February Interest Rate Roundup: Rates Falling

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Here’s another Interest Rate Roundup ordered by highest rate.

Smartypig is at 3.25% (mini-review) (not a traditional savings account)

Dollar Savings Direct is at 2.65%.

Grand Yield Direct is at 2.50%.

FNBO Direct just dropped to 2.40% today.

HSBC Direct is at 2.25%.

ING Direct Orange Savings is at 1.85%.

WaMu Online Savings is at 1.00%.

I currently have tried and still have all of these accounts open. As I expected, interest rates are falling on online savings accounts as well as traditional bank savings accounts. With the Federal Reserve rate close to zero, it’s no surprise that these rates are falling.

Wachovia does have a special Way2Save savings account that pays 5.00% for the first year! Plus you get an additional match of 5% at the end of one year!

The only catch is that you can only transfer up to $100/month into the account plus every debit card transaction will automatically transfer $1 out of checking into the Way2Save account. It’s still not a bad deal and I actually signed up for it at my local Wachovia (now owned by Wells Fargo). Who knows whether Wells will keep up the program after completing the integration.

If you’re looking for a high rate on your savings, it’s almost non-existent right now. That being said, you really shouldn’t do anything with your emergency fund. It should stay in a liquid savings account of some kind. It’s not there to earn interest. It’s there to protect against emergencies. And you need easy access to it.

I think it’s ok to move it around to maximize interest but you have to calculate the time factor plus lost interest in between switching accounts.

On a side note, Everbank is currently offering a 3.51% interest checking account that’s guaranteed for 3 months, which beats any 3 month CD that I’ve seen without the early withdrawal penalties. It does have a $1,500 minimum opening balance and I haven’t opened yet so I can’t comment on the service.

I’m thinking about opening an account for the high interest rate, but I’m not sure yet. After the three months, the interest rate is tiered from 1.26% (anything under $10,000) to 2.46% (for accounts with $100,000 or higher). If I do decide to open one, I’ll let you know here.

3 thoughts on “February Interest Rate Roundup: Rates Falling”

  1. I just wanted to comment and say that I have been an everbank customer since about 1997 when they opened (or somewhere around there!). They consistently have the highest rates and the few problems I’ve had over the years have been met with superior customer service.

  2. You might consider the 5-year CD from Discoverbank. The rate is currently 3.5-3.6% APY, and the early penalty is 6 months simple interest. This is a great option for people (like me) looking at 12-month CD’s, because the break even is about 1 year + 2 months, and therefore if rates continue to drop I can keep the 5-year CD with it’s higher interest rate for several more years before selling.

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