Your Take 
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Your Best High Yield Savings Account?

High yield baby!I’ve been emailing back and forth with reader Tomas (he’s the impetus for the Bargaineering VideoCast that will be published on Sunday), and one question I struggled with was which online bank has the best high yield savings account offer now?

In the last few months, interest rates have plummeted. It was only a few short months ago that Dollar Savings Direct offered 4.00% APY on their savings account. Now the rate is half that, a mere 2.05% APY. FNBO Direct, a long-time favorite of mine, just lowered their rates yesterday to under 2%. ING Direct, HSBC Direct, and E*Trade Bank all have rates under 2.00% and have had rates that low for quite some time.

So which one is the best? For me, it’s any of them. The difference between 1.50% at ING Direct and 2.05% at Dollar savings is microscopic. Half a percent isn’t worth the hassle of opening up an account, to be honest, and my money is going to whatever account makes it easiest for me to work with them.

How about you? What do you consider the best high yield savings account nowadays?

(Photo: refractedmoments)


 Banking 
10
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Highest Short-Term CD (Certificate of Deposit) Rates

(Updated 11/6) I’ve been keeping a list of the best CD rates for certificates of deposit in the 12-month to 18-month maturity range, figuring that’s typically the sweet spot for CD rates. If the CD maturity is too short, banks won’t give you a good rate because it’s such a short period of time. If the CD maturity is too long, the customer is taking on a lot more inflation risk than the bank is probably paying out for. However, short term certificates of deposit still have their place:

  • You’re setting up a CD ladder and you need CDs to fill up those short period slots.
  • You have funds in an account that currently isn’t earning the highest yield for savings, transferring the funds will take time and cut down on your interest earned… so you might as well throw it into a short term CD to get a better rate.
  • You simply don’t want to rate chase and open up a new account with each new online bank that offers a high rate, so you might as well hit up a short term rate with the bank you’re worth just to get a little extra.


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 Banking 
18
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Opening an Everbank Yield Pledge Money Market Account

EverBankAfter closing my Emigrant Direct account last week, I figured I’d add to my paperwork and open up a new bank account! This time I turned to a bank I’ve talked about in the past but never dealt with personally – EverBank. They have all the characteristics I look for in an online bank – FDIC insured, competitive interest rate, and informative website. They’ve been been in business for many years, as a mortgage lender, before they started taking deposits in 1998 (when they were FDIC insured). Since then, they’ve won a ton of awards such as Money Magazine “Best of the Breed” in 2007 and Kiplinger’s “Best Checking Account” in 2006. Most importantly, they don’t appear to be too affected by the credit crisis… all good things, so I opened an account today.

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 Personal Finance 
33
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Understanding Your Financial Fortress

Your Financial FortressHow many financial accounts do you have? Five? Ten? Twenty?

You probably have more accounts than you think you do. When I look at all of the financial accounts that I have, it makes my head spin. If all you have are the bare essentials: 401k, Roth IRA, a checking account, a savings account, an online savings account – then you’re already talking five accounts just to start and that doesn’t even include credit cards! Make any major life decisions and you start adding to your total. Leave a job? Add a Rollover IRA. Move? Add a local bank account. It doesn’t seem to end. I personally have a checking and savings account with a credit union in New York, I haven’t lived there since I graduated high school ten years ago!

While it may seem like too many accounts, each one plays a pivotal role in building your financial fortress and it’s important to have a good idea of what role each plays. I invite you to join me on our tour of a typical financial fortress.

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 Personal Finance 
20
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High Interest Savings Accounts Profiles

Make bundles at high interest savings accounts!The high interest rates of online banks may be appealing, but before you open an account, it pays to do a little research to learn more about the bank itself.

