I’ve been waiting for the right time to open an online savings account at E*TRADE Bank. My company stock is held at E*TRADE, and as soon as I sell my stock purchases from the past twelve months, I will move the proceeds into a savings account with the brokerage’s banking division. E*TRADE’s online savings account is currently offering one of the top interest rates, 3.30% APY, and is insured by the FDIC.

For the next few weeks, E*TRADE is offering a $25 bonus to new customers who open an online savings account by October 27 with a $5,000 minimum balance by November 10. At that point, if you meet the qualifications, you will receive the bonus by November 24.

Like most online banks, you can link external accounts to E*TRADE in order to transfer your funds quickly to and from another bank. Unlike other banks, E*TRADE’s transfer process is reportedly quick; you won’t lose any interest while your ACH deposit is “in transit” like with many other institutions.

For those who want to be among the first to know when E*TRADE Bank changes its interest rate, the company has a listing on the microcommunication website Twitter. You can “follow” etrade to be notified of any interest rate changes. A quick look shows that the interest rate on the savings account has been updated four times: 3.45% on March 12, 3.01% on April 1, 3.15% on May 8, and the current rate of 3.30% on July 2.

Please spread the word about this exclusive $25 bonus. At this time, you can only receive the bonus through Consumerism Commentary. To apply for the E*TRADE savings account and qualify for the bonus, use the link below.

Less than a month ago, Washington Mutual increased the interest rate offered on the bank’s savings account to 4.0% APY. This came as the bank was trying to attract capital. Since then, WaMu was in danger of failing and was acquired by JPMorgan Chase.

On September 26, I wrote:

There is no need to panic or pull money out of these accounts unless you don’t want to become a customer of Chase. It is possible, however, that Chase will lower Washington Mutual’s attractive interest rate offering of 4.0% APY, but nothing has been announced about this particular matter.

As of today, the interest rate drop is official. As I discovered, thanks to Five Cent Nickel, the new interest rate yields only 3.0%.

With central banks around the world dropping their short-term lending rates, I expect more banks to follow. With 3.0% APY, WaMu/Chase may still be on top of the list, but for now, their interest rate is only average among other high-yield savings accounts (list to be updated shortly).

I suggest not moving money from one bank to another to “chase” high rates until it’s clear how the other banks will react to the drop of the target for the federal funds rate to 1.5%.

If you plan on opening a new checking account at Chase, use one of the following bonus codes to receive a $100 bonus.

3333324005410519
3333324023258503 (Thanks to reader Brandon)

The codes are only valid for one use each, so you’ll have to be quick to use one before someone else does. There is some fine print, of course, restricting you to certain account features in order to receive the free money. You can bring a coupon code to a branch or use one to open the checking account online.

This is not a free checking account; in order to avoid an undisclosed monthly fee, you will need to use the account for direct deposit or have at least five debit card purchases each month. After some research online, I was able to quickly discover that this fee is $6 per month.

Here is what it says on the back of the certificate:

To qualify for the reward you must open new Chase Checking account with a $100 minimum opening deposit of new money (money not currently held at Chase or its affiliates). Bonus will be automatically deposited into your new account within 10 business days of account opening, but not considered part of minimum opening deposit… Your Chase Checking account must remain open for a minimum of six months or the bonus will be debited from the account at closing… Bonus is considered interest and will be reported on IRS for 1099-INT.

These codes won’t last long, so good luck.

With the $700+ billion bailout bill signed into law, the FDIC now insures more deposits per account holder per bank. Here are the new limits for the most common account types, effective October 3.

• Single accounts are insured up to $250,000 per owner through December 31, 2009
• Joint accounts are insured up to $250,000 per co-owner through December 31, 2009
• IRAs and other retirement accounts are insured up to $250,000 per owner
• Trust accounts are insured up to $250,000 per owner per benficiary

Single and joint accounts will revert to the $100,000 maximum after December 31, 2009 unless a new law is created before then to extend the increased limits.

These increases don’t have much of an effect on everyday depositers like me. It’s unlikely that individuals keep more than $100,000 in a single bank account. These increased limits do help small businesses that need to keep cash on hand to fund payroll accounts and other operating accounts.

Small banks are also boosted by this new law because other businesses may willing to increase deposit balances. More capital available to these small banks can in turn make more cash available for local lending.

The increase may, according to Congress, create more confidence in the safety of the banking system, preventing a massive wave of withdrawals. When people lose confidence in banks, they withdraw their money to keep cash on hand, and the banking industry and the government want to prevent that as much as possible.

