Following E*trade’s announcement that they were slightly increasing the interest rate on their Complete Savings Account to 3.15%, I’ve updated the list of savings and checking account interest yields. There have been a number of changes since the last update, including the following.

• UFB Direct dropped from 3.35% to 3.01%.
• Kirkpatrick Bank’s Savings Square dropped from 3.25% to 3.05%.
• E-Loan increased from 2.75% to 3.01%, plus they are offering a short promotion for new money at 3.75%.
• Presidential Bank decreased from 2.75% to 2.6%.
• VirtualBank decreased its entire hierarchy of rates with the lowest level down to 1.77%.

Due to popular demand, I’ve added iGoBanking to the list. This bank’s savings account is offering 3.28% APY currently, placing them towards the top of the list, below only OneUnited and Washington Mutual.

On Thursday, E*Trade Bank will increase the interest it pays on the Complete Savings Account from 3.01% to 3.15% APY. It’s a small move but it could be a good sign for savers if other banks follow suit.

My company stock purchase plan account is held at E*TRADE and I plan on opening a savings account there the next time I sell my shares later this year.

I took a moment today to update the list of high-yield savings and checking account interest rates. While the rates are in decline, with the best annual yields around 3%, it will still beat the 0.2% to 0.4% many brick-and-mortar banks are offering on their savings accounts.

An email from Justin, a reader, reminded me that it was time for an update. He notified me that Emigrant Direct’s rate decreased to 2.75% recently.

If you have $250 and are willing to become a customer of ING Direct, you have the opportunity to earn $525 on top of your deposit. It will take some work, but not too much. Here’s how it works.

First, open an account at ING Direct using one of the links at the bottom of this post. There are ten links listed for the savings account and ten for the checking account, but choose only one. You must not currently be an ING Direct customer and you must provide an initial deposit of at least $250 in order to receive a $25 bonus for opening the account.

If you choose the Orange Savings Account, also open the Electric Orange Account afterwards, and vice-versa.

After your accounts are created and funded, you will eventually see a link at the bottom of your account information website. This feature might not be available immediately for new customers, but with time, the option will be present. Click on the “Earn $$$: Refer a Friend” graphic to receive the opportunity to refer 50 of your friends, 25 for the savings account and 25 for the checking account. Each successful referral will earn you $10. If you don’t have 50 friends, you can email me. I’ll post your referral links once mine expire so you can benefit from the power of the internet.

Use the following links when opening the Orange Savings Account with at least $250 (in addition to your $25 account opening bonus).

OSA5: Deposit at least $250 with this link
OSA6: Deposit at least $250 with this link
OSA7: Deposit at least $250 with this link
OSA9: Deposit at least $250 with this link
OSA11: Deposit at least $250 with this link
OSA12: Deposit at least $250 with this link
OSA13: Deposit at least $250 with this link
OSA14: Deposit at least $250 with this link
OSA15: Deposit at least $250 with this link

Use the following links when opening the Electric Orange checking account with at least $250 (in addition to your $25 account opening bonus).

EO1: Deposit at least $250 with this link
EO2: Deposit at least $250 with this link
EO3: Deposit at least $250 with this link
EO4: Deposit at least $250 with this link
EO5: Deposit at least $250 with this link
EO6: Deposit at least $250 with this link
EO7: Deposit at least $250 with this link
EO8: Deposit at least $250 with this link
EO9: Deposit at least $250 with this link
EO10: Deposit at least $250 with this link

If you do not have $250 to deposit initially, please use this link instead.

If you click one of the above links and see this message on the first page, then choose a different link and let me know via email or comment below which link number has expired.

We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email.

I’ll receive $10 for every successful account opening, and when you receive your referral links and give them out, you’ll receive $10 for each referral as well. Your referral links might not appear immediately after opening your account, but when they do, you should take advantage of them.

ING Direct is one of my favorite banks, despite their lagging interest rates. The current rate on savings accounts is 3.0% and the rate on checking accounts is tiered with a maximum of 3.40%. These rates are better than most brick and mortar banks but low on the list of high-yield interest-bearing accounts.

The people at SmartyPig contacted me recently to offer a $100 gift card for use on their site to a Consumerism Commentary reader.

SmartyPig has been mentioned on a few personal finance blogs recently, and here’s the deal. SmartyPig is a savings account, FDIC insured, currently earning 4.30% APY. Depositors’ funds are held by West Bank, an institution based in Iowa (not the Middle East as the name might suggest). The draw of SmartyPig is that the account is tied to specific saving goals.

For example, if you are planning to buy an engagement ring, you can create an interest-bearing account with SmartyPig directed towards that goal. After creating the savings account, you can “share” the account with others, such as friends, who can contribute to your savings goal. The inspiration comes from 529 education accounts, which are designed with a specific goal in mind (education for children or another family member) and allow contributions from others.

My take

The philosophy behind SmartyPig is refreshing. Saving towards goals is important, and any method of “sharing” your goals with others, publicizing to the world (or your circle of friends), can only be a positive influence. There are many media reports across the United States about our average citizen savings rate, and in many ways of measuring, as a whole our society may be spending more than we earn. Encouraging savings can help to move this measurement in a positive direction.

