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Posts with tag savings account

New online bank with 3.75% APY but there's a catch

by Josh Smith Aug 26th 2008 at 11:00AM

Filed under: Banks, Saving

asteriskEarlier today I found out about a new entrant to the high yield online savings market on CNN which is offering a savings account with an interest rate of 3.75%. Dollar Savings Direct boasts that this new savings account has America's highest rate* a full quarter of a percent above its nearest competitor. While the new entrant is FDIC insured and not new to the banking industry the new high yield interest rate doesn't come without a catch.

Getting the 3.75% rate isn't difficult but unless you already have some savings built up you can't open an account at Dollar Savings Direct which requires a minimum of $1,000 to open an account. If you have less than $1,000 in the account at any given time, the interest rates drops to 1% APY, which is dismal, especially for an online savings account. I'm not a huge fan of the drop in interest rate but if you have trouble dipping into your savings for non-essentials it may be enough to keep your savings in the bank.

I'm a huge fan of online savings accounts, especially those which pay me well for building up my savings. I currently use HSBC where I was able to open an account with only a dollar and I am currently earning 3.5% APY on the emergency fund we have built up over the past year. The real benefit of a high yield savings account with no minimum deposit is that it isn't a huge challenge to open and combined with direct deposit is an excellent way to start an emergency fund. If it wasn't for HSBC's no minimum savings account I'm positive that our emergency fund would have been squandered on electronics and Taco Bell.

Watching Your Plastic

    United States Attorney W. Walter Wilkins speaks to reporters outside the Clement F. Haynsworth Federal Building and U.S. Court House after Esther Reed pleaded guilty to identity theft in Greenville, S.C., Tuesday, August 19, 2008. Reed pleaded guilty Tuesday to stealing the identity of a missing South Carolina woman to attend an Ivy League school in what her lawyer called a bid to escape a painful past. (AP Photo/Patrick Collard)

    AP

    Defense attorneys Ann Marie Fitz, left, and Ryan Beasley, speak to reporters outside the Clement F. Haynsworth Federal Building and U.S. Court House after Esther Reed pleaded guilty to identity theft in Greenville, S.C., Tuesday, August 19, 2008. (AP Photo/Patrick Collard)

    AP

    This handout photo courtesy of the Boston Police Department shows suspect Clark Rockefeller. FBI agents on August 2, 2008 arrested a man accused of abducting his seven-year-old daughter, who was visiting from London, sparking a national manhunt and fevered speculation over the flamboyant fugitive's identity.The Federal Bureau of Investigation in Boston, where Clark Rockefeller allegedly abducted his daughter Reigh Storrow Boss from his ex-wife a week ago, said the fugitive was arrested in Baltimore, Maryland, and the girl freed. Rockefeller is now likely to face charges including kidnapping, assault, and possibly identity theft. However, police are no closer to resolving who the man they have in custody really is. He has reportedly used a number of aliases, including J.P. Clark Rockefeller, Clark Mill Rockefeller, as well as plain Michael Brown. Police at first thought he was about to flee to Bermuda or Peru on a yacht docked in Long Island, near New York. Some reports had him already in the Caribbean. AFP PHOTO/BOSTON POLICE DEPARTMENT/HANDOUT=RESTRICTED TO EDITORIAL USE =GETTY OUT= (Photo credit should read HO/AFP/Getty Images)

    AFP/Getty Images

    Homeland Security Secretary Michael Chertoff speaks during a news conference at U.S. Secret Service offices in San Jose, Calif., Tuesday, Aug. 5, 2008. The Department of Justice announced Tuesday that it had charged 11 people in connection with the hacking of nine major U.S. retailers and the theft and sale of more than 41 million credit and debit card numbers. It is believed to be the largest hacking and identity theft case ever prosecuted by the Department of Justice. The charges include conspiracy, computer intrusion, fraud and identity theft. The indictment returned Tuesday by a federal grand jury in Boston alleges that the people charged hacked into the wireless computer networks of retailers including TJX Cos., BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW. (AP Photo/Paul Sakuma)

    AP

    Homeland Security Secretary Michael Chertoff speaks during a news conference at U.S. Secret Service offices in San Jose, Calif., Tuesday, Aug. 5, 2008. The Department of Justice announced Tuesday that it had charged 11 people in connection with the hacking of nine major U.S. retailers and the theft and sale of more than 41 million credit and debit card numbers. It is believed to be the largest hacking and identity theft case ever prosecuted by the Department of Justice. The charges include conspiracy, computer intrusion, fraud and identity theft. The indictment returned Tuesday by a federal grand jury in Boston alleges that the people charged hacked into the wireless computer networks of retailers including TJX Cos., BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW. (AP Photo/Paul Sakuma)

