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Deal of the Day by Kelli B. Grant (Author Archive)
Where to Find the Best Savings Rates
WITH A SERIES of Federal Reserve cuts knocking interest rates down to a measly 2% over the past year, there's been little incentive for cash-strapped consumers to be diligent about saving. But recently, things are taking a turn for the better.
Despite increasing uncertainty about the Fed's next rate move, bank yields are on the rise. The current average savings rate is 2.4%, up from 1.6% in April, according to Bankrate.com. But at some banks, consumers can easily earn more than 3.5%, and may even qualify for rates that top 6%.
Competition for deposits — as consumers deplete their accounts to battle higher prices on everything from gas to food — has forced many banks to start offering better deals. "Rates have stabilized, and some products have begun to go up a little bit," says Edward Kountz, a senior analyst with JupiterResearch.
Jacksonville, Fla.-based EverBank, for example, just increased the introductory annual percentage yield, or APY, on its Yield Pledge Money Market account to 4.76% (up from 4.01%) for three months on a minimum initial deposit of $1,500. Thereafter, balances earn up to 3.51% (up from 3.01%).
Given the uncertainty about the Fed's next move and consumers' stretched budgets, there's little to no advantage in investing in products like certificates of deposit, or CDs, which lock in your cash at a specific rate for a set term (from as little as three months to as long as five years). Minimum investments are often several hundred dollars, and withdrawing the money before your term is up can trigger harsh penalties amounting to several months' interest. Money market and savings accounts, on the other hand, offer easier access to the funds without penalties, and provide the flexibility to jump on a better rate should one come along in the next few months, says Kountz.
When it comes to opening these types of accounts, make sure to do your research first. "You have to shop around," says Greg McBride, senior financial analyst with Bankrate.com. "There's a substantial difference between settling for average and getting the best rates out there." Here's where you can hunt down those high yields.
High-Yield Savings/Money Market Accounts
Some of the best deals can be found in online-only accounts, says McBride. One major benefit of these accounts is that you can link them to your existing checking and savings accounts. Here are the five highest yields with the fewest strings:Bank | Type | APY | Details |
FNBO Direct (The online-only division of First National Bank of Omaha in Nebraska) | Savings | 3.5% | Minimum opening deposit of $1. No monthly maintenance fees. |
Union Federal Savings Bank (based in North Providence, R.I.) | Money Market | 3.5% | Minimum opening deposit of $1. No monthly maintenance fees. |
OnBank (the online-only division of M&T Bank in New York) | Money Market | 3.5% | Minimum opening deposit of $1. No monthly maintenance fees. |
Savings | 3.5% | Minimum opening deposit of $1. No monthly maintenance fees. | |
Flagstar Bank (based in Troy, Mich.) | Money Market | 3.5% | Minimum opening deposit of $1. No monthly maintenance fees. |
Maximum Earnings Accounts
With a few more strings attached, the latest incarnation of high-yield savings accounts offers a high interest rate (hence the "maximum earnings") in exchange for certain requirements, such as maintaining a checking account at the bank, paying bills online and signing up for electronic statements. Here are two high-yielding maximum earnings accounts from big-name banks:Bank | APY | Details |
5% for year one, and 2% for years two and three. | Each time an account holder uses their debit card, pays a bill online or sets up an automatic debit, Wachovia transfers $1 from their checking account into this linked account. Any automatic transfers from your checking account are limited to $100 a month. The bank offers a 5% bonus match of up to $300 on the total amount saved in the first year. During the second and third years, the account yield is lowered to 2%, with 2% savings bonuses of up to $300 each. Holders should be aware that the interest rate may change at any time. | |
Washington Mutual (WM) Savings for Success | 5% | Currently being test-marketed in Georgia, Illinois, Texas and Washington, these accounts let users set savings goals and designate automatic monthly transfers of $25 to $500 from a linked WaMu checking account. After one year, funds and interest are moved to a standard savings account earning 0.25% to 3.33%. The interest rate is fixed for 12 months. |
Reward Checking Accounts
If you're willing to jump through a few hoops, so-called reward checking accounts offer the highest yields around. The catch? In exchange, you must meet a few requirements each month, like making a set number of debit card purchases and receiving statements electronically. "It's a game you can't lose," says Bruene. "You either earn the extra money or break even with a rate like you'd find on a free checking account." (Most free checking accounts offer little interest, if any at all.) Here are the five highest yield accounts, plus what you must do to secure the great rate:Bank | APY | Details |
Crossroads Bank (based in Effingham, Ill.) | 6.10% | Must receive account statements electronically and make 20 debit card transactions each month. Rate applies to balances of $30,000 or less. |
TriStone Community Bank (based in Winston-Salem, N.C.) | 6.05% | Must receive account statements electronically, make 12 debit card transactions each month and have at least one direct deposit or automatic debit. Rate applies to balances of $25,000 or less. |
Orange Savings Bank (based in Austin, Texas) | 6.01% | Must receive account statements electronically, make 10 debit card transactions each month, access online banking at least once and have at least one direct deposit or automatic debit. Rate applies to balances of $25,000 or less. |
First National Bank of Dieterich (based in Dieterich, Ill.) | 6.01% | Must receive account statements electronically, make 10 debit card transactions each month and access online banking at least once. Rate applies to balances of $25,000 or less. |
Rocky Mountain Bank (based in Billings, Mont.) | 6.01% | Must receive account statements electronically, make 12 debit card transactions each month and have at least one direct deposit or automatic debit. Rate on balances of $25,000 or less. |
Checking Your Bank's Reputation | ||
Chasing the highest yields in today's economy often means turning to small financial institutions in other states, or unfamiliar online-only banks — not exactly a confidence booster for consumers already worried about preserving their holdings. Before you fork over the bulk of your savings, check that the financial institution is in good financial shape, advises Jim Bruene, publisher of industry newsletter Online Banking Report. Here's what to look for:
Solid financial footing | ||
Also See:
Order ReprintsHere is another site that is great for finding savings rates: http://www.bankaround.com
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