New Online Savings Account and CDs at American Express Bank

Update 3/03/11: The savings account rate has fallen to 1.15% APY. Refer to the bottom of the post for the rate history.

On June 1st American Express launched its new online personal savings products which include a high-yield savings account and CDs. This savings account is different than the old Savings Accelerator which was connected to the One from American Express credit card. This new savings account is a standalone account with no credit card.

The interest rates are not too exciting, but they are fairly competitive. As of 6/15/09, the savings account rate is 2.00% APY. Their short-term CDs are not competitive with only a 1% APY for a 6-month term and a 2.00% APY for a 12-month term. The longer-term CDs are more competitive with a 2.50% APY 24-month CD, a 3.00% APY 36-month CD and a 3.40% APY 60-month CD. These rates are listed at the bank's CD page as of 6/15/09.

One nice feature is that both the savings account and CDs have no minimum balance requirements. Another nice feature is that both can be funded by electronic transfers (you can also fund by check).

I called their toll-free number at 1-800-446-6307, and I was pleased with their customer service. I was able to connect fast to a knowledgeable CSR. Below are some of the features of these accounts based on my conversation with the CSR, from their FAQ and from their Disclosure document:

Savings Account and CD Features:

• Apply online or by phone
• If you apply online, can fund with ACH transfer or by check
• If you apply by phone, can fund only by check (CSR)
• Trial deposits used to verify accounts in the linking process (FAQ)
• Up to 6 beneficiaries can be added (used to say revocable trusts) (FAQ)
• No minimum balance requirements and no monthly fees
• No hard credit inquiry. Just a soft inquiry (CSR)

Savings Account Features:

• 2.00% APY on all balances as of 6/15/09
• Allows up to 5 links to external accounts (CSR) Update 3/9/10: Reader reported being told the limit is now 3.
• Electronic transfers are limited to $250,000 per day (Disc)
• Typical limit of 6 withdrawals per month as required by regulation (Disc)
• Interest compounded daily and credited monthly (Disc)
• Interest begins to accrue on the business day the deposit is received (Disc)

Certificate of Deposit Features:

• Rate is fixed for initial term
• The rate is locked at the time you submit the application provided that the account is funded within 30 days (FAQ) (updated 7/14/10).
• Interest can be paid monthly or annually or at maturity for terms under one year
• Early withdrawal penalty equals 90 days of interest on amount withdrawn for terms 1-year and under. Penalty equals 180 days for terms over 1-year. Update 7/14/10: The penalty may be higher than 3/6 months due to the Cost Recovery Value (Disc)
• Grade period at maturity is 10 calendar days (Disc)
• At maturity, you can request an ACH transfer of the money to the linked account (CSR)
• At maturity, they accept instructions by phone (CSR)

These deposit accounts are FDIC insured under American Express Bank, FSB (FDIC Certificate # 35328). The bank has fair ratings for safety and soundness: 3½ stars (good) at BauerFinancial (based on 3/31/09 data) and 3 stars (performing) at Bankrate.com (based on 12/31/08 data).

Thanks to the reader who mentioned this new savings account in the Daily News & Deals Page.

For other high-yield savings accounts, please refer to my weekly rate summary.

Rate History:

• 03/03/11: 1.15% APY
• 03/04/10: 1.30% APY
• 12/17/09: 1.50% APY
• 10/27/09: 1.70% APY
• 08/13/09: 1.85% APY
• 08/07/09: 1.75% APY
• 07/23/09: 1.85% APY
• 06/15/09: 2.00% APY