Current High-Yield Online Savings Account Rates
Tip It!I frequently receive e-mails asking my opinion as to which online bank has the best high-yield savings account.
So here’s an automated rate table – updated daily – that will show you the top 50 rates on online high yield savings rates gathered from over 200 banks.
I’ll also update the list below with accounts that FiveCentNickel readers have identified as their favorite online savings accounts.
| Institution | Type | Rate | APY | Min. To Earn APY | Details |
|---|---|---|---|---|---|
| Ultima Bank Rates as of Feb. 3rd |
Savings | 2.00% | 2.02% | $0 | SMART Savings Account – for young adults 18 yrs or younger, withdrawals prior to 18th birthday may result in a penalty |
| Washington Savings Bank Rates as of Feb. 3rd |
Savings | 1.50% | 1.51% | $0 | Saver Rewards, tiered rates apply, APY valid for balances between $0 to $15,000 , online accounts only, requires a checking account with at least a direct deposit or 5 debit card transactions per month |
| Dollar Bank Federal Savings Bank Rates as of Feb. 3rd |
Savings | 1.50% | $0 | FreeMONEYSavings – Rate for balances below $20,000 – must maintain Dollar Bank FreeMONEY Checking or e-Checking to earn rate. Open online and mail in forms. Available in Pennsylvania, and Ohio market area. Rate collected in: 15222 (PA) | |
| The Palladian Private Bank Rates as of Feb. 3rd |
Savings | 1.49% | 1.50% | $10,000 | Product and rate available for current customers only |
| AmTrust Direct Rates as of Feb. 1st |
MMA | 1.14% | 1.15% | $5,000 | Premium e-Money Market Account – Rate earned on balances of $5,000.00 to $99,999.99-new money only. |
| Mountain View Bank of Commerce Rates as of Feb. 3rd |
Savings | 1.05% | 1.06% | $1,000 | Savings for Minors – $1,000 and above. Must sign account documents in branch – Colorado market area |
| Gogebic Range Bank Rates as of Feb. 3rd |
MMA | 1.05% | 1.06% | $100,000 | Available only to Michigan market area. Must open account in person. Gogebic Money Market Checking – tiered interest rates |
| SFGI Direct Rates as of Feb. 3rd |
Savings | 1.00% | 1.01% | $1 | At this time SFGI Direct is not accepting new customers or opening new accounts for this product |
| Bank2 Rates as of Feb. 3rd |
Savings | 1.01% | $0 | Great Rate Savings-account must be linked to Great Rate Checking account, available only to Oklahoma residents. | |
| Customers Bank Rates as of Feb. 1st |
Savings | 1.00% | 1.00% | $0 | Reserve Savings Account -ATM access unavailable for this account-Apply online – Limited to Pennsylvania and New Jersey market area |
| Customers Bank Rates as of Feb. 1st |
MMA | 1.00% | $10,000 | Apply online – Limited to Pennsylvania and New Jersey market area | |
| Citizens Bank (Rate in PA) Rates as of Feb. 1st |
MMA | 1.00% | $10,000 | Performance Money Market- Tier $10,000 – $29,999,999 – $50 monthly fee waived with $1,000 minimum daily balance – $1,000 to open-Rate collected within 19140 (PA). | |
| Citizens Bank (Rate in NY) Rates as of Feb. 1st |
MMA | 1.00% | $10,000 | Performance Money Market- Tier $10,000 – $2,999,999 – $50 monthly fee waived with $1,000 minimum daily balance – $1,000 to open- Rate collected within: 10025 (NY) | |
| Citizens Bank (Rate in MA) Rates as of Feb. 1st |
MMA | 1.00% | $10,000 | Performance Money Market- Tier $10,000 – $2,999,999 – $50 monthly fee waived with $1,000 minimum daily balance – $1,000 to opem – Rate collected within: 02144 (MA) | |
| AloStar Bank of Commerce Rates as of Feb. 3rd |
