Personal Finance Software and Bank Fees read and submit comments for this post

An article from SmartMoney.com looks into banking fees for accessing your online accounts using personal finance software like Microsoft Money and Intuit's Quicken. Many banks charge a monthly fee. According to the article, this fee often matches the fee they charge for online BillPay since Money and Quicken lets you pay bills online for free.

In the article a table of the major banks shows which ones charge a fee. Bank of America, JP Morgan Chase, SunTrust Banks, and Wells Fargo all charge fees of between $3 and $10 per month. Citibank, HSBC, U.S. Bancorp, Wachovia, and Washington Mutual don't charge fees for the most part.

Unique Credit Union/Local Bank CD Specials read and submit comments for this post

Banks and credit unions can get pretty creative in their special CD offerings. Unfortunately, they can sound much better than they really are. I suppose that's why they do it. Nevertheless, these can sometimes be good deals for the consumers. Below are some examples. To take advantage of these you usually have to live near a branch. Some of the credit unions can have other membership eligibility requirements besides location.

Extra 0.01% for every year of your age - Chiphone Federal Credit Union is offering a special CD called "It's your birthday certificate". They don't explain it this way, but based on their examples, it looks like you add 0.01% to any of their current CD rates for every year of your age. So if you're 50 years old you would add 0.50% onto any of their current CD rates. This wouldn't be much of a deal if their current rates were low, but they do have some respectable CDs rates. For example, their 1-year CD yields 4.08%. So the birthday-rate for a 50-year-old would be 4.58% which is an excellent rate for a 1-year CD.

Chiphone is located in Indiana. Membership eligibility is based on employee groups.

10% APY 1-Year CDs with $1K Max Deposit - Two credit unions and one bank are offering these. The maximum deposit into this CD is $1K. You can think of these as a $60 bonus and a 4% 1-year CD. The $60 is the difference between one year of interest of a 10% CD and a 4% CD for a $1K deposit.

Central Macomb Community Credit Union is one of the two CUs offering this special 10% CD. It's also worth noting that their money market account has some very respectable rates of up to 3.75%. Its main office is in Clinton Township, Michigan, and membership eligibility is open to all who live in Macomb county Michigan.

The other CU with the 10% CD special is First U.S. Community Credit Union which is located in Sacramento, California. Membership eligibility is open to the 7-county Sacramento area.

Finally, Allen Bank and Trust Company has this same 10% CD special. Its main branch is in Harrisonville, Missouri.

Plain Old CD - There's nothing fancy about this. I just thought it was worth mentioning. The University of Iowa Community CU is offering a 4.00% APY 9-month CD and a 4.30% APY 15-month CD. They have several Iowa branches including 3 in Iowa City. Membership is open to residents in 14 Iowa counties including Washington, Marshall, Jasper and Benton.

Two Banks With Some Decent Rates read and submit comments for this post

There's nothing too exciting about Advanta Bank Corp. or Countrywide Bank. But both do offer some competitive short term CD rates and money market rates. They're not super rates, but they're quite respectable. Also, both offer checking accounts.

Both banks market themselves as primarily online banks. Transactions are intended to be either done online, by phone, or by mail. Countrywide, however, also has financial centers in many states including Arizona, California, Florida, Texas and Colorado.

The only problem is that neither seem to offer ACH transfer features like ING Direct. Deposits require paper checks based on what is and is not stated at Advanta's FAQs and Countrywide's FAQs.

The below rates are APY. Both money market accounts have different rates based on deposit size (If you have over $2.5 million at Countrywide, you'll only get 1.5% which isn't a problem for me :-)

Countrywide Bank Money Market, CDs ($10K min):

• Money Market - 3.45% ($1K to $50K)
• 12-month CD - 4.31%
• 18-month CD - 4.39%
• 24-month CD - 4.45%

Advanta Bank Corp. Money Market, CDs ($2.5K/$10K min):

• Money Market - 3.66% ($10K to $50K)
• 12-month CD - 4.30%
• 18-month CD - 4.35%
• 24-month CD - 4.40%

Online Banking and Small Businesses read and submit comments for this post

An article from entrepreneur.com looks into why online banking is lagging for small businesses. Even if you don't have a small business, there are a few things in this article that are relevant to consumer online banking. The most important is this excerpt:

Federal regulations require banks to reimburse consumers for unauthorized transfers from their accounts, says Litan. But there is no corresponding legislation that protects small businesses.

As a banking consumer, this is nice to know. If I had a small business, I wouldn't be too happy.

This issue reminded me of this article in which I mentioned in a previous post regarding online banking fraud. The article described one lawsuit filed against Bank of America by a business owner who had $90K stolen out his online account. Since it was a business account and not a personal account, Bank of America had refused to provide a reimbursement.

It's easy to understand why small businesses have been slow to embrace online banking. Some banks, like Wells Fargo, have extended their theft protection beyond federal requirements. This would be important for me if I were looking for a business account.

ING Direct's Latest Email read and submit comments for this post

I just received an email from ING Direct informing members of their latest rate increase:

Announcing the 6th Orange Savings Account Rate Increase in 2005!

On September 23, 2005 we increased the variable Annual Percentage Yield (APY) on the FDIC-Insured Orange Savings Account to 3.40%. The Orange Savings Account has now increased 1.05% since the beginning of the year, clearly making it the best choice for your hard-earned savings.

I think many would argue with the "clearly making it the best choice for your hard-earned savings". Also, it's easy to raise rates 6 times when you only raise them by 0.10%.

The fact is that they're 0.60% under EmigrantDirect, and EmigrantDirect's savings account has essentially the same features (no minimum's, ACH transfer capabilities, etc.). EmigrantDirect may not have the fancy marketing, but they easily win the battle of the best savings account.

VirtualBank Raises Money Market Account Rate read and submit comments for this post

Following the lead of the other online banks, Virtual Bank raised its eMoney Market Account by 0.15, from 3.40% to 3.55% APY. They seem to be consistently just ahead of ING Direct's rates, but never ahead of EmigrantDirect.

One thing a little unique about this money market account is that the rate drops by 0.10% for deposits over $50K. And unlike ING Direct and EmigrantDirect, there is a $100 minimum required deposit.

Even though VirtualBank hasn't come close to matching EmigrantDirect's savings rate, it does have some advantages:

• Checking account available
• CDs with decent rates (6-month: 4.15%, 12-month: 4.35% APY, require $10K minimum deposit)
• $20 referral bonus for both referrer and referee (up to 50 referrals can be given)

The only problem is its name. In my opinion, it doesn't give an image of a reputable bank. However, it has been online for a long time. As described by the FDIC, the bank was established on April 6, 2000 as VirtualBank. It then changed its official name to Lydian Private Bank in June 28, 2002, and is now registered under the FDIC by this name. I bet VirtualBank didn't sound too good to many folks who got burned by dotcom companies in 2000.

CD Specials at Hillcrest Bank read and submit comments for this post

Hillcrest Bank has two decent CD specials: a 4.05% APY 10-Month CD and a 4.50% APY 18-Month CD. Both only require a minimum deposit of $1K.

Hillcrest Bank also has some competitive money market account rates. Its Index Money Market has a maximum rate of 4.13% which is even higher than Presidential Bank's 4.12%. However, for this rate to apply requires a balance of over $500K (not exactly a low balance :-). However, the rates are still pretty good for reasonable balances. For balances between $10K and $25K the rate is 3.25% APY. For $25K to $50K, the rate goes up to 3.51%.

The bank also is offering a free gift for opening one of its checking accounts. Unfortunately, the gift isn't cash.

Hillcrest Bank is based in Kansas. It also has branches in Kansas City, Independence, and other cities in Missouri.

Presidential Bank Raises Its Savings Rates read and submit comments for this post

Presidential Bank just raised its Premier savings account rate from 3.87% to 4.12% APY. EmigrantDirect's lead didn't last long. However, EmigrantDirect's 4.0% savings account has the advantage in that it has no minimum deposit or balance requirement. Presidential Bank requires a $5K minimum deposit and a $5K minimum balance to avoid monthly fees. Also, balances over $35K only earn 2.82% APY. Refer to my previous post on Presidential Bank for more info.

Presidential Bank doesn't have the best website (although EmigrantDirect isn't the best either.) It looks like Presidential's website hasn't changed since the 90's. I find it strange that the Premier Savings page still has 3.5 Percent in the html page's title (the title shows up on the very top of the browser.) This has been out-of-date for several months.

Credit Union Locators and Networks read and submit comments for this post

I found a useful site to find local credit unions. The finder tool is run by the Credit Union National Association (CUNA). It worked better for me than other services that I've mentioned in a previous post. Unlike the ncua.gov database, CUNA's tool lists credit unions that may not be based locally but have local branches. And unlike Bankrate.com's credit union lists, CUNA's tool seems up-to-date.

I've also seen many credit unions are part of a credit union network. One is the CU Service Corporation. Here's how CU Service Corporation describes itself:

Credit Unions have joined together and created shared Service Center locations around the country. Shared Service Centers allow a participating credit union member to conduct most of their business as if it were their own credit union branch. By sharing facilities, credit unions can offer greater convenience for members to access their accounts in many more locations.

So if you have a family member in another state who belongs to a great credit union, you can join that credit union and conduct business with them through other local credit unions who are network members.

Online Banking Fears read and submit comments for this post

I hope my previous post doesn't scare people away from online banking. The news article that I referenced cites rare instances of fraud. If you take basic precautions, I feel online banking can be just as safe as banking at brick-and-mortar branches.

But there are concerns. This article reported on an annual survey of online banking customers that found that security concerns are affecting the growth of online banking:

After years of dramatic growth in online banking penetration, the percentage of Americans who conduct personal banking activities online remained virtually unchanged at 39% for the 12-month period ending August 2005.

Worries about Online Banks

I have several friends who have avoided joining online banks. A few do online banking with their brick-and-mortar banks, but aren't comfortable with joining a pure online bank like ING Direct.

This thread at ClarkHoward is a good example of someone who's interested in the very high savings rates from online banks but admits of being afraid of online banks.

Part of the fear with online banks seems to be the perception that these banks aren't real or don't physically exist. This shouldn't be a concern. All legitimate online banks like ING Direct and EmigrantDirect have physical offices somewhere in the US. There just may not be local branches. These online banks are often online units of large banking companies.

Reviewing an Internet Bank

There are two steps that you can take to ensure the online bank is FDIC insured and is financially sound.

First, go to the Bank Find page at FDIC.gov and type in part of the name of the bank. For EmigrantDirect, just type in Emigrant Savings for the name. It seems that Emigrant Savings is in the process of changing its name to New York Private Bank and Trust. The FDIC page about this bank gives a brief history of the bank. Most importantly, it provides the bank's website. However, it only gives the bank's main website, not the website of the online unit, EmigrantDirect. But when you go to emigrant.com, you'll see a link to Emigrant-Direct.com. This is proof that Emigrant-Direct.com is legitimate and is FDIC insured.