    AP

    Homeland Security Secretary Michael Chertoff speaks during a news conference at U.S. Secret Service offices in San Jose, Calif., Tuesday, Aug. 5, 2008. The Department of Justice announced Tuesday that it had charged 11 people in connection with the hacking of nine major U.S. retailers and the theft and sale of more than 41 million credit and debit card numbers. It is believed to be the largest hacking and identity theft case ever prosecuted by the Department of Justice. The charges include conspiracy, computer intrusion, fraud and identity theft. The indictment returned Tuesday by a federal grand jury in Boston alleges that the people charged hacked into the wireless computer networks of retailers including TJX Cos., BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW. (AP Photo/Paul Sakuma)

    AP

    Secretary of Homeland Security Michael Chertoff leaves after a news conference in San Jose, California, August 5, 2008. U.S. authorities charged 11 people from five countries with stealing tens of millions of credit and debit card numbers from major retailers, including TJX Cos Inc, in one of the largest identity-theft schemes on record. REUTERS/Kimberly White (UNITED STATES)

    Reuters

    Secretary of Homeland Security Michael Chertoff attends a news conference in San Jose, California, August 5, 2008. U.S. authorities charged 11 people from five countries with stealing tens of millions of credit and debit card numbers from major retailers, including TJX Cos Inc, in one of the largest identity-theft schemes on record. REUTERS/Kimberly White (UNITED STATES)

    Reuters

    Secretary of Homeland Security Michael Chertoff speaks at a news conference in San Jose, California, August 5, 2008. U.S. authorities charged 11 people from five countries with stealing tens of millions of credit and debit card numbers from major retailers, including TJX Cos Inc , in one of the largest identity-theft schemes on record. REUTERS/Kimberly White (UNITED STATES)

    Reuters

    Secretary of Homeland Security Michael Chertoff speaks at a news conference in San Jose, California, August 5, 2008. U.S. authorities charged 11 people from five countries with stealing tens of millions of credit and debit card numbers from major retailers, including TJX Cos Inc , in one of the largest identity-theft schemes on record. REUTERS/Kimberly White (UNITED STATES)

    Reuters


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Tags: 3.5, 3.75, APY, emergency fund, high yield, HighYield, interest rate, minimum balance, online banking, savings account

Guaranteed to lose spending power

by Tracy Coenen Jul 7th 2008 at 9:00AM

Filed under: Saving

With an unpredictable stock market, savers are looking for safe havens for their money. The issue of maintaining an account balance is particularly important to retirees, but as the Fed has cut the interest rate, yields on checking accounts, savings accounts, money markets, and certificates of deposit have suffered.

Banks are now using "guaranteed yields" to lure in customers, but even those aren't all that good with a few unusual exceptions. These "teaser rates" are usually only for a limited time, typically a year or less. Who knew that banks would offer a savings account rate of 3.5% and consider it a really good deal? A tiny number of banks are offering rates in the neighborhood of 4% or 5%, but those are typically very short term.

The special deals come with conditions. Often they require a minimum amount to be on deposit with the bank, or there is a maximum that a customer is able to deposit in one of the ultra-high interest accounts. If you use a product like a CD, your money is somewhat tied up for a while.

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Tags: certificate of deposit, CertificateOfDeposit, interest rate, InterestRate, money market, MoneyMarket, savings account, SavingsAccount

Continue reading Guaranteed to lose spending power

High yield savings accounts are still out there, if you're willing to play the game

by Tracy Coenen Mar 18th 2008 at 10:30AM

Filed under: Saving

As the Federal Reserve continues to cut interest rates, those who are traditional savers are suffering. Decent interest rates on savings accounts are going away fast. And the interest on money markets is dwindling too. Between money markets and savings accounts, you're lucky if you're getting 2.5% to 3.5% interest. After inflation, you could very well be looking at a negative return on your money.

But there are still some higher rate savings options out there, and they don't carry the risk of stocks or bonds with them. Community banks and credit unions are attracting customers with higher interest rates, some over 6%. The accounts are called reward checking accounts or maximum earnings accounts, and they're safe, normal bank accounts that generally have no monthly fees.

There's a little catch, however. In order to receive these higher interest rates, bank customers must jump through hoops. The banks and credit unions are requiring account holders to use online banking, bill pay services, direct deposit of paychecks, or a certain number of debit card purchases in order to qualify each month for the higher rate. Many of these activities bring the banks revenue, hence the reason for "encouraging" you to use those services.

If you use these services, don't be afraid to open an account at a bank offering the higher yield accounts. The deposits are federally insured, just as any other checking or savings account would be at a bank. And you might as well earn a little better rate on your money if the extra services aren't an inconvenience to you.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Tags: interest rate, InterestRate, savings account, SavingsAccount

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