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Your Best High Yield Savings Account?
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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)
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I signed up for Dollar Savings Direct at the 4% level. It was almost too good to be true. Then the very next day it started dropping like a rock. Still now, the 2.05% is still one of the better rates.
Yeah, 2.05% is one of the better rates but the “worst” rate is still only 1.45% and 1.50%, I wish the government hadn’t disincentivized saving… (but what can you do, recessions are only overcome through more spending, consumer or otherwise).
I completely agree. While my “emergency fund” money is probably more months-worth than most people’s, it’s still not a giant dollar amount.
An extra 0.5% per year just isn’t worth the hassle.
It’s more worth your time (and my time), to worry about saving more than finding out where the latest and greatest rate is… especially since savings rates aren’t guaranteed. Banks aren’t trying to screw savers, it’s just the nature of the world we’re in now.
I’ve been using Provident Direct for a while. It’s your typical HYS Account, but the rate’s been slightly higher than the others for a while now (currently at 2.1%).
Two possible downsides to the account: 1) They were recently acquired by another bank that may or may not keep the higher rates. 2) The bank doesn’t work with Mint so it’s a minor inconvenience to have to log in to their site to check balances.
Without a doubt, SmartyPig. They’re dropping rates a little too, but it’s staying over 3% for the time being.
I currently have accounts at SmartyPig, E*Trade, and (my primary bank) Century Bank Direct.
I find the rules at SmartyPig to be a bit onerous, I haven’t looked in a while so maybe I should check them out again.
I do not have a suggestion on high yield savings accounts, but I do have a thought on why the interest rates have dropped.
I believe most people may think the rates have dropped because the interbank overnight lending rate is at or near 0%. I doubt this rate has any impact on savings account rates. Instead, Americans have reduced their spending and using the extra that is left over to decrease short term debt (i.e credit card debt) or increase savings (bank accounts to provide maximum liquidity). This provides an increase in supply of money that banks can lend and a decrease in demand. This will tend to drive savings and CD rates down.
Just a thought.
Your thought process fits in with certain rules of economics but it misses a fundamental bit of information. Banks are in dire need of deposits. They want the cash to make their books look better so the government will let them loan money again. They want more deposits and would therefore raise rates if they could.
Instead though, the rate of almost all deposit accounts is almost perfectly correlated to the Fed rates. When the Fed raises or lowers the rate, ING and other banks will adjust theirs up or down within two weeks. Many times they will do it in the same day.
I use GMAC Bank that sports a 2.25% rate for their Online Savings Account. I picked them a couple of years ago because of the speed of the transfers and, of course, their yield. It usually takes 2 business days in and out.
I’ve been hearing a lot of good things about GMAC Bank lately.
The most important thing is that you are actually saving. Even if you are saving in a crappy local savings account, saving is the most important thing.
That being said I’ve been a loyal ING customer since 2004. They’ve never given me a reason to leave.
Very true, saving is hard. Not buying that latest thing you’ve been coveting is hard.
Can we still call these high yield?
I opened an Everbank money market account right before they dropped the interest rate, so I can enjoy their 3.51% teaser rate for a couple more months. The rest is in a rewards checking account (5.01% APR) and short term CDs (3.05% APR).
I still have an ING account, but after their recent flurry of rate decreases, I pulled out all but $10.
I’ve recently opened a Schwab account to take advantage of their rewards visa card (2% back on all purchases). They also pay 1% on their free checking option and 2% on their online savings option. After the Everbank promo period ends, I will probably use the Schwab more. I like what I see there so far.
I opened an online acct with citibank when their “ultimate money account” was around 4%. Now, unfortunately, it’s tanked to 1.5 (their ultimate savings account now has a slightly better 1.75% rate), but I find the account SO user friendly, and I’ve been trying out a lot of online banking lately just to find one where I’m happy. I will probably stick with citibank at least for a significant portion of our savings because I think they do a good job and make online banking very simple.
Most of my Emergency Fund has been in HSBC for years now…until recently. Eight months ago, I opened a series of CDs though GMAC, laddering about half of my Emergency Fund. Well, as HSBC kept dropping, GMAC still had a decent rate, I thought. It was about 2.65% a month ago – so it was at that point that I decided to open a savings account through GMAC. The bigger APY was nice, but I also really like GMAC’s website much better. I like the Account Listing page much better, and it just seems more user friendly.
So today, most of my money is moved over to GMAC. And as I said, it’s not just about the rates (although their CDs and savings APY are still among the highest), it’s more about the usability of the website, for me.
I think the interface makes a big difference, I have my emergency fund laddered at ING Direct because the interface is so great there (and because once you get a ladder setup somewhere, you don’t really want to redo it somewhere else just for a half percent difference).
Even though it hasn’t had the highest APY for sometime, I still use ING Direct for most of my online savings.
It’s convenient, has the features I need, has no costs, and isn’t going anywhere anytime soon.
I use igobanking.com, which no one talks about anymore. 1.85% is in the mid-range for interest, so that”s ok, but I really like the next day deposit or withdrawl option on amounts of $2000 or less.