Next, to confirm that an online bank is financially stable, go to Bankrate.com's safe and sound page and find the bank using the form. For the EmigrantDirect example, I selected the bank that starts with the letter E and is located in New York, New York. I then picked Emigrant Savings Bank from the menu of New York banks. Bankrate.com's current safe and sound rating for Emigrant Savings is 4 out of 5 stars, the second highest rating. This indicates that the bank has a sound financial condition.

One thing nice about EmigrantDirect and ING Direct is that you can start an account with very little money since there are no minimum deposit requirements. This allows you to start small and get comfortable with the process. After you build confidence, you can then transfer in more money.

Online Banking Fraud - The New Crimeware read and submit comments for this post

A news article reports on the rise of spyware to steal people's bank passwords. Other internet scams like phishing are on the decline as users have become better educated. Unfortunately, the crooks are turning to the more sophisticated spyware techniques in which virus programs infect people's PCs. Here's how the article described the new spyware:

The keylogging programs can install themselves after computer users open faked e-mails, instant messages or even advertisements on mainstream websites. Then they record everything typed on a computer — or just what's typed during user visits to specified financial sites. Such information is sometimes sent to the hackers in neat bundles, with a column for the relevant financial website followed by columns for the user's log-in name and password.

What's scary is that anti-spyware and anti-virus programs may not always prevent theft. An expert interviewed by the reporter described one case in which a "keylogger program installed itself in a way most antivirus software could not block."

Unfortunately, this cybercrime is unlikely to go away even as banks install more sophisticated security measures. The crooks will also get smarter. The article gave one example of new spyware that takes a picture of what's on a computer screen each time a mouse gets clicked. The spyware was used against a British bank's login procedure which required users to log in by clicking graphical numbers rather than typing them in. This login system seems to be similar to the new PIN Guard system that ING Direct just recently added.

Will the Bank Reimburse Me?

If you're a victim of crooks who drain your account using stolen passwords, will the bank reimburse you? It was stated in the article that financial responsibility is unresolved. FDIC says that banks are usually responsible. However, banks have not always agreed to assume this responsibility. One example was given regarding a lawsuit filed against Bank of America by a business owner who had $90K stolen out his online account. Since it was a business account and not a personal account, it wasn't covered by Bank of America's online liability guarantee.

Here's a link to Bank of America's current online banking guarantee. It's similar to HSBC's guarantee. EmigrantDirect's liability guarantee is buried in their terms and conditions page which is linked at the bottom of their home page. The basic responsibility of the user is to notify the bank within 60 days of fraud and to take due diligence with account safeguarding and online security.

The article ended with several tips to protect yourself from online fraud. HSBC also has some detailed info on this, and so does ING Direct.

Banking Deal Summary for Sept 24th read and submit comments for this post

The major bank news for this week is the 0.5% increase in EmigrantDirect's savings account rate. It's now at 4.0% APY and is the undisputed leader of the savings account. ING Direct disappointed their members with a pathetic 0.1% increase. The Orange Savings Account rate is now at 3.4%. I thought they would at least raise the rate to 3.5%.

Unfortunately, there were no big rate increases with the short term CDs. In fact, several of the high ones are no longer offered. Digital Credit Union ended their 5% 16-month CD. Their new CD deal is a 4.40% 11-month CD. Ebank had been on top of the 6-month CD with a 4.25% APY. It's now only 4.00%. Corus Bank has retaken the lead with their 4.09% 6-month CD.

The rates listed below are in APY. No minimum balances are required unless noted. Previous weekly summaries are available for Sept 17th, Sept 10th, Sept 4th, Aug 28th, Aug 20th, and Aug 13th.

As of September 24, 2005

Savings/Money Market Accounts:

• EmigrantDirect - 4.00%, my post
• Presidential - 3.87% (min $5K, only first $35K receives this rate), offers checking, my post
• CapitalOne/Costco - 3.81% (min $5K, Costco members only, $25 deal for exec. members)
• HSBC - 3.75%, offers checking, my post ($50/$35 deals)
• MyBankingDirect - 3.75% (min $5K), my post ($25 deal)
• UmbrellaBank.com - 3.75% (min $1K), offers checking, my post
• UFB Direct - 3.70%, offers checking, my post
• Corus Bank - 3.56% (min $10K to open)
• MetLife Bank - 3.50% (min $5K), my post ($50 deal)
• GMAC Bank - 3.45% (min $500), offers checking
• ING Direct - 3.40%, my post ($25 deal)
• ebank - 3.30% ($1K min, rate for $10-25K balance), offers checking
• NetBank - 3.04% ($500 min), requires checking, my post ($175 deal)

6-Month CDs:

• Corus Bank - 4.09% (min $10K)
• GMAC Bank - 4.05% (min $500)
• UmbrellaBank.com - 4.05% (min $1K)
• ebank - 4.00% (min $1K)
• NetBank - 3.80% (min $1K), my post ($25 CD deal)

12-Month CDs:

• Corus Bank - 4.36% (min $10K)
• GMAC Bank - 4.30% (min $500)
• ebank - 4.25% (min $1K)
• MetLife Bank - 4.25% ($1K min)
• ING Direct - 4.20%
• NetBank - 4.15% (min $1K), my post ($25 CD deal)
• UmbrellaBank.com - 4.10% (min $1K)

18-Month CDs:

• CapitalOne/Costco - 4.40% (min $5K, Costco members only)

Technorati Tags: banks, banking, money

Credit Union CD Specials - Sept 24th read and submit comments for this post

I've found several CD specials from credit unions around the country. Every week or so I'll try to put together a list of the latest deals. Last week, I listed both short term and long term CD deals at both local banks and credit unions.

You usually have to live near a branch to get one of these high interest CDs. I've included the city and state of the main branch so you can quickly determine if the deal is applicable to you. Note, many have branches in other cities, and credit unions may have other membership requirements besides location.

I found a couple credit unions that had special 5% CDs. The best is still at the Portland Teachers Credit Union. I posted about this 2 weeks ago. It's a 5-month CD with a 5.12% APY. The best I found today is a 5% 17-month CD. The only problem is that it requires a $50K minimum deposit. I found another 5% CD at Golden One Credit Union with only a $1000 minimum. However, its term is much longer at 35 months.

Here's the list of the new CD specials as of September 24, 2005:

CDs Under One Year:

• 3.75% - 6m, $5K min, San Francisco/Los Angeles, California, Provident Credit Union
• 3.79% - 6m, $1K min, San Francisco, California, Patelco Credit Union (not NCUA insured) (easy membership)
• 3.80% - 8m, $10K min, Santa Rosa/San Francisco, California, Redwood Credit Union (many other rate/min's)
• 4.40% - 11m, $5K min, Marlborough, Massachusetts, Digital Federal Credit Union (easy membership)

One Year and Over CDs:

• 4.20% - 14m, $10K min, Santa Rosa/San Francisco, California, Redwood Credit Union (with bump option) (many other rate/min's)
• 4.23% - 12m, $1K min, San Francisco, California, Patelco Credit Union (not NCUA insured) (easy membership)
• 4.40% - 12m, $5K min, San Francisco/Los Angeles, California, Provident Credit Union
• 5.00% - 17m, $50K min, Pottstown, Pennsylvania, Diamond Credit Union
• 5.00% - 35m, $1K min, Sacramento, California, Golden One Credit Union

Signup Bonus for Bank of America Checking Account read and submit comments for this post

Bank of America is offering a $50 bonus for opening a MyAccess Checking account. The main drawback of this account is that it requires direct deposit to avoid a $5.95 monthly service charge. Besides this issue, it seems like a good deal. Only $25 is required to open the account and there are no minimum balance requirements. It appears that current Bank of America customers can also take advantage of this deal. This reward incentive expires on 11/30/2005. Here's the promotion page with the official details. This page is linked from BOA's MyAccess Checking page.

This deal was discussed at this Fatwallet thread. It was mentioned that a transfer from an ING Direct account into this account counts as a direct deposit transaction. One transfer per month can satisfy the direct deposit requirement.

Online Bank Transfers and Direct Deposit

There's actually a long thread at Fatwallet that discusses which banks count ACH transfers from ING Direct or other places like PayPal as direct deposits. On page 7 of the thread, a detailed description of direct deposit and ACH was posted. ACH transfers have codes which classify the type of transfer. One common code is PPD (Prearranged Payment and Deposits) which is the code for both direct deposits and transfers like what's done using ING Direct. So banks may not be able to tell the difference. However, I suppose banks could black lists financial instutitions like ING Direct, and prevent transfers from them to count as direct deposits.

I guess the worst that could happen to you is that the bank wouldn't consider the ING Direct's transfer as direct deposit and would charge you a monthly fee. In that case, you can always close the account. Just make sure there's not a high fee for closing accounts.

ING Direct Raises Savings Account Rate read and submit comments for this post

ING Direct made a modest increase to its savings rate early this morning. The APY went from 3.30% to 3.40%. After EmigrantDirect raised its savings account rate from 3.5% to 4.0% last Tuesday, I had been predicting some increase at ING this week. However, I thought ING would at least raise the rate to 3.5%. I'm surprised they raised it to only 3.40%.

ING Direct's Interest Rate Trend

One thing that I've noticed this year by charting out ING's interest rate changes is that ING tends to increase their savings account rate in multiple small increments. For example, in late July, ING's savings rate went from 3.0% to 3.15%. Then a few weeks later, it went to 3.30%. EmigrantDirect, on the other hand, just made one increase in late July from 3.25% to 3.50%. This trend seems to be continuing.

I suspect EmigrantDirect will not change its savings rate for the rest of the year. ING will likely do two or more small increases. Perhaps ING is playing it safe. If the economy starts having problems due to the hurricanes or other reasons and the Fed ends its tightening policy, ING can just stop the increases. If the economy turns out okay and the Fed continues to raise rates, ING can also continue to raise the savings account rate.

By the end of the year, I wouldn't be surprised to see ING at around 3.70%. But I don't see ING coming close to EmigrantDirect's 4.0% rate any time soon.

$50 Signup Bonus for E*Trade Bank's Money Market Account read and submit comments for this post

In addition to the $50 signup bonus, E*Trade is offering 3.65% APY for the first 3 months. The 3.65% introductory rate is publicly being advertised from E*Trade's bank website. However, the $50 bonus is not. The bonus link is from this Fatwallet thread. Apparently, E*Trade is offering this deal by email to certain people. So like HSBC, I don't know if this is available to all. If you join using the link it seems likely you may get the bonus, but it may not be guaranteed. Here's the link to the bonus page.

This is a pretty good deal, but there are some catches. First, E*Trade's money market account doesn't have competitive rates. After the 3-month intro rate, the APY goes down to only 2.20% for balances under $50K. To get 3.0% requires balances over $50K. That's not even close to EmigrantDirect's savings account.

The required minimum deposit is only $100. However, to avoid a $10 monthy fee requires a $1K money market balance or $5K in combined E*Trade Bank deposits. This offer ends Novermber 15, 2005. For the official rules refer to the small print at the bottom of the bonus page. For details on the money market account, refer to their money market account details page.

I see two things that might make E*Trade's Money Market account worthwhile. First, E*Trade says it won't charge fees for withdrawing funds from any ATM, and it will refund fees charged by the ATM operators. So if you are a heavy user of ATMs, this might be worth it. Second, their CD rates are competitive. Their 6-month CD has an APY of 3.91% and their 1-year CD has an APY of 4.23% which is higher than ING Direct's one year CD. The CD minimum deposit requirement is a reasonable $1K.

