Online Savings Accounts & Current Rates

[poundwise]

The list was updated today, Saturday, September 22nd --

AmTrust Direct down from 5.31% to 5.21% (.10)
GMAC down from 5.30% to 4.90% (.40)
Apple Bank down from 5.27% to 5.15% (.12)
E-Loan down from 5.25% to 5.00% (.25)

(Thanks to kv968 and BTC for posting changes noted.)

Contrary to popular belief, a definite shift downward in rates across the board is not necessary and is unlikely. These online banks do not establish their rate solely based upon the Fed.

For instance, FNBO states, "Our rate is typically determined based on market condition such as, but not bound by, the Federal Funds rate. We strive to always maintain a very competitive rate..."

That is why there is such a range of rates to begin with. These institutions do not all offer the maximum rate that they can or always jockey for position to be the number one offering. Instead, many of them seem to try to settle upon a "happy medium" of sorts so that they can offer a consistent rate. A shift by the fed of a quarter or even a half a point up or down does not historically show up, across the board, in the rate offerings for these accounts.

It could be noted that the accounts above, which have lowered their rates, were all offering 5.25% or higher. (You could also note that although the Fed reduced the rate by 0.5, none of these banks lowered their rate by that much, although GMAC came close.) Of those banks offering 5.05%, which has been the mean offering for quite some time, none of them, as yet, has changed their rate.

Will more of these rates change next week and into next month? Probably. I would surprised if we didn't see some more downward shifts. Will all of these rates go down? Unlikely. Which rates will move? I don't know for certain; I suspect it is more likely to be those offering greater than 5.05% rather than those offering that rate and below but there will likely be some that continue to offer greater than 5.05% and some, currently offering 5.00% or less, that may drop their rates.

By the way, thought it was a very small shift, there was one rate increase --

Umbrella Bank up from 4.95% to 5.00% +.05

[poundwise]

ING Orange Checking drops from 4.00% APY to 3.50% APY

This is coupled with their previous savings rate drop from 4.50% APY to 4.30% APY

[sweeps]

FNBO will reportedly drop to 5.05% as of 9/28/07.

[poundwise]

The list was updated today, Wednesday, September 26th --

HSBC down from 5.05% to 4.50% (.55)
Ultima Bank down from 5.12% to 5.00% (.12)
UnivestDirect down from 5.05% to 4.90% (.15)
Zion's Bank down from 4.98% to 4.81% (.17)

FNBO's post promo rate set to 5.05%

(Thanks for the info on FNBO sweeps.)

UnivestDirect (interest checking) down from 4.00% to 3.75%

So, it would seem in an effort to prove me wrong, two of the 5.05% rate accounts dropped. Of course, this does leave four accounts at 5.05% as well as five at 5.00% and, still, six at greater than 5.05% (in other words 15 at 5%+) so my point remains valid; on the whole, we can expect multiple offerings to remain at 5.00%-5.05% and up even with the recent rate drop.

What about HSBC? Wow. They dropped their rate in excess of the Fed's recent adjustment. And this, fairly recently after offering a promo rate of 6%. They had been at 5.05% prior to that promo offer and had returned to 5.05% after it. Now, they have fallen a long way, sitting at the bottom of the list with ING.

Stay tuned. I'll be updating the list more frequently now that we are experiencing greater volatility.

[Broken Arrow]

Ouch.

[BTC]

They're dropping like flies, which isn't surprising. I was bummed that FNBO wasn't going to hang with 5.25, but now 5.05 is looking dandy in comparison to most. HSBC, low rates and slow transfers. Gotta love it.

[sweeps]

I used to be a big HSBC fan, but I fell out of love with them. I closed my account about a month ago. I hope my other long-time favorite GMAC stays in for the long haul.

I'm also surprised at the systemic rate drops. I disagreed with Aleta in another thread when she said they'd all drop, but she was right. (Apologies if Aleta is not a 'she'. )

I'll step further out on this cracking limb I'm on and say these lowered rates won't last. Inflation is going to rear its ugly head and the Fed will have to reverse the trend fast.

[BTC]

Are mortgage rates dropping at all? I know that initially they actually increased.

[Ima saver]

I agree, ouch, my local bank dropped from 5.25 to 4.75%

[sweeps]

Are mortgage rates dropping at all? I know that initially they actually increased.

Yes, they've increased slightly. I wouldn't be surprised if they go up a lot more. As I mentioned in another thread, the Fed's lowering of short term rates will likely cause long term rates (e.g. 30-year mortgage rates) to go up. It all hinges on bond investors' belief whether inflation can be contained.

[Broken Arrow]

I'll step further out on this cracking limb I'm on and say these lowered rates won't last. Inflation is going to rear its ugly head and the Fed will have to reverse the trend fast.

Well, fancy meeting you here on this fine, cracking limb. Small world.

[Aleta]

Hey Sweeps: Aleta here. Wish that I had been wrong about that one. I also have an FNBO accoount and there are a couple of things I don't like. There's just too much float time. Also, they don't have anything set up like other financial institutions to POD. (Pay on death to beneficiaries). When I asked they said they were working on it.

Also, they say 5.05,and that's the APY. What is the APR? That does make a difference.

I'm thinking about transferring back to Vanguard Prime Money Market. The rate there was 5.08 and they already have my set-up there. I've always kept some money there, but I might also split it up with a CD.

Oh, and yes, I am a female.

[kv968]

I'm thinking about transferring back to Vanguard Prime Money Market. The rate there was 5.08 and they already have my set-up there. I've always kept some money there, but I might also split it up with a CD.

Don't be so quick. Watch, that rate will fall below 5 in a week or so too.

[Aleta]

I've thought about that as well. I might get a CD to hedge things though.

[poundwise]

I've thought about that as well. I might get a CD to hedge things though.

Of course, the problem is that most of the CD rates have adjusted downward as well.

Even so, a quick look at some of the top ones shows there are still a couple of 5 and 6 month CDs at 5.40%. That may bear investigating.

Addendum: If you have $10K, you can get a 1 year CD at Countrywide Bank at 5.65% APY. Or, with $5K you can get 5.40% on a 6 month CD at IndyMac Bank.