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

Time to throw in the towel on WaMu?

The beleaguered bank just can't catch a break. Today Standard & Poor's Rating Services downgraded WaMu's counterparty credit rating to "CCC" from "BB-" further miring it in junk status. The reasoning being a split of the bank on any sale, as vultures are keen on snatching the strong deposit base while staying as far away as possible from the toxic mortgage assets.

As seen in the chart, WaMu's stock price (NYSE: WM) has fallen along with the confidence in the bank, dropping another $0.94 to a 52-week low of $2.26. Uncoincentally, this battering has led them to increase interest rates on online savings to 4.00% and on 12 month CDs to 5.00% in attempts to shore up capital.



While these are GREAT rates given current market conditions (who wouldn't want guaranteed returns in this financial crisis!) how safe is your money? Sure its FDIC insured on deposits up to $100,000 but with all these bailouts and government takeovers, but how long will the FDIC's printing press be available until it breaks down? Here's a great article on reasons to stay with WaMu from MyMoneyBlog, but seeing that nearly 60% of my cash is sitting with WaMu, I still am pretty uneasy with leaving my money in there.

I have an online savings account and an 8-Month CD (which I opened for 4.25% APY) and the trigger is itchin for me to withdraw the money. IndyMac is the closest example to what would happen should WaMu fail and after reading some stories from those customers (via SlickDeals) seems like it took 4-5 weeks for money to be returned. So seeing that a bailout of WaMu would be greater than IndyMac, I can't imagine how long my money would be locked away NOT earning interest.

So do I forgo the attractive interest rates and settle for a lower rate but more security? I'm leaning towards a move back to EmigrantDirect at 3.00%. So far I'm undecided, but I'll wait for this month's interest to be deposited and then I'll make a decision.

Happy rate hunting!

One Love,

Look

Interest Rate Freefall

Long story short. Fed cuts overnight interest rates from 5.25% to 4.75%. Result: Interest rates fall off a cliff.

Glad I locked in a 5.36% 12 month CD at E-loan before the carnage, but kicking myself for not locking in for 18 months. Unfortunately 2 CDs expired after the freefall and blah. My Wamu CD i rolled into a 4month CD @ 4.65% APY (They were offering ~2.7% for all other maturities!). My Emigrant Direct CD I transferred into my savings account earning 4.75%.

So there's little options out there as all banks seemed to have followed suit. There are higher rates at Countrywide and IndyMac, but their exposure to subprime worries me. Although they are FDIC insured, I don't feel like the small bump in rate would be worth the headache should they fail. So for now I'm going to sit tight and see how the rates play out in the coming weeks.

In other portfolio news, I'm roughly 50% cash which is way to conservative for my age bracket. Sadly, this is probably the lowest cash ratio I think I've ever had for my porfolio showing my uber conservativeness. I've been ramping down this cash number, however. I set up an auto-investment with Vanguard into my VTRIX mutual fund. I'd invest more, but with the market so hot right now and everything trading at all time highs, I'm hesitant to do more.

Well I guess we'll see what happens in the coming weeks.

One Love,
Look

The Incredible Falling Interest Rate

The Fed announced today that the fed fund rate would remain unchanged for the time being. So what does that mean for interest rates? So far online savings rates have stayed the same. E-Loan remains at 5.25% and Emigrant at 5.05%. In recent weeks, however, the CD rates at these two institutions have dropped to 5.26% and 5.10%, respectively. E-Loan had a huge drop from 5.41% to 5.26% over the last week or so, while Emigrant has been holding at 5.05%. My CD at Emigrant expires tomorrow, so what to do? Open an account at E-Loan and hold it at 5.25%? Or will the rates drop at E-Loan too and converge to the rate at Emigrant? Sigh.. Missing the rate hike!

or

I'll let you know!

One Love,
Look

The Incredible Shrinking Interest Rate... Citibank eSavings

If you've been paying attention to interest rates in the past few months, you've noticed they've leveled off after the Fed stopped raising its rate. Banks have quietly reduced the APYs offered on their accounts, with Citibank being the sneakiest (to me) of them all.

So without warning I've noticed the rates they offer have freefalled. From a high of 5.5% it decreased to 5.0% then 4.75% and now 4.65%. Having so many different webpages and different ways to access the site, I didn't even notice the decrease to the recent 4.65% rate until recently. I think they should show the rate on the login screen or at least show you the eSavings details including interest rate/APY when you log into your account.

As such, I've moved most of my money in the Citibank eSavings account to Emigrant Direct and locked in a CD at 5.20% APY. With its current trajectory Citibank will fall to a level of ING at which point I will take most of my money there out. The only reason I leave money in there is for bills and such. O wells. Citi, kiss my $$$ goodbye.

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