Update 5/24/08: The savings account and Jumbo MMA yields have fallen to 4.05% APY.
AARP Financial Savings Center has some excellent rates on its online savings account and money market account. The savings account yield is 4.50% APY for all balances $1 and up. The money market account has a tiered rate structure. The yield for balances over $50K is 4.75% APY. For smaller balances, the yield is 2.74% APY (under $25K) and 3.00% APY (between $25K and $50K).
The website lists two money market accounts: Secure MMA and the Jumbo Secure MMA. According to the banking rep, you can apply for the Secure MMA, and you'll receive the Jumbo rate once your balance reaches $50K. Likewise, when your balance falls below $50K, you'll receive the Secured MMA rates.
One important restriction regarding these accounts is that it's only available to AARP members. This is stated when you enter the application page.
I was surprised to see any liquid account (non reward checking) with rates this high. During my call with the banking rep, I was told that these rates have been this way since January. As with any liquid accounts, the rates may change at any time.
How the Accounts are FDIC Insured
Update 5/5/08: I called AARP Financial today and confirmed that AARP Financial Savings Center and aarpsavings.com are legitimate. Please see my latest post for more details.
When you review the account details, you may notice there are several similarities between this and UFB Direct. That's because both are managed by subsidiaries of Affinity Financial. The Affinity Financial subsidiary managing these accounts is Waterfield Financial Services. Like UFB Direct, the FDIC insurance comes from either Huntington National Bank or Countrywide Bank. This is explained at this AARP savings center page:
AARP Financial Inc. makes available the AARP Financial Savings Center brought to you by Waterfield Financial Services Inc. AARP and AARP Financial Inc. receive fees from Waterfield Financial Services Inc. for AARP's license of its intellectual property and AARP Financial Inc.'s oversight of the AARP Financial Savings Center.
However, these two banks don't seem to cover the AARP CDs. Instead, Reliance Trust Company manages the CDs:
Certificate of Deposit products and services available through the Savings Center are offered by and available through Reliance Trust Company.
Reliance Trust Company is not a bank. It's an investment firm. From my conversation with the CSR, it appears the CDs are managed like CDARS in which the deposits are divided up and held at several banks. This allows the FDIC insurance coverage to be up to $5 million (according to the AARP Savings Center CD page). The CD rates are fairly competitive with a top yield of 4.16% APY for a 60-month CD with a minimum deposit of $100K.
The savings account and money market account share the following features. This is based on their FAQ page, the Fee Schedule, and from my conversation with the CSR:
- AARP membership is required
- Initial funding can be done by check or wire transfer (FAQ)
- Wire transfers: free incoming, $20 outgoing (fee sch)
- ACH transfers cost $2 via MoneyHQ service for incoming and outgoing (fee sch)
- MoneyHQ ACH in/out transfers limited to $5K/day and $35K/mo (CSR)
- ATM card with $4.50/mo in reimbursements (fee sch)
- Only a soft credit pull (CSR)
Savings Account features:
- $1 minimum opening deposit
- no monthly service charges
Money Market Account features:
- $200 minimum opening deposit
- $10/mo fee if balance falls under $200
- check writing
Interest Checking Account features:
- $50 minimum initial deposit
- No monthly service fees for balances over $25
- First 25 online bill payments per month are free
- ATM card with $6/mo in reimbursements (fee sch)
Thanks to the reader who mentioned these accounts in the finding-the-best-deals post.