Every so often I address questions and comments I receive via email. If you have a question, please contact me using the form on this page. I try to respond to everyone, but it might take a while before I read every email I receive.
From Mary Lynn:
I really liked your article that explained how freecreditreport.com isn’t free at all. I was wondering if you knew of any credit report site that doesn’t ask for a fee! I don’t have any credit cards since I just turned 18 and graduated from high school but I need a credit report for this job I’m taking. Please, if you know of any, let me know.
First, to answer Mary Lynn’s question, the one and only website for retrieving the government-mandated three free credit reports each year, one from each credit reporting bureau, is AnnualCreditReport.com. Even there, since the site works with the for-profit reporting agencies, they will try to sell you something. Steer clear of the offers and get your free credit report once every four months.
I find it odd that your employer requires you to get your own credit report and present it. Employers, if they must to a credit check on prospective employees, should do it without requiring you to do anything other than provide your Social Security Number.
From Jake T.:
You seem to open a lot of bank accounts. How many different banks do you have accounts at, and which one is your favorite?
I do have a diversified set of savings accounts. I wrote about reducing your number of banks as a way to simplify your finances, but I like the idea of keeping money spread around. Without Quicken, this would be an organization nightmare. I have accounts with Wachovia (my main brick-and-mortar bank for both business and personal savings and checking), TD Bank (formerly Commerce Bank, open on Sundays, my secondary brick-and-mortar bank), Ally Bank, FNBO Direct, HSBC Direct, ING Direct, E*TRADE Bank, and Emigrant Direct. I’m also in the process of opening an account at EverBank. Of these, ING Direct and FNBO Direct stand out as favorites.
If you have questions, let us know. You can email your questions directly to me (or to Smithee, Jeff, or Tom) or leave your questions in the comments area.
A little over a year ago, I introduced SmartyPig to Consumerism Commentary, a savings account with a higher rate. Their current rate yields 3.25%, by far the highest among high-yield online savings accounts. Accounts held with SmartyPig are fully backed by the FDIC. SmartyPig’s philosophy is designed to focus on goal-oriented saving, and the bank encourages redeeming (withdrawing) your funds only when the goal is reached, and preferably in the form of a gift card offered by one of several retailers partnering with the bank or of a prepaid debit card.
If you opt to redeem your account in the form of a gift card, SmartyPig offers a bonus above the value of the cash you have saved, but keep in mind that where legal, many of the gift cards “expire” if not fully redeemed after a period of time. Is the higher interest rate worth the hassle?
It’s not your imagination. Banks are now looking for ways to actively discourage new deposit accounts. It’s not just through lowering interest rates, they are scaling back marketing. It makes sense from a business standpoint; the economy is not so great, so companies are saving their operating expenses.
Here is a summary of the most recent interest rate declines, listed as annual percentage yields (APYs) as of June 13. These accounts are recommended. I have accounts here and I’ve never had any problems with the banks.
- FNBO Direct Online Savings Account dropped to 2.15% (1.65% as of June 2009)
- E*TRADE Bank Max-Rate Savings Account dropped to 1.95% (0.95% as of June 2009)
- HSBC Direct Online Savings Account dropped to 1.85% (1.55% as of June 2009)
- ING Direct Orange Savings Account dropped to 1.65% (1.5% as of June 2009)
- Ally Bank Online Savings Account dropped to 2.05% as of June 2009 (Formerly GMAC Bank)
These accounts are recommended by others but I have no personal experience with the banks.
- ShoreBank Direct Online Savings Account dropped to 2.80% (2.05% as of June 2009)
- Kirkpatrick Bank Savings Square dropped to 2.30% (2.00% as of June 2009)
- Dollar Savings Direct dropped to 2.25% (2.00% as of June 2009)
For a history of savings account interest rates for the last fourteen months or so, take a look at this history of high-yield interest rates. With banks decreasing their rates almost every week, it’s difficult to keep up with the changes.
