Online Savings Accounts & Current Rates

[SMSF101]

Thank you Poundwise for those links. Those are helpful. I will use that as a reference once I'm indulge in online savings.

[Autoin Chance]

Thank you for your help and because of those links, I can check rates for my saving.

Just my imagination or % APY of many places are dropping.

[Rainbow Traveller]

The best online savings accounts offer high interest rates and great customer service. Savings accounts, particularly so-called high-yield savings accounts, are best for money you might need within a year. Any money that you don’t want to subject to the short-term risk and volatility in the stock market should be held safe in a savings account, earning as much interest as possible. Your emergency fund should primarily consist of money held in a high-yield savings account.

“High-yield” is unfortunately a bit of a misnomer these days; a decade ago, interest rates were 4% and 5% among select savings accounts and money market accounts. Today, the best rates are all below 2% while a fair amount are still hovering around 1%, many rates are now dipping below the 1% mark. This trend will continue until banks need more cash from depositors.

Interest rates. Interest rates are important because money shouldn’t lose too much purchasing power. In a perfect world, interest rates offered by banks should beat inflation while preserving the balance without risk. I am not aware of any bank offering a savings option with ongoing interest rates high enough to beat inflation, whether measured by the government-reported CPI-U or by any other meaningful measure of consumer prices. Nevertheless, if your savings is at a brick and mortar bank earning below 0.25% APY, choose one of the better options below.

[msnln]

I have an account at Royal Banks of Missouri which I opened by mail. I am in NY so this is open to everyone as far as I know. They have Majestic checking account that pays 2.16% interest for up to $25K. However, you need to jump through some hoops.

Requirements (per statement cycle):

15 point-of-sale debit card transactions
1 Direct Deposit and/or ACH Debit/Credit
E-Statements (must provide valid email address)

For 15 debit card transactions, I pay my internet bill online using the debit card in small increments ($2-$3 each) to make up for 15 transactions. I get satisfaction of fulfilling the requirement while sticking it to the cable co. For ACH, I transfer couple of hundred $ from my HELOC then turn around and do billpay, so in and out. And, I get E-statement, instead of paper statements which is no problem for me. I've had this account for past three years and rates started at around 4% but rate has been coming down steadily.

https://www.royalbanksofmo.com/personal_banking/checking/majestic-checking.aspx

[jeffrey]

If we put together an area where all these bank accounts could be updated and rated by all members, would that be of interest?

[SmartSpender]

Awesome resources thanks!
Smart Spender

[Mark90]

Great list. Would you mind if I shared it at another discussion site?

steve, would you share which other site(s) you use to gather information and share information?

[Mark90]

I have an account at Royal Banks of Missouri which I opened by mail. I am in NY so this is open to everyone as far as I know. They have Majestic checking account that pays 2.16% interest for up to $25K. However, you need to jump through some hoops.

Requirements (per statement cycle):

15 point-of-sale debit card transactions
1 Direct Deposit and/or ACH Debit/Credit
E-Statements (must provide valid email address)

For 15 debit card transactions, I pay my internet bill online using the debit card in small increments ($2-$3 each) to make up for 15 transactions. I get satisfaction of fulfilling the requirement while sticking it to the cable co. For ACH, I transfer couple of hundred $ from my HELOC then turn around and do billpay, so in and out. And, I get E-statement, instead of paper statements which is no problem for me. I've had this account for past three years and rates started at around 4% but rate has been coming down steadily.

can anyone else confirm how trusted this bank should be?
this is an amazing rate! is it too good to be true?

[smihaila]

What about Treasury's I-Bonds? 1.83 semi-annually x 2 = 3.6% APY. It's true that you have to keep the money in for at least 1 year, and there is an upper cap to the max amount that you can buy per annum (like $10k in electronic form + $5k in paper form via IRS's tax refunds). But still, 3.6 percent (albeit taxed - but only at federal level) is still respectable.

Thoughts?

Thank you,
A Canadian recently relocated to US.

