WaMu Review: Free Checking & Online Savings Account

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At the request of a reader, and because I enjoy wrecking my attempts to simplify my personal finances, I just opened a Wamu Free Checking and Online Savings account, the only bank I didn’t have an account at on my list of high yield savings accounts. (I also did it because Nickel said it might be interesting to see an FDIC takeover from the inside, should that ever happen with WaMu (the media reports aren’t looking good though)).

Opening An Account

Why both the Free Checking and the Online Savings? You have to if you want to get the 3.75% APY rate, so I did. Both require only $1 to open. but the online savings account has a monthly maintenance fee if your daily balance falls under $300 (at any time). So if you can’t keep $300 in your online savings account, don’t open one because the $5 fee will eat away your savings (the online savings account is the one giving 3.75% APY). I take it back! Thanks to everyone who read the terms more closely than I did, it turns out the fee is waived when you open both accounts.

The process for opening is really quick and took about five minutes tops. One little gotcha (depending on what you consider a gotcha) is a checkbox on the personal information screen at the bottom where you can elect to buy checks or defer until later. I don’t plan on using the checks and I don’t know how much they cost, but by default that box is checked. (turns out the checks are free)

Opening Deposits, Confirming Account links: The whole confirming an account link and opening deposits was a little confusing. First, you need to wait for WaMu to make two small deposits to your linked account – that takes a couple days. Then, after you log in and enter in the small amounts, they send you an email confirming the account link up. Ok, so far so good, but then you need to wait a few more days as they transfer the opening deposit amounts. That takes a few more days. It isn’t until after that opening deposit can you transfer in more funds. If you try, the system will tell you that the link hasn’t been established yet (rather than a more accurate statement, such as the opening deposit hasn’t been processed yet). The process took about two weeks to complete (including my own lag in entering the trial deposit information).

Account Summary

WaMu Account Summary SnapshotThe account summary screen is pretty standard stuff though it is more functional than many other online banks. The account summary screens of FNBO Direct and HSBC Direct, the two other banks with similar interest rates, were bare bones by comparison. The bank with a similar amount of functionality on their account summary screen is probably ING Direct, but their rates are a little farther back.

Account Security

WaMu doesn’t use security images, special image keyboards, or any of the other newer security related technologies. They rely on three security questions and an automated calling system to verify identity for certain transactions. I personally thought security images were useless, you do better by practicing safe banking (don’t click a link in an email, don’t log in to an untrusted computer, etc). Special keyboards were more hassle than they are worth (HSBC Direct has you enter a password and use their special keyboard). Three security questions is good enough (emigrant has twelve!). For some, all those security options offer a sense of safety, I personally think they’re annoying (however, I haven’t had an incident so maybe my tune will change if/when that ever happens).

Applying for the 5% APY CD

At the moment I’m still waiting for my deposits but I rolled through the CD opening process, it’s almost as easy as ING Direct (but with a much higher rate!). Simply click on the “Apply for a new account…” link in the sidebar on your Account Summary page and you’ll be taken to a list of accounts you can open. Click on Online CD and you should see the 5% APY offer for 12-month and 13-month CDs. You then go through the same application process as before, which was a bit of a hassle considering they have all this information already (they do verify your DOB and SSN with the information you’ve already provided, which seems like an unnecessary step). It’s no big deal though, once you get through you hit funding options and can open your CD.


The biggest draw about WaMu, besides their high interest rate, is that there are brick and mortar banks you can visit if you need to. They call them WaMu Financial Centers and you can use a store locator to find out if they have a branch near you. Unfortunately the closest financial center for me is all the way in New Jersey. You might have closer! 🙂

As for the rate, you can’t beat a 3.75% APY from a brand name bank. Their 5.00% APY CD is also a compelling offer but the whole liquidity and FDIC issue still sits in the back of my mind. I only have a few hundred bucks in there right now, easily under the FDIC limits, and you can’t let fear of the unknown affect your decisions. It’s 100% safe so take the interest while you can (which could be for a long time), right?

