Banking 
11
comments

Best Online Banks: It’s Not Just About Rates

Hand Painted Piggy BankA few years ago, the only high yield online savings account available was ING Direct. Their rates blew people’s minds. Until then, the only way to get that type of interest rate on an essentially 100% risk-free asset was to lock it up in a 60-month CD. Even today, check out the rates for CDs of your local bank and you’ll be hard pressed to find one under 60 months that comes close to beating the rates of high yield online savings accounts.

(Click to continue reading…)


 Banking, Personal Finance 
1
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E*Trade Rate Increase: 3.30% APY

E*Trade just sent out an email notifying us that the interest rate will be increasing from 3.15% APY to 3.30% APY, effective tomorrow, July 2nd. This takes their interest rate from 6x the national average to 8x the national average. This is a better rate than both ING Direct ($25 sign-up referral bonus) and Emigrant Direct but less than the 3.50% APY available from HSBC Direct, but that rate is only guaranteed through September 15th.

There’s no mention of how long this rate will be active but E*Trade is on an upward rate trend, as are other banks, and there’s no indication this is a promotional offer.


 Government, Investing 
10
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Emigrant Direct Foiled My Series I Bond Purchase!

I don’t know if TreasuryDirect changed their policy or if EmigrantDirect changed theirs, but my attempt to purchase Series I Bonds and take advantage of the potentially awesome new rates was foiled! I received the following message from TreasuryDirect:

Dear JIM,

We’re sorry, but your purchase request IAAAB was canceled. While trying to collect payment from your bank, they returned our debit. Please check the Investor InBox section of your TreasuryDirect account for more detailed information.

Thank you for using TreasuryDirect.

It was entirely my fault. It wasn’t Emigrant Direct’s fault, or the Treasury Direct’s fault, it was Jim Direct’s fault. The only linked account I had was from an Emigrant Direct savings account and I assumed it would still be valid to make another purchase. I had purchased $100 in Series I bonds a while back just to play with the system and assumed everything was still good. Unfortunately, TreasuryDirect now debits the linked account rather than a regular ACH transfer (I think) and so a savings account doesn’t debit! (The other explanation was that there were insufficient funds, but I confirmed I had enough)

So the only solution is to head over to the bank and buy a paper Series I Bond so I can still take advantage of the upcoming favorable rates. I suspect it should be pretty easy, the government always makes it easy for you to give them your money :) .


 Banking 
14
comments

E*Trade Complete Savings Account Review

E*Trade Banner5.05% APY is a pretty healthy yield and one of the highest in the nation now (top high yield savings accounts) that the Fed has been pulling interested rates down (much to the chagrin of overseas travelers and those shorting gold) so last week I opened up an E*Trade Complete Savings account yielding exactly that. To open an account, just go to this application page and submit your information. Now, here are a few tips after you open the account as I found the start-up and activation process to be a little confusing (it was the first time I called up the help services of any bank to assist me with opening an account, if that’s any indication).

Incidentally, E*Trade Bank is FDIC insured and has been since June 23, 1955; much longer than I had thought they’d been.

Click here to open an account today!

Online Access

After you create the account, you can log into E*Trade but the account won’t immediately appear. At first I chalked it up to the account not being established yet; but after I received all the account documentation in the mail and didn’t see the Complete Savings account listed in my Accounts Complete View, I was surprised. Apparently what you need to do is click on the “Banking & Credit Cards” tab located at the top of your screen and then look for an “Apply for access” link. I thought I already applied! Anyway, there will be three boxes that appear for you to enter in your social security number, your account number, and your zip code. After that, you new account will appear. I’m not sure why this is necessary or why none of the introductory material had a “Get Started” section to explain this. Another way to reach this is to find the link that says “Don’t see one of your accounts?,” that’ll bring you to the same page.

Adding External Accounts

When you first open your account you need to add an external funding account, I added my Bank of America account since everything funnels through there. Well, the initial $100 was withdrawn but I can’t immediately transfer money yet – I have to verify it! To do that, look for the “External Account Added” in the “Alerts” section to the right of your screen, click that and then click on “Verify your external account now” in the window that pops up. That will take you to a page that details the external account, click on the Verify link next to the “Verified on:” text label. (There are about a million ways to get to the verification page, so don’t fret).