MMA | 0.99% | $50,000 | Money Market Advantage Account -Tiered rate APY for balances $50,000 and above – offer good for new accounts or existing AloStar MMA customers who fund the account with a minimum $25K transfer from an external source – apply online | |
| EH National Bank Rates as of Feb. 3rd |
MMA | 0.98% | 0.98% | $250,000 | Premium Money Market – tier $250,000 and over |
| Chesapeake Bank Rates as of Feb. 1st |
Savings | 0.95% | 0.95% | $25 | Clear Sky Savings – Tier $1 – $249,999 |
| OneUnited Bank Rates as of Jan. 25th |
MMA | 0.95% | 0.95% | $100,000 | UNITY GOLD E-Money Market – Available Online only |
| Urban Partnership Bank Rates as of Feb. 3rd |
Savings | 0.90% | 0.90% | $100,000 | Online Savings – APY with account balances of $100,000 and above |
| Quantum National Bank Rates as of Feb. 3rd |
MMA | 0.90% | 0.90% | $100,000 | Hi-Rate Money Market (Personal) – Limited to Georgia customers only |
| Nationwide Bank Rates as of Feb. 3rd |
MMA | 0.90% | $100,000 | Tiered Money Market – tier $100,000 – apply online | |
| Discover Bank Rates as of Feb. 3rd |
Savings | 0.90% | 0.90% | $0 | Online Savings Account – Account can only be held in individual or joint ownership – Up to 6 preauthorized transfers from your Online Savings Account per statement cycle |
| Nationwide Bank Rates as of Feb. 3rd |
MMA | 0.90% | $25,000 | Tiered Money Market – tier $25,000 – $49,999 – apply online | |
| Nationwide Bank Rates as of Feb. 3rd |
MMA | 0.90% | $10,000 | Tiered Money Market – tier $10,000 – $24,999 – apply online | |
| Nationwide Bank Rates as of Feb. 3rd |
MMA | 0.90% | $1,000 | Tiered Money Market – tier $1,000 – $9,999.99 – apply online | |
| The Dime Savings Bank Rates as of Feb. 3rd |
MMA | 0.90% | 0.90% | $75,000 | Prime Rewards MMA Passbook – Apply online – located in New York |
| Virtual Bank Rates as of Feb. 1st |
MMA | 0.90% | 0.90% | $25,000 | eMoney Market online account |
| Nationwide Bank Rates as of Feb. 3rd |
MMA | 0.90% | $0 | Tiered Money Market – tier $0 – $999.99 – apply online | |
| Nationwide Bank Rates as of Feb. 3rd |
MMA | 0.90% | $50,000 | Tiered Money Market – tier $50,000 – $99,999.99 – apply online | |
| Hanmi Bank Rates as of Feb. 3rd |
Savings | 0.90% | $500 | Internet Savings – California only | |
| American Express Rates as of Feb. 3rd |
Savings | 0.90% | $0 | High Yield Savings – Bank by phone or online only. | |
| Ultima Bank Rates as of Feb. 1st |
Savings | 0.90% | 0.90% | $1,000 | UBM Direct Savings Account |
| Sallie Mae Bank Rates as of Feb. 3rd |
MMA | 0.90% | $0 | Nationwide – apply online | |
| Geddes Federal Savings and Loan Association Rates as of Feb. 3rd |
MMA | 0.90% | 0.90% | $50,000 | Central New York market area only |
| Main Bank Rates as of Feb. 1st |
Savings | 0.88% | 0.88% | $5,000 | MainStay Savings Account – APY for balances $2500 and over |
| AIG Bank Rates as of Feb. 3rd |
MMA | 0.87% | 0.87% | $250,000 | Signature Money Market – FDIC insured. Open an account online or by phone. |
| Sallie Mae Bank Rates as of Feb. 3rd |
Savings | 0.85% | $0 | Nationwide – apply online | |
| OneUnited Bank Rates as of Feb. 1st |
MMA | 0.85% | 0.85% | $1,000 | UNITY GOLD E-Money Market – Available Online only, tiered rates apply |
| Discover Bank Rates as of Feb. 3rd |
MMA | 0.85% | 0.85% | $100,000 | Money Market Tier $100,000 and up |
| Discover Bank Rates as of Feb. 3rd |
MMA | 0.85% | 0.85% | $50,000 | Money Market Tier $50,000-$99,999 |
| Salem Five Direct Rates as of Feb. 1st |
Savings | 0.85% | $0 | eOneSavings – Online applicants only, who do not have existing deposit accounts with Salem Five – APY for balances up to $1,000,000 | |
| Discover Bank Rates as of Feb. 3rd |
MMA | 0.85% | 0.85% | $2,500 | Money Market Tier $2,500 – $4,999 – $10 minimum balance fee if average balance is below $2,500 |
