These days, if you want to have a short-term saving vehicle that gives you better than 1% APY yield, you will have to look at Certificate of Deposit (CD) instead of the more liquid savings accounts, thanks to the Fed’s low rate policy that has been in place since 2008. The policy was designed to spur economic recovery by lowering short-term borrowing costs, however four years later, the recovery is still pretty weak and we ordinary people who work very hard in such a tough economic environment are left with dismal return for their money.

Usually, when we discuss short-term saving goals and ways to help us achieve these goals, we are talking about saving for a new car, a home improvement project, or a vacation, objects that we can accomplish normally in less than a five-year frame. For such a short time, putting money in the stock market is usually not a sound option because of the volatility and the potential of losing money. So essentially, for short-term, the safety of the capital is more important then return. But that doesn’t mean that we shouldn’t seek good return for the money.

To meet our short-term saving goals, there are a few vehicles we can choose, including short-term Treasury bills, money market funds, savings accounts and Certificate of Deposits. Among them, short-term CDs, with terms from 6 months to 5 years, are a valid option because they provide savers both protection and growth of the principal.  Today, I want to talk about CD products from CIT Bank, which offers attractive rates for different terms and minimum balances.

CIT Bank currently offers three different flavors of CDS, Term CD, Achiever CD, and Jumbo CD, depending on the amount of initial deposit you want to put in the CD. For a small amount of $1,000, you can get one of CIT Bank’s Term CDs:

• 6-month: 0.45% APY
• 1-year: 1.06% APY
• 2-year: 1.20% APY
• 3-year: 1.42% APY
• 5-year: 1.80% APY

To see whether you get a good deal with CIT Bank CDs, let me compare the 1-year CD with the same offers from other popular banks such as

• Ally Bank 1-year CD: No minimum to open, 1.04% APY
• Discover Bank 1-year CD: $2,500 minimum to open, 1.0% APY
• American Express 1-year CD:  No minimum to open, 0.55% APY

As you can see from the above comparison  CIT Bank 1-year CD does have a competitive rate, even though it requires a little bit higher initial deposit. For 5-year CD, CIT Bank also stands out among its peers with a 1.80% APY. Of course, a longer term requires a longer commitment. If you want to maintain some flexibility while getting better yield than the 1-year 1.06% APY, consider building a CD ladder with different maturity, from 1-year all the way to 5-year, instead.

If you have a larger amount you want to put into a CD, then consider the Achiever CD or even Jumbo CD from CIT Bank. The minimum deposit required for the Achiever CD is $25,000 and for that amount of money, you get 1.10% APY in return for a 1-year and 1.25% APY for a 2-year Achiever CD. For an initial deposit of $100,000 or more, CIT Bank’s Jumbo CD becomes available, but with a longer term. Currently, the rate of 2-year Jumbo CD is 1.25%, 3-year 1.44%, and 5-year 1.85%.

Personally, I think CIT Bank’s Term CDs are more attractive than its Achiever or Jumbo CDs because the latter requires significantly higher initial deposit, yet the yield is only marginally higher than what the Term CDs offer with the same term. What do you think?

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These days, we all know that the money we hold at banks, whether it’s a traditional B&M bank or an online bank, won’t give us much in return as we used to get in the past. As I have discussed early in a post about 2011 best high-yield savings accounts that if you look around, you will probably be surprised, and disappointed at the same time, by how low the savings account yields are this year. And with the economy still struggling, things don’t seem to get better any time soon if the Fed keeps its current policy intact.

If you are look for a high-yield savings account that gives you an above the average return for your money, you may want to check out EverBank Yield Pledge Money Market Savings Account, the one that tops my best account list. The difference between EverBank and other online banks is that EverBank gives you a 3-months introductory period with a rate that’s much higher than what you would get from other banks normally. With the bonus rate, the actual rate for the first year is also higher than rates from other popular online savings account.

How Does EverBank Compare with Other Online Banks?

Currently, the EverBank Yield Pledge Money Market Account offers savers a 1.26% bonus rate for the first three months after the account is opened. As you can see from the 2011 savings accounts list, the EverBank MM account beats many popular online banks such as ING Direct, HSBC Direct, FNBO Direct, and Ally Bank easily. While the bonus rate is nice, the only issue is that it only lasts for three month, after that the rate will depend on the on-going rate, which is at 1.01% APY now. Combining both the bonus rate and current rate, the yield of the money market account is 1.07% APY for balance up to $50,000 for the first year. To earn the rates, a minimum account balance of $1,500 is required at account opening. If the minimum balance requirement is not met, a $8.95 monthly fee will be charged.