Now there are two ways to verify an account, username and login or two small deposits. I’m willing to wait and go the two deposits route even though they claim that “Your external account login information is maintained within a secured session and will not be stored to perform this verification.” That’s okay, waiting 2-3 business days for two small deposits is acceptable.

What I don’t understand is why I need to verify an account that already has been debited in the first place. My Bank of America account was used to fund this account so why would I need to verify it one more time? The only time this makes sense is if I were to open up a bank account in someone else’s name (knowing all their information), gave it an initial deposit, but didn’t want that person to have access to my bank. Is that scenario common? I wouldn’t think so. I am pretty sure every other bank I’ve worked with has automatically added the initial funding link without having to go through this process.

Fast Help Desk

I did have to call 1-800-ETRADE-1 (1-800-387-2331) to find this and it took me about two minutes to reach a representative (it was also 8AM this morning), very quick considering I didn’t feverishly hit “0″ in an attempt to reach a representative ASAP. They were very helpful and we resolved this issue, probably something they hear all the time, in about a minute. Unfortunately, I have no basis for comparison because I’ve never had to call ING Direct or Emigrant Direct for anything. :)


 Banking 
8
comments

Risks of Paperless Personal Finance

Last week I wrote about five ways that paperless personal finance saves you money and I figured I might as well go over a few reasons why paperless finance may be risky. I’m tempted to slap a Devil’s Advocate label on something like this but paperless personal finance isn’t exactly a slam dunk answer for everyone and here’s why.

Website Down

I don’t know if you remember when Emigrant Direct rolled out a new site design last year and saw their website come to a grinding halt. That was only for a day or two… imagine if the website was down for a week. That’s the number one reason why going paperless is a huge risk, if the website goes down and you can’t get a telephone number, you’re disconnected from some of your funds. The easiest way to mitigate this risk is to avoid putting putting all of your money in one place, good as a general practice anyway.

This is why I always advocate having a brick and mortar bank account that you can access easily in person because nothing beats being able to talk to someone in person if you need a problem solved. I can’t think of a situation where, between an online bank and a B&M bank, you can’t get to your money in a timely fashion if you need it.

You’re Terrible With Email

I use email notifications as a way to remind me to pay the bills and I do so whenever I get the notifications. It’s understandable that sometimes you can’t act on an email when they receive it, thus preferring a paper bill to act as a constant reminder that you have to do something. Ultimately it comes down to priority – how important is it for you to pay your bill right that minute? If you can take a minute to check your email, you can probably take an extra minute to log into your account, schedule a payment, and then continue onto whatever pressing matter it was that you had. Right? Be honest. :)

Print Your Own Records

If you file away everything, from credit card bills to bank statements, then you have more detailed notes than most people and you might be able to justify your need to keep receiving paper statements. All of those records are accessible online, if you can get online, and certainly having the paper record is nicer than having to log on, print, and then have the record so going entirely paperless puts the onus on you to do a little extra work if you need the paper document. This is a trade off I, and many other paperless proponents, was willing to make since I found that I never used my bills or my bank statements for anything.

There you have it, a bit of a bone for those paper finance people who couldn’t see themselves not receiving a paper bill each month, and I certainly understand, though I don’t agree, with where they’re coming from. There are legitimate reasons why you would want some of your statements and not others, but I hope that some of you folks would consider moving some of your stuff to the paperless world and save some of the little trees out there. :)


 Personal Finance 
28
comments

Five Accounts You Absolutely Must Have (And Four You Don’t)

There are five finance related accounts in the personal finance world that I think every single person must have and they should get it as soon as possible. They run the gamut of the obvious, an accessible checking account, to the not so obvious, a high yield savings account (as surprising as it sounds, this is not obvious to most people because they are amazed when I tell them you can get 5% from a regular savings account). So, please enjoy this list of five accounts you absolutely must have and three that you absolutely must avoid.