| Discover Bank Rates as of Feb. 3rd |
MMA | 0.85% | 0.85% | $5,000 | Money Market Tier $5,000 – $9,999 – $10 minimum balance fee if average balance is below $2,500 |
| Colorado Federal Savings Bank Rates as of Feb. 3rd |
Savings | 0.85% | 0.85% | $2,500 | Online Savings Account – up to 6 withdrawal transactions per month with no service fee |
| Discover Bank Rates as of Feb. 3rd |
MMA | 0.85% | 0.85% | $25,000 | Money Market Tier $25,000 – $49,999 – $10 minimum balance fee if average balance is below $2,500 |
| AIG Bank Rates as of Feb. 3rd |
MMA | 0.85% | 0.85% | $100,000 | Signature Money Market – FDIC insured. Open an account online or by phone. |
| Union Federal Savings Bank Rates as of Feb. 3rd |
MMA | 0.85% | $1 | Not accepting new online accounts at this time, apply for an account by visiting their branch North Providence, RI | |
| H&R Block Bank Rates as of Feb. 1st |
MMA | 0.85% | 0.85% | $50,001 | |
| Virtual Bank Rates as of Feb. 1st |
MMA | 0.85% | 0.85% | $10,000 | eMoney Market online account |
| Urban Partnership Bank Rates as of Feb. 3rd |
Savings | 0.85% | 0.85% | $1 | Online Savings – APY with account balances of $1- $99,999.99 |
Rates / APY terms above are current as of the date indicated. These quotes are from banks,
credit unions and thrifts, some of which have paid for a link to their website. Bank,
thrift and credit union deposits are insured by the FDIC or NCUA. Contact the bank for the
terms and conditions that may apply to you. Rates are subject to change without notice and may not
be the same at all branches.
Looking for the best online high yield savings account? Here are some of the most popular online savings options. All savings rates current as of January 29, 2012
Everbank High Yield MMA – 0.76% APY
Everbank offers an online savings account. There are no fees associated with your account as long as you maintain a $5000 minimum balance. They also have a high interest checking option. While you may not have heard of them, they’re FDIC insured. Definitely worth checking out. Click to Apply.
Ally Bank Online Savings Account - 0.84% APY (as of 1/29/2012)
Formerly known as GMAC Bank, Ally is one of my favorites. They offer one of the highest savings rates out there, and they also have very competitive CD rates. Accounts with Ally have no monthly fees as well as no minimum balance requirement. We’re actively holding a portion of our savings with them. Click to Apply.
Sallie Mae High Yield Savings - 0.85% APY
Probably better known as the company that manages your student loans Sallie Mae has a very competitive high interest savings account. There are no required minimums, no monthly fees, and they match up to 10% of your Upromise earnings. Click to Apply.
FNBO Direct Online Savings Account - 0.70% APY
FNBO is currently offering a 0.70% APY on their Online Savings Account (Click to Apply). There are no minimums and no monthly fees. They offer a return that has averaged five times higher than traditional savings accounts according to a study by bankrate.com. Click to Apply.
ING Direct Online Savings Account - 0.80% APY
While they don’t have the most competitive interest rates, ING Direct is a perennial favorite. They offer both an online savings account and a high-yield checking account (Electric Orange checking). There are no fees, and they have an ultra-slick web interface that lets you create sub-accounts for different savings goals. We’ve actually zeroed out the balance in our Orange Savings account and moved those funds over to our Electric Orange account. Click to Apply.