How to Open a EverBank Savings Account

To open an account with EverBank, you need to have your personal information ready such as name, email address, employer, SSN, and driver’s license. The online account opening process is rather straightforward, however, not every account opened online is approved right away. if their address does not match what the credit agency has on file, we cannot approve them instantly. For example, if during the account opening process, there’s an address match or answers to 4 random questions don’t match with what are on credit file, etc., the approval will be delayed for a few days for additional verification. I once had a conversation with a representative from EverBank and got the following information regarding the process:

Since we’re an online bank, we have a process in place that requires us to “know our customer.” Since we don’t do face-to-face account opens, we have to do credit checks, etc. We also still require a physical signature on all account opens. However, once an account is open (meaning, the customer has an account #) they can wire, ACH, etc. into that account. The lag time occurs when the account is open (the customer finishes the application) but we’re waiting on the signature page from the applicant. I know this sounds a bit tedious, but believe me, we are very careful with the “know your customer” rule (Privacy Act). We care about the lag time, but we care more about reducing our fraud. Right now, EverBank has pretty much, the lowest fraud rate in the industry.

And for every account that’s approved online, a physical signature card has to be mailed. I know some banks did this before (for example, HSBC asked for a signature card when I opened an account years ago), but it’s not a policy for many banks that do business solely online. Is it a good policy? Maybe.

How to Fund an EverBank Account

Once the account is opened, you can fund the account with either checks, wires (EverBank ABA Routing number is 063000225), ACH deposits(EverBank ACH routing number is 063092110), or ATM deposits. ACH is always the preferred method to transfer funds for me online. EverBank has the following policy regarding ACH transfer:

ACH funding is available for personal Checking, Money Market, and Asset Manager Service cash management accounts. You can fund just the minimum opening deposit or any amount up to a total of $25,000 per day. For funding more than $25,000, you’ll want to open now with $25,000 and send a check or wire for the additional amount.

For the ACH funding source account, you can use any account that supports check writing. You can verify ownership of your source account in 3 days through a small deposit and withdrawal.

Is EverBank Safe?

No matter where you decide to put your money, the first and most important question to ask is whether the bank is safe, whether it’s fiscally sound because without that, all others are meaningless. EverBank appears to be in a good financial shape. The bank has been FDIC insured since October 1, 1998 (FDIC Certificate number 34775). Bankrate.com’s Safe & Sound Ratings rates EverBank an impressive 4 stars out of 5, which means the bank is in very good fiscal condition. And it’s pending IPO is just another proof of the bank’s strength.

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As we all know that the Federal Reserve Bank has put its interest rate on hold for nearly three years, a policy that had prevented the economy from slipping further into recession three years ago and aims to spur growth and recovery now that the recession has ended. While the Fed is idle, commercial banks have been anything but steady all these years, in terms of interest rates that they gave to their customers. Not only interest rates have dropped quite significantly since the Fed has done their part, the pace of change has also been very rapid. I know some banks even adjusted their savings account rates more than once in a week. When you opened a savings account, you would have thought that the rate would have some kind of stability. Maybe that’s the case in the past, but definitely not now.

Amid all these uncertainties, it would be nice to have some kind of assurance.

Well, there’s actually some guarantee available for a banking product, from Ally Bank and it’s for its CD account.

Since I don’t actively bank with Ally Bank any more (I still have some in the Interest Checking Account), I don’t go to check my account as often as I do with other banks. When I did go to Ally Bank website the other day, I notice something that I didn’t see before, as far as I can remember.

It’s Ally Bank’s Ten-Day Best Rate Guarantee, which guarantees that you will get the best rate available for the 10 days after a CD account is opened. Basically, what it says is that if you open a CD account with Ally Bank and if there’s any rate adjustment within the first 10 days, you will get the best rate during this period of time, regardless whether the rate is going up or down. Since there will be some delays between opening an account and having it funded no matter which funding method is used (by check, by ACH, or by wire), it’s possible that the rate may change while the account is waiting for the initial fund to come in. With this guarantee, you are assured that your CD account won’t be affected should the rate goes down shortly after the account is opened.

While the offer looks good on surface, I am not very impressed by it because, from my experience, Ally Bank made more frequent adjustments to its Online Savings account than CD account. In fact, one of the reason that I decided not to use Ally Bank is that I just can’t tolerate the Savings account rate being adjust every week. To me, I will be happier if Ally Bank not only offers a competitive rate, but also keeps the rate stable than its competitors, not a 10-day guarantee.