Where do you keep your savings?
I received the bad news earlier today. Continuing the trend across the banking industry, FNBO Direct has determined that it can afford to lower the interest rate offered on the bank’s savings account from 2.6% to 2.4% APY. Compared to many other popular online banks, this rate is still very competitive, and I can practically guarantee that it beats leaving your cash in a typical brick-and-mortar savings account. A few months ago, Kiplinger rated FNBO Direct as the best online savings account.
WTDirect has also dropped its interest rate to yield 2.16%. The catch with this account is that customers need a balance of at least $10,000 in the account before qualifying for this rate.
Ever get the feeling that someone is trying to get you to spend your money, perhaps to stimulate the economy? Banks seem to offer no encouragement for deposits lately. Here are some of the latest interest rate drops over the past few days.
- Dollar Savings Direct has dropped from 4.0% to 3.5% APY (2.0% as of May 2009)
- FNBO Direct has dropped from 2.8% to 2.6% APY (1.65% as of May 2009)
- E*TRADE Bank has dropped from 3.01% to 2.5% APY (0.95% as of May 2009)
- HSBC Direct has dropped from 2.6% to 2.45% APY (1.55% as of May 2009)
- Emigrant Direct has dropped from 2.5% to 2.4% APY (1.55% as of May 2009)
- ING Direct has dropped from 2.4% to 2.2% APY (1.5% as of May 2009)
In order to keep cash available for when an emergency strikes, it may be necessary to occasionally forgo a satisfying interest rate. This is one of those times. These choices are all better than earning 0.1% to 0.3% APY in your local bank branch. If the economy doesn’t pick up this year, we may see more of the same for the immediate future.
If you want to track how interest rates have changed over the past year, take a look at this table which shows a history of savings account interest rates.
HSBC Direct must have heard that I was planning to transfer some of my savings to the bank, which until yesterday had been offering 3.0% APY. Following other banks that lowered interest rates for the new year, HSBC dropped their interest rate 13% to 2.6% APY and is now 1.55% APY as of May 2009.
To recap, ING Direct is now at 2.5% APY, FNBO Direct is currently at 1.65%, E-Trade Bank hasn’t moved from 3.01% since December, and DollarSavingsDirect is currently at 2.0%.
Also notable is WTDirect. This account offers 1.76% APY on balances over $10,000, and if you don’t have that much cash in the bank, you’ll still get that high rate for 60 days after owning the account.
I’ve updated the list of high-yield savings and checking accounts.
One thing to keep your eye on in 2009 is your savings account. Over the past few days, several banks have lowered the interest rates on high-yield savings accounts. This is not a good sign for those who want to have liquid assets without losing purchasing power. You may want to start the new year by evaluating your choices and moving your cash to where it can earn some more interest. I don’t normally suggest chasing rates, but the beginning of the year may be a good time to refresh if you don’t do it often.
Here are some of the recent drops.
ING Direct celebrated early the other day by dropping the interest rate on their famous Orange Savings Account to 2.50% APY. The yield was 2.75% last week and 3.0% back in October. This coincides with the bank’s second interest reduction in one month on the less famous Electric Orange Checking Account. New rates for the balance tiers are 0.5%, 2.6%, and 2.8% APY.
FNBO Direct dropped its interest rate from 3.25% to 2.8% APY. This is the second highest rate among the accounts I consider to be the best online savings accounts, with HSBC Direct’s 3.0% APY being the highest.
GMAC Bank dropped the rate of its online savings account from 3.75% to 3.25% APY and its money market account from 3.25% to 2.75% APY.
Emigrant Direct lowered its interest rate from 3.0% to 2.75% APY while this bank’s “cousin,” DollarSavingsDirect, remains at the top of the list of accounts I can recommend, offering 4.0% APY.
Here’s a full list of high-yield savings accounts and checking accounts with rates current, as of today.
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