- Bank has at least a 4-star rating (sound) at Bankrate.com
- Savings account yield is at least 3.50% APY
- No significant minimum balance requirements to earn the top yield (under $100) and no monthly fees
- ACH bank-to-bank transfer service
Bank 9/21/08 4/19/09 Bankrate
APY APY Rating
FNBO Direct 3.50% 1.90% 3 stars
CNB Bank Direct 3.50% 2.20% 4 stars
OnBank 3.50% 0.75% 3 stars
Union Fed Svg Bank 3.75% 2.25% 2 stars
The biggest disappointment has been OnBank's savings account. OnBank (a division of M&T Bank, N.A.) was a rate leader for much of 2008, but the rate started plummeting in January 2009, and it's now near the bottom for rates. The one that has done the best is CNB Bank Direct (a division of Citizens National Bank in OH). However, it should be noted that their 6-month period of the 4% promo rate has recently ended, so they may be reducing rates slowly in hopes of keeping deposits.
The New Top Savings Accounts
My new list will be based on the same criteria as above except that I'll have to use a lower rate requirement (2.00% APY or higher). Bankrate just updated their safe and sound ratings. They're now based on 12/31/08 financial data. These ratings change each quarter. The FDIC has its own confidential ratings, so I would still recommend staying under the FDIC limits.
As we learned with OnBank, there's no guarantee that the competitive rates will continue. I've included links and dates of my first reviews for each account. You can use these to review their rate histories.
One important feature of online savings accounts is the capability to initiate electronic transfers (via ACH) to your other accounts at other banks. This makes it easy to fund the account and to transfer the money out if rates should happen to fall. The quality of the ACH service can vary. The best ACH services provide fast transfers (1 day), allow multiple links to other accounts and have no significant limits to transfer amounts. Unfortunately, the only way one can tell about ACH speed is from user experience. Refer to the account reviews for details about the ACH transfer features.
If rates do fall, you don't want to be forced to leave a substantial amount in the account to avoid fees. You can close the account, but if rates go up in the future, it'll be more time consuming to take advantage of it. So another feature that all of these accounts share are no significant minimum balance requirements or monthly fees.
Rates as of 4/19/09:
- CNB BankDirect - 2.20%, account review, first reviewed 8/4/08, 4 stars @ Bankrate
- iGObanking.com (Flushing Savings Bank) - 2.12%, account review, first reviewed on 11/27/06, 4 stars @ Bankrate
- Grand Yield Direct (Apple Bank for Savings) - 2.05% (see note 1 below) account review, first reviewed on 9/14/06, 4 stars @ Bankrate
- Bank Provident Online - 2.00% (see note 2 below) account review, first reviewed on 7/21/08, 4 stars @ Bankrate
Note 1: Grand Yield Direct has a $2,500 minimum initial deposit, but after it is opened, there are no minimum balance requirements to avoid monthly fees or to earn the top yield.
Note 2: Bank Provident Online is a division of The Provident Bank based in Massachusetts. It's not related to Provident Bank that's based in Maryland which was acquired by M&T Bank.
To keep within the criteria that I set, I had to exclude many accounts with higher rates. Some of the exclusions were due to Bankrate ratings. These include: Darby Direct (2 stars), Alliant Credit Union (3 stars), GMAC Bank (3 stars) and Heartland Bank (2 stars). I excluded the 3.10% savings account at AmericaNet Bank due to the very restrictive ACH transfer service and the $35K maximum balance cap that qualifies for the top yield.
To see all of the best savings account rates, please refer to my weekly rate summary. I now have the Darby Direct's 3% savings account on that list.