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DollarSavingsDirect Launches 3.75% APY Online Savings Account
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There's a new online savings account competing for your money — the Dollar Savings Account from New York-based Emigrant Savings Bank — offering a 3.75% APY.
Available at DollarSavingsDirect.com, the account requires a $1,000 minimum for the 3.75% rates. All accounts under $1,000 get a 1% APY, according to CNN Money.
Emigrant Savings Bank also offers EmigrantDirect, an online savings account offering a 3% APY.
We're not quite sure what exactly the difference between the two accounts are — besides the obvious interest rate.
With a 3.75% APY, the Dollar Savings Account is the highest-yielding free online savings account, tied with WaMu.
HSBC, FNBO, and WTDirect follow behind them.
It doesn't look like the rate is temporary, so it'll be interesting to see how long it lasts.
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These Are Odd Times for Savers
America has relatively low interest rates at a time when banks and credit intermediaries are curtailing loans and cutting bank lending. Low interest rates do not normally go with less borrowing. Low interest rates, or falling interest rates, should increase borrowing and lending whereas higher interest rates decrease borrowing and lending.
Low interest rates are part of the Federal Reserve Bank's current policy to keep up spending and avoid a recession at the same time home mortgage foreclosures help limit lending since defaulters restrict the banking sector's loanable funds.
As savers, we need borrowers or interest rates would be zero. In general, the fewer the borrowers the lower the interest rate, but we should worry too about the new mix of loans.
Banks are having trouble finding enough business and industry borrowers. In the search for new borrowers they keep turning to more consumer lending and promote the use of consumer spending and consumer debt with heavy advertising.
A recent New York Times article entitled "Given a Shovel, Americans Dig Deeper Into Debt" quotes an advertising executive. "One of the tricks in the credit card business is that people have an inherent guilt with spending." … "What you want is to have people feel good about their purchasing."
The article also reported from Federal Reserve Bank data showing the percentage of disposable income used to pay debt keeps going up year by year reaching 14.5 percent in 2007. That is one piece of data and one sign of the rising consumer debt among many signs including personal bankruptcies.
The growing reliance on consumer debt and consumption spending makes it harder for the Federal Reserve Bank to maintain the economy. Sure, they can lower interest rates, but credit card interest rates continue above 20 percent for millions of consumers.
The lower interest rate policy applies primarily to business loans, but essential consumer spending depends more on people's income rather than interest rates.
America must keep up consumption spending to prevent a recession but threats to continued consumption grow with the numbers who earn stagnate wages, or who are unable to pay credit card debts, or file for bankruptcy, or have reached credit limits. Defaults limited new loans.
Government spending and tax cuts will stimulate consumer spending, but government, especially the federal government, are already running big deficits.
These are tough times for savers with interest rates low and limited ability for the Federal Reserve Bank to stimulate the economy. As savers we are in the awkward position of hoping others will go on buying, buying, buying so that we can save.
As savers, we can't change the rest of the world, but we can avoid get rich schemes, pay our monthly credit card balance and do our best to avoid paying interest and fees even as we earn less from our savings.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
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WaMu, WTDirect Up Online Savings Account APYs
Lots of news from the savings world this week: Washington Mutual has upped the APY on its online savings account to 3.75%, making it the highest currently available savings offering, according to BankRate.
As far as we know, it's not a promo rate, like HSBC's 3.50% account, which was recently extended until September 15.
WTDirect also upped its APY, pushing up to 3.31%. The higher rates go, the harder our money is working for us.
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HSBC Direct Extends 3.50% APY to 9/15/08
HSBC Direct is extending the promotional 3.50% APY rate on their online savings account until September 15, 2008.
The promo, announced in June, was intended to end on August 15.
Here's the text of the email they sent to account owners Tuesday:
Customers like you have told us how much they love our big fat rate. And as far as our customers are concerned, we can’t give them too much of a good thing. So that’s exactly what we’re going to do.
- You’ll keep earning 3.50% APY* on all balances in your Online Savings Account.
- That’s 9x the national savings average.±
- Deposit more now to take full advantage of our great rate extension.
Now’s the time to watch your savings grow. So deposit more today.
The 3.50% rate puts HSBC at the top of online savings accounts, tied with FNBO Direct and Goldwater Bank.
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E-Trade Complete Savings Account Up to 3.30% APY
E-Trade has upped the APY on their Complete Savings Account to 3.30%, putting it in the top 5 of online savings accounts.
The move follows WTDirect and HSBC's upward revision of their online savings accounts (to 3.26% and 3.50% APY, respectively).
E-Trade's account has a $1 minimum to open and no minimum to avoid fees.
The rate was previously 3.15%.
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HSBC Direct Ups Online Savings Account to 3.50% APY, Temporarily
HSBC Direct has increased the APY of its online savings account to 3.50%, up from 3.05% (press release).
But here's the catch: it's only until August 15, 2008.
“We are committed to helping our customers get the most from their money, and we constantly look for ways we can reward them,” said Kevin Martin, executive vice president and head of HSBC Direct U.S. “Increasing our HSBC Direct Online Savings Account to 3.50% — when other savings rates have been falling — gives new and existing customers an even better reason to start saving more.”
Why HSBC would choose to make the rate change a temporary one (or announce it as a pre-planned temporary adjustment) I'm not quite sure. My best guess is that they are trying to get to the top of the APY lists for people looking to save their economic stimulus checks.
We currently use HSBC to hold our housing fund, and while the online interface can sometimes be a bit klunky and they take their time moving money around, their rates have always been competitive.
HSBC follows E-Trade as one of the only banks to increase the rates of their online savings accounts in the recent past.
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WTDirect Drops Savings Account to 3.16% APY
WTDirect's Savings Account has fallen from a 3.31% APY to a 3.16% APY.
Despite the drop, they're still in the top 10 of online savings accounts, according to Bankrate.
While rate drops have been the norm since the Fed started cutting interest rates, E-Trade upped their online savings account APY last week. Looks like the trend may not continue.
Minimum balance to get into WTDirect is $10,000, so it's not for savers starting out. But once you open it, there's no minimum to avoid fees.
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E-Trade Ups Savings Account to 3.15% APY
Bucking the recent trend of falling APYs, E-Trade has upped the interest on their Complete Savings Account to 3.15%.
That puts them in the top 5 of online savings account rates, behind WTDirect, iGobanking and FNBO Direct.
E-Trade's account was at a 3.01% APY previously.
Ever since the market started slowing down, it's been rate drops consistently.
Hopefully E-Trade's move will be followed by other banks. We'll be on the lookout.
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latest posts
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- Joshua Raines: I use a version of BofA's Keep the Change at my own bank. I have WAMU Online Savings account as ...
- JF: I experienced this problem and it was quite disconcerting, although it wasn't down for long. With no HSBC ATM or ...
- Savings Toolbox: Ouch. Reliability is a must with online savings. Hopefully their problems don't re-occur on a regular basis. ...
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- Savings Toolbox: This is a clear ploy to suck in 'new money', but chances are these high interest rates won't last forever. ...
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