These Five Accounts You Absolutely Must Have

1. High Yield Online Savings Account

Number one definite must have account is a high yield savings account getting you at least 4%, at the very very least. If you assume inflation at around 3%, anything less and you’re losing money. Take your pick of ING Direct, FNBO Direct, Emigrant Direct, Citi, and you’ll get over 4%. My recommendation is that if you have a Citi or an HSBC bank account, go with one of them because your transfers will be instant between accounts. If you don’t, I use FNBO Direct but both they and HSBC offer 5.05% APY.

(Click to continue reading…)


 Banking 
9
comments

State of the High Yield Online Savings Account

I’ve recently been getting a lot of emails asking what I recommend for folks looking to open a high yield savings account and, having not kept up to date with the APYs, I didn’t really have much advice other than that they should take advantage of the ING Direct new account referral bonus and then select either FNBO Direct or E*Trade for their main online savings account. (which actually turns out to be good advice)

Until recently, there were a couple folks in the high yield category, including Citi e-Savings, Emigrant Direct, and HSBC. However, just a few days ago the Citi e-Savings dropped their yield down to 4.75% so they are no longer in line with the leaders of the back (I define inline as within a tenth of a percent or so). Unfortunately, ING Direct hasn’t tried to keep up and Emigrant and HSBC are the current leaders in the clubhouse.

Now, HSBC recently announced that they’d offer a promotional interest rate of 6% for new funds until the end of April, giving you a little less than three months of interest earnings – not enough incentive for folks with existing accounts (you lose yield by moving the funds around because of the lag) but it’s a good reason for people without accounts to open one and put their funds there (assuming it will fall back to the 5.05%).

So, in a nutshell, here are where the major (in my mind) online savings accounts stand in terms of interest yield:

  • HSBC: 6% until 4/30, then 5.05% presumably. (if I didn’t have an account, I’d open it here)
  • Emigrant Direct: 5.05%
  • Citi e-Savings: 4.75% – One plus of this account is that you can link regular Citi accounts to it and transfer money very quickly.
  • Virtual Bank: 4.6%
  • ING Direct: 4.5%

ING Direct & Virtual Bank Referral Bonuses:

If you know someone who has an existing ING Direct or Virtual Bank account (I have both, please email me if you want a referral or go to the self-serve ING Direct $25 Promotion page), they can send you a new account referral and you can earn money for signing up. For ING, you’ll need to deposit $250 and you can get a quick $25 (the referrer gets $10). For Virtual Bank, I’m not sure what the minimum is but you get $20 for signing up (so does the referrer). Once you have an account, you can refer up to 25 people for ING and 50 for Virtual Bank.

Caveats to Online Savings Accounts:

With the high yields come some inconveniences that are consistent with savings accounts but that you may not be familiar with because of how you use savings accounts. For example, there is an FDIC limit of six transfers to and from any one particular savings account (reasons are in the linked post) and there is generally a nearly one week lag for moving funds. The one week lag is because the savings account generally doesn’t having an associated checking account, like you would normally, and so in order to access the funds you’d need to ACH it to another account – that ACH process can take five business days. A workaround is if you have a Citi e-Savings account because you can link it to a regular checking account and the transfer would be internal to Citi and immediate. So, with the higher rates, you have to suffer some inconveniences – it’s not as bad as a certificate of deposit though!

If you want to stay current, I recommend visiting Bank Deals, they do a great job getting the latest and greatest info out to you and they also do a weekly summary that has this sort of information, but in greater detail, which is linked to from their sidebar under Weekly Bank Deals Summary.


 Banking 
1
comments

Oh yeah… ING Direct’s Interest Rate is 4.40% Now

Extra extra! ING Direct just raised their interest rate on their high yield online savings account from 4.35% to a whopping 4.40%! If it weren’t for the $25 referral bonus (if you are referred by a current account holder, use this self-serve $25 ING Direct promotion page if you want a referral link) I don’t know why anyone would sign up with them if you can get 5.15% from Emigrant Direct.


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