College Checking Accounts read and submit comments for this post

Wachovia has a deal to attract the college students. It's offering free checking plus a special signup bonus marketed especially for students. The bonus includes 15 free songs from the iTunes music store and requires a $50 minimum initial deposit made by 9/30/05.

The free checking account has no monthly service fee, minimum balance or direct deposit requirements. It also includes a free check card and free online banking will BillPay.

Probably the number one feature that students require is easy and free access to ATMs. Wachovia has what it calls College Connections to help with this. By linking the student's account with the parents' Wachovia checking account, Wachovia will waive its fees for four withdrawals and other transactions per month at other banks' ATMs.

This article from The Daily Free Press describes the competition among four banks with branches on Boston University's campus. Bank of America has the largest presence and the advantage of the most ATMs. It even has a 5 year free checking program for students.

The smaller and local Century Bank tries to compete with personalized services. It also has a checking account, which unlike Bank of America, is free without any limitations. It may not have as many ATMs, but they are strategically located on the campus, and Century Bank allows 4 free monthly transactions at other banks' ATMs. And like Wachovia, the campus branches have a signup bonus, but instead of iTunes, it's $25 cash.

Another small local bank, Sovereign Bank, has similar deals as Century Bank. One additional service is free incoming domestic wire transfers.

Finally, the article mentioned Citizens Bank. It's a bank more like Bank of America with free checking accounts that have some limitations.

I'm surprised the article didn't mention anything about Boston University's Credit Union. Just like any other credit unions, university credit unions often have better deals than the banks. However, I was only able to find the University Credit Union which seems to only serve employees of Boston University. There's no mention of students.

Challengers to EmigrantDirect read and submit comments for this post

I thought we would be seeing more responses from other online banks after EmigrantDirect made the bold move to increase its savings account to 4%. But yesterday was pretty quiet. Any day now I still expect ING to raise its rates to at least 3.5%. Perhaps today we'll see something. However, with the major hurricane in the Gulf, the banks may decide to postpone any major rate changes.

I only found two online banks that have made any increases in their rates in the last week. As I reported last Saturday, UmbrellaBank raised its money market rate from 3.65% to 3.75%.

MyBankingDirect also made a change that I missed until today. It has been offering its 3.75% money market account for a while now, and it still has that rate. The new offering is a 4-month CD with a 4% APY. The initial minimum deposit is $2.5K. This offer was actually before EmigrantDirect's latest increase. I'm not sure exactly when this CD special started. Google cached the page with the offer last Saturday. I think its previous special was a 3.9% APY 9-month CD.

For more information about MyBankingDirect and its $25 signup bonus, refer to this previous post.

EmigrantDirect vs the Average Bank read and submit comments for this post

I thought it would be interesting to see how EmigrantDirect's new 4.0% savings rate compares to rates of some of the big Brick-and-Mortar banks. Since they don't even come close in their savings account rates, I chose to see if they have any CDs equal to or over 4% APY. Here are the results of my little comparison. All rates are in APY and are based for the state of Texas:

• Bank of America, 2.75%, 60 month CD
• Bank One, 3.55%, 36 month CD
• Compass Bank, 3.65%, 36 month CD
• Wachovia, 4.05%, 5 year CD (for balances over $100K)
• CapitalOne, 4.00%, 24 month CD
• Wells Fargo, 4.00%, 15 month CD special
• Bankrate.com listed average for 2 year CD, 3.86%

The closest competitor is Wells Fargo with a special CD of a moderate-length 15-month term that's equal to EmigrantDirect's current savings rate. Bank of America had the worst rate of only 2.75%. I hope no one is investing in those CDs. Bankrate.com listed the national average for 2-year CDs as 3.86% APY.

Comparing CDs with a savings account isn't exactly a fair comparison. Nevertheless, it does help to show how great EmigrantDirect's savings account rate is.

Highest Cash Back Credit Card from EmigrantDirect? read and submit comments for this post

EmigrantDirect sent out an email last night to its customers not only informing them of its 4.00% APY rate increase but also of a new credit card that it says it'll be offering by the end of the year.

Here is a section of the email:

We are also pleased to announce the upcoming launch of a no-fee credit card from EmigrantDirect offering the highest cash back rebate in the country on all your purchases - from the first dollar spent on your card to the very last. This revolutionary credit card featuring platinum-level benefits will be offered only to EmigrantDirect customers and will be available before yearend.

This looks like another reason to join EmigrantDirect. I wonder how high the cash back rate will be. This Fatwallet thread discusses an August E.D. survey about such a cash back credit card. Apparently, E.D. was tossing around the idea of a 1.25% cash back card. As was mentioned in the thread, if they want to stand out like they stand out on savings rate, they need to offer at least 2%. One of the highest cash back cards now is Fidelity MasterCard which has a flat 1.5% cash back. Also, there are several 5%/1% cash back cards which reward you 5% back on everyday purchases and 1% on all others (This Fatwallet thread summarizes many of these).

Are Credit Card Cash Back Rebates Taxable?

Also mentioned in that thread was the worry that if E.D. deposits the rebates into your savings account, it'll consider it interest which is taxable as income. This is how banks handle any type of signup bonus. A common question is if cash back rewards are taxable. According to this IRS page it should not be. But there is still some uncertainty since it doesn't specifically mention credit cards.

EmigrantDirect Savings Now 4.00% read and submit comments for this post

Update: EmigrantDirect Savings Account rate as of 9/10/09 is 1.30% APY. A higher rate is available at Emigrant Bank's other internet bank, DollarSavingsDirect (see post).

EmigrantDirect increased the APY on its AmericanDream Savings Account from 3.5% to 4.0% today. It comes on the same day that the Fed raised the funds rate a quarter-percent to 3.75%.

I had thought ED might make the big jump from 3.5% to 4.0%. Early in the year its 3.0% rate was way ahead of most other banks for several months. At the time, ING Direct's savings rate was only 2.35%. This allowed ED to gain the reputation as America's highest rate. However, for the last few months, it started to lag many other banks like HSBC which also had a savings account without a minimum balance requirement.

As can be seen from this chart, ED has made fewer rate increases this year compared to ING or HSBC. Instead of incrementally increasing the rate, it just made a quarter-percent increase in March and in July. So I would guess it's likely ED will stick with this 4.0% rate for the rest of the year.

Now the question is how will the other banks respond? My guess is that ING Direct will raise its rate this week to 3.5%. I don't know about HSBC. During most of this year, HSBC has lagged ED. So I don't think HSBC feels compelled to be even or ahead of ED. Its no-minimum 3.75% is still very competitive.

Information on EmigrantDirect

Here are some of my EmigrantDirect related posts which may be useful if you're deciding whether to join.

• Rate comparison between EmigrantDirect, ING Direct, and HSBC
• Credit card bill payment directly from EmigrantDirect
• Speed of transferring money out of EmigrantDirect
• EmigrantDirect's $1000 gifts to members affected by Katrina
• My experience with opening an account at EmigrantDirect

More Talk About HSBC's OnlineSavings Bonus read and submit comments for this post

There have been more discussions at several forums about the HSBC's signup bonus for its OnlineSavings account. Seems like some people are receiving HSBC mail with information about this signup bonus. This current bonus is for $25. The previous bonus which I had previously mentioned was for $35.

The only problem is that this bonus doesn't seem to be for the general public. I called HSBC today and confirmed this. I was told the same thing that I was told by an email earlier this month: "Qualifying customers were offered a promotion code to apply for the Online Savings account."

A link is provided at this Fatwallet thread that takes you to the HSBC page describing this promotion. However, this HSBC promo page is not linked anywhere else on HSBC's site so it doesn't seem to be publicly available. It's possible that signing up at this promo page will result in a bonus. But there's no guarantee.

Note, HSBC's $50 Smart Package signup bonus is still available and is open to all. It's advertised at HSBC's Personal Service page. Unfortunately, this has more requirements than the OnlineSavings promo. I described the details of this deal in this previous post.

Even if you don't get the signup bonus, it's still worthwhile to join just for the high 3.75% rate. But I have to admit, I haven't signed up yet. I'm still hoping that there will be a publicly available bonus.

To see how HSBC's rate has compared to the savings rates of ING Direct and EmigrantDirect, refer to my chart that I created earlier this month. I discussed this comparison in this previous post.

Checking Account Bonuses for Chicago Area read and submit comments for this post

For those in the Chicago area, there are some good deals for opening a checking account with direct deposit. Here are three of them:

• Edens Bank - $75 Bonus
• North Community Bank - $75 Bonus
• GuarantyBank - $50 Bonus (branches also in Michigan, Minnesota, Ohio, Wisconsin)

Note, both Edens Bank and North Community Bank have some decent CD specials including 4.00% APY for a 12-month CD.

4% Money Market Deal for Northeasterners read and submit comments for this post

Eastern Bank has a special money market deal. They're offering 4.00% APY on their Maximum Money Market Account (MMMA) that's guaranteed through 3/31/06. Here are the catches:

• Required to open a Select Checking first
• Select Checking requires a combined balance of $5K to avoid $18 per month service charge
• Requires at least 3 Select Checking transacations per statement cycle to earn 4.00%
• The MMMA requires a $10K balance to earn 4.00%. Under $10K earns 0.50%.

Refer to their special offers page for the official details.

You can submit an application request online. However, they are only accepting applications from individuals residing in the following New England states: Massachusetts, Connecticut, Rhode Island, Maine, New Hampshire and Vermont.

Stock Market CDs read and submit comments for this post

A new type of CD is growing in popularity. It gives you a percentage of the gains of a market benchmark like the SP 500 stock index, and it guarantees that you won't lose principal even in a bear market. Some providers of these stock market index CDs include:

• EverBank (MarketSafe CD)
• State Farm (MarketRate CD)
• Charles Schwab (Index Rewards annuities)

There's an article (subscription req'd) on these index CDs in October's Money Magazine. The writer's opinion is that you would be better off with putting your money into a 50%-50% mix of stock and bond funds. The downsides that he mentioned included:

• limits your upside compared to the market
• early withdrawal penalties
• taxed as income not as capital gains
• stock dividends not usually included in returns
• tend to be very complex

It seems like Everbank has been simplifying their index CD products. The article mentioned that EverBank's MarketSafe CD uses an average of the closing price of the SP index every six months over the CD's 5-year term to compute the gain. However, EverBank's latest 5 year MarketSafe CD seems to be much simpler. The 5-year return is described as follows:

Earn the greater of:
a) 75% of the S&P 500 upside from Initial to Final Value Date plus your Principal Investment
b) 100% of Principal (FDIC insured)

That Money article compares these index CDs with stocks and bonds. For longterm investing, like for retirement, this may be a fair comparison. However, if you intend to use the money in around 5 years from now, stocks and bonds may be too risky.

This index CD could be a better choice than a standard 5-year CD. EverBank provides a history of hypothetical returns from this CD. Unlike the SP index, it never has negative returns. In bull markets, the returns are only 75% of the SP index. But this often far exceeded the returns of standard CDs (the highest was 165% over 5 years or about 21% annually.) So if you want something more exciting than a standard CD but don't want to risk your principal, these CDs may not be too bad.