{ 15 comments, please add your thoughts now! }

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15 Responses to “WaMu Review: Free Checking & Online Savings Account”

  1. Money Maus says:

    I just switched everything over to WaMu and they are now my primary bank for my checking account and some savings with the Free Checking/High-Yield Savings account combo. So far, I have been pleased and have not had any issues other than the standard (lengthy) time period to do initial deposits into the account.

    Also, I believe, with the savings account, the interest is not compounded monthly (unlike ING – which is why I also have a savings account there!) but I’ve only had the account open for a month so we’ll see. Overall, my experience has been positive. I also like the fact that it is a very popular B&M, which means its easy to find ATMs/branch locations if/when I need them. I’ve also been pleased with their easy online bill pay process! 🙂

  2. Money Maus: The 3.75% is APY, which accounts for compounding.

  3. ckstevenson says:

    Great review, however, be forewarned: WaMu may go belly up very soon. Be very very careful about putting more money into this bank. “[Washington Mutual] is the next most likely candidate to have major issues… They got into subprime lending, the got into ARMs. Their home equity book is quite large, and these losses are building and building and building… and they simply do not have the capital to absorb these easily.”

  4. EN says:

    A few things (because I recently opened them too). Checks should be free and that’s why they are checked by default. I just had them send me the generic ones just in case (the design ones do cost money). Also, I don’t think you need to keep $300 at all times. I think that’s only required if you solely open an online savings account without a linked checking. With the checking, the monthly fee should be waived even at amounts below $300. Or did I actually misread the terms?

  5. jim says:

    EN: Ah! I didn’t think they’d be free, I didn’t check the box so I never knew. Shoot, those might have come in handy… as for the $300, the online savings fee listing says that if you don’t keep $300 you will have a fee… at least that’s what I read.

    The checking has no such requirement though.

    ckstevenson: Even if they do get taken over, it’s FDIC insured.

  6. Cheapo says:

    Actually I was going through some of the fine print on their web site ( and it states:

    “Relationship Rates/APYs: Open an Online Savings account with a WaMu Free Checking™ account online, or link a new Online Savings to an existing active WaMu checking account, and your Online Savings will receive the Relationship Interest Rate/APY and a monthly service charge waiver.”

    It also mentions that the min balance to earn interest is:

    “Minimum balance to earn APY on savings account is $1.”

    From this I am assuming you do not need to maintain a $300 balance to avoid a fee.

  7. jim says:

    Cheapo: It looks like you’re right, I must have missed that part. Thanks!

  8. I really hate all the security questions also. They are so annoying to try to remember, and almost all of them are not applicable (e.g. honeymoon location if you’re not married), common knowledge or easily researched (anyone who knows anything about me probably knows my graduation year, high school name, and name of my first employer), or otherwise changing/non-memorable/lame in general.

    The best strategies I’ve seen for dealing with them usually involve making up and using a set convoluted pattern for the answers regardless of the question being asked. Which just proves how poor the whole idea is, when the most secure way of dealing with the “security questions” is to more or less ignore them.

  9. Ken says:

    — “I also did it because Nickel said it might be interesting to see an FDIC takeover from the inside”

    Based on my experience with IndyMac, it was pretty boring. On Friday when the FDIC took over, I wasn’t able to log into my account. Early Monday, I was able to log into the account, and it was like nothing happened.

    To make it interesting, try to have over $100,000 in the account (assuming just a plain individual account). You don’t have to have much over $100k. Just enough so that you can see the claims process in action with the FDIC. I’m afraid I don’t have enough for that experiment 🙂

  10. jim says:

    Good idea Ken, let me find twenty of my friends and try to convince them to “try it out.” hahaha

  11. Jackson says:

    Oh…so tempting…

    I want to move out of Countrywide to something better and WaMu looks great but that FDIC thing is a bit freaky…

    I think I might be better off trying FBNO or HSBC Direct…

  12. Terry says:

    Whoo hoo!

  13. wildhorse says:

    There statement about there atm card is mis-leading. Can you use the cards anywhere?

  14. Judy B. Smith says:

    How do I sign up for on-line banking?

  15. mikestreb says:

    WaMu WAS great for a minute. I put a few k away into their 12 month CD at 5%. By the time it matured, Chase had completed it acquisition and it would have renewed at like 1.2%. Needless to say I moved it to my 5% reward checking account.

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