Lending Club - average 9.05% APY
If you’re looking for a significantly higher yield than a regular bank can offer, you might want to check out online investing (Click to Apply) company Lending Club. They are a good option if you don’t mind taking on some additional risk. It’s not FDIC-insured, but net annualized return for Lending Club notes are between 5.82% for grade A notes and 12.28% for G grade notes so net annualized returns have averaged 9.05% APY over the past 18 months. It’s free to open an account, and you can get started with as little as $25. I’ve been using them for the past few months, and have had a great experience thus far. Click to Apply.
I should also note that USAA was a popular option amongst those that have access to it. I did not, however, include it in the main list, as it’s only available to members of the armed services (active duty, reserves, or retired) and their families.
And finally, in addition to the rate comparison tool and the list I have presented above, you can check different websites such as RateAPY.com which do periodic updates of the best bank rate deals.
Published on April 3rd, 2008 - 144 Comments
Filed under: Banking, Online
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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April 3rd, 2008 at 8:58 am
HSBC isn’t a bad choice, though ING seems to be the favorite. I personally shy away from anyone that doesn’t offer ATM access because some emergencies can’t wait 3-5 business days.
April 3rd, 2008 at 9:04 am
I’m on board with ING since it’s really simple and easy.
April 3rd, 2008 at 10:15 am
I have been researching a thing called rewards checking accounts. They offer high yields but come with a catch- minimum of 10 debit card transactions, online statements delivery and direct deposit or bill pay setup.
You also have to live in the area of the bank.
April 3rd, 2008 at 10:56 am
I stash my cash in Vanguard Prime Money Market Fund. There’s a $3000 minimum, but I can write checks from it.
April 3rd, 2008 at 11:22 am
I did a lot of research, and decided to try out savingssquare.com. No minimum, and the rate is still the best one I could find out there (currently 3.5% vs. ING Direct at 3.0%). It’s definitely not as user-friendly as ING, but it’s not bad for longer term thinking.
April 3rd, 2008 at 11:51 am
Love ING! Though I’ve been thinking about WaMu since I may get a new checking account. I’m not too happy with BofA these days.
April 3rd, 2008 at 11:55 am
I have used HSBC, ING, and now Wamu. ING has by far the best customer service. However I’m sticking with Wamu for now out of convenience (free account transfers online and brick/mortar visits) and the fact that it has a slightly better APY than the other two.
April 3rd, 2008 at 1:57 pm
FNBO Direct got some flack awhile back for allegedly not being very customer-friendly, but I have never had a problem with them. They do tend to maintain fairly high rates, though it’s currectly only 3.25%.
For the “convenience” factor, I use my local credit union paying a whopping 0.8%, but the majority of my cash savings (emergency fund, CC arbitrage money) is in FNBO.
April 3rd, 2008 at 2:22 pm
I’m surprised CapitalOne isn’t on this list. I find their APY is comparable to other banks, and they sent me an ATM card and checkbook to use for the account, which is what sold me. No minimums or fees. I also use ING Direct.
April 3rd, 2008 at 4:50 pm
I love ING Direct, but also Citibank offers a high yield savings account. You must have a checking account linked, but there are no fees, and you have the benefit of bricks and mortar branches. Their checking account may have fees, but the amount after a certain balance of assets (including your high yield savings), it may be free.
April 3rd, 2008 at 4:56 pm
My experience with the three internet savings accounts I use: VirtualBank has the best rate, and they are fairly quick about delivering withdrawals. Next best rate is HSBC, but they are slow to credit deposits and are the slowest of the three to deliver withdrawals. HSBC’s account account does come with a free debit card so you can get fast access to a few hundred if needed, however, larger withdrawals can take an irritatingly long amount of time to be delivered to my credit union – up to a week.) ING provides quick service (about the same as Virtual Bank), but is typically about .25 percent below Virtual Bank for the interest rate. ING’s web interface is easiest to use.