For more information on these index CDs, refer to this EverBank MarketSafe CD Fatwallet thread and this State Farm MarketRate CD thread.

Banking Deal Summary for Sept 17th read and submit comments for this post

I only added one new bank to the list for this week. It's NetBank. The main reason I added NetBank was due to it's high $175 signup bonus deals. I first posted about this deal in August and it's still active. It may not be a good longterm choice for an online bank. Its rates are a bit low, and there are some extra hoops to worry about with their accounts. A commenter filled me in on some of these on this NetBank post.

For the banks that I've previously listed, there were some increases as well as some decreases in the rates. For savings and money market accounts, UmbrellaBank raised its interest rates from 3.65% to 3.75% APY. Corus Bank seems to tweak its rates weekly. Their rate went form 3.49% to 3.51%. Perhaps the marketers wanted to be ahead of EmigrantDirect.

On the CDs, the 6-month rates stayed the same except for a small decrease in UmbrellaBank's rate from 4.05% to 4.00%. There were more changes in the 1-year CDs. ING Direct raised its 1-year CD from 4.15% to 4.20%. GMAC also did a 0.05% increase (from 4.20% to 4.25%). However, two banks made a bigger reduction in rates. Corus went from 4.47% to 4.35%. Also, UmbrellaBank went from 4.25% to 4.10%. Perhaps UmbrellaBank decided to raise its money market rate at the expense of the short-term CDs.

The rates listed below are in APY. No minimum balances are required unless noted. Previous weekly summaries are available for Sept 10th, Sept 4th, Aug 28th, Aug 20th, and Aug 13th.

As of September 17, 2005

Savings/Money Market Accounts:

• Presidential - 3.87% (min $5K, only first $35K receives this rate), offers checking, my post
• CapitalOne/Costco - 3.81% (min $5K, Costco members only, $25 deal for exec. members)
• HSBC - 3.75%, offers checking, my post ($50 deal)
• MyBankingDirect - 3.75% (min $5K), my post ($25 deal)
• UmbrellaBank.com - 3.75% (min $1K), offers checking, my post
• UFB Direct - 3.70%, offers checking, my post
• Corus Bank - 3.51% (min $10K to open)
• EmigrantDirect - 3.50%, my post
• MetLife Bank - 3.50% (min $5K), my post ($50 deal)
• GMAC Bank - 3.45% (min $500), offers checking
• ING Direct - 3.30%, my post ($25 deal)
• ebank - 3.30% ($1K min, rate for $10-25K balance), offers checking
• NetBank - 3.04% ($500 min), requires checking, my post ($175 deal)

6-Month CDs:

• ebank - 4.25% (min $1K)
• Corus Bank - 4.09% (min $10K)
• GMAC Bank - 4.00% (min $500)
• UmbrellaBank.com - 4.00% (min $1K)
• NetBank - 3.80% (min $1K), my post ($25 CD deal)

12-Month CDs:

• ebank - 4.35% (min $1K)
• Corus Bank - 4.35% (min $10K)
• GMAC Bank - 4.25% (min $500)
• MetLife Bank - 4.25% ($1K min)
• ING Direct - 4.20%
• UmbrellaBank.com - 4.10% (min $1K)
• NetBank - 4.05% (min $1K), my post ($25 CD deal)

16-Month CDs:

• Digital Credit Union - 5.00% (min $5K)

18-Month CDs:

• CapitalOne/Costco - 4.40% (min $5K, Costco members only)

Technorati Tags: banks, banking, money

Local Banks Are Sometimes Better read and submit comments for this post

My previous post shows how much better online banks can be over your local banks. However, there are exceptions. Here's one. It's a bank based in Taylor Texas (about 30 miles northeast of Austin Texas) called City National Bank of Taylor (CNBT).

CNBT's Reward Savings Account has 3.78% APY with no monthy fees and no minimum balance (even better than HSBC!). However, there is a $100 minimum deposit requirement.

CNBT also offers a free checking account that pays 3.45% interest. It claims free checks, elimination of all ATM fees, free imaged checks online, and free online bank to bank transfers (probably using ACH). It does require direct deposit and at least 10 monthly VISA check card point-of-sale transactions. Here are the details.

It looks like CNBT has contracted with FundsXpress to provide online banking. They don't say this on their website, but if you click the link to open a new account application, you're taken to the website under the domain fundsxpress.com.

This seems similar to what EmigrantDirect does (EmigrantDirect is an online unit of Emigrant Savings Bank of New York.) If you notice when you log into your EmigrantDirect account, you'll see the top level domain name ibanking-services.com. This domain is owned my Metavante which provides electronic banking services. It's interesting that ED doesn't mention anything about Metavante. Perhaps they don't want you to know thay they've contracted out the online banking service.

But I don't see a problem with this. The smart local banks like CNBT and Emigrant Savings realize that they can offer their customers a lot more by using online banking services. These services allow the small banks to compete with the big banks like HSBC. It would be interesting to know how much FundsXpress and Metavante charge the banks for their services. I bet it's much less than starting new brick-and-mortar branches.

So keep an eye out for those smart local banks that give you the online banking perks along with the local service.

Beware of Local Banks read and submit comments for this post

Many local banks have high fees and very low deposit interest rates. Here's one example from a Brownsville Texas reporter who compared his local banks with online banks. His conclusion: "Brownsville's banks all stink"

The reporter randomly picked three local banks. The rates of the savings accounts ranged from 0.35% to 0.50%, and all had minimum balance requirements, lots of fees, and other restrictions. The banks included International Bank of Commerce, Laredo National Bank, and Texas State Bank.

The reporter then looked at some online banks like HSBC and ING Direct. Of course with rates as high as 3.75% and no minimum balance requirements, it was easy for him to see the advantage of online banking. He concluded:

Normally I'm all for supporting local businesses, but until our local banks develop a better business model and actually serve customers decently, my advice is to vote with your feet - and your dollars - and earn about 10 times the APY online

Couple of 4-Month 4 Percent CDs read and submit comments for this post

With interest rates expected to rise, it may be a good idea to stick with savings accounts or short term CDs. If a CD rate isn't over 3.75%, you would be better off with a high rate savings account like HSBC's OnlineSavings Account. You won't find many CDs with terms of under 6 months with rates over 3.75%. I did find a couple of 4-month CDs with rates of 4.00% APY.

4.00% APY, 4-month CD, $2.5K minimum deposit

This CD special is offered by The NYCB Family of Community Banks which has branches in New York and and northern New Jersey. According to the FAQs, you can open a CD account over the internet. However, the bank doesn't have the rates of its savings accounts or its standard CDs online. It says to contact your local branch or call their customer service center. So I'm not sure if this would be a good choice for an online bank.

This bank has some additional featured products that are interesting, one of which is a Gift CD. If you open a specific term CD with a required deposit you can choose from a variety of gifts. There are three levels of gifts that seem to range from about $50 value on the low-end, $100 value on the mid-range, and $200 value on the high-end. The problem, however, is that the rates are low and the required deposits are high. For example, to get the high-end digital camera gift requires a $20K deposit for a 4.25% APY, 5 year CD. A 5 year CD with a 4.75% APY would give over $500 more interest over the 5 years. That would pay for at least two of those gifts. In addition to its Gift CDs, it also has All-In-One Banking which requires opening the All-In-One checking combined with savings, money market, or a CD. You then can get a few bonuses such as $50 for starting direct deposit and $25 for online banking with bill payment. A combined minimum balance of $5K is required.

4.01% APY, 4-month CD, $10K minimum deposit

This special CD is offered by World Savings Bank. You can complete and submit an account application form online. For the initial deposit, you'll have to mail in a check. If you have a checking or money market account with them, you can transfer funds from other banks using ACH. They also have branches in several states including California, Florida, Arizona, Colorado, and Texas.

According to this Fatwallet thread, World Savings Bank is also offering a 7-month 4.36% APY CD which is not being advertised on their website. You can apply and set up the account over the phone. Like the 4-month CD, it requires a minimum $10K deposit. Another perk regarding Worlds Savings was mentioned on this thread. If you have over $25K in accounts, you can get a free safe deposit box.

APY vs APR - How Do They Differ? read and submit comments for this post

MyMoneyBlog has the best explanation of APY and APR that I've seen. It can help you understand the difference between a 5.00% APY CD and a 5.00% APR CD. Which is better? If both CDs are compounded once a year, the returns would be the same. ING Direct's CDs are like this. However, if the 5% APR CD compounds monthly, $10K would become $10511.62 at the end of a year (5.12% APY). If the 5% APR CD compounds daily, $10K would become $10,512.67 at the end of the year (5.13% APY). The monthly compounding adds $11.62 over the yearly compounding. Increasing the compounding frequency to daily only adds another $1.05 to the yearly interest.

Will the Fed Raise Interest Rates? read and submit comments for this post

Before Katrina hit, every analyst predicted the Fed would continue with its 0.25% rate increase in its September 20th meeting. But after Katrina, many changed their minds. This September 1st Forbes article reported on the sentiment that Greenspan and company would wait until the November meeting to begin raising rates again. As one analyst put it, "They would look cold-hearted raising rates in September."

The sentiment now seems to have gone back to a rate increase for next Tuesday's meeting. This MSNBC article reports that most economists and analysts now expect the increase. Some still think there's a slim chance that the Fed will pause until November, either out of respect for the Hurricane victims or due to uncertainties regarding its effect on the economy. But with soaring fuel costs, the fear of inflation is expected to prevail in the Fed's decision.

If there is an increase, it'll be interesting to see how the banks respond. My prediction for the end of the month is ING Direct will raise its savings rate to 3.5% and EmigrantDirect will raise its rate to 3.75%.

Paying Credit Cards Using ING Direct or EmigrantDirect read and submit comments for this post

Can you pay credit card bills using your ING Direct Savings Account? How about using your EmigrantDirect Savings Account? That is what I wanted to find out.

ING Direct

ING Direct's FAQ implies the only way to get money out of the savings account is to conduct a transfer at ING's website through one of your linked checking accounts. I've seen it discussed that it's possible to pull money from your ING's savings account by using your ING's account and routing number just like you do with a checking account. I know people at Fatwallet forums and PFBlog have reported being able to do this. The benefit is that you can avoid the delay of going through your linked checking account which can be useful if you need to pay a bill fast.

I wanted to get the official information so I sent ING these two questions:

1. Can I use my savings account to electronically pay my credit card bill? My credit card company can debit an account using the routing and account number.
2. What are the maximum number of withdrawals per month that I can make from my savings account? And what are the maximum number of deposits?

Here's ING's answer to my first question:

The only way to transfer funds into or out of your account is by
transferring them to and from your linked checking account(s) via our
website, our Interactive Phone Service by calling 1-888-464-7868 or by
speaking to a Sales Associate at 1-888-464-0727.

