E-Trade, whose complete savings account had been sitting at a nice 3.30% APY, is falling to 3.01%.
The bank directly relates the drop to the recent Fed rate cut, which will surely lead to other rate drops.
E-Trade's rate will be dropping at the end of the day, Friday 12/19/08.
The news that the Federal Reserve cut a key interest rate to near zero on Tuesday may have pushed the stock market up more than 300 points, but for savers, there's a downside.
Almost consistently, when the Fed has cut rates, savings accounts have dropped in reaction.
While I'm not normally a rate chaser, there are still a number of great APYs available.
Dollar Savings Direct is at 4.00% APY, by far the highest available among the big names.
If you're thinking about opening up a new online savings account, WTDirect has a new bonus for you.
When you open a new account using this link and fund with an online transfer by December 22, 2008, you can earn up to a $250 bonus (depending on your deposit).
Here are the deposit amounts and the bonuses attached:
Balance | Bonus
WTDirect says they will average the account balance between 1/1/09 and 2/28/09 to determine where you fall, and deposit the bonus in mid-March.
The bank's current APY is 3.06%.
The magazine doesn't go deep into why it suggests FNBO as the best options, but it does offer up this:
Earn 3.5% on your FDIC-insured savings at www.fnbodirect.com. You pay just $1 to open an account with no maintenance fees and no minimum-balance requirements. You can link the account to as many as three others, including FNBO's bill-payment account. Use electronic transfers to move your funds and your ATM card to withdraw cash.
WTDirect has dropped the rate on their online savings account to 3.06% APY, down from 3.31%.
While that's a pretty significant drop, the rate is still pretty competitive with a number of the other accounts out there.
Yesterday, I closed my E-Loan online savings account.
I'd been thinking about doing it for awhile now, but finally made the request and have moved all of my money to ING Direct.
Despite being one of the most promising online savings accounts when it first came out, E-Loan couldn't compete on a customer-friendly level with other online banks.
Not telling your customers when the rate changes is cheap.
Not allowing your customers to move their money to more than one bank every 4 months is controlling.
Not letting new savers get the same rates as those with biggers coffers is discouraging.
Even though they offer a lower rate, ING Direct lets you do whatever you want with your money.
Remember: it's your money. Don't let someone else control it.
That's why I closed my E-Loan account.
In October, he put forth The Declaration of Financial Independence, and today, he's addressing the country's current economic situation.
Economic Situation- A letter to our Customers from the CEO of Savings, Arkadi Kuhlmann
As we enter the final few months of 2008 I want to thank you for your continued confidence in ING DIRECT. Over 700,000 new Savers have joined us so far this year strengthening the bank and their own financial footing through our savings, home mortgage and ShareBuilder investment accounts. Despite a challenging economic climate our Customer base is 7 million strong and growing.
The consequences of the mortgage meltdown on financial institutions and individuals continue to erode many American dreams. We will continue to stress the right way to achieve home ownership – buy only as much house as you can afford and pay off your mortgage as fast as possible. In return for good credit and prioritizing home investment, ING DIRECT mortgage Customers are rewarded with exceptional rates and a transparent, direct administration process. Rather than selling your mortgage to another bank or investor the minute you get it, we keep your mortgage and service it here. Doing so gives us flexibility to find innovative solutions to help Customers keep their homes during unexpected financial downturns.
While we don’t have an Orange crystal ball we do expect the economy to remain fragile through 2009. The best course of action for our Customers is to be disciplined: avoid splurges; identify and cut out unnecessary expenses; save for what’s essential; and hedge against these tough times. We can all benefit by developing good spending habits: confront — and cut up — credit cards; use your home as a savings vehicle — not as an ATM; and establish and contribute regularly to an IRA or 401(k).
In this difficult financial environment, we work tirelessly to safeguard your deposits, mortgages and investments. Importantly, your deposits are FDIC-insured according to its limits and your investments are SIPC-protected. Our security processes are the best in the business and are in place to protect your money from those with bad intentions. While we are constantly vigilant, we need your help. Keep passwords to yourself. Never give personal information through an email. And always install both the latest antivirus and anti-malware software on your home computer.
Thank you for your continued trust in ING DIRECT. We will not waver in our promise to provide you with great value, service, security and convenience.
CEO of Savings
This is one of the reasons customers stick with ING Direct despite better rates from other banks. ING Direct seems to care about its customers and has their best interests in mind.
HSBC Direct, in line with many other online savings accounts, is dropping its interest rate to 3.00% APY.
We currently using HSBC Direct for our housing fund.
FNBO Direct has dropped the rate of their online savings account to 3.25% APY (previously at 3.50%).
The account has no fees and requires only $1 to open.
Despite the falling rate, I'm tempted to close my E-Loan account and switch to FNBO. E-Loan has been pretty annoying to deal with — not telling anyone about their falling rates and implementing unnecessary rules.
The rate drop follows ING Direct's decision to lower its APY to 2.75%. Dollar Savings Direct, however, has recently gone the other way, upping its rate to 4.00% APY. Other options include WT Direct (3.31% APY) and HSBC Direct.
E-Loan, who burst onto the online savings scene with a 5.50% APY account, has dropped its rates dramatically — and didn't tell anyone about it.
The regular online savings account, which had been at 3.01% APY, is now down to 2.76% for balances above $10,000. Accounts with $5,000 to $9,999 will be receiving a 2.51% APY.
The worst of all? Accounts under $5,000 will be getting a 1.00% APY.
With that kind of crappy rate, you should definitely be moving your money if you're just starting out.
When the rates are rising, they'll certainly let you know. But when they're dropping, you need to constantly be looking out for changes.
It looks like E-Loan adjusted their rates sometime between Sept. 17 and Sept. 20. On 9/20, Interesting Money first reported the rate drop (and also expressed annoyance at E-Loan's lack of communication).
On 9/17, we blogged about E-Loan's new Savings Plus account and the online savings account was still at 3.01% APY.