Unfortunately, I don’t see SmartyPig as a perfect solution to the problem of savings towards goals. Customers should be aware of some fees that SmartyPig may charge. First of all, contributions towards your goals at SmartyPig are generally initiated through an automatic monthly contribution. Make sure your funding source always has funds available. Otherwise, you will be subject to a $25 insufficient funds fee. This fee itself is worth mentioning, although it’s fairly typical in comparison with other banks.

It’s worth noting that SmartyPig is designed to be most beneficial when savings towards a specific spending goal, like the engagement mentioned earlier or a high-definition television. If you have a savings goal, like an emergency fund, you might be better off placing your funds in a no-fee, high-interest savings account.

Here’s why. To redeem your funds from SmartyPig once your goal has been reached, you can opt for receiving either a pre-paid MasterCard debit card or a gift card at a number of retailers. The list of retail shops offering gift cards include Best Buy, Amazon.com, Marriott, Home Depot, and Babies ‘R Us. If you opt to redeem your savings in the form of a retail gift card, you will receive a bonus up to 5% of your savings.

That’s not a bad deal, but there’s a catch. If you’d prefer to close your SmartyPig account once reaching your goal and receive your funds in the form of a check, you will be charged a $25 fee. To withdraw your own money, you must pay $25. This is unlike any other savings account of which I am aware. Bank-to-bank transfers out of the SmartyPig account are not allowed to encourage sticking to your goals.

Although SmartyPig encourages sharing your goals with family and friends in the interest of motivation and progress, it’s actually in the company’s financial interest. Anyone who contributes to a savings goal other than their own, including your friends who contribute to your account, will be charged a $4.95 fee for the privilege. This fee will change to 2.9% for contributions funded by credit card and eliminated for contributions funded by a linked savings or checking account.

The bottom line

SmartyPig presents a unique approach to reaching and sharing your savings goals. Once you open your account and set your first goal, your contributions—and the contributions of your friends and family—will earn a high interest rate. The bonus of up to 5% when you redeem your savings is more than you can get from credit cards and is a contributing factor to my recommendation.

If you know that you need to save incrementally to spend a sum of money on an item that is accessible via one of the vendors that have “partnered” with SmartyPig, this account can be a fun and motivating way to save for your spending goal, if you’re careful to avoid fees. Other people, habitual savers for example, will get better bang for their saved buck in a more liquid savings account at a bank offering high-yield interest rates, where withdrawals are free at any time.

$100 giveaway

Is SmartyPig for you? If so, I have a $100 gift card for you, redeemable only in a SmaryPig account. Write a comment below to tell me about your savings goal, and I will choose a winner randomly in the near future. This offer is only valid for individuals with mailing addresses in the United States or Canada and only one entry per name, email address, or IP address is permitted. Please leave a valid email address so I can contact you if you’re selected. If you don’t want to write about your savings goal, that’s fine, too. Any comment here will contribute towards your entry in the giveaway.

Good luck!

The Federal Reserve lowered rates again today, inspiring me to check the so-called “high-yield” savings and money market accounts to view the damage to the latest interest rates. I’ve once again updated the list of APYs reflecting the latest drops. I’m keeping a historical record, so siply scroll the spreadsheet to see how rates have changed since January 26.

Following ING Direct’s recent interest rate drop to 3.1% annual yield, I’ve updated the list of high-yield savings and checking account interest rates, a list that is becoming less “high-yield.” It’s getting increasingly difficult to find good places to keep liquid savings.

This doesn’t sound like good news.

[FDIC] is planning to beef up its staff—including temporarily hiring up to 25 retired FDIC employees who worked in the agency’s more than 200-person division that handles failed banks—to handle an anticipated increase in bank failures.

If you keep funds in some of the smaller online banks, you might want to reconsider your saving strategy. While the FDIC insures deposit accounts up to $100,000 per depositor, you might be exposed to delays when withdrawing your money if your bank disappears. Last year, NetBank failed and its accounts were absorbed by ING Direct. Individuals and companies had trouble getting money out. This could become more common in the next year or so.

To help stave off bank failure, the government is bailing out American banks. However, it is not the United States government; foreign investors are investing heavily in domestic banks through sovereign wealth funds, which basically means that banks in this country are increasingly owned by overseas governments.

Singapore recently paid $4.4 billion for an ownership stake in Merrill Lynch. The Chinese bought a $5 billion piece of Morgan Stanley… Middle Eastern and East-Asian “sovereign wealth funds” are in the process of owning a larger and larger portion of the global banking system.

The foreign governments aren’t investing enough to gain control of the companies or seats on the Board of Directors, but there is some chatter about requiring more disclosure from soverign wealth funds.

Bank profits plunge 84 percent in 4Q [AP]
Foreign investments are just bailouts [Marketplace]
Foreign investments in US banks draw scrutiny [Boston Globe]