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Sticking to EmigrantDirect and 3.50% APY

Contributed by mm | August 22, 2005 11:30 AM PST

(As of July 2006, EmigrantDirect is paying 5.15% APY at its savings account. Read PFBlog's review and take a try!)

One surprising episode during my vacation in NYC is related to my savings account. When my wife and I were (window) shopping on the 5th Avenue, we ran into a familiar name: Emigrant Savings Bank. If you recall, back in spring, I blogged a lot about EmigrantDirect, the online arm of Emigrant Savings Bank. At the time I stopped by its branch, I had more than $21,000 emergency fund in this very bank. I was not completely unaware that Emigrant is first and foremost a brick-and-mortar bank, but for me, who primarily banks online, it is pretty surreal to see the physical form of the bank that holds most of my money in the downtown of Manhatten. (Later I found out Emigrant Savings Bank has 12 locations in Manhatten alone.)

I have been very satisfied with EmigrantDirect since I deposited the first water-testing $100 to the bank in January 2005. While its web site is not the fanciest, it delivers -- by that I mean it consistently leads the wave by increasing yields of money market/savings accounts. Along the way, I have been using ING Direct, VirtualBank and CapitalOne, but today, I only have $4,000 in VirtualBank, $140 in ING Direct and $10 in CapitalOne.

If your savings account only yields 1% or 2%, you really need to know that the leading brands are offering 3% and more now. Here are some of the banks I have experience with, and my personal observations. All institutions are FDIC-insured, so safety is not a concern.

Bank The Deal The Good The Bad

3.50% APY

$1 to open

Very nimble in consistently offering the top rate Online banking interface is minimalistic.
CapitalOne Savings 3.45% APY

$1 to open

  Online banking interface is minimalistic.
Virtual Bank(*) 3.40% APY

$100 to open

Well-designed online banking interface. Not fast enough in offering the most competitive rates
ING Direct (*) Click here to start saving with ING DIRECT!  3.30% APY

$1 to open

Well-established name in online banking. Always lagging in the current price war
(*) PFBlog received nominal referral fee if you sign up using the link provided here.

Another source of top-yielding money market/savings accounts is Bankrate. For example, I kept this link in my favorite folder, and it allows me to check out latest offerings in one page. Note, some of the offerings require fairly high upfront deposits. Besides names in this list, another contender is Presidential Bank, which offers 3.75% APY checking and 3.87% APY savings accounts, although both require hefty deposits.)

For now, I'll stick to EmigrantDirect. ING Direct and VirtualBank are famous names, but they might well be too big to be the most competitive in offering the best rates.

This Post Has Received 24 Comments. Share Your Opinions Too.

Flounder Commented on August 22, 2005

Zions Bank in Utah has an Internet Money Market account that is paying 3.56% APY and changes with the market. It is FDIC insured.

Ken Commented on August 23, 2005

One nice thing about ING is that it's easy to get a CD online using money from your savings. (Don't think this is possible with ED???) It's as easy as transfering money. Their 1yr CDs are now paying a respectable 4.15% APY and there's no minimum. If you have a chunk of money that you'll likely not need in a year, you may be better off at ING with a combination of savings and 1yr CDs.

PG Commented on August 30, 2005

I have an ING Direct account and an Emigrant Direct account. I also have a third savings account that I think should also be mentioned... PAYPAL! The paypal money market fund is now offering 3.28% and is rapidly climbing. Plus... you can have an ATM card associated... it's practically like having a checking account with a very high yield.

RLC Commented on August 31, 2005

Out of curiosity, at your age, take a tiny bit more risk by going the short term municipal / government debt route? Depending on the state, you could reduce your projected AGI and get better return by dealing with the 30 day notes. May be a little more work but potentially paying much better than the CD's and MM accounts with fairly minimal risk.

Pi31415 Commented on September 12, 2005

This from somebody with a first hand bad experience: stay away from EmigrantDirect.

First of all, the initial setup takes forever and involves numerous steps. Ensuring security is nice, but with today's technology this can be done much less painfully. Second, the online account is very poorly designed and awful to use. Third, any transaction takes forever (or much longer than INGDirect, where I also have accounts). Most importantly, the customer service is about as bad as I've ever seen with a bank.

In my opinion, at yield merely 0.2% higher than INGDirect, it's not worth the effort to switch. If you have not set up an online direct saving account, you'll be making a wise decision to stay away from an bad experience you may come to regret later on.

M Commented on September 21, 2005

I have both ING Direct & EmigrantDirect(ED) and have found that EmigrantDirec has been faster in transferring my cash into and out of my checking account. Only once have I waited more than 2 business days from ED. Currently they are offering a min. of 4.0% APY guaranteed through 12-31-05 w/possibility of increasing the rate while ING is stuck at 3.30%

bmb Commented on September 23, 2005

I totally agree...ED moves money over to your checking account in 1 business day. I have had NO PROBLEMS WHATSOEVER with EmigrantDirect!!

Mathieu Commented on September 24, 2005

Even better now, quoting the announce:

"We are pleased to announce that effective today, Tuesday, September 20, your American Dream Savings Account from EmigrantDirect now yields 4.0% APY, the highest rate in the country with no fees and no minimums, FDIC insured. Responding immediately to the most recent news from the Federal Reserve, EmigrantDirect is pleased to be able to offer this unmatched rate to our loyal customers."

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