When Dollar Savings Direct first appeared with its amazingly high interest rate, I know I was one of the first customers to sign up. The 4.00% APY savings account was amazing, as other banks dropped to 3% or lower. I saw the FDIC emblem, I saw that it was affiliated with Emigrant Direct and Emigrant Bank, but I never confirmed it. I did a little bit of research and discovered that it was once branded Banco Fortuna, Emigrant’s aborted attempt into the Spanish-speaking market. I was satisfied and opened an account. Thankfully, astute readers investigated further, even calling up the FDIC, and we learned that Dollar Savings Direct was FDIC insured but shared that protection with Emigrant Direct. In other words, having a Dollar Savings Direct account, for FDIC insurance purposes, was the same as having another Emigrant Direct account, the combined assets would be protected up to $250,000. I did not know that when I opened the account and while it wouldn’t have affected me, I should’ve known.

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 Banking 
10
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Best CD (Certificate of Deposit) Rates

If you’re looking for the best CD rates, you’ve come to the right place. Below is a list of the nationally available best CD rates, updated every single day. I looked at the best rates available for CDs of less than 18 months and listed the ones with the highest rate. Typically the longer the term, the higher the rate, but for many online banks the best rates were for periods of shorter than 18 months. For simplicity’s sake, I put the cutoff at 18 months (some banks offer higher rates for longer terms). If you want shorter term CD rates, I have also compiled a list of highest short-term CD rates (less than 12 month maturities).

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 Banking 
11
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How I’m Reacting to the Rate Cut

Fed Cuts Rate to 0-0.25%The Fed announced in their December FOMC that they were lowering their target federal funds rate “range” to 0.00% to 0.25%, a drop from the former target of 1.00%. While it was seen as mostly a symbolic move, since the actual federal funds rate was much lower than 1.00%, the language surrounding the numbers made it sound like the Fed was willing to do anything to pump up liquidity, including doing something its never done before called quantitative easing. I don’t want to get into the technicalities of everything because for most people, the biggest part of that announcement was that interest rates are going lower.

When the Fed cuts interest rates, the first thing that happens is interest rates on all banking products will go down. As you may remember, savings rates aren’t guaranteed and are variable, they can change at anytime. The same is true for the interest rates on checking accounts, money market accounts, etc. The only rate that is ever guaranteed is on a certificate of deposit (CD) and that’s only locked for the term of the CD.

Emergency Fund

I currently have our emergency fund laddered in CDs at ING Direct so there will be no changes there. I’ve been slowly rolling over CDs each month into an FNBO Direct CD because their one year rates are half a percent higher (FNBO Direct 12-month CDs are 4.00% APY vs. ING Direct 12-month CDs at 3.50% APY), but it’s been slow going since only one CD matures per month. If you don’t have your emergency fund locked into a CD ladder, you should consider it.

Mortgage Rates

Mortgage rates are falling hard. My friend emailed to let me know that his broker has rates for 30-year loans at 4.50% and Wells Fargo has 4.75% listed on their list of today’s rates. Under 5% for a thirty-year loan is absolutely ridiculous. While we’re not in the position to buy another home, if you were waiting on the fence, now is a fantastic time to start looking because the rates are so low. If and when we do have the ability, I hope that these low rates are still around.

Regular Savings

The only rates that will stick are those promotional rates guaranteed by banks. The best example I can think of is Everbank, they’re guaranteeing their 4.01% bonus rate for three months but then they’re going to drop you back down to whatever it is the rates will fall to. Does that mean you should rush out and open an Everbank account? Not necessarily, because we won’t know what the rate is afterwards but that’s the type of high yield savings account that will guarantee a rate for a specified time and still give you the flexibility of moving your funds around. If you don’t lock it into a CD, your rate can change at anytime.

Who knows what will happen in the next few months to the next year with regard to our economy, but the one thing you can be sure of is that banks will be lowering interest rates in the short term.


 Personal Finance 
14
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Your Financial Network Map

Have you ever drawn a financial network map?

A financial network map is a one-page diagram that shows the links and relationships between each of your financial accounts, which include but are not limited to bank, brokerage, mutual fund, retirement, credit card, and service accounts.

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