4

I'm planning to move my rainy-day fund into an online savings or money market account in the near future. For a couple of months, I've been keeping an eye on rates and recommended accounts at sites like bankrate.com, depositaccounts.com, and getrichslowly.org. I can see two clear patterns.

  • Interest rates are still falling everywhere
  • Last month's best buy just dropped their rate by (fill-in-the-blank)%

I want to get a better rate than the 0.60% 0.54% 0.45% that my brick-and-mortar bank is currently paying me, but I don't want to be constantly moving my money around in pursuit of a higher rate.

I found this: EverBank's Yield Pledge Savings Account. They promise to "keep the yield on your account in the top 5% of competitive accounts as ... surveyed by Bankrate.com." This seems like the closest thing to a guaranteed rate that I could get, but their rate (currently 0.76%) is still lower than many competitors: Ally, American Express, and many others are paying 1%; others more. I expect EverBank are probably consistently scraping the low end of that 5% group. Still, 1% vs. 0.76% interest is only a $24 a year difference on a $10000 deposit. I can give up one dinner out and make up the difference.

I guess I have several questions. If I choose the EverBank account, is the loss of interest in exchange for that guarantee a good deal (would you take it, and why)? Do most people who save in online accounts (with the aim of getting a good rate) move their money around a lot? Is there any such thing as an account with high liquidity and a guaranteed, reasonable rate, even if it's not the highest on the market?

  • Not sure you'll find much as far as guarantees go, but ING is one of those that's offering 1% for savings, and offering a $50 bonus for signing up for their checking as well. No fees for either. Not sure how much money you're saving but that $50 would probably offset any gains from moving elsewhere for a few months. I have no affiliation with ING. – John Straka Oct 2 '11 at 2:50
0

The "Yield Pledge" looks like a marketing promise to me. It may well be true, but I'm not sure it's useful. As you say, it's currently not the best account out there.

If those extra $24 per $10000 are really important to you, why not do your own analysis? Put the money in the highest interest account you can find, and then every three months survey the accounts available and, if it isn't still the highest, transfer the funds to the one that is. Personally I wouldn't put that much effort in for $24, but you may be different.

  • Thank you for this. The words 'marketing promise' made me realize that you are right, and I'm simply being seduced by the idea of getting paid without doing the research. I'm going to do as you suggest, but maybe on a 6mo. or 1yr. interval (to avoid potential early-closure fees and to better match the level of effort I think it is worth). – Kimberly Oct 10 '11 at 4:05
2

Most of these blogs/websites that you mention above promote banks that pay a commission and hence you never realize there are better banks out there that offer a higher rate.

I went through the same exercise to find the bank that paid the best rate and realized the truth I mention above.

I currently bank with Alliant Credit Union, which doesn't pay a commission or have affiliate fees. If you find a bank that pays a higher rate than ACU, let me know, I'd like to switch to that bank as well!

To give an example, ACU's regular savings rate is equivalent to EverBank's 2 year CD! See what I mean when I say affiliate and commissions run the show?

Disclosure: BTW, I'm a customer of this bank, not an employee. I do have a blog if you wish to read my experience with ACU.

  • +1 because I am also a customer of Alliant CU. Nothing but positives for me so far. – MrChrister Oct 2 '11 at 19:04
  • Thanks MrChrister! I always felt I was the lone voice in favor of this credit union! :) – MoneyCone Oct 3 '11 at 14:53
  • Maybe a lone(ly) voice on this site, but Alliant is well-liked over on FatWallet. It was my second choice when I asked this question, and is my top choice now that I've given up on EverBank, so +1. – Kimberly Oct 10 '11 at 4:07
1

The most important thing to look at is the FDIC insurance. Savings accounts are covered. Money markets - not necessarily.

Online savings accounts provide rates of ~1%. Look at American Express, Ally, Capitol One, ING Direct, E*Trade, etc.

The "pledge" basically brings EverBank into the same list, as they all have similar rates. Being top 5% of competitive accounts is not that hard, because there are thousands of banks around, you know. 0.76 is not the highest rate available. American Express currently give 1% on their savings account.

Re moving the money a lot - depends on the amounts, but when the rates were higher, I moved around a lot. Now, it just doesn't worth the trouble, although I would move for 0.25%.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.