None of you guys use EvantageBank? They have a checking account (but really I just use it as a savings account) and they give 5.25% interest. They have requirements like 10 debit uses per month but that just means I buy 10 individual packs of gum at the grocery.
There’s actually a few banks like this which offer high interest rates.
Thanks – I’ll check them out! I have no problem with gum
Holy smokes, the interest rate on reward checking is 5.25% (the pack of gum one) and on savings is 3.10% (no requirements of any kind that I see but a max of $35K at that rate). Thank you for pointing this bank out!!
I have the bulk of my cash savings in emigrant direct, which is really sad right now at 1.6% the last time I checked. I have a few CD’s at ING but of course when I started on my mission to purchase one CD a month the rate dropped like a rock from 4.5% down to 1.5% after my 4th purchase.
But to my surprise when I checked on my AMEX high yield MM account that I opened about four years ago. The rate is doing very well at 2.75% and holding for the last couple of months.
The ONE card form AMEX opened the MM account for me automatically and deposits one percent of all my monthly purchases at the end of each month into the account. I also received $100 bonus after my first purchase deposited directly into the account.
This count has been on a small automatic deposit in addition to the one percent and it has really turned into an eye opening amount of money. I’ve been blessed to never make a single withdrawal from the account.
I told a good friend of mine to get the card back when I did. But she waited until last month to try and unfortunately, American Express no longer offers the OneCard.
I use ING for all the reasons listed here (good interface, used to have high rates and too much of a pain to switch). But I hate how long they tie up my bank to bank transfer money. I really dislike my money being unavailable to me, and I make a point to mention that each time they send me a customer satisfaction survey.
That seems to be a problem common to many online savings accounts. FNBO offers an immediate transfer for a small fee, as I assume others might do, but still…3 days is a long time to have money in purgatory!
The difference between 1.5% and 2% is one-fourth. If you have $10K in an account at 2%, you will earn $200/year. At 1.5%, you’ll earn $150. That’s a significant difference.
I’ve just started to save some significant funds for a down payment on a house. I fell into the rate chasing trap fast. Went from Dollar Savings to SmartyPig within 2 months. Now I’m thinking of putting everything in West Banks Rewards Checking account (5%). We already use our debit card more than a dozen timed a month doing grocery shopping and with other purchases that are part of our budget so aside from me tracking stuff on an excel spread sheet, we don’t have to make any changes to our life style. What does anyone else think?
It’s definitely worth looking into. I’ve had a rewards checking account for three months and have no regrets. While I manage the majority of my financial matters online, I do enjoy having a relationship with a local bank.
I’ve been meeting my 10 debt card transactions requirement by buying a gallon of gas with my debit card before using the gas rewards card to fill the rest of the tank.
Before you jump in, take a close look at the bank’s fees so you have a feel for the potential pitfalls. Talk to someone who’s been a customer for a while to see how they treat their customers.
There was a recent article on MSN about the higher yield banks. They are typically smaller banks but you can link here and do your research http://articles.moneycentral.msn.com/Banking/BetterBanking/banks-offer-big-perks-to-lure-savers.aspx
Some of the rates have changed, but still seem to be in the 4% to 5% range.
Both Redneck Bank (don’t laugh) and Evantage Bank are offering Mega Money Market accounts at 3.1%. I opened a Redneck account a few weeks ago, and the rate hasn’t dropped yet. They do seem to be a bit slow to post my deposits though, but it’s not like my cash was earning much where it was. Customer service over the phone has been great, which is not what I read about Evantage in other reviews.
Go to highyieldcheckingdeals.com/ There is a list of banks some paying as high as 6%. I use these checking accounts as savings accounts. most require using debit card 10 times a month.
Believe it or not, I’m finding that small, local lending institutions are becoming a source of good deals here as they are pretty darn financially stable in most cases.
i am going to check some these 5+% rates. ING Direct is a risky bank i have learned. i do not trust them.
they routinely close accounts for no reason and when they do, they first block your login before notifying you. then they refuse to provide a current statement for the current period until the end of the quarter. my sister’s account had several transactions withdrawing from the linked accounts various fees for the closure that added up to over 300 dollars. then this week i saw this scary article:
http://watchingamerica.com/News/24352/ing-taking-risks-with-american-savings/
Still at ING. Have 6 savings accounts with small balances, segregated for different household and bill payment budgeting throughout the year. Consistently outstanding customer service, which to me is a primary concern. I feel like a valued customer even though I’m a small fish. They’ve always had fair rates, but no one financial institution can stay at the top of the rate chart for long. I don’t feel like jumping around for the deal of the month for an extra $50 in interest. Just like any product that makes you feel good, price is not everything! Sometimes convenience and peace of mind win out….for example, that’s why I stick with my insurance agent, though I can probably beat his rate online. He has always been there for me and my family.
I have been sticking with EmigrantDirect.com for a while. Their yield is steadily dropping like everyone else. I do like their rewards credit card that pays back 1.4% of all purchases and get deposited every 6 months.
I just had my electric orange account at ING closed last week too! When I called, I was placed on hold for over an hour and I still do not know why. I cannot log in and get my money. This is really depressing because I loved that account.