April 3rd, 2008 at 6:24 pm
hate ING, well i’m a fair weather ING fan when the rates are high; otherwise, don’t see the justification to stay with them. maybe it’s me, but i don’t find much difference between any on the list, having had or have accounts with most of them.
April 3rd, 2008 at 6:52 pm
I love USAA (thanks for mentioning it)… their customer service is amazing. Their savings interest rates aren’t too bad, but also not at the top, but the convenience and the service more than makes up for it. (And we got a mortgage in 2005 with a rate so low that when we tried to get other quotes, the mortgage companies/brokers just told us flat-out they could never match it.) Also, they pay you back any ATM fees you get charged by other banks, and charge none of their own. We can deposit checks at home by scanning them in as well. Now THAT’s free checking.
I read in their magazine that some members of other gov’t agencies might qualify…they mentioned the CIA and FBI.
April 3rd, 2008 at 11:05 pm
I have Emigrant, E*TRADE, ING, and Citibank (ok, yeah, I signed up to get a bunch of bonuses), and as far as actually using the accounts, I like ING the best. It’s just nice, clean, and easy, and I like having both the checking and multiple savings accounts.
April 4th, 2008 at 7:19 pm
WAMU online savings rocks!!!
April 6th, 2008 at 6:27 pm
I tested 5 banks last year for online savings, mainly for “free” money. I will say that ING is the slickest and has a great UI, but my vote goes for WAMU. Higher rates (ING just drops them way too fast, and is slow to raise), Brick and Mortar, and UI are all high marks. HSBC used to have a higher rate, but their website was a pain due to multiple login processes and site was clunky.
although the different between 3% and 3.3% is relatively nothing until you are talking 50k+ balances, go with what works for you. It would be a shame to chase a nickel if you have to go through hoops for it.
April 7th, 2008 at 5:17 pm
ING’s simplicity, ease of use, and customer service is hard to beat. I had a nightmare of a time with Emigrant a few years ago, it is good to see that they are up on the list – maybe they have gotten a bit better?
April 8th, 2008 at 8:34 pm
I am a big AmTrust fan. In addition, I have an ING, Emigrant Direct and CapitalOne MMA. AmTrust consistently pays more than the others. It is the easiest to link external accounts with.
Best Wishes,
D4L
April 11th, 2008 at 9:57 am
Well, what about Igobanking guys? their 3.28% no minimum, no fees definitely beats the 3% orange savings account…
April 11th, 2008 at 11:48 am
ING does offer ATM access! If you open their Electric Orange account, you get an ATM/Debit card. The checking account actually has an interest rate attached to it and you can freely move money from the Orange Savings account to it online. So when you need money, just xfer cash from your savings to the electric orange, then go to the ATM and take money out. no waiting 3-5 days.
April 11th, 2008 at 12:17 pm
I have ING Checking & Savings accounts, and I absolutely love them. The web site is cool and easy to use, and the counter that tracks how much interest you’ve earned over the month/year is nifty.
I also have an HSBC savings account, but I’ve come to enjoy the ING experience much more.
April 13th, 2008 at 4:26 pm
I use ING for checking but hate the general ledger. Positive and Negative pending transactions are grouped together. Another way to confuse clients and charge for NSF.
US Bank has a great checking interface ledger but pays no interest.
ING savings had the best rate in 2003 but has steadily declined.
Switched to Emigrant and eTrade for better Savings rates.
Waiting to see new rates after end of April FOMC meetings before checking out other banks like IGoBanking, etc.
April 13th, 2008 at 4:39 pm
Opened a CD with First National Bank of Omaha, parent of FNOBDirect, and they low-balled me on the interest rate advertised (5.10 > 4.90) and the term (18 months). They completed the transaction without informing me of the rate/term change.
They claimed the change was because I am from another state. I am not a banker, CPA, or Lawmaker so I do not understand how that would matter.
I closed the account mainly out of principle and have avoided FNOBDirect because of the parent bank’s behavior.
I consequently found a better rate (5.35) and similar term (16 months) locally.