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Sallie Mae Bank is the online banking division of Sallie Mae, the student loan provider. Even though Sallie Mae Bank is the new comer in the online banking area which is previously dominated by well-known names such ING Direct and FNBO Direct, it was quickly recognized as one of the best online banks. In the December 2010 issue of Kiplinger’s Personal Finance magazine, Sallie Mae High-Yield Savings Account was named the Best Online Savings Account in 2010. With the current yield at 1.15% APY, Sallie Mae Savings Account offers one of the highest interest rates among popular online high-yield savings accounts. The account has no minimum balance requirement and no monthly fee. Other features include

• Daily compounded interest
• Sallie Mae routing/ABA number 124385119
• ACH fund transfer to/from external accounts
• Trial deposit account ownership verification
• 5-day hold period for deposit $5,000 or less, 10-day hold period for deposit more than $5,000
• Maximum 6 free withdrawals per statement cycle ($10 per withdrawal over the limit)
• Customer service toll free number (877) 346-2756

The account opening process is rather straightforward, taking only about 10 minute from start to finish. Like many other banks which offer account application online, the process of opening an online savings account, including Sallie Mae Savings Account, is pretty standard nowadays: Select the account type, provide personal information, set up a user name and password to access account later, verify identity, choose account funding method, and create online account access. For SallieMae account, there’s no paperwork to be sent back to the bank. All were done online.

SallieMae High-Yield Savings Account Opening Process

During the process, you will be asked to provide external bank information to make initial deposit (though no minimum deposit is required for this account) and any subsequential deposits that you may want to add to you account. ACH fund transfer, which is done by linking your savings account to an existing checking account  to transfer money back and forth, is the fastest and easiest way to fund your Sallie Mae Savings Account or withdraw money from it. Therefore, it’s recommended the external bank link be set up at the account opening to speed things up.

Sallie Mae uses two small trial deposit to verify account ownership, i.e., you are the rightful owner of the external bank account linked to Sallie Mae Bank. It usually takes one or two business days for the trial deposits to show up in the external bank. Once the two small deposit appear, you will need to go back to your Sallie Mae account and enter the amounts of the trail deposit to complete the verification process.  And after the external bank is verified, the initial deposit you made during the account application will be created to your Sallie Mae Savings Account and starts to earn interests on a daily basis. You can also start transfer money from your linked checking account to your new savings account and let your hard earned money work  even harder for you

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FNBO Direct, the online division of First National Bank of Omaha, is a popular online bank that offers savers a wide range of financial products from high-yield savings account to interest checking account to credit card. Among FNBO’s products, its Online Savings Account is one of the best savings accounts out there. Currently paying an yield of 1.10% APY, FNBO Direct Savings Account will let you earn return of money faster.

I applied for an FNBO Direct Savings account last Thursday, two small trial deposits showed up in my Bank of America checking account on Friday, and after confirming the deposits, I was informed on Saturday that my new account is ready. Yesterday, I enrolled for online access, set up external bank transfers, and initiated first fund transfer from HSBC to FNBO. The whole process took only two days, the shortest among all the online banks I have used so far.

FNBO’s user interface is very simple, no fancy functions but enough to meet my requirements: transfer money and earn interests. In fact, Transfer Funds, as shown above, is the probably the only practical function FNBO offers, besides the regular maintenance services such as a change password and mailing address, etc. After enrolling my account for online access, I was able to set up external links to my accounts at HSBC and IGoBanking and initiated a transfer request. Unlike IGoBanking, which asked me to verify my identity twice and had to mail me my password in a rather lengthy process, FNBO makes everything straightforward. During the enrollment, I was asked to answer three security questions (again) and one personalized sentence that will show up every time before logging into my account.

Currently, it seems that FNBO only offers standard 3-day fund transfer through ACH. As for ACH account transfer limit, FNBO says the daily transfer limit is $25,000, which is pretty high among online banks. Regarding external fund transfer at FNBO:

The first deposit you make to your FNBO Direct account will be subject to a hold. Funds from that deposit will not be available for transfer or withdrawal until after the sixth business day following the day the first deposit is deducted from your funding account. Interest, however, will begin to accrue no later than the business day we receive credit for your deposit (typically, this will be 2-3 business days after the first deposit is deducted from your funding account).

As long as I am not losing any interests, I am fine with the extra holding period which, according to the policy, is only applicable to the first deposit instead of every one.

So far from what I have experienced, FNBO seems to be quite easy to deal with: fast application, easy to use interface, and higher transfer limit. To apply for an account, you will need the following items:

1. Your Social Security or Tax ID Number.
2. Your Driver’s License or ID card issued by a state DMV.
3. Information about any loans or mortgages that you may have to help us confirm your identity.
4. For instant funding, you will need your current bank account and routing numbers.
5. If applying for a joint account, you will need the Secondary Applicant’s name, Social Security or Tax ID Number, and Date of Birth.

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