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Retirement Savings: How Much Should I Save Each Month?Flooded by Deposits, Banks Restricting Applications - FAB&T and SFGI Direct
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ON BY Ken Tumin
There were more cases this week of banks with good deals restricting new applications after being flooded by deposits. First Arkansas Bank & Trust stopped accepting nationwide applications for its reward checking account on Monday. Only applications from Arkansas residents are now accepted. FAB&T's reward checking account with a 4.44% APY on balances up to $50K had become especially attractive since most other reward checking accounts with rates above 4% have caps of only $25K. In addition FAB&T has a long history with this rate which dates back to February 2008 (see post).
The other bank to restrict applications was SFGI Direct which is offering a no-minimum online savings account with a 2.25% APY. The new internet bank temporarily stopped accepting new applications on Monday. I first reported on this savings account in this late July post.
In both of the above cases, at least the banks didn't cut rates. Hopefully, they'll keep rates competitive. I was told by a SFGI Direct representative that they intend to be one of the top 5 with the best online savings account rates. So they may keep their rates competitive, but this doesn't mean much if you are unable to open an account.
The above cases show how much demand there must be for some decent interest rates. Savers who want to avoid risking principal don't have many alternatives these days. Money market fund rates are even worse than saving account rates. I keep track of a few money market funds in my weekly rate summary. The best yield is currently being offered by the Fidelity Money Market Fund which offers a 7-day yield of only 0.34%. Treasury yields are not much better. They've gone up a little bit in the last couple of weeks, but they're still very low. As of 8/11/09, the 2-year yield was 1.21% and the 6-month yield was 0.28%. With higher rates at banks along with the new temporary $250K FDIC limit, banks are attracting more deposits.
The other bank to restrict applications was SFGI Direct which is offering a no-minimum online savings account with a 2.25% APY. The new internet bank temporarily stopped accepting new applications on Monday. I first reported on this savings account in this late July post.
In both of the above cases, at least the banks didn't cut rates. Hopefully, they'll keep rates competitive. I was told by a SFGI Direct representative that they intend to be one of the top 5 with the best online savings account rates. So they may keep their rates competitive, but this doesn't mean much if you are unable to open an account.
The above cases show how much demand there must be for some decent interest rates. Savers who want to avoid risking principal don't have many alternatives these days. Money market fund rates are even worse than saving account rates. I keep track of a few money market funds in my weekly rate summary. The best yield is currently being offered by the Fidelity Money Market Fund which offers a 7-day yield of only 0.34%. Treasury yields are not much better. They've gone up a little bit in the last couple of weeks, but they're still very low. As of 8/11/09, the 2-year yield was 1.21% and the 6-month yield was 0.28%. With higher rates at banks along with the new temporary $250K FDIC limit, banks are attracting more deposits.