Although you may be able to pull money from your ING account, you are not suppose to do it. I would recommend sticking with ING's rules. You might be okay, but if something goes wrong, it'll be easier to get ING's help. And I have seen problems reported by people such as this Fatwallet member who complained about losing money during an automatic transfer. If there's some mistake when you're making a non-checking-accout-link transfer, it could create more complications in trying to correct the problem. However, it should be noted that the Fatwallet member had played by the rules and was still having a tough time correcting the problem. It's unclear, however, if the root cause of the problem was ING or Bank of America.

EmigrantDirect

I sent EmigrantDirect the same questions. Unlike ING, ED replied with the following:

Yes. You may use the American Dream account to pay your credit card bill.

So this might be another advantage of EmigrantDirect over INGDirect. With ED, you can bypass your checking account and pay your credit card bills directly without worrying about disobeying the rules.

Savings Account Withdrawal Limitations

Before you start paying bills using your EmigrantDirect account, beware that you don't over use this feature. Here's what ED sent to me regarding my second question:

Federal regulations require that no more than six (6) transfers per statement cycle may be made to (1) an account at another bank or financial institution, including your External Account, (2) to another EmigrantDirect account or (3) to a third party by means of a preauthorized or automatic electronic transfer. We reserve the right to close your Account for violation of the above restriction.

ING Direct also had a similar limitation. Here's what ING sent to me:

There are no limits on the number of deposits you can make into the
Orange Savings Account, however we ask that you limit your withdrawals to
6 per month.

I Don't know what would happen if you go past 6 outbound transfers at either bank.

ING Direct vs EmigrantDirect - Response Time read and submit comments for this post

In a previous post I compared the time it took for ING Direct and EmigrantDirect to transfer money into my externally linked checking account. Today I compared the time it took to get an email response from their customer service representatives.

For ED, I sent the questions using its secure message box which is only accessible when you're logged into your ED account. The nice thing about this feature is that it allows you to ask questions specfic to your account. ING does not have this secure message box. You can only send an email to sales@ingdirect.com. For account-specific questions, you have to call ING. So I made sure my question was not account specific.

At 8:30am this morning, I sent the same two questions to both ING and ED. I recieved a response in my email inbox from ING at 9:46am. The response did include answers to my questions. ED was also prompt in its reply. I received answers from them today. However, I can't determine the exact time. Messages received by ED's secure inbox do not have a time stamp. I can only say that the response came by 4:45pm.

So I'll have to call it a tie. Both responses were prompt and gave clear answers to my questions. One of the worries of online banking is not being able to get help. Although my experiment was a very small test, it's good to know they both exceeded my expectations.

Savings Rate Comparison

BTW, refer to this chart to see how the interest rates have compared over the last 9 months between ING Direct's Orange Savings Account and EmigrantDirect's American Dream account (I also include HSBC's OnlineSavings Account).

CD Specials - Terms Over One Year read and submit comments for this post

This is a continuation of yesterday's post of my list of CD promotions from small banks and credit unions. Instead of short term CDs, I'll list the longer term CDs with terms over 1 year. They range in terms of 13 months to 5 years.

As I mentioned before, you usually have to live near a branch to get one of these high interest CDs. I've included the city and state of the main branch so you can quickly determine if the deal is applicable to you. Note, many have branches in other cities, and credit unions may have other membership requirements besides location.

The best deal for longer term CDs is offered by the same credit union that had the best short term deal. It's a CD promo from Garden Savings Federal Credit Union. The APY is 5.38% for a 24 month CD. The credit union's main office is in Parsippany, New Jersey. Looks like its field of membership is primarily related to company affiliation.

As a comparison with national rates, the best 2 year CD listed at Bankrate.com is from Stonebridge Bank with an APY of 4.55%.

13 and 14 month CDs

• 4.37% - 14m, $500 min, Trenton, Illinois, Tempo Bank
• 4.25% - 13m, $2.5K min, Kenton, Ohio, Liberty National Bank
• 4.25% - 13m, $500 min, Gardner, Kansas, Gardner National Bank
• 4.14% - 14m, $2K min, Toledo, Ohio, Glass City Federal CU

15 Month CDs

• 4.57% - ? min, Burlington, Massachusetts, Milestone Federal CU
• 4.20% - $5K min, Madison, Wisconsin, Capitol Bank
• 4.16% - $5K min, Remer, Minnesota, Woodland Bank

18, 19 and 20 month CDs

• 4.50% - 19m, $500 min, Tampa, Florida, Community Bank of Manatee
• 4.30% - 20m, $500 min, Gardner, Kansas, Gardner National Bank
• 4.25% - 18m, $1K min, Wisconsin/Illinois, First Community CU
• 4.14% - 19m, $500 min, Philadelphia, Pennsylvania, National Penn Bank

22, 23, and 24 month CDs

• 5.38% - 24m, $1K min, Parsippany, New Jersey, Garden Savings Federal CU
• 4.39% - 22m, $500 min, Lake Mills, Wisconsin, Bank of Lake Mills
• 4.35% - 23m, $500 min, Greenville, South Carolina, The Palmetto Bank

28 to 36 month CDs

• 4.55% - 36m, $1K min, Waterloo, Illinois, Commercial State Bank
• 4.49% - 28m, $500 min, Wessington Springs, South Dakota, American Bank & Trust

60 month CDs

• 5.25% - has bump up feature, $10K min, Fargo, North Dakota, Town & Country CU
• 4.58% - $1K min, Springfield, Illinois, Bank of Springfield (Not a great rate, but the name reminded me of the Simpsons :-)

Note, all rates were advertised on the institutions' websites as of Sept 15, 2005. For my list of national short-term CD deals, refer to my Deal Summary for Sept 10th.

Short-Term CD Specials read and submit comments for this post

Local banks and credit unions often have CD specials that are very good deals. These special CDs often have odd terms like 7 months or 11 months. Also, they tend to have higher minimum deposit requirements than the standard CDs. Unfortunately, you usually have to live near a branch.

After a lot of web searching, I've put together a list of high rate short-term CDs from banks and credit unions around the country. They range in terms from 6 months to 12 months. All of them have rates of 4% or higher. To help you quickly determine if these are applicable to you, I've included a city and state. Most have branches in many other cities. For ease of reading, I just mentioned one. For the credit unions, other criteria besides location may factor into membership eligibility.

The best deal is a 4.25% 6 month CD special offered by Garden Savings Federal Credit Union. Its main office is in Parsippany, New Jersey. Looks like its field of membership is primarily related to company affiliation.

As a comparison with national rates, the best 6 month CD listed at Bankrate.com is from Corus Bank with an APY of 4.09%.

6, 7 and 8 month CDs:

• 4.25% - 6m, $1K min, Parsippany, New Jersey, Garden Savings Federal CU
• 4.05% - 7m, $5K min - Jamestown, North Dakota, First Community Credit Union
• 4.03% - 7m, $2.5K min, Trenton, Illinois, Tempo Bank
• 4.00% - 7m, $500 min, Basehor, Kansas, First State Bank & Trust
• 4.00% - 8m, $5K min, Appleton, Wisconsin, First National Bank Fox Valley

9 and 10 month CDs:

• 4.23% - 10m, $500 min, Harrisburg, Pennsylvania, Belco Community Credit Union
• 4.10% - 9m, $5K min, Huntington, Indiana, Bippus State Bank
• 4.00% - 10m, $1K min, Madison, Wisconsin, Capitol Bank

11 and 12 month CDs

• 4.25% - 11m, $500 min, Wessington Springs, South Dakota, American Bank & Trust
• 4.25% - 11m, $1K min, Wooster, Ohio, Wayne Savings
• 4.25% - 12m, $500 min, Arizona/South Florida, AmTrust Bank
• 4.25% - 12m, $500 min, Lyons, Nebraska, First National Bank Northeast

Note, all rates are in APY and were advertised on the institutions' websites as of Sept 14, 2005. For my list of national short-term CD deals, refer to my Deal Summary for Sept 10th.

M&T Bank Cash Bonus read and submit comments for this post

M&T Bank is offering a bonus when you open a checking account and activate direct deposit. Opening its Select Checking account qualifies for a $100 bonus. Opening any other checking account qualifies for a $25 bonus.

The main catch is the high minimum balance requirements for the Select account. To avoid a $14 monthly fee requires a $5K balance in the checking or a combined $10K balance in all accounts. M&T provides a useful table comparing the checking accounts.

You can initiate the opening of a deposit account online. However, you must be a resident of either New York, Maryland, Pennsylvania, Washington, D.C., Virginia, West Virginia or Delaware.

Wells Fargo Featured CDs read and submit comments for this post

Wells Fargo Bank is offering CD specials which it calls Featured CDs in several states. The rates are not the best, but they are respectable. These are not currently available in all states, and the rates and terms differ by state. All require an initial deposit of $10K. Here is a sampling of these Featured CDs:

Wells Fargo of Florida, Illinois, Kansas, New York, and Virgina have Featured CDs with APYs of 3.80% (10 months), 4.00% (15 months) and 4.15% (30 months).

Colorado's Featured CDs have APYs of 3.60% (7 months) and 3.80% (15 months).

Texas Well Fargo has the best deal with APYs of 3.75% (7 months), 4.00% (15 months), and 4.40% (37 months).

New ING Direct Security Feature read and submit comments for this post

ING Direct is adding a new login feature called PIN Guard that allows a user to enter the PIN number with a mouse instead of typing the PIN into the form box. A graphical keypad will be shown on the login page.

The advantage of this system is that it reduces the risk of having your PIN number stolen by keylogging software. Keylogging software can record what you type and email it to the outside. Keyloggers could be part of spyware or viruses and be used by criminals to steal account numbers.

This PIN Guard feature is similar to HSBC's Bill Pay Security Key.

Keylogging software targeted against these systems could still potentially break this feature. However, it should definitely make it more difficult. Also, if you want to make it even more difficult (or are very paranoid), do some fake clicks (outside the keypad) as you enter the numbers. This would make it even harder for criminals to decode your number from the keylogging software records.

As I mentioned in yesterday's post, ING Direct's extra question that varies with each login doesn't provide much extra security. I'm glad ING is adding PIN Guard, and I hope other banks follow along.

More Adjustable Rate CDs read and submit comments for this post

Compass Bank offers its own version of adjustable rate CDs which it calls Option CDs. As I mentioned in this previous post, it can be a tough decision to decide if adjustable rate CDs make more sense than a fixed term CD. The initial APY of an adjustable rate CD is often anywhere from 0.25% to 0.75% lower than the corresponding fixed rate CD. In a rising interest rate environment, it may make sense to settle for the lower initial rate in exchange for the option to bump up your rate in the future.

Compass Bank makes this decision easy, at least in Texas (rates in other states may be different). The Option CDs actually have higher interest rates than the fixed rate CDs.

For example, its 24 month fixed rate CD is 3.50% APY. The 24 month Option CD is 4.10% APY. Not only can you request one rate bump during the term, but also you can make one additional deposit to your CD.

The 3, 4, and 5 year fixed rate CDs APYs are 3.65%, 4.30%, and 4.35%. The corresponding Option CDs are 4.15%, 4.20% and 4.25%. Only the 4 and 5 year fixed term CDs offer slightly higher interest rates than the corresponding Option CDs. These 36, 48, and 60 month Option CDs have the additional benefit of two rate bumps and two additional deposits. So even with the slightly lower interest rate, this extra flexiblity would likely be worthwhile.

