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WaMu Review: Free Checking & Online Savings Account

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 [7], the only bank I didn’t have an account at on my list of high yield savings accounts [4]. (I also did it because Nickel [8] 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

The 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 [9]. 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 [7], 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 [10] 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 [11] 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?