943 (Certificate # 15951).

Rate History:
04/17/09: 1.25% APY
03/06/09: 2.10% APY (was 2.82% APY)
Related Pages: CD rates, savings account



New High Yield Online Savings Account at Provident Direct
Update 8/23/08: The yield has risen from 3.50% to 3.75% APY.
Update 5/21/08: The yield has fallen from 3.75% to 3.50% APY.
Update 3/29/08: The yield has fallen from 4.50% to 3.75% APY.

Provident Bank has started a new online bank called Provident Direct. The current yield is 4.50% APY. It has no minimum balance requirements or monthly fees.

I called Provident Bank yesterday and the CSR said that they actually started this in November 2007 with a 4.50% APY. She didn't know how long the 4.50% APY would last. As is typical it...





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Update on Provident Direct - Online CDs, Savings Account
Provident Direct is offering some competitive CD rates. There's a 4.00% APY 18-month CD and a 4.35% APY 36-month CD. The 18-month CD has a minimum deposit of $1,000, and the 36-month CD has a $10,000 minimum. The maximum allowed deposit is $500,000.

These can be opened online with an electronic funds transfer (ACH) or you can mail a check. According to the CSR, they can't do a reverse ACH when the CD matures and you don't want to renew. You can either request a check or have the money transfered...

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