Online Savings Accounts & Current Rates

[savingtaker]

I guess Countrywide is still desperate for liquid sources to fund their mortgage business, so maybe it'll stay up for a while.

Costco's Capital One dropped from 5.2 to 5.0, so that's kind of OK.

Keydirect is 5.25 now, as well.

UltimaBank is 4.9

[krayziebone33]

Poundwise, in your opinion, why has UFB, OneUnited, and KeyDirect not followed suit and lowered their rates? Do you think they will sometime in the near future?

[sweeps]

M&T Bank 5.05%

[poundwise]

Updated online savings rates 10/23:

Rate drops --
Key Direct down from 5.30% to 5.25%
AmTrust Direct down from 5.06% to 4.93% (see note below)
Ultima Bank down from 5.00% to 4.90%
Captial One down from 5.00% to 4.75%
Zion's Bank down from 4.76% to 4.71%
Univest Direct down from 4.75% to 4.55%

Rate increase --
ELOAN up from 4.70% to 4.75%


Note: AmTrust is now offering a promo rate of 5.36% APY, which is "locked in" for 90 days when you open an account.


Also added M&T Bank (thanks sweeps)

[poundwise]

Poundwise, in your opinion, why has UFB, OneUnited, and KeyDirect not followed suit and lowered their rates? Do you think they will sometime in the near future?

You just have to consider that there are multiple factors that may have bearing on any given institution's rate offer.

Take for instance the recent rate drop. No doubt triggered by the Fed rate cut, different institutions responded (a) at different times and (b) with different cuts.

These banks have to balance keeping customers and their funds vs. paying out a rate that works for them. It has less to do with the actual Fed rate and more to do with their needs and their current deposit accounts -- and how those deposits accounts react to rate changes.

Consider ING Direct. Though they have been paying a comparably low rate for quite some time (and were the first bank to drop their rate after the recent Fed cut) they still have, by far, the largest amount on deposit among Internet institutions. Basically, they have discovered that marketing, bonuses, and account features are enough to keep their multiplicity of depositors happy and on-board.

You'll also notice that these institutions either are slow to react to change or they change their rate incrementally. An example of the latter can be seen with the recent AmTrust direct moves. They dropped their rate, a little at a time, several times. No doubt, in part, this is done to gauge the number of accounts (and amount on deposit) they'll lose along the way. If they drop the rate a quarter of a percent, for instance, and don't lose very many, they'll go ahead and drop it another tenth, and so on, until they reach a point where they have a comfortable balance between what they are paying out in interest and the amount of funds on deposit.

Also, you'll notice that these banks will offer promo rates. Everyone knows that when the promo ends, the rate will be lower, yet people will move money to an account to take advantage of the promo. The promo will also encourage those who are shopping for their first online savings account to possibly select their institution. We've seen HSBC and FNBO, most recently, offering 6% APY as a promo. Now, AmTrust, whom I just mentioned has dropped their rate several times in the last few weeks, is offering a promo rate of 5.36%. Why would they lower their rate and then offer the promo? Perhaps they lost too many accounts when they lowered their rate. Perhaps they are just taking a different strategy, other than being among the rate leaders, to gain and keep accounts.

That's not necessarily an answer, but that's my thoughts on the issue.

As for whether or not UFB or OneUnited rate's will drop, I have no idea. I would expect so, but I would have already thought we'd see it. UFB and OneUnited have been among the most consistent rate offerings among all on the list (Amboy Direct is another) in that they have not changed their rates or terms very often at all. They are, apparently, slow responders -- or, at least, they do not take changing rates lightly. As for Key Direct, their rate has dropped twice in the last 60 days, so they may be set for a while. Either that or they are doing what AmTrust has done, only more slowly.

Ultimately, no one really knows what the different online offerings may do in the future. I typically suggest selecting a quality institution, with a decent web site/interface, and a consistent history of a good rate offering.

Hope that helps.

[poundwise]

Updated online interest checking rates 10/23:

Rate drops --
UnivestDirect down from 4.75% to 4.55%

[safari]

6 and 12 month CD's at Countrywide are up at 5.65% APY for deposits >= $10K. For those in California, the rates are 5.70% APY (to see California rates, enter zip code 90001).

Link

[Blue Leader]

AmTrustDirect now has e-savings with a 90 day promo APY of 5.36%. I've encountered excellent customer service so far with them....just signed up.

[poundwise]

Updates to this list will be on hold for a little while. We have had a family medical emergency that will require some ongoing attention. I hope to still be able to access a computer from time to time but I will, no doubt, not have time to post much, if at all, and certainly not to actively maintain this list.

Thanks for your understanding.

Please continue to post new updates in this thread.

I'll return to active management of this list as soon as I am able.

[scfr]

Take care, poundwise.

[sweeps]

Hope to see you soon, PW.

[sweeps]

ShoreBank 5.0%

[savingtaker]

ing lowered to 4.2%. Guess we'll see more fallout from the Fed Rate cut.

[sweeps]

ING wastes no time in dropping their rates when the Fed cuts rates... but when the Fed raises rates, ING takes it own sweet time.

[jeffmem]

Countywide has alerady dropped their rates also, and quite a change, savings acounts .15%, 1 year CD's .45%. I am glad I decided to open an account with them last month and was able to lock in their highest CD interest rate which was 5.65%. They wasted no time in dropping. I did also notice the ING dropped fast too.