April 13th, 2008 at 4:45 pm
eTrade’s interface is quirky. I have CDs and Savings. They project your savings contributions and I have found them to calculate them strangely, ie. not in order of transfer if they are within the same week. They have a decent rate so I am mostly satisfied.
Like others have posted here: the interfaces are basically the same or same ease of use. Go for the money.
April 15th, 2008 at 2:25 am
I am looking to start my emergency fund and I was looking at the money market accounts offered by EverBank and Nationwide.
-Everbank is offering an intro rate of 4.01%APY for 3 months then 3.01%APY.
-Nationwide is offering 3.65%APY.
Anyone have any experience with these accounts?
What sorts of questions should I be asking when I am comparing high yield savings accounts?
Are there practices in high yield savings accounts that I should watch out for?
Thanks for any help you can offer,
Sci
April 17th, 2008 at 12:06 pm
Since when is BoA a “high yield savings” bank? Their savings accounts earn less than 2%, and much much less if you don’t keep $50,000 in the account.
May 27th, 2008 at 11:32 pm
I just received a mailer from Schwab for a high yield checking account w/free online billpay and no ATM fees. Anyone have feedback on this?
May 28th, 2008 at 6:45 pm
Don’t forget about your local credit union. You probably can qualify for at least one and mine hasn’t paid less than 3.25% during the last several months. Competitive CD rates as well.
May 31st, 2008 at 12:51 am
Ing is a great bank. I have used them since 2001 and love their customer service. They are great for mortgages and mutual funds also.
Rivermark CU out of Portland Oregon offers a 6% cd for 500 to 1000 dollar new money for six months. They also have a five percent rewards savings for a minumum deposit of 2500.00 Check on the length that you get that rate for.
They put the limits on to get new people to join. They are a great credit union.
May 31st, 2008 at 4:34 pm
A great summary of high yeild accounts. I use ING and HSBC myself. They key thing to remember is not to use these accounts as your investment vechile – I wrote about this recently. Given how easy they are to work with people just end up leaving all their cash in them. Big mistake.
June 3rd, 2008 at 7:37 am
Do you know anything about IndymacBank? They have MoneyMarket account that give 3.85% on deposits over 10K.
July 16th, 2008 at 7:28 pm
Thanks for the comments. They have helpful. I received an offer from ING today and I think I will take advantage of it.
Saver Learner
August 27th, 2008 at 9:39 am
Not a savings account but WAMU now has a 5% 12 month CD.
September 9th, 2008 at 2:14 am
I liked ING for a while, but I got hit with an NSF on my Electric Orange and they froze and subsequently closed my account the next day with very little explanation besides “Well, don’t worry… there’s other banks out there.” (Literally, that’s what I was told) I was pretty disappointed with that, and am thinking of either moving my money to my credit union or FNBO.
September 9th, 2008 at 1:23 pm
I had an account with ING for several months and when I went to access it out of need, I found out they had closed the account. They had mixed me up with someone else. They even sent me the other person’s private documents in the mail. It took me many hours and weeks to get this all cleared up and I had to sell some stock funds at a loss to get the money I needed (even though they had my money). Their response was basically, “Well, we all make mistakes.” No apology or anything (just an offer to reopen the account). No thanks. I will never do business with them again.
October 25th, 2008 at 2:44 am
I’ve also had an online savings accounts with ING direct and what bugs me is the variable interest rate. They all have variable rates and ING never lets you know that the rate drops. You just have to find out when the interest payment comes at the end of the month. Keep a vigilant eye folks.
October 31st, 2008 at 12:28 pm
I was very pleased with customer service at Emigrantdirect, so much so that I opened an account with their offshoot Dollarsavingsdirect (at 3.75, later raised to 4.00 after the fed rate cut!). So far, so good. I also use FNBOdirect but don’t like that they don’t update info until the first of the month, also, they’re slow with opening transactions.
November 1st, 2008 at 5:09 pm
Had FNBO for a couple of months. Nothing but a hassle. Very unfriendly. Pulled all my money out. Emmigrant is great. No problem. Based on Consumer Reports I am thinking of apllying to Capital One.
