{ 15 comments… read them below or add one }

Steward September 24, 2008 at 3:29 pm

I bank at WAMU and it was a big bummer to see the rates decline so quickly many months ago when all those rate cuts were hitting us. Now, with WAMU doing really badly in the market, they are raising rates to attract more money to keep their books in check. I certainly hope it works because I like have a high yield once again. 🙂

Silicon Valley Blogger September 24, 2008 at 3:51 pm

Remember that your funds are purely liquid in a checking or savings account. So surely, this gives you a lot of flexibility with your money even with the stuff going on in the financial industry. There’s a lot to be said about tying your money up in a CD at these rates when you can get it here with with easy access and redemption privileges — just as long as you keep within FDIC guidelines!

Which makes me ask the question — if these online banks offer such high yields, why even bother with the average short term CD? Goes to show we all need to shop around for the best returns.

The other side of the story of course, is the whole issue of WaMu’s health. They are offering the excellent rate for a good reason.

jennydecki September 24, 2008 at 11:50 pm

With the current financial climate I’m willing to be risky with stocks, but NOT with my checking and savings account.

I’ll wait a week or two and see if WaMu is “savable” – then I’ll consider switching. It feels like they’re piling it on so they have more liquid cash, so if they aren’t extended the credit they desire they can cover those overnight overages. Smart plan, but one I wouldn’t like to be part of.

With all things equal (aka not this week in the American economy) I have no problem spending twenty minutes to switch checking/savings accounts. Even if it was for an extra .5%

Silicon Valley Blogger September 25, 2008 at 12:09 am

Very good points Jenny. It’s definitely prudent to see how the dust settles over the next few weeks. With the whole bailout plan unfolding from Pres. Bush’s lips today, I hope that the murkiness in our nation’s financial picture soon dissipates and we’ll move from “uncertain” to something more clearcut, whatever plans the “powers that be” decide to undertake.

There are other issues to consider here, of course, including what came out today: the downgrading of WaMu ratings.

Well, let’s see how this unfolds.

Ken Deboy September 25, 2008 at 10:02 am

For a while, they had a pretty good rate, but I’d be kind of hesitant to put my money with a troubled bank, even if it’s a rumor. It’s probably worth checking into local solutions as well. For a while, my credit union was actually offering 5.0% APY on checking account balances up to $50,000 if you met certain (easy) requirements.


Silicon Valley Blogger September 25, 2008 at 10:54 am

I agree, those were some great rates we had in the past. Now if others can share their high rate sources, we would very much appreciate it!

Luke @ Money & Fitness September 25, 2008 at 11:22 am

Good post but that is definitely a tough question. Has anyone gone through the process of getting money out of a bank through the FDIC if the bank goes under? If that is an easy task, then I would have no problem about putting money there. I am with a risky bank now with Country Wide (Although hopefully their time has passed).

Scott @ The Passive Dad September 25, 2008 at 11:57 am

4.0% is a fantastic rate and better than the current 3% of my ING account. WAMU is covered by FDIC as well so the savings account should be secure. I don’t know if I would move both my savings and checking account over at this time, but it does look appealing. Thanks for the info.

Start-Up September 25, 2008 at 1:21 pm

The key is to keep it under FDIC limits. That way the only risk you’re opening yourself up to is if the bank fails you miss out on interest for a few days. As soon as I don’t have to worry about hard credit checks effecting my credit score I will be opening a WAMU checking and savings account, if it’s still standing.

Silicon Valley Blogger September 26, 2008 at 7:42 am

Our dear WaMu,

why oh why did you do this to us? Okay some disappointment aside, I guess it’s best that you got bought out by your friend with the deeper pockets, J.P. Morgan.

At least your depositors will still have access to their funds in your care. In my mind we can probably consider your buyout as a “best case scenario” for a bank in your straits. So it’s a consolation that somebody was around to catch your fall. But still, I find it ironic how you’d advertise a rate increase on the week you decide to “fold” as an independent bank.

It may not matter as things will carry on as usual — except under a different name (that of the acquirer’s, J.P. Morgan) — although I expect that what customers and employees will experience from WaMu is the standard situation you’d see at an establishment that is undergoing transition and changes within its walls.

Until they get their act squared away, things can be “bureaucratically” slow. Or, we may be pleasantly surprised and things go smoothly…. we shall see.

But yeah, the good news is that depositors still get their money and are probably going to keep earning your stated rate. Correct me if I’m wrong…..anyone?

underground September 26, 2008 at 7:57 am

This is something we haven’t seen in a while, but I bet we will be seeing a lot more of in the near future. I’ve heard it called “death-spiral financing,” and its a process where a bank becomes so desperate for capital that it begins to offer higher and higher return rates that it ultimately can’t afford.

The more a bank needs the money – the more it costs.

The government can try to step in and make money cheaper, but this has the unintended consequences of driving up prices on food and energy and pushing more consumers to the brink of debt-default…

Of course, when the credit cards and mortgages default, the banks need more money.

Its a pretty vicious cycle with no clear end in sight. Even the big bailout could backfire in half a dozen ways.

Peter May 5, 2009 at 8:13 pm

It is funny how times change. I was looking on Google for the best savings accounts rates and I stumbled upon your article. I wish I could find rates like this again.

Northumberland Realtor May 14, 2011 at 7:34 pm

I think there is always a catch to what the banks are offering. They would always say free but when you already have the check book and the terms, you’ll see the hidden charges. Everyone should ask all the details and read all the terms before signing anything. Unless you want to be shocked with the charges you’re going to get.

Silicon Valley Blogger May 16, 2011 at 7:59 am

I think a lot of people don’t realize that bank products change their terms and features quite a bit. This happens a lot with credit card products, for example. If you read their T & C, you will notice that banks will give themselves an “out” by saying that their offers or terms may change at any time, so consumers will need to keep their eye on bouncing rates if they happen to live on the edge and count those rates when they budget or spend and incorporate these figures into their accounts.

Amy Saves May 17, 2011 at 11:04 am

I’ve been with Bank of America for over 10 years and get free checking with direct deposit. It works for me since I just have my paycheck deposited automatically. Saves a trip to the bank too.

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