Although these Option Certificates of Deposits look attractive, as I mentioned in the previous post, there's no way to know how these rates will change. Even if interest rates overall go up, there's no guarantee that the Option rates will go up. Since Option rates are currently very high compared to the fixed rate CDs, they could remain unchanged for a long time.

Slight Rise in ING Direct CD Rates read and submit comments for this post

ING Direct slightly increased its rates on all of its CDs. The new one year CD is now 4.20% APY (up from 4.15%). The new CD rates for 2, 3, 4 and 5 years are now: 4.30%, 4.40%, 4.40%, and 4.50%. Previously, the rates were 4.20%, 4.30%, 4.35%, and 4.40%. These new rates are still lower than ING's CD rates at the end of August. At that time 2 through 5 year CD rates were 4.40%, 4.45%, 4.50%, and 4.60%.

There is still not much difference between the interest rate of a 1 year CD and a 5 year CD (0.30% difference). So there's not much to be gained by committing to a longer term CD.

Online Banking and Phishing Scams read and submit comments for this post

This AP article reports on a private investigation into the workings of an internet thief who used phishing techniques to hijack online bank accounts and to steal credit card numbers.

In one example of the work of this cybercriminal, official-looking emails were routed through a computer in Macedonia. These fake emails instructed users to visit a web page to confirm details about their bank accounts. The web page that looked like the official bank's page was being hosted on a Kenyon College computer that had been hacked into. Once users submitted their information, the page would email the information to the thief.

In the sidebar of the article, several tips are provided to avoid these kinds of scams. I've mentioned several of these at this previous post.

What Happens If They Get You?

Many banks with online banking will not hold you liable if you're a victim of online bank fraud if you take due diligence. For example, here's Bank of America's Online Banking Guarantee. It guarantees $0 liability for any unauthorized activity. However, they list several responsibilities of the customer including notifying the bank within 60 days for unauthorized transactions.

Bank of America also is developing a method called SiteKey to reduce the risk of phishing scams. This method uses secret pictures or questions known as SiteKeys that are only known by the bank and the user. These SiteKeys are presented to the user after the user enters his ID but before he enters his password. If the user doesn't see the SiteKey after he enters his ID, he knows not to give his password.

ING Direct does a very simple version of this SiteKey method by including a user-specific question with the account number and password submission. This question will vary from zip code, to pieces of the user's social security number, to date of birth. The problem with this is that a thief could have access to all of this information. The birthdays and zip codes are easily available.

More Searching for 5 Percent CDs read and submit comments for this post

I found several credit unions with certificate deposits with rates of over 5%. However, these CD specials are often connected with some special restrictions and requirements. Also, these credit unions all have fairly restricted membership eligibility so you most likely would have to live near a branch.

10% CD Special?

The Guardian Credit Union offers a one year 10% CD. Of course there are restrictions and requirements. First, the maximum deposit allowed is $2500 (minimum $500). Also, it requires the opening of the checking account with direct deposit. So you can think of this as a new account bonus. For $2500, the extra 6% interest would be equal to a bonus of about $150. The credit union's field of membership includes many of those in Alabama.

5.12% 5-month CD

Portland Teachers Credit Union has this special 5-month CD paying 5.12% APY. The minimum deposit requirement is $5K and the maximum is $50K. If you deposit $50K, you'll get about $280 more than you would if you had put it into HSBC's 3.75% money market account (assuming no rate changes). The credit union's field of membership includes many of those in Oregon.

5.10% 6-month CD

US Premier Federal Credit Union has a special 6-month 5.10% CD. The maximum deposit is only $5K. So you would gain only about $34 over a HSBC 3.75% money market account. This has an unique age reguirement. It's only offered to those 22 years of age and under. The credit union has its headquarters in Alexandria, Virginia with branches in Washington DC. Its field of membership includes many organizations and federal employees.

You can also get a no-restriction 5.10% CD from this credit union, however, it has a term of 5 years. There's only a $1K minimum deposit requirement.

5.26% 5 year CD

South Carolina Federal Credit Union offers several high rate CDs with terms of 3, 4, and 5 years. For deposits of over $50K, the 3, 4, 5 year rates are 5.01%, 5.11%, and 5.26%. For deposits of over $500, the 3, 4, 5 year rates are 4.75%, 4.85%, and 5.00%. The credit union's field of membership is primarily limited to those in South Carolina.

Other 5 percent CDs are mentioned in my previous posts of Sept 10th, Sept 3rd, Sept 1st, and Aug 24th.

Checking Account Deals read and submit comments for this post

As I mentioned in a previous post, USAA Bank offers a great free checking account. Another good choice is Compass Bank. Like USAA, Compass Bank has these features:

• No minimum balance requirements or monthly maintenance fees
• No direct deposit requirement
• Free use of any bank's ATMs with rebates of other banks' ATM fees
• Free checks for life of account

Compass Bank goes beyond USAA in that they claim unlimited free use of any bank's ATM and unlimited rebates of other banks' ATM fees. USAA Bank offers the first 10 non-USAA ATM withdrawals for free per statement cycle ($1 each after that). For rebating other banks' ATM fees, it rebates up to $15 per account per statement cycle.

Compass Bank has a table to compare its checking account with other common banks. The table for Compass Banks in Texas is here. Out of six services listed, most banks like Bank One, Chase, Wells Fargo, and Bank of America only offer one. Wachovia has 2 of the 6 and Washington Mutual has 3 of the 6. Different banks are compared for other states (Alabama, Arizona, Colorado, Florida, and New Mexico).

Banking Deal Summary for Sept 10th read and submit comments for this post

I've added three new banks to the list. First, MetLife Bank is now included since it has raised its money market rate to 3.5% APY. MetLife also has a competitive 1 year CD rate of 4.25%.

The second bank that I added is CapitalOne. However, the high rates only apply for Costco members. The money market account has the very high rate of 3.81%. Also, it offers a 18-month CD with APY of 4.40%. Non-Costco members are only offered a 3.45% APY money market and a 18-month CD of only 3.90%.

The third bank that I added is ebank. The primary reason for ebank's inclusion is for its 6-month CD of 4.25% APY. The 12-month CD is also competitive at 4.35%. However, the money market rate is not too great. For balances between 10K and 25K, the rate is only 3.30% APY.

For the banks that I've previously listed, rates stayed pretty much the same. There were two minor exceptions. Corus Bank's money market rate slightly declined from 4.56% to 4.49%. Its 12-month CD also had a slight decline from 4.52% to 4.47% APY. On the other hand, GMAC Bank incresed its 6-month CD from 3.95% to 4.00% and its 12-month CD from 4.07% to 4.20%.

The rates listed below are in APY. No minimum balances are required unless noted. Previous weekly summaries are available for Sept 4th, Aug 28th, Aug 20th, and Aug 13th.

As of September 10, 2005

Savings Accounts:

• Presidential - 3.87% (min $5K, only first $35K receives this rate), offers checking, my post
• CapitalOne/Costco - 3.81% (min $5K, Costco members only, $25 deal for exec. members)
• HSBC - 3.75%, offers checking, my post ($50 deal)
• MyBankingDirect - 3.75% (min $5K), my post ($25 deal)
• UFB Direct - 3.70%, offers checking, my post
• UmbrellaBank.com - 3.65% (min $1K), offers checking, my post
• EmigrantDirect - 3.50%, my post
• MetLife Bank - 3.50% (min $5K), my post ($50 deal)
• Corus Bank - 3.49% (min $10K to open)
• GMAC Bank - 3.45% (min $500), offers checking
• ING Direct - 3.30%, my post ($25 deal)
• ebank - 3.30% ($1K min, rate for $10-25K balance), offers checking

6-Month CDs:

• ebank - 4.25% (min $1K)
• Corus Bank - 4.09% (min $10K)
• UmbrellaBank.com - 4.05% (min $1K)
• GMAC Bank - 4.00% (min $500)

12-Month CDs:

• Corus Bank - 4.47% (min $10K)
• ebank - 4.35% (min $1K)
• UmbrellaBank.com - 4.25% (min $1K)
• MetLife Bank - 4.25% ($1K min)
• GMAC Bank - 4.20% (min $500)
• ING Direct - 4.15%

16-Month CDs:

• Digital Credit Union - 5.00% (min $5K)

18-Month CDs:

• CapitalOne/Costco - 4.40% (min $5K, Costco members only)

Technorati Tags: banks, banking, money

Adjustable Rate CDs read and submit comments for this post

If you want the high rate of a long term CD but are worried about rising interest rates, adustable rate CDs may be a good alternative. USAA Bank has adjustable rate CDs (ARC) with interest rates about 0.25% under the fixed rate CDs. With these CDs you have the option to request a one-time adjustment to the new rate up to 2% higher.

USAA ARC CD is similar to CapitalOne's No Regrets CD. At this time, CapitalOne's 5 year No Regrets CD has a much lower interest rate of 4.03% APY. USAA's equivalent is 4.74% APY. Another advantage of USAA is that the minimum is only $1K vs. CapitalOne's minimum of $5K.

What I don't like about CapitalOne's No Regrets CDs is that you don't know how well these CDs will compare with the fixed rate CDs. Rates may go up, but the rates on the No Regrets CDs may rise less. Currently, CapitalOne's 5 year fixed rate CD is 4.50%, almost half a percent higher than the corresponding No Regrets CD. On the other hand, USAA's adjustable rate CDs are pegged to be 0.25% under the standard rates.

Finally, would a saver be better off with a standard CD or an adjustable one? Also, there's the option to break a standard CD when there is a large increase in interest rates. It would cost you a penalty, but it may cost you less than a couple of years of lower interest. Then there's the option to stick with shorteer term CDs or savings accounts. When longterm CD rates finally rise, you can then lock in the higher rates. Trying to maximize deposit rates for money that's not needed for several years is not easy especially when interest rates are expected to rise. A CD caculator tool that can compare these different options would be useful. I haven't seen any online tool like this.

Refer to my previous post for more info on USAA Bank.

USAA Bank - The Willy Wonka of Banks read and submit comments for this post

USAA Bank sort of reminds me of Willy Wonka's chocolate factory in that it has a grand reputation but is somewhat hidden from the general public. Visit its home page, and it appears only certain people can join (with specific military affiliation). And if you're not a member, you can't even see the banks's savings rates or specific features of its accounts. You have to log in to see those details.

What's not apparent from USAA's home page is that anybody in the US can join. Mililtary affiliation is not required. The first step to join is to obtain access into their website. This is done by contacting them by phone at 1-800-531-2265.

I've learned about USAA's impressive reputation from this Fatwallet thread and also from reviews at Epinions. So I decided to call and see for myself this wonderous "chocolate factory". Here is my experience with gaining access into USAA's site:

Gaining Access

I called 1-800-531-2265 and pressed 0 to speak with a customer service representative (CSR). Once connected with the CSR, I said I was interested in joining and wanted to gain access. He then asked me several questions including lots of personal information including name, address, phone numbers, and social security number (I wasn't too thrilled about providing the ss number). The CSR then guided me through the login procedure. Luckily, I was calling near my PC which was still connected to the web. This allowed the CSR to guide me through the registration procedure. He provided a member number and helped me set up a password and a new pin.

