{ 22 comments… read them below or add one }

Mikael @ Retire Rich May 1, 2009 at 12:49 am

One of my biggest problems with having money in the bank is that if you’re only getting rates that are the same or lower than the inflation rates, then you’re actually loosing money. Secondly you’ll also have to pay taxes on your interest income which will only mean that you’ll need higher deposit interest rates to make it worth your while.

So if inflation rates are e.g. 2% then anything below 3% in the bank would be a loss and not a gain. Instead I try to find other deals that would actually provide me with a profit while still being “as good as money”. There are tons of options out there but you’ll need to start looking to find them.

Baker @ ManVsDebt May 1, 2009 at 6:52 am

I think that you did a good job in pointing out that interest rate is not the only thing you should look for. I’m personally still with ING, because I love some of the other factors you listed. They have great customer service, treat me well, and I know in the long run they will stay competitive!

Nabeel May 1, 2009 at 9:40 am

I’ve come across a few of these ‘best high interest savings rate’ lists. None of them, however, list GMAC bank (www.gmacbank.com). They have an interest rate of 2.25%. I am now feeling a little uncomfortable keeping money in there since no one really talks about it. I have checked and found out that they are FDIC insured. What are your thoughts about that bank? Did you know about it? If so, then why’d you leave it out of this list?

Silicon Valley Blogger May 1, 2009 at 9:45 am

Hi Nabeel,

I actually have seen GMAC in many lists as well. I believe it’s a good bank too. I provided a sampling of options but I can definitely update this list accordingly. I will review their terms to make sure. Thanks for pointing it out! On this blog, I list banks, institutions and products which I’ve studied to some extent, and which I or someone I know have had personal experiences with; generally, I’ve found that the ones we discuss have great treatment of their customers (or some other good features). But just because a particular bank is not on a list, doesn’t mean it is not as good, it just means that I may not have had a chance to review it diligently. So I would encourage anyone checking out a suggestion or recommendation to also conduct their due diligence (as in the post above, I mention the features against which to check your account, to see how it measures up for you).

MoneyEnergy May 1, 2009 at 3:59 pm

Nice list, thanks for the explicit comparisons. I should probably get on with the business of getting an online bank account – though, I currently use online banking (as well as online brokerage services) with my so-called “brick and mortar” bank. I guess for me, my bank (which is effectively already an online bank for me) is already pretty perfect (though I’d have to compare yet on the aspect of the high-interest savings. That would be the only reason to consider a new bank at this point).

Sarah May 2, 2009 at 9:43 am

Hi! I found better rates in high-yield checking accounts, especially through credit unions.
I got one at 5.15%. Caveat: requires credit card activity of 15 transactions, online billpay, e statements and direct deposit (trying to find a creative way to do this since my waitress checks always=0.00$, I do have online income and LLC income….any suggestions?) Not the best CD rates but competitive. I just did some banking and saw they lowered their APY to 4.15% (still scceptable, I guess:/
Mycheckingfinder.com, I believe. Def. gotta keep above inflation!

jim May 4, 2009 at 6:15 pm

Money plays baby… interest rate is the most important aspect.

Tammy May 18, 2009 at 8:46 am

As long as the bank is FDIC insured, I am not really worried about my money. I recently started using SmartyPig which is currently offering 3.05%

Sarah June 11, 2009 at 4:56 pm

@Nabeel & @Silicon Valley Blogger:

Ally Bank /is/ GMAC bank. They just re-branded as a PR move, distancing themselves from their auto industry roots.

See the story here.

Silicon Valley Blogger June 11, 2009 at 5:36 pm

Thanks Sarah, you’re absolutely right… Ally Bank is the new name for GMAC. I actually wrote a post on Ally Bank (formerly GMAC) here. I do appreciate the comment!

Goober June 20, 2009 at 6:04 am

Also, the information for WT Direct is a bit misleading.

