Earlier this month, Emigrant, the bank that holds most of my $40,000-strong cashpile, announced that it reduced its savings account yield from 5.15% to 5.05%. While the 0.1% decline is almost negligible and 5.05% APY is still very competitive, this event will probably be remembered as an inflection point of high-yield savings.
I opened my account with EmigrantDirect back in January 2005, when the NYC bank made an entry to the online savings account industry with a then ground-breaking 3.0% APY offering. Over the course of the last 22 months, Emigrant Direct has always been competitive by offering the very top yields. Its sudden reversal of course is disappointing, but considering the declining of long-term bond yields these days, and the apparent end of the Fed rate hiking cycle, it is probably only reasonable to expect more rate declines like this from other online savings account outlets.
From an avid saver's perspective, it is also right time to consider new market entrants like Eloan (who is offering super-competitive 5.50% APY for savings account -- with a minimal opening balance of $5,000), and to commit funds for a longer term (e.g. CDs).
To that end, I have moved all my $40,000-plus cash to Eloan. (I love the easy account opening process at Eloan -- everything is done online with no need to wait for snail mail confirmation.) Also, I'm carefully evaluate Eloan's strong CD offerings, which yields 5.60% for 6-month, 5.70% for 1-year, and 5.75% for 18-month to 5-year terms (all with a $10,000 minimal). Should I create a CD ladder for this 10% of my portfolio for some guaranteed juicy interest income?