So now I have access into their website. I haven't yet opened any bank accounts. According to the CSR, you can open accounts online, however, it does require printing and mailing in signature cards.

Now that I made it inside, I can see for myself the bank deals. A few of the things that make USAA stand out are the following:

Great checking accout features:

• no minimum or balance requirements
• no monthly service fees
• free paper checks for the life of the account
• no ATM fees or charges (there are a few reasonable limits)
• Debit Mastercard available with 0.5% rebate on all non-PIN purchases
• Online ACH transfer system to move money to/from other banks

High CD interest rates on longer terms with only $1K minimum

• 5% APY CD, 5 year term
• 4.6% APY CD, 4 year term
• 4.45% APY CD, 3 year term

Note, you can get about 0.16% higher interest for a Jumbo CD with $95K deposit and 0.26% higher interest for a Super Jumbo CD with a $175 deposit. There's also a 7 year CD that gets about 0.10% higher interest than the 5 year CDs.

In addition to the specific features and rates, USAA is well liked for its customer service. This is mentioned many times at both Fatwallet and Epinions.

Some Downsides

One downside to USAA is that it doesn't have great interest rates on its savings accounts. Even its Performace First Index savings account which requires a minimum $10K deposit only has a maximum rate of 3.31% APY for balances over $50K. For balances between $10K and $25K, the APY is only 2.95%. Its short-term CDs are also not too competitive. For example, the 1 year CD only has an APY of 3.70%.

General Info

USAA Federal Savings Bank is rated 4 out of 5 stars on Bankrate.com which is only one below its top score of 5 stars. The bank is headquartered in San Antonio, Texas and was founded in 1922 as United Services Automobile Association. It also offers other products like insurance (which do require military affiliation). For a detailed description of this bank, check out this Fatwallet thread. Finally, no Oompa Loompas have been reported to work there.

MetLife Bank Raises Money Market Rates read and submit comments for this post

MetLife increased the rates on their Money Market Account and High Yield Savings Account from 3.30% to 3.50% APY. Also, they still have the $50 signup bonus for the Money Market Account. The requirements for the bonus remain the same since my last post on them. The main requirement is the deposit of $5K.

It should be noted that both the Money Market and High Yield Savings require a $5K balance for the 3.5% rate to apply. Balances below that only get 1.0%. The Savings account has the advantage of only requiring a balance of $50 to avoid a monthly service charge. The Money Market requires $1500. Their product comparison page has more details about both of these.

Should your insurance agent be your banker?

I just found this article at Bankrate.com. It's a little old but I found it relevant for this post. Thanks to the Gramm Leach Bliley Act of 1999, insurance companies like MetLife are allowed to offer banking services. MetLife isn't alone, Statefarm and Allstate have their banks now. I just checked the savings rates they offer, and they're not very competitive.

The article didn't give any real problems with banking with your insurance company. You shouldn't expect local bank branches from them. They are essentially online banks. The one tip from the article is to stay with the top-of-the-line insurance companies with strong credit ratings.

Which Transfers Faster? ING Direct or EmigrantDirect? read and submit comments for this post

Linking a checking account with a high interest rate online savings account can work well. You retain the convenience of your checking account and get the high interest rate of the online savings account. The linking allows you to move money back and forth. Unfortunately, it's slow compared to a savings account that is at the same bank as your checking. For an external linked account (like ING Direct or EmigrantDirect), it can take a couple of days.

So how long does it take? That is what I wanted to find out. I conducted a little experiment with both my ING Direct account and my EmigrantDirect account. Last Tuesday at 9:30am CDT I logged into both accounts and put in a request for an immediate transfer of $10 to my linked checking account (both are linked to the same checking account). I then waited to see when the money would show up in the checking account.

The Results

The money from EmigrantDirect showed up first. My checking account registered the deposit on Wednesday, one day after I initiated the transfer. ING Direct took an extra day. It didn't show up in my checking account until today (Thursday). So if you're concerned about speed of transfers, EmigrantDirect seems to be faster.

Of course this is just one example. I'll continue with some more of these experiments in the future.

BTW, if you're interested to see how ING and ED rates have compared this year, check out this chart that I generated.

EmigrantDirect's Gift to Members Affected by Katrina read and submit comments for this post

According to this Fatwallet forum thread, EmigrantDirect has just issued gifts of $1000 per household to all of its customers who live in areas principally affected by Hurricane Katrina. The post was made by a senior member of the forum who lives in Alabama. Yesterday he reported that he had just received an email from EmigrantDirect notifying of this gift. He then confirmed that the thousand dollar deposit had been made to his account. In the post, he attached the email he received. Just based on my experience with Fatwallet forums, this seems real.

I'm glad EmigrantDirect decided to make such a generous gift to the hurricane victims. It should provide some real help. This gift shows that an online bank can be just as caring as the local brick-and-mortar bank. Online dealings can seem very impersonal. It can be hard to feel comfortable with an online bank. But generosity like this can help break that image.

Do Security Fears Prevent You from Online Banking? read and submit comments for this post

According to this timesunion article, online banking is growing despite security fears. The convenience of online banking is outweighing the worries. Popular features like being able to access images of your canceled checks are attracting more to online banking. The article didn't mention interest rates, but I'm sure this is another major factor.

One of the fastest-growing scams is phishing in which bogus emails attempt to trick people in providing account passwords and other personal information. One study quoted by the article found phishing attacks were up 28 percent in the year ending May 2005.

Online Security Tips

This page at ING Direct offers some good security tips to avoid being tricked by online fraud like phishing. One simple tip is to ensure the spelling of the domain name is right. In phishing emails, the domain you see in the email is likely different to where it'll take you. A good practice is to avoid clicking on any links in emails. Also, before logging into a site, make sure the padlock icon on the bottom of the browser is shown to be locked. By clicking on this lock, a popup from your browser should appear to verify the identity of the website.

Credit Union CD Rate Specials read and submit comments for this post

Often your local credit unions will have some great CD specials. Here's a list of the best certificate of deposit rates that I've found at credit unions around the country. One thing to note about these specials is that they're only offered for a limited time. All of the CDs that I list below were being advertised at the credit union websites as of September 8, 2005.

Space City Credit Union of Houston Texas is offering the highest CD rate that I've seen. The rate is 9.38% APY for a 9 month CD. How is this possible? The maximum deposit that qualifies for this rate is only $2K. So with $2K, it's really only like a 4% 9-month CD with a $80 bonus. But that still is a good deal. Their membership eligibility is listed here.

Soo Co-op Credit Union of Sault Ste. Marie of Michigan is offering 5.10% APY on its 5 year CD. A 5 year CD rate over 5% is hard to find these days. It does require a $10K deposit.

NorthWest Plus Credit Union in Washington State is offering a 1 year CD rate of 4.58% APY. One nice feature is that the minimum required deposit is only $500. The main office is in Everett Washingtion. It seems to have a wide field of membership including all those who live in Washington State.

Florida Credit Union has a 21-month CD paying 4.32% APY with a minimum deposit of $10K. It's not the highest CD rate but it's competitive considering ING's 2 year CD is only 4.2%. Their field of membership is listed near the bottom of their home page and includes residents of many Florida counties including Alachua, Bradford, Citrus, Columbia, Gilchrist, Levy, Marion, South Clay, Suwannee, and Union County.

University of Iowa Community Credit Union has a 15-month CD with an APY of 4.25%. Their field of membership is detailed at the bottom of their FAQ. It includes Iowa residents living in the following counties: Johnson, Linn, Iowa, Cedar, Tama, Muscatine, Louisa, Keokuk, Poweshiek, Benton, Jasper, Marshall, Mahaska, and Washington.

For more information on finding credit unions, refer to this previous post of mine.

3.5% APY Money Market at Wachovia read and submit comments for this post

This might be a sign that brick-and-mortar banks will be fighting back against the online banks. Wachovia is offering 3.5% APY for at least a year on its money market account. It does require a minimum deposit of $10K. If the balance drops below $10K, the APY falls way down to 0.25%. This deal is good until the end of September. You can apply online, by phone, or at one of their branches.

If you already have an online bank like EmigrantDirect or HSBC, this deal is probably not worth it. However, if you don't like online banking or already a Wachovia customer, this may be a good deal.

Wachovia is the largest bank in the southeast US and is the second largest US bank in terms of number of branches. Last year it acquired SouthTrust Corporation. Back in 2001 Wachovia merged with First Union Corporation (more at Wikipedia.).

HSBC Signup Bonuses? read and submit comments for this post

It was reported on this Fatwallet thread that HSBC is offering a $35 signup bonus for its OnlineSavings account if you use a promo code. Another signup promo for HSBC's free checking was reported at this Fatwallet thread. The checking bonus was for their free checking combined with their debit card with paypass. It was also reported by this KRON 4 article. This checking bonus was different than their advertised Smart Package promotion. The Smart package required one of their interest checking accounts instead of the free checking. I have more information about their Smart package promotion at this post

There was some confusion on the Fatwallet threads about these promotions. These promotions do seem to be by invitation only. However, the codes don't appear to be unique to individuals. Several people who posted were informed by customer service representatives that they would not be receiving the bonus. So it's unclear if signing up with these codes would guarantee a bonus.

Both of these bonuses require the use of a promo code. Here's what HSBC says about these special promotion codes:

Periodically, HSBC customers are provided with a unique access code for special promotions and offers. To take advantage of the offer, customers visit us.hsbc.com and enter the access code in the 'Special Promotions' box found at the right of this page and the home page.

I want to be careful not to mislead readers so I called and sent email to HSBC asking about these promo codes and signup bonuses. The customer representative who I spoke with told me there were no signup bonuses. The email that I received said that qualifying customers were offered a promotion code to apply for the Online Savings account. Apparently, these promo codes are not for the general public. If you sign up with these promo codes without an invitation, there's no guarantee that you'll get a bonus.

Even without these special signup bonuses, HSBC's savings and checking accounts are still good deals. As I mentioned previously, it's currently the highest no-minimum savings account rate.

Bank of America Online Banking Promotion read and submit comments for this post

It's not a high paying promotion, but it is free money without much work. Bank of America will reward you with $5 for stopping delivery of your paper statement for each account. Here are the official instructions and rules. Offer expires on October 31, 2005.

If you haven't switched to Bank of America on-line banking, this is a good time to do so. As this New York Times article that I discussed yesterday mentioned, banks are having a hard time switching people over to internet banking. It's a combinatinon of mistrusting online banking and hanging onto old habits. But as the article stated, online banking customers are more profitable to the banks than those who stay offline. Online statements are definitely more efficient than paper statements (no printing and no postage).

It's nice to see a major bank like Bank of America using a carrot rather than a stick to encourage online banking. My credit union started charging customers a monthly fee if they wanted to keep receiving paper statements.

I noticed at the Bank of America home page, they have a link where you can take a test drive of online banking and bill pay. It's a good way to see how it works.

For those who are not registered at NYT, CNET also has a copy of this article.