November 20th, 2008 at 11:56 am
Currently GMAC Bank has a 3% Money Market and 3.75% Savings, both with no fees or minimums. It’s very easy to transfer from the savings to the money market, which comes with free 1st order of checks and debit card.
November 22nd, 2008 at 11:47 pm
I, too, just noticed the GMAC online bank. Best rates that I can see right now – better than my current ING (which I’ve been very happy with). How long have you banked with them? Do you transfer btwn GMAC and other online accounts? Overall experience w/ them?
November 28th, 2008 at 4:22 pm
vings rate, but a little more complicated and slow on crediting funds. Guess for ease my vote goes to ING, but Dollar has the best rate at present 4%.
November 28th, 2008 at 4:25 pm
Sorry, for some reason all of my comments does not show. I have both ING and DOLLAR SAVINGS, and find ING easier to use, however it only has a rate of 2.75%. Dollar has 4.00% but is not as user friendly. Thanks
December 3rd, 2008 at 11:43 pm
I will stick with my ING savings account for now. I also have a Sharebuilder account with them and they let me transfer money instantly and without any fees. The interface is great (the Sharebuilder interface could use a touch up). Right now I am sticking with them because they are convenient and easy to use. I am shopping around for a new high interest savings account so I can at least try to beat inflation!
December 8th, 2008 at 2:24 pm
Wamu / Chase’s online savings is now 2%. Time to shop around. I’ll miss the convenience of transferring money easily between accounts but 2% is just too low.
December 9th, 2008 at 1:48 pm
Keep in mind that rates that seem too good to be true usually are just that.
Remember, banks take your money and then turn around and loan it out. They make money on a “spread” which is the difference between what they are loaning it out at vs. what they are paying you.
So, if they are charging 6% on a loan to someone with your money and are paying you 2%, then they are making a 4% “spread” on your money. They then turn around and have to pay their personnel, light bills, facility costs, etc, etc, with that 4% spread money.
When banks get in liquidity trouble (ie, they have a lot of assets but not much of it is readily available without liquidation), they may start paying higher rates to customers in an attempt to boost cash in their control.
The problem is that paying you more means their “spread” is less. And, just like the example above, if they are charging 6% on a loan they are making with your money and are paying you 4% now (instead of 2% previously), they are only making a 2% spread.
Depending on the bank, a 2% spread may not make them any money at all. Thus, banks paying high interest rates is frequently a sign of a bank in trouble.
Of course, not all online banks are like this, they simply have less overhead, but they still have to make a spread.
In summary, be wary of interest rates that seem too good to be true and do your research. Sometimes, it would be better to make 1% less (which is only $100/yr on an account of $10,000) and know that your money is in better hands. Just something to consider.
December 16th, 2008 at 12:21 am
The best is Dollar Savings Direct (a division of Emigrant Bank). 4.00% APY on a savings account. No one can beat it….
December 16th, 2008 at 6:25 pm
Capital One E*Trade HSBC & GMAC Was with ING droped them because of low interest rate but might go back for one of their cds after todays cut.We have been happy with all of them overall But they all have had there special times.We have been online banking since 2001
December 24th, 2008 at 6:33 pm
I opened an account with Virtual, but found them very difficult to deal with. And now, they have dropped rate on Savings account to 2%. I think I will be closing very soon.
I like HSBC and will continue to use them.
Dollar Savings and GMAC have told me my applications are pending. Will have to see if they open accounts. If not, their loss, not mine!
December 24th, 2008 at 6:44 pm
Has anyone heard of Provident Bank?
Supposed to be offering 3.75%
December 28th, 2008 at 12:24 am
Dollar Savings is by far the best. Easy interface that hooks up to your checking account, moves money back and forth for free and it’s fast. Or you can sign up and have your pay check go directly to Dollar. The user interface shows you your daily interest as it is being accrued, monthly and yearly. You can set transfers into your savings account as a 1x event, or you can preset a certain amount to auto-transfer 1x per week or every other week or whatever. No one comes close to their APR which is a cool 4 %, no fees, no charges, no kidding.