This would-be acquisition is turning into a mess. First Citi agreed to buy Wachovia’s deposits with the help of the FDIC. Wachovia accepted this deal under duress, apparently. The FDIC warned Wachovia that if they did not agree to the deal, the government would seize Wachovia’s deposits. That left Wachovia little choice but to accept.

Not much later, Wells Fargo stepped in with a better offer for Wachovia. This offer called for an acquisition of the entire operations of Wachovia, not just deposits, without the help of the government, for $15.1 billion in stock.

On Saturday, the FDIC succeeded in having the New York State Supreme Court block the deal between Wells Fargo and Wachovia, but on Sunday night, the ruling was overturned on appeal. Citi will appeal this decision.

It seems that the Wells Fargo deal is better for Wachovia, Wachovia’s shareholders, and the public. Wells Fargo will keep Wachovia intact and the FDIC will not be required to use taxpayer money to cover any losses. I don’t see any reason that anyone would favor the Citi deal.

Although Wachovia was recently saved by Citi and the FDIC, Wells Fargo stepped into the picture with a better offer. In this deal, Wells Fargo would take on all of Wachovia, including deposits, brokerage, and investment management, for $15 billion. Earlier this week, Citi offered $2.2 for Wachovia’s banking operations only.

If the Wells Fargo deal goes through, and Citi will do everything in its power to attempt to stop that from happening, shareholders of Wachovia would receive about one-fifth a share in Wells Fargo for every share in Wachovia.

While Citi’s offer relied on the FDIC for financial assistance, Wells Fargo can go through with the transaction without help from the government. The FDIC, however, is in favor of the Citi’s deal.

The banking landscape continues to change.

A few days ago, I mentioned I invested in the stock market at a low with money marked for an intermediate time horizon. I didn’t get the price I wanted, however. I initiated the $3,000 investment in VTSMX, the index fund following the total stock market, on Monday night following the stock market’s sharp decline. My order at Vanguard wasn’t placed until Tuesday’s fund price was set, after the market had regained over half of its losses.

Next time, I will be prepared to take advantage of dips at the right time. As commenters suggested, I will opt for an ETF that tracks the market, accepting a small transaction fee in return for an immediate price. Additionally, I’ll keep money in a money market account at a brokerage to eliminate a delay caused by transferring funds from an external account.

Additionally, I believe it’s time to get a better rate of interest for the cash in savings I might need within a year. This short-term money would earn a better return in a money market fund. The bulk of my cash is earning 3.0% APY at ING Direct and some earning more at FNBO Direct. Yesterday, however, I invested a big portion of my cash in VNJXX, the New Jersey Tax-Exempt Money Market Fund.

This money market fund is currently earning 4.83% APY based on the average yield over the past seven days, and the interest income is tax-free, both federal and state (for me as a resident of New Jersey). Since there are no fees, as the economic situation changes and the fund begins earning less than the after-tax equivalent of a high-yield savings account, I can easily move the funds back.

Money Market Funds like VNJXX are riskier than savings accounts, however. The prospectus outlines five specific risks: state-specific risk, income risk, credit risk, manager risk, and non-diversification risk. I weighed these risks and determined that the fund is a better option for most of the cash I am keeping for short term goals like purchasing a house.

October 3 update: Wells Fargo has stepped in and placed a better offer for Wachovia.

Wachovia is my main brick-and-mortar bank. The bank has held my primary, though small, savings and checking accounts for about fifteen years. During this time, it hasn’t always been known as Wachovia to me due to a series of mergers and acquisitions. My accounts, which haven’t moved, were held at First Union National Bank, CoreStates National Bank, and New Jersey National Bank.

Soon, my bank will be Citibank. Citibank recently announced its plans to bail out Wachovia’s banking operations.

Until now, I’ve managed to hold completely free accounts at Wachovia. While I’ve been charged fees for various reasons, perhaps mistakes on my part like allowing my savings account balance to dip below a minimum level, Wachovia has always refunded the charges. In fact, I’ve been quite happy with the bank’s customer service all around from the beginning.

If CitiBank does not offer a free option to correspond with my current Wachovia accounts once the acquisition and transition is complete, I will not hesitate to move my funds out of the bank. I have had some interesting experiences with CitiBank’s banking services—mostly on the business end—and I’m not anticipating the switch.

The new Wall Street Journal blog, The Wallet, has a couple of posts regarding the takeover that would be helpful to Wachovia customers like me, here and here. These are the major points:

• Deposits insured by FDIC won’t be lost.
• If you sell your Wachovia stock, which was at $3.50 per share as of last night, you can write off your losses against your stock gains for tax purposes.
• Wachovia mortgages and student loans will become Citi’s assets along with bank accounts after December 31.