Citibank iPod Deal and Online Banking read and submit comments for this post

Citibank is offering a free iPod shuffle for opening an EZ Checking account and for using its online bill payment for 3 months. The details are available at this Citibank page.

Looks like the main intention of Citibank is to have you become an active user of their online bill paying system. As this New York Times article explains, online bill payment customers can be extremely profitable. Studies have indicated these types of customers tend to keep higher balances, buy more products, and are less likely to switch banks. So like Citibank, many banks offer online bill payment for free.

Online Banking Risks

According to this article, banks are not having an easy time attracting online customers. Security concerns are preventing many people from online banking. Even though the risk is very small, all the news about hackers, browser vulnerabilities and phishing attacks make the risk seem much greater.

I think banks can still do more to improve online security. The article mentioned that E*Trade Financial has offered its best customers a small token device that generates a password every minute. I've used this type of device with my employer, and it works well. You combine your own pin number with the displayed token value and input this as a password. Even if a hacker gets the code, it's useless since it changes every minute.

Some other security features the article mentioned included one from Bank of America which has an extra step in the login in which the user must click on an assigned photo. If you don't see the assigned photo, it might be a phishing site.

However, for the person interviewed for this article, the issue was more about habit than security. The adage "old habits die hard" applies here. Once people get use to something like writing paper checks, it's hard to change.

Finally, the article mentioned some online banking risks that are not as well known. One is the risk that people will be late with their payments because they wrongly assumed there wouldn't be a delay with online bill payment. The other risk is that you might have a harder time defending yourself against a bill collector or an IRS audit without a paper trail.

Banking Deal Summary for Sept 4th read and submit comments for this post

The big news for this week was HSBC increasing the interest rate on the online savings account from 3.50% to 3.75% APY. HSBC now has the highest interest savings account rate without a minimum requirement. You never know how long it'll be on top. HSBC doesn't have a long history with this savings account. For most of this year, it has been close to ING's rates. In the last two months, it started to jump ahead of ING and be close to EmigrantDirect. For more info on comparing ING Direct vs. EmigrantDirect vs. HSBC Bank, refer to this graph and this post.

The other rate news isn't good for savers. CD rates have started to go down a bit. ING kept the 1 year CD rate the same but lowered the longer term CD rates. GMAC Bank reduced both its 6 month and 1 year CD. Its 6 month CD was only reduced from 4.00% to 3.95% APY. However, its 12 month CD had a significant reduction from 4.35% to 4.07%. This is another indication that the yield-curve continues to flatten. Rates on long term certificates of deposits are not much higher than shorter term CDs. This can also be seen with Umbrella Bank. Its one year CD went from 4.38% to 4.25% APY, but its 6 month CD actually went up a bit (4.00% to 4.05% APY).

The rates listed below are in APY. No minimum balances are required unless noted. Previous weekly summaries are available for Aug 28th, Aug 20th, and Aug 13th.

As of September 4, 2005

Savings Accounts:

• Presidential - 3.87% (min $5K, only first $35K receives this rate), offers checking, my post
• HSBC - 3.75%, offers checking, my post ($50 deal)
• MyBankingDirect - 3.75% (min $5K), my post ($25 deal)
• UFB Direct - 3.70%, offers checking, my post
• UmbrellaBank.com - 3.65% (min $1K), offers checking, my post
• Corus Bank - 3.56% (min $10K to open)
• EmigrantDirect - 3.50%, my post
• GMAC Bank - 3.45% (min $500), offers checking
• ING Direct - 3.30%, my post ($25 deal)

6-Month CDs:

• Corus Bank - 4.09% (min of $10K)
• UmbrellaBank.com - 4.05% (min of $1K)
• GMAC Bank - 3.95% (min $500)

12-Month CDs:

• Corus Bank - 4.52% (min of $10K)
• UmbrellaBank.com - 4.25% (min $1K)
• ING Direct - 4.15%
• GMAC Bank - 4.07% (min $500)

16-Month CDs:

• Digital Credit Union - 5.00% (min $5K)

Credit Card Deal:

• Charles Schwab VISA Credit card - $100 VISA gift card when signing up. No annual fee.

Technorati Tags: banks, banking, money

Another 5 Percent CD read and submit comments for this post

I came across another rare 5% CD thanks to the Fatwallet forum. This one isn't a low 5% one either. The 60-month certificate of deposit offers an APY of 5.61%. Even the 3 year CD has a APY of 5.04%. Here's a link to the full list of rates.

However, there are a few catches. First, it's a credit union (the State Department Federal Credit Union) so there are membership restrictions, although it does have a large field of membership.

Also, to get these high CD rates, you have to join the Capital Club which requires a checking account with either direct deposit or a savings account with a $500 minimum.

It appears that you can open the CD and other accounts online. The checking account has some nice features like no monthy service charges.

Another Credit Union Finder Tool

This credit union is part of the CO-OP Network of credit unions which allows you to use a local network credit union branch to conduct financial transactions as if it were your own credit union. I found their branch finder especially useful for finding local credit unions. It's better than other credit union finder tools that I mentioned in a previous post.

Multiple Savings Accounts at ING Direct read and submit comments for this post

The PFBlog has some useful information regarding setting up additional ING Direct savings accounts. Additional accounts can be useful for budgeting, but more importantly, it can be useful to expand your FDIC coverage. As this FDIC webpage describes, you can qualify for more than $100K in coverage at one insured bank if you own deposit accounts in different ownership categories. For example, you can have $100K coverage for a single account and $100K coverage in a joint account at the same bank.

One type of ownership category not offered by ING, however, is the trust account. Many banks allow you to have a payable-on-death (POD) account. This is a common form of a revocable trust account and can be used to expand the FDIC insurance coverage.

The Interest Rate Outlook read and submit comments for this post

Unlike other major hurricanes of the past, Hurricane Katrina may have a significant effect on the national economy since it hit a major center of US oil production and refining. The soaring prices for gas and heating oil will hurt consumer spending. As this MSN Money article discusses, it has the potential to tip the US into recession.

This article from Forbes mentioned the possibility that the Fed may not raise rates at its next meeting on September 20th. Instead it might wait until its November meeting for the next rate rise.

A slowing of the overall economy is only one of several factors that can affect interest rates. This New York times article mentions some others:

A significant housing slowdown would reduce mortgage loan demand. Banks would have less reason to attract assets with high CD rates.

Dollar-rich foreign central banks have been major buyers of long-term Treasuries. If higher rates on short-term Treasuries gain their attention, and they start shifting more of their assets into these, it could reduce short-term rates and raise long-term rates.

Comparing Yields on the Top Savings Accounts read and submit comments for this post

I thought it would be interesting to compare the APY rates of the top savings account for this year. If you're deciding on an online bank primarily due to its high interest rate, you want to know not only that its current rates are high, but also its history of rates has been high. So I've created a graph comparing savings account rates for three major players: ING Direct, EmigrantDirect, and HSBC Bank. My main criteria for these is that the accounts have no initial or balance minimums. There are a few other banks that may qualify such as UFB Direct. UFB Direct doesn't allow you to link its savings accout to an external checking so I excluded it (also I didn't want to over complicate the graph).


ING Direct is the granddaddy of this type of online savings account. It has been offering its no-minimum Orange Savings account for years.

EmigrantDirect just started offering its AmericanDream Savings Account around the start of the year. Its 3.00% APY was successful in getting attention. At this time, ING's savings account was only at 2.35%.

Then came HSBC's Online Savings account in March. For the first few months, HSBC's savings account offered rates comparable to ING.

Throughout the year, EmigrantDirect has maintained a lead over the other two. At the start of the year, EmigrantDirect was 0.65% above ING. But ING has been consistent in raising rates. Currently, ING is only 0.20% under EmigrantDirect. In the last two months, HSBC has gone past ING, and as of yesterday has even gone past EmigrantDirect.

Note, I had to review several sources to retreive this history of interest rates. I might have missed a few changes. Also, some of the dates may be a little off. Feel free to leave a comment if there's something that I missed.

ING Direct Again Lowers Long Term CD Rates read and submit comments for this post

It has just been about 2 weeks since ING's last rate cut on its long term CDs. Today, ING did another cut. All of its long term CDs (over 1 year) fell by 0.15% to 0.20% today. The new CD APY rates for 2 through 5 year terms are now: 4.20%, 4.30%, 4.35%, and 4.40%. Previously, the rates were 4.40%, 4.45%, 4.50%, and 4.60%. The APY for the 1 year term CD remains at 4.15%.

With only 0.25% difference between the 1 year CD and the 5 year CD, there's not much to be gained by the longer maturity CDs.

HSBC Raises Its Savings Account Rate read and submit comments for this post

HSBC Bank raised the interest rate today on their Online Savings Account from 3.50% to 3.75% APY. Now it's the best savings account without a required minimum deposit or balance. Other banks like Presidential or Key Direct may have slightly higher interest rates, but they require a substantial minimum balance or deposit.

Also, HSBC's $50 signup bonus is still active until the end of September. However, as I mentioned in this post, there are a few requirements that may not make this a great deal for everyone.

So now I wonder when EmigrantDirect will raise the interest rate on its American Dream Savings Account? Even though EmigrantDirect didn't have the highest savings account rate, it could boast that it was the highest with no fees or minimums. Perhaps EmigrantDirect will take the bold step to set themselves apart from the competition and raise their rates to something like 4%. It worked well for them earlier this year when they were one of the first to offer 3% on their savings account. This was when ING's Orange Savings Account hovered in the low 2% range.

More Searching for Those 5 Percent CDs read and submit comments for this post

This is a continuation of last week's post for those rare 5 percent CDs. There has been one change. A bank in Illinois called Mutual Bank is offering 5.35% APY five-year CDs. It requires a deposit of at least $5K to get this rate.

The highest 5yr CD rate listed on Bankrate.com is only 4.80% APY at Centennial Bank of Fountain Valley California. So you can't always depend on Bankrate.com for the highest rates. I found out about Mutual Bank from Fatwallet.

Mutual Bank also has some decent rates on the shorter term CDs (4.75% for 4 year, 4.55% for 3 year, 4.35% for 2 year, and 4.25% for 1 year). This bank has branches around the Chicago area.

Other Illinois Bank Deals?

This time a brick-and-mortar bank is ahead of the online banks in terms of rates. So it's a good practice to keep an eye on your local banks and credit unions for specials. I was thinking that Mutual Bank may be having some local competition so I did some searching at other Illinois banks for comparable deals. Seems like Mutual Bank is way ahead of many of its peers on CD rates. For example, LaSalle Bank highest 5yr CD rate is only 4.25% APY. However, LaSalle Bank does have one 7 month special CD yielding 4.00%.

After a lot of searching, I didn't find anyone else offering 5% or higher CDs. The best I was able to do was to find a couple of Illinois banks offering some modest signup bonuses.

Lakeside Bank of Chicago is offering a $10 Target GiftCard for opening any checking or savings account with a $100 minimum balance. If you open a money market or CD with a $10K minimum balance, you can get a $25 Target GiftCard.

Associated Bank is offering $25 for opening a new checking account with direct deposit. This bank has branches in Illinois, Wisconsin, and Minnesota.