[feh]

What about Treasury's I-Bonds? 1.83 semi-annually x 2 = 3.6% APY. It's true that you have to keep the money in for at least 1 year, and there is an upper cap to the max amount that you can buy per annum (like $10k in electronic form + $5k in paper form via IRS's tax refunds). But still, 3.6 percent (albeit taxed - but only at federal level) is still respectable.

Thoughts?

Thank you,
A Canadian recently relocated to US.

1.83 is the APY; you don't multiply it by 2.

[smihaila]

Arghh, bummer then :-)
Thanks for bringing this to my attention.

I am quite puzzled - The Canadian dollar supposedly shows a lower inflation rate (at least according to the "official" massaged Consumer Price Index). And most of the virtual/non-brick and mortar banks are able to offer interest rates of about 1.8-2%.
But the US $, according to the officially declared CPI should show a higher inflation. But still, the interest offered at almost all major financial institutions doesn't go above 1%. I find that a mystery. I guess the biggest difference comparing to Canada, is that somehow, the mortagage/lending rates are artificially kept low?!

The only other better thing that I was able to find so far were those checking accounts, whereas if you meet certain conditions such as at least 1 direct deposit set up, a minimum number of "signature transactions" per month and use of e-statements instead of paper mail, then you can get 2% as cash back. I guess for that aspect, the banks can easily recoup those money from the merchants via credit card transaction fees.

The possibilities seem to be quite limited.

Thanks for replying.

[feh]

Arghh, bummer then :-)
Thanks for bringing this to my attention.

I am quite puzzled - The Canadian dollar supposedly shows a lower inflation rate (at least according to the "official" massaged Consumer Price Index). And most of the virtual/non-brick and mortar banks are able to offer interest rates of about 1.8-2%.
But the US $, according to the officially declared CPI should show a higher inflation. But still, the interest offered at almost all major financial institutions doesn't go above 1%. I find that a mystery. I guess the biggest difference comparing to Canada, is that somehow, the mortagage/lending rates are artificially kept low?!

I can't answer this - the relationship between CPI, mortgage rates and interest rates is not something I'm knowledgable about.

The only other better thing that I was able to find so far were those checking accounts, whereas if you meet certain conditions such as at least 1 direct deposit set up, a minimum number of "signature transactions" per month and use of e-statements instead of paper mail, then you can get 2% as cash back. I guess for that aspect, the banks can easily recoup those money from the merchants via credit card transaction fees.

The possibilities seem to be quite limited.

Thanks for replying.

I don't chase interest rates to that extent - I'm not willing to make sure I have a certain number or type of transactions. Ally offers .87%, which is what I use for my EF/savings.

Getting back to your original topic of I-bonds - I'm a big fan, and buy up to the limit each year.

[smihaila]

Regarding those 'cash-back checking accounts', I tend to agree with you - it's much easier to use real credit cards instead of debit cards (under 'signature transactions' disguise) not necessarily that you get to borrow money (I'm always in for 0.00 debt), but simply because it creates a 'buffer entity' and from a liability perspective you are more protected as a payer. Also, you don't have to keep track of getting the min required transactions etc.

I'll check those I-Bonds out. Somehow I thought the composite rate is stated as semi-annual coupon, not annual.

The other - rather radical - alternative would be to go into p2p lending or bite the bullet and get back into stock market / dividend paying or index funds/ETFs. But the 2008/2009 event left a bitter taste personally and also after reading Mr. Richard Ney's "The Wall Street Gang" book, I'm not that keen getting into that anymore.

Perhaps....Gold, physical gold. Or real-estate, or some local businesses to directly invest in (and take part of their risk directly as well).

I'm not looking for a way to get 'rich' without work, or to speculate. I just wish to preserve the today's value of my hard-earned money, like grandma's jam in the pantry - in order to enjoy those money at a later age. With the Goverments spending like drunken sailors and playing tricks with us, I guess it's impossible.

[amarowsky]

Someone mentioned a checking account paying 2.5% for up to 25k deposited.

I'm currently getting .75% with capitol one online bank.

[amarowsky]

They bumped it up to 1% @ capital one!