After the Fall: High Yield Checking Accounts

Another week, and more pain for savers.  Dollar Savings Direct continued their rate chopping from 3.20% APY to 3.05% APY on their online savings accounts.  While still offering one of the highest rates available, their margin is no longer much more than competitors.  Here's a roundup of some other rates we here at the LookBlog follow:

• FNBO Direct  2.60%
  
• HSBC Direct 2.45%
• Emigrant Direct 2.40%
• ING Direct 2.20%

So what's a saver to do?  We mentioned a while back about High Yield checking accounts and the relatively high rates they are still offering as long as you are willing to jump through a few hoops.  The guys over at http://www.highyieldcheckingdeals.com/  have some great resources on what is available in your area, as well as a primer on how these checking accounts can still offer up these rates.  Long story short, by making you use your debit card they earn more on fees allowing them to keep a nice little spread while still offering you a high rate.  Check the site, its definitely worth a read.

As a NJ resident, I'm leaning more and more towards pulling the trigger and opening an account at The Provident bank.  Currently they are offering 5.01% APY on up to 25K and a $123 sign up bonus.  O how I salivate when looking at this compared to the meager online savings yields.  A couple more drops and I'm all but forced to open this up! 

Lets hope things start turning around soon!

One Love,

Look

Interest Rate Roundup

Rates have come up a tad bit in the last month. Here's the current roundup:

WaMu Online Savings: 3.75%

WaMu 8 month CD: 4.25%

WaMu 12 month CD: 4.50%

Emigrant Direct: 3.00%

ING Direct 3.00%

HSBC Direct: 3.50%

E-Loan Savings: 3.01%

E-Loan 6 month CD: 4.06%

So my in my rate chasing, I moved my matured E-Loan CD into WaMu and dumped it into an 8 month CD. I've been socking most of my savings into the online savings account as well. Due to the turbulence in the market I'm reluctant to move everything into WaMu, so I still maintain my other account at Emigrant Direct. While these rates are better than what we've been seeing, the forecast looks bleak. About a week or two after I opened the 8 month CD, WaMu was offering a 12 month, 5.00% CD which I would have definitely jumped on. I jumped the gun too early, then waited to late and now they've dropped the 12 month rate to 4.50%. So unfortunately looks like there won't be another uptick in savings rates anytime soon :(

One Love,

Look

Financial Crisis: The Broken American Dream

It's been quite some time since my last post and much has transpired. The housing market in the U.S. has collapsed with Countrywide Bank being bought by Bank of America, BearStearns the fifth-largest investment bank collapsed and was absorbed by J.P. Morgan, Freddie Mac & Fannie Mae have tumbled as a result of the housing debacle forcing government guarantees, IndyMac was taken over by the FDIC, Lehman Brothers is facing the way of BearStearns, S&L's like WaMu and Wachovia have had their balance sheets come into question. So where does this leave little investors like us?

They say don't panic. Easier said than done. Since the turmoil began last August, my portfolio has seen double-digit percentage declines and the bleeding has still not stopped. Following the "buy low, sell high" adage, I've bolstered these falling positions by purchasing additional shares. While I'm getting these shares at a "discount" this strategy will only bear fruit if a rebound occurs. So since I'm young I'm holding my breathe and blindly sticking to my guns. That's not to say I'm totally exposed to the market. I still have a considerable cash balance and just recently invested in a bond fund to diversify away from my stock exposure. Jumping ship and selling shares seems like the wrong thing to do. Interest rates are at all time lows so there leaves growth possibilities very low. I guess the only thing it would do is to stop the losses. This may be good for someone at/near retirement, but my time horizon is too long to have my money just sit and do nothing. No risk, no reward right?

So what happens if a rebound doesn't occur and we enter a prolonged bear market recession? Well the buy & hold strategies, the dollar cost-averaging and the long term views will end up destroying my retirement plan. No social security to count on, a fledgling 401k. What's a boy to do? Time will tell. I'll suck it up until I can take it no longer and decide what my next plan of action is.

So for those rate chasers, a mini-update. IndyMac failed so I wouldn't recommend pouring cash there (seeing that it might be a process to get it back), but here's the latest rates:

• HSBC - 3.5%
• WaMu - 3.3%
• ING Direct - 3.0%
• EmigrantDirect - 2.75%
• Citi - 2.65%

Good luck investors!

One Love,
Look

CDs? Nah, stay liquid with online savings...

If you're lookin for a place to stash your holiday cash, you might want a traditional CD to get a guaranteed rate of return. In this day and age, however, look no further than online savings accounts. They offer comparable rates to traditional CDs, but lack the restrictions of being able to pull out your money. So if you need access to your dough asap, or are looking for a temporary place to stash your cash and get a decent return without the penalites, look at an online savings account.


Here are a look at some of the biggest names in this arena:







ING DIRECT

• 4.50% APY
• First big player on the market; interest rates have not kept pace with competitors
  
• $25 referral bonuses for recommending friends

Citibank E-Savings

• 5.00% APY
• Convenient transfers/set up if already have Citibank accounts
• Requires Citibank EZ-Checking account
  
  

EmigrantDirect

• 5.05% APY
• Big player offering one of the most competitive rates
• After peaking around 5.15%, interest rates have trailed off recently
  
  
  

E-LOAN

• 5.38% APY
• Newest big player on the market, started offering 5.50% APY but has trailed off recently
• Still offering one of the most competitive rates
• Require $5,000 minimum for accounts

These are only a small handful of the biggest players, but by doing your own research you may be able to find better deals for smaller, regional players. Either way, set up your account and start making your money work for you!

One Love,
Look