Here is what their site says: There is no minimum deposit required to open the account. For the first 60 days from the date the account is opened, regardless of the account balance, the account will earn our highest APY, which is variable and is currently 1.76%. After the first 60 days, the APY for the account will have two tiers: (a) a higher APY for accounts with balances of $10,000 or more (variable and currently 1.76% APY); and (b) a lower APY for accounts with balances of less than $10,000 (variable and currently 0.15% APY).

So, unless you deposit and keep $10k in the account, you will earn 0.15%… that’s laughable.

TheGooroo @ FinanceAdvisoryStop July 2, 2009 at 12:53 am

I agree with what Jim said above. Interest rate beats all.

Erik August 1, 2009 at 3:03 am

in response to the top comment posted by Mikael@RetireRich’s…getting an interest rate that is above current inflation is of course vital in making sure you get a return on your investment.

But the inflation rate has been in the negative since March 2009 (also known as deflation.) In fact, the rate in June was -1.43%. So even a .01% rate would yield a profit. Im no economist though so maybe Im missing something here – if so, please correct me. Below are the inflation rates since 2009

JAN: 0.03%
FEB: 0.24%
MAR: -0.28%
APR: -0.74%
MAY: -1.28%
JUN: -1.43%

Source: http://www.inflationdata.com

Suzie August 3, 2009 at 11:32 am

I wonder when savings rates will return to a decent rate again? I feel sorry for pensioners and the like who rely on the interest to live on, as their income funds must have been hit really badly.

Scott November 27, 2009 at 7:36 pm

If you want FDIC then stick with the banks. This is an investment bound by a contract and the best investment I’ve ever made! Can’t beat the rates and withdraw all your money at any time, who can beat that?!?!

Tyler July 7, 2010 at 11:05 am

Flux Holdings is offering a 5% APY with no minimums. Sign me up.

Mason August 10, 2010 at 7:53 am

In regard to Tyler’s last comment, Flux Holdings is not FDIC Insured. The rate is also down to 2.5%.

Silicon Valley Blogger September 25, 2010 at 12:15 am

Sorry, never heard of Flux Holdings. Please do your due diligence before putting your money into a new savings account, especially if it’s a product you are not familiar with. I prefer to feature savings accounts that are, for the most part, offered by familiar, well-known, reputable banks and financial institutions.

Tom January 27, 2011 at 3:20 pm

What do you think about emigrantdirect.com? They have a pretty good history of high interest rates and their entire site is HTTPS (the extra S means it is a secured server) so I assume they are a safe online bank. But their rate right now is only 1%, which is good, but not great. They do have some physical locations where I am in the city and have been around for a while. I feel like those are good reasons to consider them, I was wondering what your opinion is?

Silicon Valley Blogger January 27, 2011 at 4:53 pm

I actually called them as well as Dollar Savings Direct in the past, and felt that the person behind the line was rather curt and not really well informed when I asked about their products (I had questions about their CDs). She seemed to keep wanting to refer me to their site but the answers I needed were not well explained and were not existent. I wasn’t too thrilled with the reception I got from them. I actually prefer EverBank — they seem to be a great fit if you’re after more sophisticated savings products. For basic products, I’d go with HSBC, FNBO or ING Direct.

henrietta smith October 21, 2012 at 10:37 pm

I need help with putting my money in a secure fdic saving account, cd or money market that is paying a decent interest rate. I have money in a union bank with almost 0 interest rate. I need my savings to start working for me. Please give me some good financial advice to follow up on.

Silicon Valley Blogger October 22, 2012 at 10:57 pm

What do you mean by a “decent” rate? If it’s anything higher than 2% then we’re all out of luck (for the most part). Unfortunately, interest rates are extremely low right now as the government is trying to spur growth by making it cheap to borrow. This penalizes savers. Also, they are encouraging more risk taking by forcing investors to seek better returns through the stock market. I believe that this is the wrong direction to take and would much prefer interest rates to be higher. However, it is what it is. If you want higher returns, you’ll need to invest your money in assets that may carry a bit more risk than cash.

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